UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission file Number 0-18151
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
(Exact name of registrant as specified in governing instrument)
Delaware 13-3286866
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2 World Trade Center, New York, NY 10048
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 392-1054
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interests
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X . No .
Indicate by check mark if disclosure files pursuant to Item 405 of Regulation
S-K (sec. 229.405 of this chapter) is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ X ]
State the aggregate market value of the voting stock held by nonaffiliates of
the registrant. Not Applicable
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
PART I.
ITEM 1. BUSINESS
The Registrant, Dean Witter Realty Growth Properties, L.P. (the
"Partnership") is a limited partnership formed in March 1985 under the
Uniform Limited Partnership Act of the State of Delaware for the purpose
of investing primarily in income-producing commercial and residential
properties.
The Managing General Partner of the Partnership is Dean Witter Realty
Growth Properties Inc., a Delaware corporation, which is wholly-owned
by Dean Witter Realty Inc. ("Realty"). The Associate General Partner is
Dean Witter Realty Growth Associates, L.P., a Delaware limited
partnership (the "Associate General Partner"), the general partner of
which is the Managing General Partner. The Managing General Partner
manages and controls all aspects of the Partnership's operations. The
terms of transactions between the Partnership and its affiliates are set
forth in Item 13 below.
The Partnership issued 78,594 units of limited partnership interests
(the "Units") with gross proceeds of $78,594,000. The offering has been
terminated and no additional Units will be sold. The proceeds from the
offering were used to make leveraged investments in three office
properties (one of which was lost through foreclosure in 1992), an
industrial park (a portion of which was disposed of in 1995) and a hotel.
The properties are described in Item 2 below.
The Partnership considers its business to include one industry
segment, investment in real property. Financial information regarding
the Partnership is set forth in the Partnership's financial statements
in Item 8 below.
The Partnership's real property investments are subject to
competition from similar types of properties in the vicinities in which
they are located. Further information regarding competition and market
conditions where the Partnership's properties are located is set forth
in Item 7, "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
The Partnership has no employees.
All of the Partnership's business is conducted in the United States.
ITEM 2. PROPERTIES.
The Partnership's principal offices are located at Two World Trade
Center, New York, New York 10048. The Partnership has no other offices.
The Partnership owns, through partnership interests, the following
property interests. Generally, the leases pertaining to the properties
provide for pass-throughs to the tenants of their pro-rata share of
certain operating expenses. In the opinion of the Managing General
Partner, all of the properties are adequately covered by insurance.
<TABLE>
<CAPTION>
Net Rentable Year(s) Acquisition Type of ownership
Area Completed/ Cost of land and
Property, location and type (000 sq. ft) Acquired ($000) improvements
<S> <C> <C> <C> <S>
Bayport Plaza
Tampa, FL 45.8% indirect
Office building1 259 1984/1985 $26,206 General Partnership
interest in a part-
nership which owns
the building.
Hotel1 448 rooms 1985/1985 $11,178 91.6% indirect
general partnership
interest in a
partnership which
owns the hotel.
Braker Center, Phase III
North Austin, TX
Warehouse building2 150 1985/1985 $3,848 99% General Part-
nership interest.
Land2 28 acres NA/1985 $10,108 99% general part-
nership interest.
Four Office/R&D buildings2 100 1986/1985 - 49.5% indirect general
partnership interest
in a partnership which
owns the property.
Peninsula Office Park1 379 1972-82/1985 $6,026 49.9% indirect
San Mateo, CA general part-
Six office buildings nership interest
and restaurant in two limited
partnerships
which own the
buildings.
1. The property is subject to a mortgage loan. See note 6 to the consolidated financial
statements in Item 8.
2. Disposed of in part or in full in 1995. See Item 7, Management's Discussion and
Analysis of Financial Condition, and Note 4 to the consolidated financial statements in
Item 8.
Each improved property has been built with on-site parking facilities.
</TABLE>
ITEM 3. LEGAL PROCEEDINGS.
On December 27, 1995, a class action lawsuit (the "Grigsby Action")
naming various public real estate partnerships sponsored by Realty
(including the Partnership and its Managing General Partner and Associate
General Partner), Realty, Dean Witter Reynolds Inc. and others as
defendants was filed in Superior Court in California. The complaint
alleges fraud, negligent misrepresentation, intentional and negligent
breach of fiduciary duty, unjust enrichment and related claims and seeks
compensatory and punitive damages in unspecified amounts and injunctive
and other equitable relief. The defendants have removed the case to the
United States District Court for the Southern District of California.
The parties have signed a stipulation requesting that the action be
transferred to the United States District Court for the Southern District
of New York. The defendants have not yet responded to the complaint and
intend to vigorously defend the action.
On February 14, 1996, a class action lawsuit (the "Schectman Action")
naming various public real estate partnerships sponsored by Realty
(including the Partnership and its Managing General Partner), Realty,
Dean Witter, Discover & Co., and Dean Witter Reynolds Inc. as defendants
was filed in the Chancery Court of Delaware for New Castle County. The
complaint alleges reckless and/or negligent misrepresentation and
nondisclosure, breach of fiduciary duty and related claims and seeks an
accounting of profits and rescissory and/or compensatory damages in
unspecified amounts. The defendants have not yet responded to the
complaint and intend to vigorously defend the action.
On February 23, 1996, a class action lawsuit (the "Dosky Action") naming
various public real estate partnerships sponsored by Realty (including
the Partnership and its Managing General Partner), Realty, Dean Witter,
Discover & Co., Dean Witter Reynolds Inc. and others as defendants was
filed in the Chancery Court of Delaware for New Castle County. The
complaint alleges breach of fiduciary duty and seeks an accounting of
profits, compensatory damages in unspecified amounts, possible
liquidation of the Partnership under a receiver's supervision and other
equitable relief. The defendants have not yet responded to the complaint
and intend to vigorously defend the action.
On February 29, 1996, a class action lawsuit (the "Segel Action") naming
various public real estate partnerships sponsored by Realty (including
the Partnership and its Managing General Partner), Realty, Dean Witter
Reynolds Inc., Dean Witter, Discover & Co. and others as defendants was
filed in the Chancery Court of Delaware for New Castle County. The
complaint alleges breach of fiduciary duty and seeks an accounting of
profits, compensatory damages in unspecified amounts, possible
liquidation of the Partnership under a receiver's supervision and other
equitable relief. The defendants have not yet responded to the complaint
and intend to vigorously defend the action.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted during the fourth quarter of the fiscal year
to a vote of Unit holders.
<PAGE>
PART II.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
An established public trading market for the Units does not exist,
and it is not anticipated that such a market will develop in the future.
Accordingly, information as to the market value of a Unit at any given
date is not available. However, the Partnership does allow limited
partners, (the "Limited Partners") to transfer their units, if a suitable
buyer can be located.
As of March 18, 1996 there were 6,123 holders of limited partnership
interests.
The Partnership is a limited partnership and, accordingly, does not
pay dividends. However, the Partnership Agreement permits distributions
of "Distributable Cash" to its partners. Pursuant to the Partnership
Agreement, Distributable Cash is to be paid 96% to the Limited Partners,
after the Managing General Partner has received a management fee of 6.25%
of Distributable Cash. The Managing General Partner did not receive a
management fee in 1995, 1994 or 1993 because the Partnership did not pay
a cash distribution in any of those years.
Sale or refinancing proceeds will generally be distributed (i) to the
Limited Partners until they have received a return of their capital
contributions; (ii) to the General Partners until they have received
1.01% of the amount distributed to the Limited Partners; (iii) 99% of any
remaining amounts to the Limited Partners and 1% to the General Partners
until the Limited Partners have received cumulative distributions in an
amount sufficient to provide a 6% cumulative annual return on their
adjusted capital contributions; and (iv) 85% to the Limited Partners and
15% to the General Partners after the Managing General Partner receives
a brokerage fee, if earned, not in excess of 3% of the aggregate gross
sales prices of all properties. During the years ended December 31, 1995
and 1994, the Partnership did not distribute any sale or refinancing
proceeds.
Taxable income and tax loss generally are allocated to the partners
in proportion to the distribution of Distributable Cash (after payment
of the Managing General Partner's management fee) or sale or financing
proceeds (or 96% to the Limited Partners and 4% to the General Partners
if there is no Distributable Cash).
<PAGE>
<TABLE>
<CAPTION>
ITEM 6. SELECTED FINANCIAL DATA.
The following sets forth a summary of selected financial data for the
Partnership:
Dean Witter Realty Growth Properties, L.P.
Years ended December 31:
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C>
Total revenues $ 28,731,324 $ 28,095,985 $ 27,391,611 $ 28,243,603 $ 29,502,208
Loss before extra-
ordinary item $ (2,387,229)1 $ (1,105,050) $ (5,550,240)2 $ (6,421,433) $ (7,331,621)
Extraordinary item $ 1,938,6453 $ - $ - $ 422,1233 $ -
Net loss $ (448,584)1 $ (1,105,050) $ (5,550,240)2 $ (5,999,310) $ (7,331,621)
Per unit of Limited
Partnership interest:
Loss before extra-
ordinary item $ (5.22)1 $ (13.50) $ (67.79)2 $ (78.44) $ (89.55)
Extraordinary gain $ - $ - $ - $ 5.16 $ -
Net loss $ (5.22) $ (13.50) $ (67.79) $ (73.28) $ (89.55)
Cash distributions paid $ - $ - $ - $ - $ -
Total assets $ 41,836,913 $ 55,097,988 $ 58,385,005 $ 87,483,150 $100,445,904
Long-term debt due after
one year $ - $ 54,936,984 $ 57,844,135 $ 84,193,991 $ 92,305,541
1Includes a $1,249,457 loss on the sale of real estate. See Note 4 to the consolidated financial statements
in Item 8.
2Includes a $334,988 loss on the sale of real estate.
3Represents gain on extinguishment of debt due to foreclosure of a property.
Note: The above financial data should be read in conjunction with the
consolidated financial statements and the related notes appearing
in Item 8.
</TABLE>
ITEM 7. MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Liquidity and Capital Resources
The Partnership raised $78,594,000 in a public offering which was
terminated in 1986. The Partnership has no plans to raise additional
capital.
The Partnership used the proceeds from the offering to make
leveraged investments in four properties (one of which was lost through
foreclosure in July 1992). No additional investments are planned.
The condition of the real estate markets varies among different
regions of the country and by property type. The relative absence of
office construction as well as growth in business services has resulted
in absorption of office space in certain cities of the Northeast and
Southeast. In selected cities in the West, technology and entertainment
companies are providing steady demand for office properties. In most
markets, office construction is limited to build-to-suit projects. For
the hotel industry, demand for rooms has revived with little new
construction. As a result, average daily rates, occupancy levels and
profits have increased at many hotel properties.
The Managing General Partner plans to offer for sale in 1996 the
Bayport Plaza hotel and Peninsula Office Park properties. However, there
can be no assurance that the properties will be sold.
The Partnership's liquidity depends upon cash flow from operations
of its properties and capital expenditures. In 1995, all of the
Partnership's property investments generated positive cash flow from
operations, and it is anticipated that they will continue to do so.
In addition, the Partnership's liquidity will be affected by the
sale of the Partnership's properties. Because the Partnership has fewer
income-producing investments, the Partnership's cash from operations will
decline in 1996 and thereafter.
In 1995, Partnership cash flow from operations exceeded capital
expenditures and investments in joint ventures, and the Partnership
expects that this will continue in 1996.
The Partnership's current restricted cash balances are being
reserved primarily for debt service, working capital, and the replacement
of certain furniture, fixtures and equipment at the Bayport Plaza hotel
pursuant to the hotel loan and management agreements. In 1996, Bayport
Plaza hotel expects to incur capital expenditures of approximately
$175,000.
The Partnership has lent $210,005 to the Peninsula Office Park
investment as of December 31, 1995. The loan bears interest at the prime
rate plus 1%. Peninsual Office Park expects to incur capital
expenditures of approximately $1 million to be funded from cash reserves
at the Joint Venture.
In August 1995, the Partnership entered into an Agreement of Sale
with Hill Partners, Inc., an unaffiliated party, to sell some of the
Braker Center properties for a minimum sales price which was
approximately $8.2 million. The closings of the sale of the warehouse
and four parcels of land, for a net purchase price of approximately
$6,594,000 took place in September and November 1995. At the September
closing, the Partnership repaid the $3.7 million mortgage encumbering the
property. The remaining proceeds will be used to repay borrowings from
an affiliate of Realty and for reserves to fund future leasing costs at
the Partnership's other properties.
The sales closings for one of the remaining parcels of land is
scheduled to occur in April 1996, and the closing of the sale of the
final parcel of land is scheduled to occur no later than May 1997.
Pursuant to the Agreement of Sale, the Partnership may continue to market
the final parcel prior to the closing date of the sale of that parcel.
If the final parcel is sold to a third party, the excess of the proceeds
from such sale over the purchase price otherwise to be paid by Hill
Partners, Inc. will be divided between the Partnership and Hill Partners.
In December 1994, the partnership which owned the four office/R&D
buildings at Braker Center was in default on its mortgage loan. In
January 1995, the Partnership's joint venture partner placed 46 of its
properties, including the entity owning the four office/R&D buildings at
Braker Center, under bankruptcy protection. The Partnership did not
consent to this bankruptcy filing. The joint venture partner
subsequently submitted a plan of reorganization which was approved by the
bankruptcy court in November. The reorganization plan required the
Partnership to contribute additional equity to the joint venture in order
to retain its interest in the joint venture. The Managing General
Partner believed that the plan of reorganization was not favorable to the
Partnership and that additional investment was not justified and,
accordingly, did not contribute additional equity. As a result, the
Partnership lost its interest in the buildings.
Since the mortgage loan on the four office/R&D buildings exceeded
their carrying value, the loss of the buildings resulted in a non-cash
gain of $1,938,645 which was reported as an extraordinary item. Net loss
and cash flow from operations of these properties in 1995 were
approximately $222,000 and $55,000, respectively.
In May 1995, the Partnership and Hyatt Hotel Corporation modified
the management agreement for the hotel at Bayport Plaza. Under the terms
of the new agreement, Hyatt is entitled to an annual fee equal to a
percentage of the hotel's net revenues in excess of annual debt service,
not to exceed an overall percentage cap. In addition, Hyatt has agreed
to certain expense reductions that should increase the hotel's cash flow.
During the second quarter of 1995, the Partnership prepaid $3 million of
the senior debt at the hotel from restricted cash reserves. The
Partnership expects to refinance the $42 million mortgage secured by the
hotel prior to maturity in 1996.
The Partnership has not paid a distribution to the Partners since
the fourth quarter of 1990 and does not expect to pay a distribution in
1996. Through December 31, 1990, the General Partners have deferred
receipt of cash distributions of $262,316.
Except as discussed above and in the consolidated financial
statements, the Managing General Partner is not aware of any trends or
events, commitments or uncertainties that will have a material impact on
liquidity.
Operations
Fluctuations in the Partnership's operating results for the year
ended December 31, 1995, compared to 1994 and 1994 compared to 1993 are
primarily attributable to the following:
The hotel's average occupancy rate was 67% in 1995, 69% in 1994, and
62% in 1993. The hotel's room revenue increased in 1995 compared to 1994
because increases in room rates offset the slight decrease in occupancy.
Food beverage and other revenue increased because of increases in banquet
and in-room dining sales. The increases in food and beverage sales led
to a corresponding increase in related expenses. Room expenses decreased
in 1995 compared to 1994 because of reduced managment fees due to the
renegotiated management contract with Hyatt. The hotel's operating
revenue increased during 1994 as compared to 1993 as a result of an
increased average daily room rate, higher occupancy and an increase in
food and beverage income. The increase in occupancy was primarily
related to an increase in group room sales. Food and beverage revenue
increased primarily due to greater banquet sales, in-room dining sales
and outlet beverage sales. The higher operating revenue led to higher
hotel operating expenses.
The decreases in rental income, property operating expenses,
depreciation and amortization in 1995 compared to 1994 are attributable
to the disposition of the Partnership's interests in the properties at
Braker Center in 1995. The decreases in rental income, property
operating expenses, interest expense, depreciation and amortization in
1994 compared to 1993 are attributable to the change from consolidation
to the equity method of accounting for the Partnership's investment in
the Bayport Plaza office building in July 1993 and the sale of a building
at Braker Center in October 1993.
Interest expense increased in 1995 compared to 1994 primarily
because of the increase in the interest rate on the Bayport Plaza hotel
mortgage to 9% in 1995.
Equity in net losses of partnerships reflect the operations at the
Peninsula Office Park for all years presented. See Note 5 to the
consolidated financial statements.
General and administrative expenses were higher in 1995 compared to
1994 as a result of legal fees incurred in connection with the
modification of the Hyatt management agreement and the bankruptcy
reorganization at the Braker Center properties. General and
administrative expenses were higher in 1993 compared to 1994 because of
legal fees incurred in connection with the restructuring of the Bayport
Plaza Office building investment in 1993.
The losses on sales of real estate resulted from sales of properties
at Braker Center in 1995 and 1993. See Note 4 to the consolidated
financial statements.
A summary of the hotel, office and warehouse/research and
development building markets where the Partnership properties are located
and the performance of each property is as follows:
The hotel market in the Westshore area of Tampa Bay, FL continued
to improve during 1995 as a result of improvements in the economy and a
lack of new supply.
The Bayport Plaza Office Building, located in the same project as
the Hotel, is in a strong market. The market vacancy rate for Class A
buildings in the Westshore market is approximately 13%. However, the
downtown Tampa market is significantly weaker, and this may adversely
impact the Westshore market. As of December 31, 1995, occupancy at the
property increased to 96% from 93% in the prior year. The property is
leased to 32 tenants. Tenants occupying more than 10% of the building
space are: Prudential Insurance, the Federal Insurance Company and Butler
and Burnette whose leases expire in 2001, 2000 and 2005, respectively.
Approximately 6% of the leases expire in 1996.
The Partnership's remaining investment in Braker Center, located in
the Austin, TX industrial market, consists of vacant land. The
industrial building market in Austin, which has a current vacancy rate
of approximately 3% remains strong. A portion of the vacant land at
Braker Center has been sold during 1995. The remaining two parcels of
land are scheduled to be sold in April 1996 and no later than May 1997.
See Note 4 to the consolidated financial statements in Item 8.
The office market in San Mateo, CA, the location of Peninsula Office
Park, is characterized by declining vacancy rates (approximately 3% at
December 31, 1995) and steady leasing activity. As of December 31, 1995,
occupancy at the six office buildings is approximately 99%. The 17,000
square foot restaurant remains vacant. The property is leased to 34
tenants. Tenants occupying more than 10% of the building space are USL
Capital and CMP, whose leases expire in 1998 and 2005, respectively.
Leases totalling approximately 8% of the building space are due to expire
in 1996.
Inflation
Inflation has been consistently low during the periods presented in
the financial statements and, as a result, has not had a significant
effect on the operations of the Partnership or its properties.<PAGE>
<TABLE>
<capital>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
DEAN WITTER REALTY GROWTH PROPERTIES L.P.
INDEX
(a) Financial Statements
Page
<S> <C>
Independent Auditors' Report - 1995-1994 12
Independent Auditors' Report - 1993 13
Consolidated Balance Sheets at December 31, 1995 and 1994 14
Consolidated Statements of Operations for the years ended 15
December 31, 1995, 1994 and 1993
Consolidated Statements of Changes in Partners' Capital (Deficiency) 16
for the years ended December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows for the years ended 17-18
December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements 19-31
(b) Financial Statement Schedule
Real Estate and Accumulated Depreciation III 38-40
All other schedules have been omitted because either the required
information is not applicable or the information is shown in the
consolidated financial statements or notes thereto.
</TABLE>
<PAGE>
Independent Auditors' Report
The Partners
Dean Witter Realty Growth Properties, L.P.:
We have audited the accompanying consolidated balance sheets of Dean
Witter Realty Growth Properties, L.P. and consolidated partnerships (the
"Partnership") as of December 31, 1995 and 1994, and the related
consolidated statements of operations, changes in partners' capital
(deficiency) and cash flows for the years then ended. Our audits also
included financial statement schedule III. These financial statements and
the financial statement schedule are the responsibility of the
Partnership's management. Our responsibility is to express an opinion
on these financial statements and the financial statement schedule based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of Dean Witter Realty
Growth Properties, L.P. and consolidated partnerships as of December 31,
1995 and 1994, and the results of their operations and their cash flows
for the years then ended in conformity with generally accepted accounting
principles. Also, in our opinion, financial statement schedule III, when
considered in relation to the basic financial statements taken as a
whole, presents fairly, in all material respects, the information set
forth therein.
Deloitte & Touche LLP
/s/Deloitte & Touche LLP
New York, New York
March 29, 1996
<PAGE>
Independent Auditors' Report
The Partners
Dean Witter Realty Growth Properties, L.P.
We have audited the accompanying consolidated statements of operations,
changes in partners' capital (deficiency) and cash flows of Dean Witter
Realty Growth Properties, L.P. and consolidated partnerships for the year
ended December 31, 1993. These consolidated financial statements are the
responsibility of the Partnership's management. Our responsibility is
to express an opinion on these consolidated financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the results of operations and
cash flows of Dean Witter Realty Growth Properties, L.P. and consolidated
partnerships for the year ended December 31, 1993, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
March 25, 1994
<PAGE>
<TABLE>
<CAPTION>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
CONSOLIDATED BALANCE SHEETS
December 31, 1995 and 1994
ASSETS
1995 1994
<S> <C> <C>
Real estate, at cost:
Buildings and improvements $ 47,253,598 $ 55,690,646
Land and land improvements 4,658,353 13,161,632
51,911,951 68,852,278
Accumulated depreciation 20,984,839 22,452,497
30,927,112 46,399,781
Real estate held for sale 2,021,342 -
Cash and cash equivalents 2,072,917 663,387
Deferred expenses, net 1,277,687 1,655,347
Accounts receivable 1,671,728 1,870,771
Restricted cash 3,570,238 4,042,780
Other assets 295,889 465,922
$ 41,836,913 $ 55,097,988
LIABILITIES AND PARTNERS' CAPITAL (DEFICIENCY)
Mortgage notes payable $ 42,000,000 $ 54,936,984
Due to affiliates 6,385,499 6,712,665
Accounts payable and accrued expenses 3,083,884 3,270,432
Other liabilities 2,098 509,280
Excess of distributions and losses over
cost of investments in partnerships 7,510,575 6,704,781
Minority interests 1,583,135 1,243,540
60,565,191 73,377,682
Partners' capital (deficiency):
General partners (3,298,849) (3,260,230)
Limited partners ($1,000 per Unit,
78,594 Units issued) (15,429,429) (15,019,464)
Total partners' capital (deficiency) (18,728,278) (18,279,694)
$ 41,836,913 $ 55,097,988
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31, 1995, 1994 and 1993
1995 1994 1993
<S> <C> <C> <C>
Revenues:
Hotel:
Room $13,455,469 $13,329,447 $11,413,533
Food, beverage and other 13,895,927 12,864,869 11,841,890
Total 27,351,396 26,194,316 23,255,423
Rental 1,236,740 1,698,704 3,857,816
Interest and other 143,188 202,965 278,372
28,731,324 28,095,985 27,391,611
Expenses:
Hotel:
Room 3,696,484 4,090,932 3,531,078
Food and beverage 9,201,086 8,335,717 8,410,508
Administrative and other 7,586,269 7,598,825 7,172,063
Total 20,483,839 20,025,474 19,113,649
Interest 5,327,001 4,994,853 6,800,694
Property operating 381,262 537,138 1,975,311
Amortization 246,841 281,710 518,063
Depreciation 2,119,206 2,129,520 3,031,354
Equity in net losses of partnerships 845,578 985,769 832,468
General and administrative 464,415 274,198 453,699
Loss on real estate sold 1,249,457 - 334,988
31,117,599 29,228,662 33,060,226
Loss before minority interest (2,386,275) (1,132,677) (5,668,615)
Minority interest in (income) loss of
consolidated partnerships (954) 27,627 118,375
Loss before extraordinary item (2,387,229) (1,105,050) (5,550,240)
Extraordinary item:
Gain on extinguishment of
debt due to foreclosure (Note 4) 1,938,645 - -
Net loss $ (448,584) $(1,105,050) $(5,550,240)
Net loss allocated to:
Limited partners $ (409,965) $(1,060,848) $(5,328,230)
General partners (38,619) (44,202) (222,010)
$ (448,584) $(1,105,050) $(5,550,240)
Net loss per Unit of limited partnership interest $ (5.22) $ (13.50) $ (67.79)
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
<TABLE>
<CAPTION>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIENCY)
Years ended December 31, 1995, 1994 and 1993
General Limited
Partners Partners Total
<S> <C> <C> <C>
Partners' capital (deficiency)
at January 1, 1993 $(2,994,018) $ (8,630,386) $(11,624,404)
Net loss (222,010) (5,328,230) (5,550,240)
Partners' capital (deficiency)
at December 31, 1993 (3,216,028) (13,958,616) (17,174,644)
Net loss (44,202) (1,060,848) (1,105,050)
Partners' capital (deficiency)
at December 31, 1994 (3,260,230) (15,019,464) (18,279,694)
Net loss (38,619) (409,965) (448,584)
Partners' capital (deficiency)
at December 31, 1995 $ (3,298,849) $(15,429,429) $(18,728,278)
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1995, 1994 and 1993
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (448,584) $(1,105,050) $(5,550,240)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 2,366,047 2,411,230 3,549,417
Minority interest in joint ventures'
operations 954 (27,627) (118,375)
Equity in net losses of partnerships 845,578 985,769 832,468
Loss on real estate sold 1,249,457 - 334,988
Gain on extinguishment of debt (1,938,645) - -
Decrease (increase) in:
Accounts receivable (576,390) (695,414) 802,814
Restricted cash 472,542 (1,621,411) (414,725)
Deferred expenses (559,339) (253,181) (301,397)
Other assets 603,915 (91,132) 8,153
Increase (decrease) in:
Accounts payable and accrued expenses 640,583 511,019 851,475
Due to affiliates (327,166) 344,732 (203,503)
Other liabilities (435,122) (133,628) 248,666
Minority interests - (350,795) -
Net cash provided by (used in) operating activities 1,893,830 (25,488) 39,741
Cash flows from investing activities:
Proceeds from sale of real estate 6,594,399 - 2,500,000
Investment in real estate, net (671,880) (589,225) (1,276,231)
(Investment in) distributions from unconsolidated
partnerships (39,784) 94,810 -
Effect of change in cash from exchange of
partnership interests (Note 4) - (25,932) -
Effect of change in cash from
consolidation to equity accounting (Note 5) - - (144,423)
Net cash provided by (used in) investing activities 5,882,735 (520,347) 1,079,346
Cash flows from financing activities:
(Repayment of) proceeds from mortgage notes payable (6,367,035) (57,151) 157,415
Minority interest in joint ventures' distributions - (46,000) (125,000)
Additional investment by minority interest - 90,800 -
Repayment of construction note payable - - (1,900,000)
Borrowings from affiliates - - 1,137,234
Net cash used in financing activities (6,367,035) (12,351) (730,351)
Increase (decrease) in cash and cash equivalents 1,409,530 (558,186) 388,736
Cash and cash equivalents at beginning of year 663,387 1,221,573 832,837
Cash and cash equivalents at end of year $ 2,072,917 $ 663,387 $ 1,221,573
Supplemental disclosure of cash flow information:
Cash paid for interest $ 4,086,567 $ 4,854,870 $ 6,149,991
See accompanying notes to consolidated financial statements.
(Continued)
/TABLE
<PAGE>
<TABLE>
<CAPTION>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
Years ended December 31, 1995, 1994 and 1993
1995 1994 1993
<S> <C> <C> <C>
Supplemental disclosure of non-cash
investing activities:
Transfer of partnership interests:
Real estate, net $ - $ 2,963,174 $ -
Deferred expenses, net - 139,683 -
Accounts receivable - 9,002 -
Mortgage note payable - (2,850,000) -
Accounts payable - (151,588) -
Minority interests - (136,203) -
Effect of change in cash from transfer
of partnership interests $ - $ (25,932) $ -
Change from consolidation to equity accounting:
Real estate, net $ - $ - $21,813,229
Deferred expenses, net - - 607,217
Accounts receivable - - 1,806,742
Other assets - - 56,675
Mortgage note payable - - (24,607,271)
Accounts payable and accrued expenses - - (2,417,382)
Other liabilities - - (81,504)
Excess of distributions and losses
over cost of investment in partnership - - 1,186,284
Minority interests - - 1,491,587
Effect of change in cash from
consolidation to equity accounting $ - $ - $ (144,423)
Foreclosure of Partnership interest (Note 4):
Balance due on mortgage loan $(6,569,949) $ - $ -
Writeoff of:
Real estate 4,160,145 - -
Account receivable and deferred expenses 926,441 - -
Minority interest 338,641 - -
Other assets 105,268 - -
Accounts payable and other liabilities (899,191) - -
Gain on extinguishment of debt due
to foreclosure $(1,938,645) $ - $ -
See accompanying notes to consolidated financial statements.
/TABLE
<PAGE>
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
1. The Partnership
Dean Witter Realty Growth Properties, L.P. (the "Partnership") is a
limited partnership formed in 1985 under the laws of the State of
Delaware. The Managing General Partner of the Partnership is Dean Witter
Realty Growth Properties Inc., which is wholly-owned by Dean Witter
Realty Inc. ("Realty").
In 1986, the Partnership issued 78,594 units of limited partnership
interest (the "Units") for $78,594,000. No additional Units will be
sold. The proceeds were used to make investments in income-producing
office, industrial and hotel properties.
Assets of the Partnership are subject to substantial leverage. All
mortgage notes payable are secured by the real estate and are not general
obligations of the Partnership.
Certain 1994 amounts have been reclassified to conform to the 1995
presentation.
2. Summary of Significant Accounting Policies
The financial statements include the accounts of the Partnership, Bayport
Ltd.'s investment in the Bayport hotel, and Braker Associates on a
consolidated basis. The Partnership's interest in Peninsula/DW
Associates and, effective July 19, 1993, Bayport Ltd's investment in the
Bayport office building are accounted for on the equity method.
The Partnership's records are maintained on the accrual basis of
accounting for financial reporting and tax purposes. The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
The carrying value of real estate includes the purchase price paid by the
Partnership and acquisition fees and expenses. Costs of improvements to
the properties are capitalized, and repairs are expensed. Depreciation
is recorded on the straight-line method.
Effective January 1, 1995, the Partnership adopted the provisions of
Financial Accounting Standards No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" ("SFAS
121"); adoption was not required prior to 1995. Pursuant to SFAS 121,
at least annually, and more often if circumstances dictate, the
Partnership evaluates the recoverability of the net carrying value of its
real estate. As part of this evaluation, the fair values of each of the
properties are estimated (in some cases with the assistance of
independent real estate consultants) based on discounted cash flows. The
fair values are compared to the properties' carrying amounts in the
financial statements. A deficiency in fair value relative to carrying
amount is an indication of the need for a writedown due to impairment.
In such case, the expected future net cash flows from the property are
estimated for a period of approximately five years (or a shorter period
if the Partnership expects that the property may be disposed of sooner),
along with estimated sales proceeds at the end of the period. If the
total of these future undiscounted cash flows were less than the carrying
amount of the property, the property would be written down to its fair
value, and a loss on impairment recognized by a charge to earnings.
Because the determination of fair value is based upon projections of
future economic events such as property occupancy rates, rental rates,
operating cost inflation and market capitalization rates which are
inherently subjective, the amounts ultimately realized at disposition may
differ materially from the net carrying value as of December 31, 1995.
The cash flows used to determine fair value are based on good faith
estimates and assumptions developed by the Managing General Partner.
Unanticipated events and circumstances may occur and some assumptions may
not materialize; therefore actual results may vary from the estimates and
the variances may be material. The Partnership may provide additional
write-downs, which could be material in subsequent years if real estate
markets or local economic conditions change.
If the provisions of SFAS 121 had been effective for the year ended
December 31, 1994, the Partnership would have recognized a loss on
impairment of land and a warehouse building at Braker Center of
approximately $1 million in 1994. As more fully described in Note 4, the
Partnership recognized a loss on such land and warehouse building in the
second quarter of 1995, when it determined to sell them and reduced their
carrying values to fair value net of selling costs.
Cash and cash equivalents consist of cash and highly liquid investments
with maturities, when purchased, of three months or less.
Deferred expenses consist of deferred asset supervisory fees, which are
amortized over the terms of the related agreements, deferred commitment
fees, which are amortized over the related commitment periods, and
deferred leasing commissions, which are amortized over the applicable
lease terms.
Rental income is accrued on a straight-line basis over the terms of the
leases. Accruals in excess of amounts payable by tenants pursuant to
their leases (resulting from rent concessions or rents which periodically
increase over the term of a lease) are recorded as receivables and
included in other assets.
Pursuant to the Bayport hotel loan and management agreements, restricted
cash balances are reserved primarily for debt service, working capital,
and the replacement of certain furniture, fixtures and equipment at the
hotel.
Net loss per Unit amounts are calculated by dividing net loss allocated
to Limited Partners, in accordance with the Partnership Agreement, by the
weighted average number of Units outstanding.
No provision for income taxes has been made in the financial statements,
since the liability for such taxes is that of the partners rather than
the Partnership.
The accounting policies used for tax reporting purposes differ from those
used for financial reporting as follows: (a) depreciation is calculated
using accelerated methods, (b) rental income is recognized based on the
payment terms in the applicable leases, and (c) losses on impairment of
real estate are not deductible until realized. In addition, offering
costs are treated differently for tax and financial reporting purposes.
The tax basis of the Partnership's assets and liabilities is
approximately $2.2 million higher than the amounts reported for financial
statement purposes.
3. Partnership Agreement
The Partnership agreement provides that the Limited Partners will receive
96% of distributable cash remaining after the Managing General Partner
has received a management fee of 6.25% of distributable cash.
Sale or refinancing proceeds will generally be distributed (i) to the
Limited Partners until they have received a return of their capital
contributions; (ii) to the General Partners until the General Partners
have received 1.01% of the amount distributed to the Limited Partners,
and (iii) 99% of any remaining amounts to the Limited Partners and 1% to
the General Partners, until the Limited Partners have received cumulative
distributions sufficient to provide a 6% cumulative annual return on
their adjusted capital contributions; and (iv) 85% to the Limited
Partners after the Managing General Partner receives a brokerage fee, if
earned, not in excess of 3% of the aggregate gross sales prices of all
properties.
Taxable income (loss) generally will be allocated to the partners in
proportion to the distribution of distributable cash or sale or financing
proceeds (or 96% to the Limited Partners and 4% to the General Partners
if there is no distributable cash).
The Partnership did not pay a cash distribution to the Partners in 1995,
1994 or 1993. Through December 31, 1990, the General Partners have
deferred receipt of cash distributions of $262,316.
4. Investments in Real Estate
Braker Center, Austin, Texas
The Partnership owns a 99% general partnership interest in L.S. Braker
Associates ("Braker Associates"); a partnership consisting of current and
former officers of Realty holds the remaining 1% interest. Braker
Associates owned 50% interests in partnerships which owned three
warehouses, four office/R&D buildings, and undeveloped land. In 1993,
one of the warehouses, (which was subject to a $1.9 million mortgage
loan), was sold at a loss of approximately $335,000. In October 1994,
Braker Associates exchanged its partnership interest in one of the
remaining warehouses for the interests of its joint venture partner in
the other warehouse and the undeveloped land. The exchange was accounted
for at the book value of the interest given up, and no gain or loss was
recognized.
Thus, at December 31, 1994, Braker Associates owned one warehouse, the
undeveloped land, and a 50% interest in the partnership (the "Office/R&D
Building Partnership") which owns the four office/R&D buildings at the
property. The carrying value of the Office/R&D Partnership at December
31, 1994 was approximately $4.3 million.
During the second quarter of 1995, the Partnership determined to sell the
warehouse and land and, accordingly, reclassified the property to real
estate held for sale and reduced its carrying value to $8.2 million (its
estimated fair value net of selling costs), which resulted in a loss of
approximately $1,249,000. In August 1995, the Partnership entered into
an Agreement of Sale with Hill Partners, Inc., an unaffiliated party, to
sell these properties for a minimum sales price approximately equal to
their reduced carrying value.
The closings of the sale of the warehouse and four parcels of the land,
for a net purchase price of approximately $6,594,000 took place in
September and November 1995. At the September closing, the Partnership
repaid the $3.7 million mortgage debt encumbering the property. (The
Partnership had previously paid a fee of approximately $165,000 (included
in interest expense) for an extension of the maturity of the loan.) The
remaining proceeds will be used to repay borrowings from an affiliate of
Realty and for reserves to fund future leasing costs at the Partnership's
other properties.
The closings of the sale of one of the remaining parcels of the land is
scheduled to occur in April 1996, and the closing of the sale of the
final parcel is scheduled to occur no later than May 1997. Pursuant to
the Agreement of Sale, the Partnership may continue to market the final
parcel prior to the closing date of the sale of that parcel. If the
final parcel is sold to a third party, the excess of the proceeds from
such sale over the purchase price otherwise to be paid by Hill Partners,
Inc. will be divided between the Partnership and Hill Partners, Inc.
The buildings owned by the Office/R&D Building Partnership were
encumbered by a mortgage loan which was cross-collateralized and cross-
defaulted with loans on approximately 94 projects owned by the
Partnership's joint venture partner. Because certain of the projects
failed to make scheduled principal payments, in December 1994, the lender
declared a default. In January 1995, the Partnership's joint venture
partner placed 46 of its properties, including the Office/R&D
Partnership, under bankruptcy protection. The Partnership did not
consent to the bankruptcy filing. The joint venture partner subsequently
submitted a plan of reorganization which was approved by the bankruptcy
court in November. The reorganization plan required the Partnership to
contribute additional equity to the joint venture in order to retain its
interest in the Office/R&D Building Partnership. The Managing General
Partner believed that several terms of the plan of reorganization were
not favorable to the Partnership and that additional investment was not
justified and, accordingly did not contribute additional equity. As a
result, the Partnership lost its interest in the buildings and the
Office/R&D Building Partnership.
Since the mortgage loan on the four office/R&D buildings exceeded their
carrying value, the loss of the buildings resulted in a non-cash gain of
$1,938,645 which was reported as an extraordinary item.
Net loss and cash flow from operations of the Braker Associates
properties in 1995 were approximately $222,000 and $55,000, respectively.
Bayport Plaza Hotel, Tampa, Florida
Bayport Plaza is a mixed-use development consisting of an office building
and a Hyatt hotel. The Partnership owns a 99% general partnership
interest in Bayport, Ltd.; a partnership consisting of current and former
officers of Realty holds the remaining 1% interest. Bayport, Ltd. owns
(after a preferential return as described below) a 92.5% partnership
interest in the partnership which owns the hotel (the "Hotel
Partnership"); affiliates of the developer of Bayport Plaza (the
"Developer") own the remaining 7.5%. Bayport Ltd. also owns a 46.25%
interest in a partnership which owns the office building (the "Office
Partnership") (see Note 5).
Net cash flow from the Hotel Partnership will generally be distributed
99% to Bayport, Ltd. and 1% to the Developer until Bayport, Ltd. has
received a 10% cumulative annual preferred return on the amount of its
equity invested in the Hotel Partnership. The balance of any net cash
flow will be distributed 92.5% to Bayport, Ltd. and 7.5% to the
Developer. Capital proceeds will generally be distributed: first, 100%
to Bayport, Ltd., until it has received from all distributions a 10%
annual return on the amount of its equity invested in the Hotel
Partnership; second, 100% to Bayport, Ltd., until it has received an
amount equal to its equity invested in the Hotel Partnership; third, 100%
to Bayport, Ltd., in the event that the hotel has been previously
disposed of by the other of such partnerships, an amount equal to its
equity invested in the Office or Hotel Partnership that has not been
theretofore returned to Bayport, Ltd.; thereafter, 92.5% to Bayport, Ltd.
and 7.5% to the Developer. Taxable income and losses will generally be
allocated in accordance with distributions of net cash flow and capital
proceeds.
An affiliate of Realty provided a partial loan principal and operating
deficit guarantee to the first mortgage lender on the hotel. See Note
7.
In May 1995, the Partnership and Hyatt Hotel Corporation modified the
management agreement for the hotel at Bayport Plaza. Under the terms of
the new agreement, Hyatt is entitled to an annual fee equal to a
percentage of the hotel's net revenues in excess of annual debt service,
not to exceed an overall percentage cap. In addition, Hyatt has agreed
to certain expense reductions that should increase the hotel's cash flow.
During the second quarter of 1995, the Partnership prepaid $3 million of
the hotel mortgage loan from restricted cash reserves.
5. Investments in and Advances to Partnerships
Bayport Plaza Office Building, Tampa, Florida
In July 1993, the Partnership completed the restructuring of the Office
Partnership and the mortgage loan on the property. The Office
Partnership received an equity contribution of approximately $6,700,000
from a third-party investor ("Investor"), which was used to pay down
principal on the mortgage to $20,000,000 from $24,607,271, to establish
reserves for future real estate taxes, and to pay overdue real estate
taxes and certain other expenses aggregating approximately $1,900,000.
The Investor also committed up to $2.3 million for future leasing costs
and operating deficits. During 1995 and 1994, the Investor contributed
approximately $509,000 and $621,000 respectively pursuant to its
commitment. The Investor is entitled to receive a preferred return on
its investment and a 50% participation in cash flow in excess of the
preferred return. In addition, the interest rate on the mortgage loan
was reduced from 11.75% to 8.5%, and its maturity was extended to
September 1, 1999.
Prior to the restructuring, Bayport Ltd. owned a 92.5% interest in the
Office Partnership. As a result of the restructuring, the Investor
obtained a 50% interest in the Office Partnership, and the Bayport Ltd's
interest was reduced to 46.25%. Affiliates of the Developer own the
remaining 3.75%. The Partnership remains the managing general partner
of the partnership, but the Investor has the right to approve certain
major decisions and financial policies of the partnership and, under
certain circumstances, has the right to cause the partnership to sell the
property after July 1998. Effective upon the restructuring, the
Partnership ceased consolidating its investment in the Office Partnership
and began accounting for it on the equity method.
The Investor was entitled to a monthly minimum distribution from net cash
flow equal to a 6% annual return on its invested capital in 1993 and
1994, and an 8.5% annual return on its invested capital thereafter. Net
cash flow in excess of the minimum distribution will be distributed,
first: 20% to Bayport Ltd. and the Developer, based on their respective
interests, and 80% to the Investor, until the Investor has received an
annual return (including the minimum distribution) of 12% on average
capital; and thereafter, 50% to Bayport Ltd. and the Developer, based on
their respective interests, and 50% to the Investor. Capital proceeds
will generally be distributed: first, 100% to the Investor until it has
received its capital and a 14% annual return thereon; second, to Bayport
Ltd. and the Developer until they have received distributions equal to
those to the Investor; and thereafter, to Bayport Ltd., the Developer and
the Investor in proportion to their interests. Taxable income and losses
will generally be allocated in accordance with distributions of net cash
flow and capital proceeds.
As of December 31, 1995 and 1994, the Partnership has contributed
$9,145,691 to the Bayport Plaza Office Partnership.
The assets, liabilities and partner's capital of the Office Partnership
are summarized as follows:
<TABLE>
<CAPTION>
December 31,
1995 1994
Assets
<S> <C> <C>
Land and building, net $19,786,585 $20,055,060
Other (including cash and cash equivalents
of $200 and $209,260) 2,436,585 2,596,587
Total assets $22,223,170 $22,651,647
Liabilities and Partners' Capital
Mortgage notes payable $20,000,000 $20,000,000
Other liabilities 741,793 479,884
Partners' capital 1,481,377 2,171,763
Total liabilities and
partners' capital $22,223,170 $22,651,647
</TABLE>
<TABLE>
<CAPTION>
The results of operations are summarized as follows:
Years ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Rental Revenues $ 4,343,102 $ 4,174,012 $3,489,860
Expenses
Operating 1,802,630 1,496,912 1,661,761
Interest 1,677,016 1,694,223 2,718,415
Depreciation and amortization 1,509,063 1,389,200 1,191,803
4,988,709 4,580,335 5,571,979
Net loss $ (645,607) $ (406,323) $(2,082,119)
</TABLE>
The accounting policies of the Office Partnership are consistent with
those of the Partnership.
The Office Partnership has determined that all leases relating to its
properties are operating leases. The lease terms range from three to
five years, and generally require tenants to pay their pro rata share
of increases in operating expenses.
Peninsula Office Park
Peninsula/DW Associates, a general partnership owned 98% by the
Partnership and 2% by former and current Realty officers and executives,
owns a 49.9% general partnership interest in two limited partnerships
(the "Joint Venture") which owns Peninsula Office Park, a corporate
office park located in San Mateo, California. The remaining 50.1%
interest in the Joint Venture is owned by the developer of Peninsula
Office Park.
Net cash flow from operations of the Joint Venture and net proceeds from
a sale or refinancing of the property are to be allocated to the Joint
Venture partners in proportion to their ownership interests. For tax
purposes, Peninsula/DW Associates is allocated all losses from the Joint
Venture until its cumulative loss is equal to approximately $8,000,000,
less any cash distributions previously received. Thereafter, profits
and losses will be allocated to the partners in proportion to their
ownership interests. Profits and losses for tax purposes and net cash
flow from operations and net proceeds from a sale or refinancing will be
allocated to the partners in Peninsula/DW Associates in accordance with
their partnership interests.
As of December 31, 1995 and 1994, the Partnership had lent the Joint
Venture $210,005 and $170,222, respectively, bearing interest at the
prime rate plus 1%. The prime rate as of December 31, 1995 was 8.50%.
<TABLE>
<CAPTION>
The assets, liabilities and partners' capital (deficit) of the Joint Venture
are summarized as follows:
December 31,
1995 1994
Assets
<S> <C> <C>
Land and building, net $31,561,713 $31,777,116
Other (including cash and cash equivalents
of $3,829,280 and $3,444,428) 7,794,464 7,505,991
Total assets $39,356,177 $39,283,107
Liabilities and Partners' Capital (Deficit)
Mortgage notes payable $42,162,985 $41,639,499
Other liabilities 2,043,192 1,378,615
Partners' capital (deficit) (4,850,000) (3,735,007)
Total liabilities and
partners' capital (deficit) $39,356,177 $39,283,107
</TABLE>
<TABLE>
<CAPTION>
The results of operations of the Joint Venture are summarized as follows:
Years ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Revenues
Rental $ 7,683,063 $ 7,139,299 $8,036,461
Other 90,522 173,956 216,319
7,773,585 7,313,255 8,252,780
Expenses
Operating 2,591,492 2,606,631 2,698,413
Interest 4,045,746 3,965,753 3,942,166
Depreciation and amortization* 2,291,124 2,158,136 2,720,618
8,928,362 8,730,520 9,361,197
Net loss $(1,154,777) $(1,417,265) $(1,108,417)
*Includes $558,000 per year depreciation of the excess of the cost of the
Partnership's investment in the Joint Venture over the underlying equity in
net assets at the date of acquisition.
</TABLE>
The accounting policies of the Joint Venture are consistent with those
of the Partnership.
The Joint Venture has determined that all leases relating to its
properties are operating leases. The lease terms range from three to
eleven years, and generally require tenants to pay their pro rata share
of increases in operating expenses, including real estate taxes and
maintenance costs over base year expenses.
In May 1994, the Joint Venture completed a modification of the mortgage
loans (which matured in December 1993) on the Peninsula Office Park
properties. The interest accrual and pay rates under the loans were
reduced from 9.875% to 9.5%, and from 9% to 8.25%, respectively, and the
maturity date was extended to December 1, 1996. The Joint Venture may
further extend the maturity dates of the modified loans by making partial
paydowns of the loans. If the Joint Venture fails to repay the loans at
maturity, it has agreed not to file for bankruptcy or contest any
foreclosure proceedings brought by the lender. During the loan term, the
Joint Venture is prohibited from making cash distributions to its
partners. The Partnership paid a $400,000 fee to the lender as part of
the restructuring.
<TABLE>
<CAPTION>
Activity in the Excess of Distributions and Losses over Cost of
Investments in Partnerships is as follows:
Year ended December 31,
1995 1994 1993
<S> <C> <C> <C>
Investment at beginning
of year $ 6,704,781 $5,624,202 $3,605,450
Equity in losses 845,578 985,769 832,468
Distributions - 94,810 -
Contributions (39,784) - -
Change from consolidation to
equity accounting - - 1,186,284
Investment at end of year $ 7,510,575 $6,704,781 $ 5,624,202
</TABLE>
The Partnership was not entitled to any equity in losses of the Office
Partnership in 1995, 1994 or 1993. Accordingly, equity in losses
includes only the Partnership's 49.9% share of the losses of the Joint
Venture, adjusted to include 100% of the depreciation of the excess of
the cost of the Partnership's investment in the Joint Venture over the
underlying equity in net assets at the date of acquisition.
<PAGE>
<TABLE>
<CAPTION>
6. Mortgage Notes Payable
Mortgage notes payable are as follows:
December 31,
1995 1994
<S> <C> <C>
Mortgage note payable secured by the
Bayport Plaza hotel: interest at
7 3/4% through December 1994 and 9%
thereafter, matures December 31, 1996;
interest-only payable monthly through
maturity. $42,000,000 $45,000,000
Mortgage note payable secured by 4
office/research & development buildings
at Braker Center: interest at 10.9%
with a minimum pay rate of 9.65%,
matures December 31, 1996; interest-only
payable through maturity. In default
as of December 31, 1994. See Note 4. - 6,174,949
Mortgage note payable secured by the
warehouse at Braker Center: interest
at 9.109%, matures July 1, 1995.
Principal and interest of $43,000 is
payable monthly through maturity. See Note 4.
The fair value of the mortgage note
payable is approximately equal it its
carrying value. The fair value of the
mortgage note payable is estimated by
discounting future principal and interest
payments using current lending rates and
market conditions for instruments with
similar maturities and credit quality.
- 3,762,035
$42,000,000 $54,936,984
</TABLE>
The fair value of the mortgage note payable is approximately equal to its
carrying value. The fair value of the mortgage note payable is estimated
by discounting future principal and interest payments using current
lending rates and market conditions for instruments with similar maturity
and credit quality.
7. Related Party Transactions
Prior to 1991, the Partnership borrowed funds from an affiliate of Realty
to fund working capital needs and capital expenditures at certain
properties. Interest expense, calculated at the prime rate (8.5% at
December 31, 1995) was $263,976 $196,923 and $127,331 in 1995, 1994 and
1993, respectively. At December 31, 1995 and 1994 the balances due to
the affiliate, including accrued interest, were $3,094,625 and
$2,830,649, respectively.
During the third quarter of 1995, the affiliate and the Partnership
agreed to amend and restate the Partnership's borrowing relationship.
The Partnership agreed to repay all outstanding amounts borrowed from the
affiliate, including accrued and unpaid interest, no later than April 1,
1996. In addition, new advances to the Partnership under the
Partnership's line of credit were capped at $500,000. The amended and
restated credit facility expires July 31, 1996. Proceeds from the sale
of Braker Center will be used to repay this borrowing.
Additionally, in conjunction with a 1991 refinancing of the hotel at
Bayport Plaza, an affiliate of Realty guaranteed a maximum of $5,350,000
of the first mortgage debt. Advances (all of which were made prior to
1994) by the guarantor to the first mortgage lender under this guaranty
(which constitute loans from the guarantor to the Partnership which must
be repaid by the Partnership) equalled $2,166,098 at December 31, 1995
and 1994. Consequently, the remaining potential liability of the
guarantor to the lender under the guaranty as of December 31, 1995 was
$3,183,902. Interest expense, calculated at the prime rate, was
$244,619, $182,771 and $152,451 in 1995, 1994 and 1993, respectively.
At December 31, 1995 and 1994, the balances the Partnership owed the
guarantor, including accrued interest, were $2,867,716 and $2,623,097,
respectively. No portion of this indebtedness to the affiliate has been
repaid to date.
The Managing General Partner is entitled to receive a management fee
based on a percentage of distributable cash. Because there was no
distributable cash, the Managing General Partner did not receive a fee
for the years ended December 31, 1995, 1994 or 1993. As of December 31,
1995 and 1994 $422,987 of management fees earned prior to 1992 remained
unpaid.
Realty performs administrative functions, processes investor transactions
and prepares tax information for the Partnership. For 1995, 1994 and
1993, the Partnership incurred fees of $203,967, $178,160 and $217,714,
respectively for these services. As of December 31, 1995 and 1994, the
balances due to Realty were $171 and $835,932, respectively.
An affiliate of the Partnership's joint venture partner at Braker Center
had funded shortfall loans to the property. In 1994, the balance due to
the affiliate of $19,200 was repaid.
Entities controlled by officers of Realty earned approximately $36,000
and $85,000, respectively, for 1994 and 1993, for providing asset
management services. In May 1994, such entities agreed to terminate
these fees.
8. Litigation
Various public partnerships sponsored by Realty (including the
Partnership and its Managing General Partner) have been named as
defendants in four class actions lawsuits pending in state and federal
courts. The complaints allege a variety of claims, including breach of
fiduciary duty, fraud, misrepresentation and related claims, and seek
compensatory and other damages and equitable relief. The defendants have
not yet responded to the complaints and intend to vigorously defend the
actions. It is impossible to predict the effect, if any, the outcome of
these actions might have on the Partnership's financial statements.
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
None.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The Partnership is a limited partnership which has no directors or
executive officers.
The directors and executive officers of the Managing General
Partner are as follows:
<TABLE>
<CAPTION>
Position with the
Name Managing General Partner
<S> <S>
William B. Smith Chairman of the Board of Directors
E. Davisson Hardman, Jr. President and Director
Lawrence Volpe Controller, Assistant Secretary and Director
Ronald T. Carman Secretary and Director
</TABLE>
All of the directors have been elected to serve until the next
annual meeting of the shareholder of the Managing General Partner or
until their successors are elected and qualify. Each of the executive
officers has been elected to serve until his successor is elected and
qualifies.
William B. Smith, age 52, is a Managing Director of Dean Witter
Realty, Inc. and has been with Dean Witter Realty Inc. since 1982. He
is an Executive Vice President of Dean Witter Reynolds Inc.
E. Davisson Hardman, Jr., age 46, is a Managing Director of Dean
Witter Realty Inc, and has been with Dean Witter Realty Inc. since 1982.
Lawrence Volpe, age 48, is a Director and the Controller of Dean
Witter Realty Inc. He is a Senior Vice President and Controller of Dean
Witter Reynolds Inc., which he joined in 1983.
Ronald T. Carman, age 44, is a Director and the Secretary of Dean
Witter Realty Inc. He is a Senior Vice President and Associate General
Counsel of Dean Witter, Discover & Co. and of Dean Witter Reynolds Inc.,
which he joined in 1984.
There is no family relationship among any of the foregoing persons.
ITEM 11. EXECUTIVE COMPENSATION.
The General Partners are entitled to receive a share of cash
distributions, when and as cash distributions are made to the Limited
Partners, and a share of taxable income or tax loss. Descriptions of
such distributions and allocations are contained in Item 5 above. The
General Partners have not received cash distributions for the period 1988
through 1995. As of December 31, 1995, the general partners have
deferred receipt of cash distributions of $262,316.
The General Partners and their affiliates were paid certain fees
and reimbursed for certain expenses. Information concerning such fees
and reimbursements are contained in Note 7 to the Consolidated Financial
Statements in Item 8 above.
The directors and executive officers of the Partnership's Managing
General Partner received no renumeration from the Partnership.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
(a) No person is known to the Partnership to be the beneficial
owner of more than five percent of the Units.
(b) The executive officers and directors of the Managing General
Partner own the following Units as of December 31, 1995:
<TABLE>
<CAPTION>
Amount and
Nature of
Title of Class Name of Beneficial Owner Beneficial Ownership
<S> <C> <C>
Limited William B. Smith *
Partnership
Interests E. Davisson Hardman, Jr. *
All directors and executive *
officers of the Managing
General Partner, as a group
</TABLE>
*Owns, by virtue of ownership of limited partnership interests in the
Associate General Partner, less than 1% of the Units of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
As a result of their being partners of a limited partnership which
is the limited partner of the Associate General Partner, certain current
and former officers and directors of the Managing General Partner also
own indirect general partnership interests in the Partnership. The
Partnership Agreement of the Partnership provides that cash distributions
and allocations of income and loss to the general partners be distributed
or allocated 50% to the Managing General Partner and 50% to the Associate
General Partner. The general partners' share of cash distributions and
income or loss is described in Item 5 above.
All of the outstanding shares of common stock of the Managing
General Partner are owned by Realty, a Delaware corporation which is a
wholly owned subsidiary of Dean Witter, Discover & Co. The general
partner of the Associate General Partner is Dean Witter Realty Growth
Properties Inc., which is a wholly-owned subsidiary of Realty. The
limited partner of the Associate General Partner is LSP, L.P., a Delaware
limited partnership. Realty and certain current and former officers and
directors of the Managing General Partner are partners of LSP, L.P.
Additional information with respect to the directors and executive
officers and compensation of the Managing General Partner and affiliates
is contained in Items 10 and 11 above.
The General Partners and their affiliates were paid certain fees
and reimbursed for certain expenses. In addition, affiliates of the
General Partners have ownership interest in certain properties.
Information concerning these transactions is contained in the Notes to
Consolidated Financial Statements in Item 8 above. The Partnership
believes that the payment of fees and the reimbursement of expenses to
the General Partners and their affiliates are on terms as favorable as
would be obtained from unrelated third parties.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
(a) The following documents are filed as part of this Annual Report:
1. Financial Statements (see Index to Financial Statements
filed as part of Item 8 of this Annual Report).
2. Financial Statement Schedule (see Index to Financial
Statements filed as part of Item 8 of this Annual Report).
3. Exhibits
(3)(a) Amended and Restated Agreement of Limited Partnership
dated as of July 12, 1985 set forth in Exhibit A to the
Prospectus included in Registration Statement Number 2-
96767 is incorporated herein by reference.
(3)(b) Certificate of Limited Partnership dated as of July 12,
1985 incorporated by reference in Registration Statement
Number 2-96767 is incorporated herein by reference.
(4)(a) Amended and Restated Agreement of Limited Partnership
dated as of July 12, 1985 set forth in Exhibit A to the
Prospectus included in Registration Statement Number 2-
96767 is incorporated herein by reference.
(4)(b) Certificate of Limited Partnership dated as of July 12,
1985 incorporated by reference in Registration Statement
Number 2-96767 is incorporated herein by reference.
(9) Not applicable.
(10)(a) Partnership Agreement of TWC Ten, Ltd. was filed as
Exhibit 10(b) to Registration Statement No. 2-96767 and is
incorporated herein by reference.
(b) Partnership Agreement of TWC Eleven, Ltd. was filed as
Exhibit 10(c) to Registration Statement No. 2-96767 and is
incorporated herein by reference.
(c) Amended and Restated Partnership Agreement of Bayport,
Ltd. filed as Exhibit b to Registrant's report on Form 8-
K, dated July 15, 1985 (Commission File No. 0-18151), is
incorporated herein by reference.
(d) General Partnership Agreement of TWC Eleven, Ltd. dated as
of August 29, 1985.
(e) First Amendment to the General Partnership Agreement of
TWC Eleven, Ltd. dated as of June 19, 1987.
(f) Second Amended and Restated Agreement of Limited
Partnership of TWC Ten, Ltd. dated as of July 19, 1993.
(g) Partnership Agreement of Braker Lane III Associates was
filed as Exhibit 10(a) to Registration Statement No. 2-
96767 and is incorporated herein by reference.
(h) Amended and Restated Partnership Agreement of L.S. Braker
Associates filed as Exhibit b to Registrants report on
Form 8-K dated July 15, 1985 (Commission File No 0-18151)
is incorporated herein by reference.
(i) Partnership Agreement of Peninsula/DW Associates dated
December 27, 1985 filed as Exhibit c to Registrants'
report on Form 8-K dated December 27, 1985 (Commission
File No 0-18151) is incorporated herein by reference.
(j) Amended and Restated Agreement of Limited Partnership of
Campus Drive Investment Company, dated as of December 27,
1985.
(k) Amended and Restated Agreement of Limited Partnership of
Peninsula Office Park, dated as of December 27, 1985.
(l) Agreement of Sale, dated August 3, 1995, with respect to
the sale of the warehouse and the undeveloped land at
Braker Center filed as Exhibit 2 to the Registrant's
report on Form 8-K dated September 1, 1995 (Commission
File No. 0-18151) and is incorporated herein by reference.
(11) Not applicable.
(12) Not applicable.
(13) Not applicable.
(16) Not applicable
(18) Not applicable.
(19) Not applicable.
(21) Subsidiaries:
TWC Eleven Limited Partnership, a Florida Limited
Partnership.
L.S. Braker Associates, a Texas Limited Partnership.
(22) Not applicable.
(23) Not applicable.
(24) Not applicable.
(27) Financial Data Schedule.
(28) Not applicable.
(99) Not applicable.
(b) No Forms 8-K were filed by the Partnership during the last quarter
of the period covered by this report.
(c) See 3a. above.
(d) 1. Financial Statements of TWC Ten Limited Partnership an
office building located in Tampa, Florida. To be filed
when received from TWC Ten Limited Partnership.
2. Financial Statements of Peninsula Office Park, an office
complex located in San Mateo, California. To be filed
when received from Peninsula Office Park.
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
Real Estate and Accumulated Depreciation
December 31, 1995
Initial cost to Partnership (A)
Costs
Capitalized
Buildings & Subsequent to
Description Encumbrances Land Improvements Total Acquisition
<S> <C> <C> <C> <C> <C>
Warehouse
Austin, TX $ - $ 666,455 $3,181,552 3,848,007 $ 1,090,568
Office/R&D
Austin, TX - - - - 5,272,231
Land & Improvements
Austin, TX - 9,974,576 133,809 10,108,385 (3,919,396)
Hotel
Tampa, FL 42,000,000 4,836,077 6,341,650 11,177,727 41,946,636
$42,000,000 $15,477,108 $ 9,657,011 25,134,119 $ 44,390,039
</TABLE>
<TABLE>
<CAPTION>
Gross Amount at which
Carried at End of Period (B)
Amount Sold
Writeoff of Foreclosed or
Fully reclassified to
Depreciated Real Estate Buildings &
Description Assets Held for Sale Land Improvements Total
<S> <C> <C> <C> <C> <C>
Warehouse
Austin, TX $ - $(4,938,575) $ - $ - $ -
Office/R&D
Austin, TX - (5,272,231) - - -
Land and Improvements
Austin, TX - (6,188,989) - - -
Hotel
Tampa, FL (1,212,412) - 4,658,353 47,253,598 51,911,951
$ (1,212,412) $(16,399,795) $4,658,353 $47,253,598 $51,911,951
/TABLE
<PAGE>
<TABLE>
<CAPTION>
Life on which
Depreciation
Accumulated in Latest Income
Depreciation Date of Date Statement is
Description (C) Construction Acquired Computed
<S> <C> <C> <S> <C>
Warehouse
Austin, TX $ - 1985 July 1985 40 years
Office/R&D
Austin, TX - 1986 July 1985 40 years
Land and Improvements
Austin, TX - 1985 July 1985 N/A
Hotel
Tampa, FL 20,984,839 1985 July 1985 40 and 15 years
$20,984,839
</TABLE>
<TABLE>
<CAPTION>
Notes:
(A) The initial cost includes the purchase price paid by the Partnership and
acquisition fees and expenses. There is no difference between cost for financial
reporting purposes and cost for federal income tax purpose.
(B) Reconciliation of real estate owned
at December 31: 1995 1994 1993
<S> <C> <C> <C>
Balance at beginning of period $68,852,278 $72,046,998 $102,378,331
Additions during period:
Improvements 671,880 589,225 1,277,638
Write-offs (1,212,412) - (1,406)
Other - - -
Real estate lost through foreclosure - - -
Real estate lost through transfer of
Partnership interest - (3,783,945) -
Sale of real estate - - (2,975,644)
Transfer to real estate held
for sale (11,127,564) - -
Change from consolidation to equity
accounting (5,272,231) - (28,631,921)
Balance at end of period $ 51,911,951 $ 68,852,278 $ 72,046,998
/TABLE
<PAGE>
<TABLE>
<CAPTION>
(C) Reconciliation of accumulated depreciation:
1995 1994 1993
<S> <C> <C> <C>
Balance at beginning of period $22,452,497 $20,687,639 $24,615,633
Depreciation expense 2,119,206 2,129,520 3,031,354
Retirements (1,212,412) - -
Write-off due to foreclosure - - -
Write-off due to transfer of
Partnership interest - (364,662) -
Write-off due to sale of real
estate (1,262,366) - (140,656)
Change from consolidation to equity
accounting (1,112,086) - (6,818,692)
Balance end of period $20,984,839 $ 22,452,497 $ 20,687,639
/TABLE
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
DEAN WITTER REALTY GROWTH PROPERTIES, L.P.
By: Dean Witter Realty Growth Properties Inc.
Managing General Partner
By: /s/E. Davisson Hardman, Jr. Date: April 1, 1996
E. Davisson Hardman, Jr.
President
By: /s/Lawrence Volpe Date: April 1, 1996
Lawrence Volpe
Controller
(Principal Financial and Accounting Officer)
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.
DEAN WITTER REALTY GROWTH PROPERTIES INC.
Managing General Partner
/s/William B. Smith Date: April 1, 1996
William B. Smith
Chairman of the Board of Directors
/s/E. Davisson Hardman, Jr. Date: April 1, 1996
E. Davisson Hardman, Jr.
Director
/s/Lawrence Volpe Date: April 1, 1996
Lawrence Volpe
Director
/s/Ronald T. Carman Date: April 1, 1996
Ronald T. Carman
Director <PAGE>
<TABLE>
<CAPTION>
Exhibit Index for Dean Witter Realty Growth Properties, L.P.
Exhibit
No. Description Sequential
____________ __________ Page No.
<C> <S>
(3)(a)* Amended and Restated Agreement of Limited Partnership dated as
of July 12, 1985 set forth in Exhibit A to the Prospectus
included in Registration Statement Number 2-96767 is incorporated
herein by reference.
(3)(b)* Certificate of Limited Partnership dated as of July 12, 1985
incorporated by reference in Registration Statement Number 2-
96767 is incorporated herein by reference.
(4)(a)* Amended and Restated Agreement of Limited Partnership dated as
of July 12, 1985 set forth in Exhibit A to the Prospectus
included in Registration Statement Number 2-96767 is incorporated
herein by reference.
(4)(b)* Certificate of Limited Partnership dated as of July 12, 1985
incorporated by reference in Registration Statement Number 2-
96767 is incorporated herein by reference.
(10)(a)* Partnership Agreement of TWC Ten, Ltd. was filed as Exhibit 10(b)
to Registration Statement No. 2-96767 and is incorporated herein
by reference.
(10)(b)* Partnership Agreement of TWC Eleven, Ltd. was filed as Exhibit
10(c) to Registration Statement No. 2-96767 and is incorporated
herein by reference.
(10)(c)* Amended and Restated Partnership Agreement of Bayport, Ltd. filed
as Exhibit b to Registrant's report on Form 8-K, dated July 15,
1985 (Commission File No. 0-18151), is incorporated herein by
reference.
(10)(d) Partnership Agreement of TWC Eleven, Ltd. dated as of August 29,
1985.
(10)(e) First Amendment to the General Partnership Agreement of TWC
Eleven, Ltd. dated as of June 19, 1987.
(10)(f) Second Amended and Restated Agreement of Limited Partnership of
TWC Ten, Ltd. dated as of July 19, 1993.
(10)(g)* Partnership Agreement of Braker Lane III Associates was filed as
Exhibit 10(a) to Registration Statement No. 2-96767 and is
incorporated herein by reference.
(10)(h)* Amended and Restated Partnership Agreement of L.S. Braker
Associates filed as Exhibit b to Registrants report on Form 8-K
dated July 15, 1985 (Commission File No 0-18151) is incorporated
herein by reference.
(10)(i)* Partnership Agreement of Peninsula/DW Associates dated December
27, 1985 filed as Exhibit c to Registrants' report on Form 8-K
dated December 27, 1985 (Commission File No 0-18151) is
incorporated herein by reference.
(10)(j) Amended and Restated Agreement of Limited Partnership of Campus
Drive Investment Company, dated as of December 27, 1985.
(10)(k) Amended and Restated Agreement of Limited Partnership of
Peninsula Office Park, dated as of December 27, 1985.
(10)(l)* Agreement of Sale, dated August 3, 1995, with respect to the sale
of the warehouse and the undeveloped land at Braker Center filed
as Exhibit 2 to the Registrant's report on Form 8-K dated
September 1, 1995 (Commission File No. 0-18151) and is
incorporated herein by reference.
*incorporated by reference
</TABLE>
Exhibit 10(d)
_____________
GENERAL PARTNERSHIP AGREEMENT OF
TWC ELEVEN, LTD., A FLORIDA GENERAL PARTNERSHIP
This Partnership Agreement is entered into this ___ day
of August, 1985 by and between TWC FOURTEEN, LTD., a Florida limited
partnership, and BAYPORT, LTD., a Florida general partnership,
comprised of Liberty Street/Bayport, Ltd., a Florida limited
partnership and DEAN WITTER REALTY GROWTH PROPERTIES, L.P., a
Delaware limited partnership.
W I T N E S S E T H:
WHEREAS, on May 28, 1985 TWC FOURTEEN, LTD. as general
partner and BAYPORT, LTD. as limited partner entered into an amended
and restated agreement of limited partnership of TWC ELEVEN, LTD.
WHEREAS, pursuant to the terms of the aforesaid Limited
Partnership Agreement BAYPORT, LTD. exercised its option to convert
its interest from a limited partnership interest into a general
partnership interest of TWC ELEVEN, LTD. thereby converting TWC
ELEVEN, LTD. from a Florida limited partnership to a Florida general
partnership.
WHEREAS, it is the intention of the parties hereto for
this instrument to constitute the General Partnership Agreement by
and between the respective partners.
NOW, THEREFORE the parties hereto agree as follows:
1. All of the terms of the amended and restated
Agreement of Limited Partnership of TWC ELEVEN, LTD. dated as of May
28, 1985, a copy of which is attached hereto, shall operate as the
General Partnership Agreement by and between TWC FOURTEEN, LTD. and
BAYPORT, LTD. as general partners.
Except as may be expressly limited in the Partnership
Agreement annexed hereto all actions of TWC ELEVEN, LTD., as a
Florida general partnership shall be carried on and conducted
jointly by both of the partners.
IN WITNESS WHEREOF, the parties hereto have executed this
General Partnership Agreement this __ day of August, 1985.
Signed, sealed and delivered
in the presence of: TWC FOURTEEN, LTD., a
Florida
Limited Partnership
/s/Jack Wilson
By: ___________________________
Jack Wilson, individually, a
General Partner of TWC
Fourteen, Ltd.
-AND-
By: TWC ELEVEN, INC., a Florida
corporation, a General
Partner
of TWC Fourteen, Ltd.
/s/Jack Wilson
By: ______________________
Jack Wilson, President
(CORPORATE SEAL)
-AND-
BAYPORT, LTD., a Florida General
Partnership, its General Partner
By: LIBERTY STREET/
BAYPORT, LTD., a Florida
Limited Partnership, a
General Partner of Bayport,
Ltd.
/s/Warren B. Lane
By: _____________________
Warren B. Lane, its
General Partner
-AND-
By: DEAN WITTER REALTY
GROWTH PROPERTIES,
L.P., a Delaware Limited
Partnership, a General
Partner of Bayport, Ltd.
By: DEAN WITTER REALTY
GROWTH PROPERTIES,
INC., a Delaware
Corporation, a General
Partner of Dean Witter
Realty Growth
Properties, L.P.
/s/Warren B. Lane
By: _________________________
Warren B. Lane,
Senior Vice
President
(CORPORATE SEAL)
Exhibit 10(e)
_____________
FIRST AMENDMENT TO THE GENERAL
PARTNERSHIP AGREEMENT OF TWC ELEVEN, LTD.
This First Amendment to the General Partnership Agreement of
TWC ELEVEN, LTD., a Florida general partnership, is entered into
effective as of the 19th day of June, 1987, by and between TWC
FOURTEEN, LTD., a Florida limited partnership, as General Partner
("TWC FOURTEEN"), and BAYPORT, LTD., a Florida general partnership,
as General Partner ("BAYPORT"),
W I T N E S S E T H:
WHEREAS, TWC FOURTEEN and BAYPORT are parties to that certain
Limited Partnership Agreement dated October 30, 1983, as amended by
Amended and Restated Limited Partnership for TWC ELEVEN, LTD., dated
October 30, 1984, as amended by Amended and Restated Agreement of
Limited Partnership for TWC ELEVEN, LTD., dated effective as of May
28, 1985, and as converted to a general partnership pursuant to
Section 7.07 of the aforesaid Amended and Restated Agreement by that
certain General Partnership Agreement of TWC ELEVEN, LTD., dated
August 29, 1985 ("Hotel Partnership Agreement"), all of which
pertain to that certain Hyatt hotel situate in Hillsborough County,
Florida, more particularly described therein ("Hotel Partnership");
WHEREAS, a Certificate of Limited Partnership for TWC ELEVEN,
LTD., was executed as of December 1, 1983, a First Amendment to
Certificate of Limited Partnership was executed as of October 30,
1984, a Second Amendment to Certificate of Limited Partnership was
executed as of April 15, 1985, a Third Amendment to Certificate of
Limited Partnership was executed on May, 1985, and a Certificate of
Voluntary Cancellation of the Limited Partnership was executed as of
July 15, 1985;
WHEREAS, subsequent to the voluntary cancellation of the
Limited Partnership Certificate as described above, TWC ELEVEN,
LTD., was continued and is operating as a Florida General
Partnership;
WHEREAS, contemporaneous with the signing of this First
Amendment to the Hotel Partnership Agreement the relevant parties
thereto are signing a certain First Amendment to that certain
Amended and Restated Limited Partnership Agreement of TWC TEN, LTD.,
dated as of May 25, 1985, as signed by its general partners TWC TEN,
INC., JACK WILSON and BAYPORT ("Office Partnership Agreement") which
is an amendment to and restatement of the Limited Partnership
Agreement of TWC TEN, LTD., dated December 30, 1985, as amended by
First Amendment to Limited Partnership dated June 29, 1983, Second
Amendment to Limited Partnership dated October 30, 1984, and Third
Amendment to Limited Partnership dated April 15, 1985, all of which
pertain to that certain office building contiguous to the Hyatt
hotel situate in Hillsborough County, Florida, more particularly
described therein ("Office Partnership"); and
WHEREAS, the parties hereby desire to amend the Hotel
Partnership Agreement for the purpose of providing for the
disbursement of Additional Shortfall Loans or Shortfall Loans as
described in the Hotel Partnership Agreement, as amended hereby,
distribution of Net Cash Flow and Capital Proceeds, and the
reallocation of Partnership Interests between the parties hereto.
NOW, THEREFORE, for good and valuable consideration, the
receipt of which is hereby acknowledged by the parties hereto, the
parties hereby agree to amend the Hotel Partnership Agreement as
follows:
1. Except as expressly modified herein, all of the terms,
conditions, representations, and warranties set forth in the Hotel
Partnership Agreement are hereby ratified and confirmed effective as
of the date hereof. All capitalized terms as used herein shall have
the same meaning as described in the Hotel Partnership Agreement
unless expressly defined herein. All reference in the Hotel
Partnership Agreement to General Partner shall hereinafter mean TWC
FOURTEEN and to Limited Partner shall hereinafter mean BAYPORT.
Reference herein to Wilson General Partners and Wilson Partners
shall have the same meaning as described in the Office Partnership
Agreement.
2. The parties hereby acknowledge that BAYPORT has
previously exercised its rights under the provisions of Section 7.07
of the Hotel Partnership Agreement to effect the conversion of TWC
ELEVEN, LTD., from a Limited Partnership to a General Partnership.
All of the terms and provisions of Section 7.07 as it applies to
such conversion have been in effect as of the date of the conversion
as described above.
3. The term "Partnership Interest" as defined in Section
1.01 of the Hotel Partnership Agreement is hereby modified to
reflect that BAYPORT shall have a ninety-two and one-half percent
(92.5%) interest and TWC FOURTEEN shall have a seven and one-half
percent (7.5%) interest in the Hotel Partnership. The interest in
the Hotel Partnership of TWC FOURTEEN shall only be adjusted in the
event of a material default as described in Section 4.03(c)(x)
herein.
4. Section 3.01 of the Hotel Partnership Agreement is
modified by providing that the Hotel Partnership shall be managed by
TWC FOURTEEN and BAYPORT in accordance with the terms as set forth
in the Hotel Partnership Agreement.
5. Section 3.03 of the Hotel Partnership Agreement, titled
"Limitations on General Partner," is hereby now described as Section
3.03-A, "Limitations on General Partner," and subparagraph (a) of
Section 3.03 is deleted in its entirety.
6. A new section Section 3.03-B, titled "Rights of Bayport,"
is hereby added to the Hotel Partnership Agreement. Section 3.03-B
shall read as follows:
"Notwithstanding anything herein to the
contrary, BAYPORT shall have the sole power
and authority acting on behalf of the
Partnership to sell, lease, assign, exchange,
pledge, mortgage, finance, refinance or
otherwise encumber, transfer or dispose of
all or any portion of the Property, or any of
the other properties or assets of the
Partnership or any interest in any of the
foregoing or enter into any amendment,
modification, termination or waiver
pertaining thereto, or to amend or modify the
Financing Documents."
7. Section 3.10 of the Hotel Partnership Agreement is hereby
modified by deleting the Section in its entirety and inserting in
lieu thereof the following:
"The Partners recognize that BAYPORT will be
treated as "Tax Matters Partner" of the
Partnership pursuant to Section 6231(a)(7) of
the Code. BAYPORT shall take such action as
may be necessary to constitute TWC FOURTEEN a
"notice partner" within the meaning of
Section 6231(a)(8) of the Code. BAYPORT
shall keep TWC FOURTEEN informed of all
material matters that may come to the
attention of BAYPORT in its capacity as Tax
Matters Partner by giving TWC FOURTEEN notice
thereof."
8. Section 3.11 of the Hotel Partnership Agreement is hereby
modified by adding the following to the end thereof:
"Notwithstanding anything herein to the
contrary, TWC FOURTEEN may be converted to a
limited partner of the Partnership at any
time and for any reason at the sole and
absolute discretion of BAYPORT. The
conversion to a limited partner shall take
place within five (5) days after written
notice of such conversion is received by TWC
FOURTEEN from BAYPORT. Contemporaneous with
such conversion the Partnership shall be
converted from a General Partnership to a
Limited Partnership. TWC FOURTEEN hereby
grants to BAYPORT a power of attorney for the
sole purpose of BAYPORT signing on behalf of
TWC FOURTEEN any and all documents necessary
to be signed by TWC FOURTEEN with respect to
the conversion of TWC FOURTEEN to a limited
partner. Subsequent to the conversion of TWC
FOURTEEN to a limited partner pursuant to
this section TWC FOURTEEN shall remain liable
as required by law for all obligations
incurred by the Hotel Partnership during the
period of time that TWC FOURTEEN was a
general partner thereof."
9. Section 4.03 of the Hotel Partnership Agreement is hereby
modified by adding the following as Section 4.03(c) thereof:
"Section 4.03(c). (i) Shortfall Loans are
required to be funded on a seventy-five
percent (75%) and twenty-five percent (25%)
ratio, respectively, by BAYPORT and TWC
FOURTEEN pursuant to Section 4.03 of the
Hotel Partnership Agreement and by BAYPORT
and WILSON PARTNERS pursuant to Section 4.03
of the Office Partnership Agreement. As of
June 18, 1987, BAYPORT has funded Shortfall
Loans in the amount of One Million Nine
Hundred Two Thousand Six Hundred Eighty-Five
and No/100 Dollars ($1,902,685.00) while TWC
FOURTEEN and WILSON PARTNERS have funded
Three Hundred Eight Thousand One Hundred
Twenty-Seven and No/100 Dollars ($308,127.00)
in Shortfall Loans. The amount funded as
Shortfall Loans by BAYPORT include all DW
Advances made pursuant to the terms of the
Hotel Partnership Agreement and Office
Partnership Agreement which were converted
from DW Advances to Shortfall Loans but not
interest on such DW Advances.
(ii) In order to achieve the ratio of
seventy-five percent to twenty-five percent
(75%/25%) funding of Shortfall Loans as
required prior to the effective date hereof
TWC FOURTEEN and/or WILSON PARTNERS shall
fund from its deferred fee as described in
Section 4.03(c)(vi) hereof a Shortfall Loan
to satisfy the next sum of Three Hundred
Twenty-Six Thousand One Hundred One and
No/100 Dollars ($326,101.00) required to be
funded as a Shortfall Loan.
(iii) Subsequent to the funding of the
Shortfall Loan described in Section 4.03
(c)(ii) the next One Million Three Hundred
Sixty-Three Thousand Five Hundred Forty and
No/100 Dollars ($1,363,540.00) of Shortfall
Loans required to be funded shall be paid by
(a) TWC FOURTEEN and/or WILSON PARTNERS
funding from its deferred fee as described in
Section 4.03(c)(vi) hereof the sum of Three
Hundred Forty Thousand Eight Hundred Eighty-
Five and No/100 Dollars ($340,885.00) and (b)
BAYPORT funding the sum of One Million
Twenty-Two Thousand Six Hundred Fifty-Five
and No/100 Dollars ($1,022,655.00).
(iv) All Shortfall Loan requirements
under the Hotel Partnership Agreement and
Office Partnership Agreement in excess of the
amounts to be funded pursuant to Sections
4.03(c)(ii) and (iii), hereinafter defined as
"Additional Shortfall Loans," shall be the
sole responsibility of BAYPORT except in the
event of a material default by TWC FOURTEEN
or WILSON PARTNERS under the terms of the
respective Partnership Agreements as
hereinafter described.
(v) BAYPORT, in its sole discretion,
may fund or not fund any or all Shortfall
Loans and Additional Shortfall Loans. Except
as specifically differentiated herein the
term Shortfall Loans as described in the
Hotel Partnership Agreement and Office
Partnership Agreement shall include
Additional Shortfall Loans.
(vi) The total of Six Hundred Sixty-Six
Thousand Nine Hundred Eighty-Six and No/100
($666,986.00) in Shortfall Loans to be paid
by TWC FOURTEEN and WILSON PARTNERS pursuant
to Sections 4.03(c)(ii) and (iii) shall be
credited against the balance to be paid to
TWC FOURTEEN, or an affiliate thereof, of the
deferred fee described in Section 3.05(e) of
the Hotel Partnership Agreement which sum was
to be distributed pursuant to Section
4.02(a)(ii) thereof.
(vii) The Adjusted Net Cash Flow, as
herein defined, from either the Hotel
Partnership or Office Partnership shall be
distributed in accordance with the following
priority after first applying such sum
generated from either Partnership to pay any
Operating Deficits or interest due on
underlying mortgage obligations of the other
Partnership.
(a) Payment of current
interest on the Additional
Shortfall Loans made to the
Partnership that generated the
Adjusted Net Cash Flow being
distributed;
(b) Payment of current
interest on the Additional
Shortfall Loans made to the other
Partnership if not paid by
Adjusted Net Cash Flow generated
by the other Partnership;
(c) Payment of current
interest on the Shortfall Loans
made to the Partnership that
generated the Adjusted Net Cash
Flow being distributed;
(d) Payment of current
interest on the Shortfall Loans
made to the other Partnership if
not paid by Adjusted Net Cash Flow
of the other Partnership;
(e) The balance of Adjusted
Net Cash Flow shall be applied as
follows:
(x) Fifty percent
(50%) of the remaining Adjusted
Net Cash Flow to be disbursed as
follows:
(i) first to pay
accrued interest and then
principal on the Additional
Shortfall Loans made to the
Partnership that generated the
Adjusted Net Cash Flow being
distributed;
(ii) first to
pay accrued interest and then
principal on the Additional
Shortfall Loans made to the other
Partnership if not paid by
Adjusted Net Cash Flow generated
by the other Partnership;
(iii) first to
pay accrued interest and then
principal on the Shortfall Loans
made to the Partnership generating
the Adjusted Net Cash Flow being
distributed;
(iv) first to
pay accrued interest and then
principal on the Shortfall Loans
made to the other Partnership if
not paid by Adjusted Net Cash Flow
generated by the other
Partnership;
(y) The remaining
fifty percent (50%) of the
Adjusted Net Cash Flow which is
attributed to either the Hotel
Partnership or Office Partnership
shall be distributed in accordance
with the terms of Section 5.02(a)
of the respective Partnership
Agreements or
The term "Adjusted Net Cash Flow" shall mean
for the purposes herein the Net Cash Flow
without reduction for any principal or
interest payments on Shortfall Loans or
Additional Shortfall Loans of either
Partnership.
(viii) In the event of a capital event
which results in Adjusted Capital Proceeds as
herein defined, the Adjusted Capital Proceeds
shall be distributed as follows after first
applying such sum generated from either
Partnership to pay any Operating Deficits or
interest due on underlying mortgage
obligations of the other Partnership.
(a) Payment of current interest, accrued
interest and then principal on the
Additional Shortfall Loans made to the
Partnership that generated the Adjusted
Capital Proceeds being distributed;
(b) Payment of current interest, accrued
interest and then principal on the
Additional Shortfall Loans made to the
other Partnership if not paid by
Adjusted Capital Proceeds generated by
the other Partnership;
(c) Payment of current interest, accrued
interest and then principal on the
Shortfall Loans made to the Partnership
that generated the Adjusted Capital
Proceeds being distributed;
(d) Payment of current interest, accrued
interest and then principal on the
Shortfall Loans made to the other
Partnership if not paid by Adjusted
Capital Proceeds of the other
Partnership;
(e) The remaining Adjusted Capital Proceeds
from both the Hotel Partnership and
Office Partnership shall be distributed
in accordance with the terms of Section
5.02(b) of the Hotel Partnership
Agreement and the Office Partnership
Agreement.
The term "Adjusted Capital Proceeds" shall
mean for the purposes herein the Capital
Proceeds without reduction for any principal
or interest payments on Shortfall Loans or
Additional Shortfall Loans.
(ix) BAYPORT's agreement to fund, at
its sole discretion, one hundred percent
(100%) of the additional capital requirements
of the Hotel Partnership and Office
Partnership by virtue of Additional Shortfall
Loans or otherwise, as may be required or
determined to be paid by BAYPORT under the
terms of the Hotel Partnership Agreement or
the Office Partnership Agreement, is
expressly contingent upon there being no
material default under the terms of the Hotel
Partnership Agreement or Office Partnership
Agreement by TWC FOURTEEN or WILSON PARTNERS
respectively. In the event of a material
default under either the Hotel Partnership
Agreement or Office Partnership Agreement,
BAYPORT shall have the ability to require TWC
FOURTEEN and WILSON PARTNERS to fund its
twenty-five percent (25%) share of all
Additional Shortfall Loans that were advanced
by BAYPORT as Additional Shortfall Loans
pursuant to Section 4.03(c)(iv). In the
event of such material default, notice shall
have been provided to TWC FOURTEEN or WILSON
PARTNERS, as applicable, pursuant to the
terms of the Hotel Partnership Agreement and
Office Partnership Agreement, and in the
event that such entity has failed to cure
such default within any cure period provided
for thereunder, either TWC FOURTEEN or WILSON
PARTNERS shall be required to immediately
fund to BAYPORT twenty-five percent (25%) of
the Additional Shortfall Loans funded by
BAYPORT pursuant to Section 4.03(c)(iv).
This funding will occur within five (5) days
of receipt by TWC FOURTEEN or WILSON PARTNERS
of written notice of said material default
and its failure to cure such default within
the applicable cure period, if applicable.
(x) To the extent that TWC FOURTEEN or
WILSON PARTNERS does not fund its portion of
the Additional Shortfall Loans described in
Section 4.03(c)(ix) after a material default
within the time frame as described therein,
then the Partnership Interest in the Hotel
Partnership and Office Partnership held by
TWC FOURTEEN and WILSON PARTNERS,
respectively, shall be reduced by one (1)
percentage point for each Forty Thousand
Dollars ($40,000.00) of Additional Shortfall
Loans not reimbursed to BAYPORT pursuant to
the terms of Section 4.03(c)(ix). BAYPORT's
percentage of Partnership Interest in both
the Hotel Partnership and Office Partnership
shall be increased by the amount that TWC
FOURTEEN's and WILSON PARTNER's Partnership
Interest are diluted as described herein."
10. Section 7.08 of the Hotel Partnership Agreement
pertaining to the Buy/Sell provision is hereby modified by expressly
limiting the application of such clause to BAYPORT wherein if
BAYPORT desires to sell its interest or buy TWC FOURTEEN's interest
in the Hotel Partnership BAYPORT may appropriately notify TWC
FOURTEEN of its intention. However, TWC FOURTEEN shall not have the
right to notify BAYPORT of its desire to sell its interest in the
Hotel Partnership unless the Buy/Sell provision is first initiated
by BAYPORT. The remaining provisions of the terms of the Buy/Sell
provision once notice is so provided by BAYPORT shall apply.
11. With respect to the Construction Cost Overrun guarantee
set forth in Section 8.06 of the Hotel Partnership Agreement and
Section 8.04 of the Office Partnership Agreement such obligations
shall continue to the extent that any overruns are incurred over the
amount of Four Hundred Fifty-Three Thousand and No/100 Dollars
($453,000.00) which amount is to be funded by BAYPORT and/or TWC
FOURTEEN as either a Shortfall Loan or Additional Shortfall Loan
depending on the time period that such disbursement is made, i.e.
whether such sums shall be funded pursuant to Sections 4.03(c)(ii),
(iii) or (iv). The Construction Cost Overrun guarantee shall be
satisfied and TWC FOURTEEN, TWC TEN, INC. and JACK WILSON released
from any further liability thereunder upon the completion of
installation, construction and repair of the items described in
Exhibit "A" to this Amendment.
12. This First Amendment to the General Partnership Agreement
of TWC ELEVEN, LTD., supersedes and replaces in all respects the
terms, covenants and conditions set forth in that certain letter
agreement of addendum dated July 6, 1987, signed by the relevant
parties hereto. The parties hereto further acknowledge that except
as modified herein all obligations and liabilities of the parties
hereto described in the Hotel Partnership Agreement and other
parties described in the Hotel Partnership Agreement remain in full
force and effect.
13. Section 9.12 of the Hotel Partnership Agreement is hereby
modified by providing that the Hotel Partnership Agreement may be
modified or amended solely by BAYPORT, without the consent, approval
or joinder of TWC FOURTEEN other than a reduction of the Partnership
Interest of TWC FOURTEEN which may only be changed as provided for
herein. Such amendment shall be evidenced by a writing signed
solely by BAYPORT.
14. This First Amendment to the General Partnership Agreement
of TWC ELEVEN, LTD., shall be binding on and inure to the benefit of
the successors and assigns of the parties hereby.
IN WITNESS WHEREOF, the parties hereto have executed this
document as of the date described above.
Signed, Sealed and Delivered TWC ELEVEN, LTD., a Florida
in the Presence of: Limited Partnership,
By: TWC FOURTEEN, LTD., a
Florida Limited Partnership,
/s/Jack Wilson
By: _________________________
Jack Wilson, General
Partner
By: TWC ELEVEN, INC., a
Florida Corporation, a
General Partner
/s/Jack Wilson
By: ___________________________
Jack Wilson, President
Signed, Sealed and Delivered BAYPORT, LTD., a Florida
in the Presence of: General Partnership,
By: LIBERTY STREET/BAYPORT,
LTD., General Partner
By: ____________________________
General Partner
Exhibit (10)(f)
SECOND AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF TWC TEN, LTD.
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP (this "Agreement") of TWC Ten, Ltd., a Florida limited
partnership, dated as of July 19, 1993, is entered into by and among
BAYROCK REALTY ASSOCIATES L.P., a Delaware limited partnership, as
general partner ("TSG"), BAYPORT, LTD., a Florida limited
partnership, as general partner ("Bayport"), and the persons and
entities identified as limited partners in Exhibit A annexed hereto
and hereby made a part hereof (the "Limited Partners").
W I T N E S S E T H :
WHEREAS, TWC Ten, Ltd. (the "Partnership") was formed
pursuant to that certain Limited Partnership Agreement dated
December 30, 1983, as amended by a First Amendment to Limited
Partnership Agreement dated June 29, 1984, a Second Amendment to
Limited Partnership Agreement dated October 30, 1984, and a Third
Amendment to Limited Partnership Agreement dated April 15, 1985, as
amended and restated by that certain Amended and Restated Agreement
of Limited Partnership dated as of May 28, 1985 (the "Restated
Agreement"), and as amended by a First Amendment to the Restated
Agreement dated as of May 28, 1985, an additional First Amendment to
the Restated Agreement dated as of June 19, 1987, a Second Amendment
to the Restated Agreement dated as of December 17, 1991 and a Third
Amendment to the Restated Agreement dated as of February 3, 1993 (as
so amended, restated and further amended, the "Partnership
Agreement");
WHEREAS, the Existing Partners (as hereinafter defined)
desire to amend the Partnership Agreement to provide for (i) the
admission of TSG as a general partner of the Partnership on the
terms and conditions hereinafter set forth, (ii) the admission of
Westrock Realty Associates L.P., Ltd. as a limited partner of the
Partnership on the terms and conditions hereinafter set forth and
(iii) the other matters provided for below; and
WHEREAS, the parties hereto desire to amend and restate
the Partnership Agreement in its entirety and replace the
Partnership Agreement with this Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt of which is hereby acknowledged, the undersigned hereby
agree as follows:
1. Definitions.
As used in this Agreement, the following terms shall have
the meanings set forth below:
1.1 "Acquisition Agreement" shall mean the
agreement of even date between the TSG Group and Bayport relating to
the acquisition by the TSG Group of interests in the Partnership.
1.2 "Act" shall have the meaning set forth in
Section 2.1.
1.3 "Act of Insolvency" shall have the meaning
set forth in Section 19.3.
1.4 "Additional Capital Contributions" shall mean
all contributions hereafter made by the Partners, or any of them, to
the capital of the Partnership other than the Mandatory Capital
Contribution and Unmatched Capital Contributions.
1.5 "Affiliate," when used in respect of any
Person, shall mean a corporation, partnership or other Person which,
directly or indirectly, controls, is controlled by or is under the
common control with such Person. For the purpose of this
definition, control shall mean the ownership of more than 50% of the
voting stock of a corporation or more than 50% of all the legal and
equitable interests in any other Person, or the possession of the
power, directly or indirectly, to direct the management and policies
of such Person, whether through the ownership of voting securities,
common directors or officers, the contractual right to manage the
business affairs of such Person, or otherwise. In addition, with
respect to any Partner, "Affiliate" shall also mean a general
partner of such Partner, any Person which, directly or indirectly
controls such general partner and any Person in which such general
partner, directly or indirectly, through one or more intermediaries,
is a principal, partner, shareholder, beneficiary or equity owner.
1.6 "Approval Request" shall have the meaning set
forth in Section 15.11.
1.7 "Available Net Income" shall have the meaning
set forth in Section 11.1
1.8 "Budget Meeting" shall have the meaning set
forth in Section 15.3.
1.9 "Building Reserve Account" shall mean an
account in the Partnership's name maintained in NationsBank or any
other bank selected in the manner provided for in Article 14, which
account shall be funded and drawn upon as hereinafter provided, the
funds in which shall be invested as provided in Article 14 and,
except as otherwise provided in Section 8.1, the balance in which
shall not exceed one million dollars ($1,000,000). Said sum of one
million dollars ($1,000,000) shall not be reduced by any tax escrows
maintained pursuant to the First Mortgage or any substitute First
Mortgage placed on the Property in accordance with Section 15.8.
1.10 "Buy-Sell Effective Date" shall have the
meaning set forth in Section 21.2.
1.11 "Capital Account" shall have the meaning set
forth in subsection 9.1.2.
1.12 "Capital Costs" shall mean, with respect to any
period, costs of improvements, repairs, replacements and alterations
of or to the Property and other costs incurred in accordance with
the applicable provisions of Article 15, which costs, for federal
income tax purposes, may not be deducted as an expense but must be
capitalized and depreciated or amortized over more than one year,
excluding, however, Leasing Costs. "Capital Costs" shall in no
event include any Operating Costs.
1.13 "Capital Deficit" for any period shall mean
the excess of (a) Capital Costs and Leasing Costs paid or incurred
during such period over (b) the sum of the following amounts, if
any, to the extent they are then available in accordance with the
terms of this Agreement (including, without limitation, Section
7.2.2 in the case of the Supplemental Capital Contribution) to pay
such Capital Costs and Leasing Costs: (i) the Gross Revenues for
such period, (ii) amounts available in the Building Reserve Account
and (iii) the unadvanced portion of the Supplemental Capital
Contribution.
1.14 "Capital Deficit Notice" shall have the
meaning set forth in subsection 8.2.3.
1.15 "Capital Proceeds" shall have the meaning set
forth in Section 12.1.
1.16 "Code" shall mean the Internal Revenue Code
of 1986, as amended, or any successor federal income tax statute,
including any transition or effective date rules (whether or not
codified).
1.17 "Commitment Termination Year" shall have the
meaning set forth in subsection 7.2.4.
1.18 "CPI" shall mean the Consumer Price Index,
all urban consumers, 1982-84=100, for the Miami-Fort Lauderdale area
published by the Bureau of Labor Statistics, U.S. Department of
Labor, or if such index ceases to be published, a substitute
therefor agreed to by TSG and Bayport.
1.19 "Declaration" shall have the meaning set
forth in subsection 15.8.6.
1.20 "Default" shall have the meaning set forth in
Section 17.2.
1.21 "Default Loan" shall have the meaning set
forth in subsection 7.4.4.
1.22 "dissolved", when used with respect to a
Partner, shall have the meaning set forth in Section 19.3.
1.23 "Due Date" shall have the meanings set forth
in subsections 7.2.3, 8.2.5 and 8.2.6.
1.24 "Electing Partner" shall have the meaning set
forth in Section 21.1.
1.25 "Environmental Laws" shall mean any present
or future federal, state and local statutory and common law and any
regulation, code, plan, order, decree, judgment, agreement or
injunction issued, entered, promulgated or approved thereunder,
which is applicable to the Property, imposes a duty in respect
thereof on the Partnership and relates to the protection of the
environment, including without limitation those relating to
emissions, discharges, releases or threatened releases of Hazardous
Substances into the environment (including without limitation air,
surface water, groundwater or land) or relating to the manufacture,
refining, processing, distribution, use, sale, treatment, receipt,
storage, disposal, transport or handling of Hazardous Substances,
and including without limitation the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by
Superfund Amendments and Reauthorization Act of 1986 ("CERCLA"), the
Solid Waste Disposal Act, the Toxic Substances Control Act, the Safe
Drinking Water Act, the Refuse Act, the Clean Water Act, the Clean
Air Act and the Hazardous Materials Transportation Act.
1.26 "event of default" shall have the meaning set
forth in Section 17.1.
1.27 "Excess Negative Balance" shall have the
meaning set forth in subsection 9.4.6.
1.28 "Existing Partners" shall mean Bayport and
those of the Limited Partners which are identified as such on
Exhibit A annexed hereto and hereby made a part hereof.
1.29 "Existing Partner Excess" shall have the
meaning set forth in subsection 23.3(H).
1.30 "First Mortgage" shall mean that certain
first mortgage on the Property dated January 19, 1984, as modified
by a certain mortgage modification agreement dated August 28, 1985
and assigned to The Prudential Life Insurance Company of America
("Prudential") by assignment dated August 28, 1985 and as further
amended in accordance with the terms of Section 4.03 of that certain
Forbearance Agreement dated February 3, 1993 among Prudential, the
Partnership and Bayport, as amended through the date of this
Agreement (the "Forbearance Agreement"), or any substitute first
mortgage placed on the Property in accordance with Section 15.8.
The term "First Mortgage" shall also mean and include the note
secured by such mortgage and any collateral security documents,
including, without limitation, financing statements, security
agreements and any assignment of leases and rents, executed and
delivered in connection with such mortgage. "First Mortgagee" shall
mean Prudential, its successors and assigns or the holder of any
substitute First Mortgage placed on the Property in accordance with
Section 15.8.
1.31 "General Partners" shall mean (i) TSG and
Bayport and their respective successors and permitted assigns, and
(ii) if Bayport is converted to a Limited Partner, from and after
the date of such conversion TSG and its successors and permitted
assigns unless and until Bayport once again becomes a General
Partner in accordance with the terms of this Agreement.
1.32 "Governmental Authorities" shall mean all
federal, state, county, municipal and local governments, and all
departments, commissions, boards, bureaus, agencies and offices
thereof, having or claiming jurisdiction over all or any portion of
the Property.
1.33 "Gross Revenues" shall mean, with respect to
any period, the gross receipts of the Partnership during such
period, excluding unforfeited security, damage or similar deposits
made by Space Tenants, insurance proceeds (other than rental or
business interruption insurance), Capital Proceeds, proceeds of the
sale, exchange, transfer, assignment or other disposition of all or
substantially all of the Partnership's assets which is an event of
dissolution or incident to the liquidation of the Partnership,
capital contributions and proceeds of loans (including, without
limitation, loans by the Partners) made to the Partnership.
1.34 "Guaranteed Payment" shall mean (i) for each
month within each of the first two twelve-month periods commencing
on and following the date hereof, an amount equal to 1/12th of 6% of
the average outstanding balance during such month of the Unrecovered
Capital of the TSG Group and (ii) for each month within each 12-
month period or fraction thereafter, an amount equal to 1/12th of
8.5% of the average outstanding balance during such month of the
Unrecovered Capital of the TSG Group, each such payment to be made
by the Partnership to the TSG Group monthly in arrears on the tenth
day of each month, commencing on July 10, 1993, and appropriately
prorated for any portion of a month. Interest shall accrue on any
Guaranteed Payment not made when due in accordance with the
foregoing, at the rate of 14% per annum until paid in full.
1.35 "Hazardous Substances" shall mean
collectively any contaminants, pollutants, chemicals, industrial
substances, regulated substances, toxic, radioactive or hazardous
substances, materials, wastes or constituents, petroleum products,
polychlorinated biphenyls, medical wastes, infectious wastes,
asbestos, paint containing lead and urea formaldehyde.
1.36 "Hypothetical Capital Account" shall have the
meaning set forth in subsection 9.1.2.
1.37 "Improvements" shall mean all buildings,
structures and improvements now or hereafter erected on, over or
under the Land, together with all walkway and road improvements,
parking areas and facilities, landscaping improvements of whatever
nature, utility and sewage lines and all apparatus, machinery,
devices, fixtures, appurtenances and equipment necessary for the
proper operation and maintenance of the foregoing, and all
alterations and additions thereto and restorations and replacements
thereof. Such buildings and improvements shall include, without
limitation, the office building containing approximately 259,500
square feet of rentable area and the 765 parking spaces in a
structured parking deck located on the Land at the date of this
Agreement.
1.38 "Initial Capital Contribution" shall have the
meaning set forth in Section 7.1.
1.39 "Initiating Notice" shall have the meaning
set forth in Section 21.1.
1.40 "Internal Rate of Return" shall mean, as of
the date of determination, the rate per annum at which all
distributions to the TSG Group through such determination date
(excluding distributions in respect of Unmatched Capital
Contributions and Additional Capital Contributions) must be
discounted to the date of this Agreement to cause the present value
of such distributions as of the date of this Agreement to equal the
sum of the Initial Capital Contribution of the TSG Group and the
present value of the Supplemental Capital Contribution of the TSG
Group calculated as of the date of this Agreement using the same
discount rate.
1.41 "Investor Agreement" shall have the meaning
set forth in Section 16.7.
1.42 "Investor Manager" shall have the meaning set
forth in Section 16.7.
1.43 "Land" shall mean that certain parcel of land
containing approximately 13 acres located at the southwest corner of
the intersection of Memorial Highway and Courtney Campbell Causeway
in Tampa, Florida. A description of the Land is set forth in
Exhibit B annexed hereto and hereby made a part hereof.
1.44 "Laws" shall mean all present or future laws,
ordinances, statutes, administrative and judicial orders, rules,
regulations and requirements of all Governmental Authorities which
may be applicable to the Property.
1.45 "Leasing Costs" shall mean (i) all costs
incurred by the Partnership in accordance with the applicable
provisions of Article 15 after the date of this Agreement in
connection with the leasing of space in the Property (including the
renewal or extension of existing Space Leases and the expansion of
space demised under a Space Lease) and shall include, without
limitation, tenant alteration costs or allowances in lieu thereof,
leasing commissions, takeover costs of the existing lease of a new
Space Tenant and reasonable attorneys' fees and disbursements, and
(ii) all such costs incurred by the Partnership prior to the date of
this Agreement in connection with the Space Leases with Microsoft
Corp. and/or Merck & Company, Inc. and not paid out of Gross
Revenues prior to the date hereof, which costs are listed in Exhibit
C hereto. "Leasing Costs" shall in no event include advertising and
promotion costs in connection with the leasing of the Property or
any other Operating Costs.
1.46 "Leasing Guidelines" shall have the meaning
set forth in Section 15.6.
1.47 "Limited Partners" is defined in the
introductory paragraph of this Agreement and shall include all other
Persons admitted to the Partnership as limited partners in
accordance with Section 18.5 or any other provision of this
Agreement.
1.48 "Managing General Partner" shall mean
Bayport, Ltd., a Florida limited partnership, or any replacement
thereof as managing general partner of the Partnership made in
accordance with the terms of this Agreement.
1.49 "Mandatory Capital Contribution" shall mean,
at any time, the sum of the Initial Capital Contribution and the
aggregate amount of the Supplemental Capital Contribution
theretofore advanced by the TSG Group to the Partnership as at such
time.
1.50 "Minimum Gain" shall mean, at any time, the
aggregate amount of gain (of whatever character), if any, that would
be realized by the Partnership if, with respect to each nonrecourse
liability of the Partnership, the Partnership disposed of the
property securing such liability by transferring such property (in a
taxable transaction) in full satisfaction of such liability. For
purposes of the preceding sentence, the term "nonrecourse liability"
shall mean a liability of the Partnership with respect to which no
Partner or related person (within the meaning of Regulations Section
1.752-4(b)) bears the economic risk of loss, as determined in
accordance with Regulations Section 1.752-2. Each Partner's share
of Minimum Gain shall be determined in accordance with Regulations
Section 1.704-2(g).
1.51 "Net Effective Rent" shall have the meaning
set forth in Section 15.6.
1.52 "net excess insurance proceeds" shall have
the meaning set forth in Section 12.6.
1.53 "net income" shall have the meaning set forth
in subsection 9.1.1.
1.54 "net losses" shall have the meaning set forth
in subsection 9.1.1.
1.55 "net proceeds" shall have the meaning set
forth in Section 12.6.
1.56 "Non-Electing Partner" shall have the meaning
set forth in Section 21.1.
1.57 "Notices" shall have the meaning set forth in
Section 26.1.
1.58 "notice partners" shall have the meaning set
forth in Section 13.9.
1.59 "Operating Costs" shall mean, with respect to
any period, all costs and expenses of operating, maintaining,
protecting and repairing the Property (determined on an accrual
basis and, except as hereinafter set forth, in accordance with
generally accepted accounting principles consistently applied)
incurred by the Partnership in accordance with the applicable
provisions of Article 15 and including, without limitation, the
following: fees and reimbursement of expenses payable to the
property manager; advertising and promotion costs in connection with
the leasing of space in the Property; utilities; service contract
costs for cleaning, maintenance and the like; cost of repairs (to
the extent the same do not constitute Capital Costs); real estate
taxes and assessments; interest and principal due and payable under
the First Mortgage or any other loan approved as provided in
Section 15.8; interest on any loan made by the TSG Group pursuant to
subsection 15.5(g); reasonable independent accountants' fees; and
reasonable fees of outside counsel in the performance of routine
legal matters related to the Property pursuant to this Agreement;
but excluding (i) depreciation, amortization of prepaid leasing
commissions, loan costs and other pre-paid expenses and other non-
cash items, (ii) Capital Costs, (iii) Leasing Costs, (iv) Guaranteed
Payments, and (v) amounts deducted in calculating net excess
insurance proceeds or net proceeds.
1.60 "Operating Deficit" for any period shall mean
the excess of (a) the sum of (i) Operating Costs for such period and
(ii) the Guaranteed Payments for such period over (b) the sum of
(i) the Gross Revenues for such period, (ii) amounts available in
the Building Reserve Account and (iii) the unadvanced portion of the
Supplemental Capital Contribution to the extent available for the
payment of amounts described in clause (a) hereof pursuant to
Section 7.2.
1.61 "Operating Deficit Notice" shall have the
meaning set forth in subsection 8.2.1.
1.62 "Other Partner" shall have the meaning set
forth in Article 20.
1.63 "Other Party" shall have the meaning set
forth in Article 25.
1.64 "Outstanding Additional Capital
Contributions" shall mean the excess, if any, of (i) the aggregate
amount of Additional Capital Contributions made by the TSG Group or
the Existing Partners, as the case may be, as at the time in
question over (ii) the aggregate amount of all distributions
theretofore made to the TSG Group or the Existing Partners, as the
case may be, pursuant to subsection 12.1.6.
1.65 "Outstanding Unmatched Capital Contributions"
shall mean the excess, if any, of (i) the aggregate amount of
Unmatched Capital Contributions made by the TSG Group or the
Existing Partners, as the case may be, as at the time in question
over (ii) the aggregate amount of all distributions theretofore made
to the TSG Group or the Existing Partners, as the case may be,
pursuant to subsection 12.1.5.
1.66 "Partner" shall mean each of the parties to
this Agreement and any other Person to which an interest in the
Partnership is hereafter transferred, and who is admitted to the
Partnership, in accordance with the terms of this Agreement.
1.67 "Partner Nonrecourse Debt Minimum Gain" shall
mean, at any time, the aggregate amount of gain (of whatever
character), if any, that would be realized by the Partnership if,
with respect to each liability (i) that is nonrecourse within the
meaning of Regulations Section 1.1001-2, and (ii) with respect to
which a Partner or a related person (within the meaning of
Regulations Section 1.752-4(b)) bears the economic risk of loss
under Regulations Section 1.752-2, the Partnership disposed of the
property securing such liability by transferring such property (in a
taxable transaction) in full satisfaction of such liability. Each
Partner's share of Partner Nonrecourse Debt Minimum Gain shall be as
determined in accordance with Regulations Section 1.704-2(i)(5).
1.68 "Partnership" shall mean the limited
partnership continued by this Agreement.
1.69 "Partnership Accountants" shall mean the firm
of KPMG Peat Marwick and their successors, or any other firm of
independent certified public accountants hereafter selected in
accordance with the applicable provisions of Section 15.8.
1.70 "Percentage Interest" shall have the meaning
set forth in Section 7.3.
1.71 "Permitted Encumbrances" shall mean those
defects, charges, liens, encumbrances and other matters set forth on
Exhibit D annexed hereto and hereby made a part hereof.
1.72 "Person" shall mean an individual,
partnership, corporation, trust or estate, unincorporated
association, a Governmental Authority or any other legal entity.
1.73 "Personal Property" shall mean all apparatus,
machinery, devices, appurtenances, equipment, furniture, furnishings
and other items of personal property used in connection with the
operation and maintenance of the Improvements and/or the Property
now or hereafter owned or leased by the Partnership.
1.74 "Property" shall mean the Land, together with
the Improvements and Personal Property situated thereon or, in the
case of Personal Property, used in connection therewith, subject to
the Permitted Encumbrances.
1.75 "Purchase Option" shall have the meaning set
forth in Section 21.3.
1.76 "Requested Capital Funds" shall have the
meaning set forth in subsection 8.2.3.
1.77 "Requested Funds" shall have the meaning set
forth in subsection 8.2.5.
1.78 "Requested Operating Funds" shall have the
meaning set forth in subsection 8.2.1.
1.79 "Regulations" shall mean the Income Tax
Regulations issued under the Code, as such Regulations may be
amended from time to time.
1.80 "Sale Option" shall have the meaning set
forth in Section 21.3.
1.81 "Selling Partner" shall have the meaning set
forth in Article 20.
1.82 "Space Lease" shall mean any lease, sublease,
license, concession agreement or any other form of agreement,
however denominated, affecting the use and occupancy of the Property
or any portion thereof, and all renewals, modifications, amendments
and other agreements affecting the same, including, without
limitation, all space leases for office or retail use.
1.83 "Space Tenant" shall mean any tenant,
subtenant, licensee, concessionaire or other user, occupant or
lessee of the Property or any portion thereof under any Space Lease,
and any other user or occupant of the Property or any portion
thereof.
1.84 "Stated Valuation" shall have the meaning set
forth in Section 21.2.
1.85 "Supplemental Capital Contribution" shall
have the meaning set forth in Section 7.2.
1.86 "tax matters partner" shall have the meaning
set forth in Section 13.9.
1.87 "Title Company" shall have the meaning set
forth in subsection 17.1.1.
1.88 "Transfer" shall have the meaning set forth
in Section 18.1.
1.89 "TSG Excess" shall have the meaning set forth
in subsection 23.3(H).
1.90 "TSG Group" shall mean TSG and the TSG
Limited Partners, which shall be the Limited Partners identified as
members of the TSG Group in Exhibit A annexed hereto.
1.91 "TSG Leasing Representative" shall have the
meaning set forth in Section 15.6.
1.92 "Uncontrollable Expense" shall have the
meaning set forth in subsection 15.5(b).
1.93 "Unmatched Capital Contribution" shall have
the meaning set forth in subsections 8.2.5(B) and 8.2.6.
1.94 "Unrecovered Capital" shall mean at any given
time the excess of (i) the amount of the Mandatory Capital
Contribution at such time over (i) all amounts theretofore
distributed to the TSG Group pursuant to subsection 12.1.2.
1.95 "Vacant Space" shall have the meaning set
forth in Section 15.6.
1.96 "Warranting Party" shall have the meaning set
forth in Article 25.
2. Continuance of Partnership.
2.1 The Partners do hereby agree to continue the
existence of the Partnership as a limited partnership pursuant to
the provisions of the Florida Uniform Limited Partnership Act, as
the same may heretofore have been or may hereafter be amended (the
"Act"). The business and operations of the Partnership shall be
conducted under the name of "TWC Ten, Ltd."
2.2 The Partnership was formed pursuant to a
certificate of limited partnership of the Partnership filed pursuant
to the Act. Promptly after the execution of this Agreement, the
Managing General Partner shall file an amended and restated
certificate of limited partnership in the office of the Department
of State of the State of Florida pursuant to the Act. The Managing
General Partner shall also, from time to time, execute or cause to
be executed all such certificates (including limited partnership and
fictitious name certificates) or other documents and cause to be
done all such filing, recording, publishing or other acts as may be
necessary to comply with the Act's requirements for formation and
operation of the Partnership as a limited partnership under the laws
of the State of Florida.
3. Term.
The Partnership shall continue until December 31, 2010,
or such earlier date on which the Partnership is terminated in
accordance with the terms of this Agreement.
4. Scope of Partnership.
The Partnership is and shall be a partnership formed for
only the purposes specified in Article 5 and nothing contained in
this Agreement shall be deemed to create a partnership between the
Partners with respect to any activities whatsoever other than
activities within the proper business purposes of the Partnership as
specified in Article 5.
5. Purpose.
The purposes of the Partnership are to own, operate,
mortgage, exchange, lease, encumber, manage, alter, improve and
dispose of the Property, and in all respects to act as owner
thereof, upon and subject to all of the terms and conditions of this
Agreement. The Partnership shall have such powers as are necessary
to fulfill its purposes. The Partnership shall not engage in any
other business without the prior consent of all Partners.
6. Principal Office; Agent
for Service of Process.
6.1 The place of business and principal office of
the Partnership shall be in care of Dean Witter Realty, Inc., Two
World Trade Center, 64th floor, New York, New York 10048, but other
or additional places of business within and without the State of
Florida and within the continental United States may be selected
from time to time by the Managing General Partner, on Notice to the
other Partners.
6.2 The Partnership's registered office within
the State of Florida shall be care of CT Corporation System,
1200 South Pine Island Road, Plantation, Florida 33324. The name
and address of the registered agent of the Partnership for service
of process within the State of Florida shall be CT Corporation
System, 1200 South Pine Island Road, Plantation, Florida 33324. In
the event that the Person at any time acting as such agent ceases to
act as such for any reason, the Managing General Partner shall
appoint a substitute agent. The Managing General Partner shall give
Notice to the other Partners of the appointment of each such
substitute agent promptly after such appointment has been made.
Such agent is and shall be the agent of the Partnership upon which
any process, notice or demand required or permitted by law to be
served on the Partnership may be served.
7. Initial Capital Contribution; Supplemental
Capital Contribution; Percentage Interests.
7.1 The TSG Group is this day contributing the
sum of $5,339,067.52 in cash to the capital of the Partnership,
which sum shall constitute the initial capital contribution (the
"Initial Capital Contribution") of the TSG Group. The Initial
Capital Contribution of the TSG Group shall be applied as follows:
$5,078,481.07 to reduce the outstanding principal balance of the
First Mortgage to $20,000,000 and to pay accrued and unpaid interest
thereon and $260,586.45 to pay the Accrued Expenses listed on
Exhibit E annexed hereto and made a part hereof.
7.2 Subject to the terms and conditions set forth
in this Article 7, the TSG Group shall from time to time contribute
up to an additional $3,660,932.48 in cash to the capital of the
Partnership (the "Supplemental Capital Contribution") at the times
and to pay the expenses described in this Section 7.2.
7.2.1 On the date hereof TSG shall
contribute $1,506,916.52 of its Supplemental Capital Contribution to
the Partnership, such amount to be utilized to pay (a) reasonable
costs of due diligence, title insurance premiums and closing costs
incurred by the Partnership or the TSG Group in connection with the
acquisition by the TSG Group of interests in the Partnership and the
entering into of this Agreement and the Acquisition Agreement
(except for real estate transfer, stamp or similar taxes, if any,
which shall be paid by the Existing Partners) and up to $10,000
payable by the Partnership on account of legal fees and
disbursements incurred by Prudential in connection with the
modification of the First Mortgage pursuant to the terms of the
Forbearance Agreement (it being understood that legal fees and
disbursements incurred by Prudential and payable by the Partnership
as aforesaid in excess of $10,000 shall be paid by the Existing
Partners and legal fees and disbursements incurred by the TSG Group,
on the one hand, and the Existing Partners and/or the Partnership,
on the other hand, in connection with this Agreement, the
Acquisition Agreement and the closing thereunder and the Forbearance
Agreement and the modification of the First Mortgage pursuant to the
terms thereof shall be paid by the TSG Group and the Existing
Partners, respectively), (b) Leasing Costs listed in Exhibit C
hereto and paid or incurred prior to the date of this Agreement for
or in connection with the Space Leases with Microsoft Corp. and/or
Merck & Company, Inc., which Leasing Costs shall be paid to Dean
Witter Realty Growth Properties, L.P. in repayment of advances made
by it to the Partnership to pay such costs, and (c) $100,000 to be
paid to Bayport to reimburse it for an advance, excluding interest
thereon, made by it to the Partnership to enable the Partnership to
pay such amount to Prudential for an extension to May 15, 1993 of
the Termination Date under the Forbearance Agreement referred to in
Section 1.30, which amount shall be applied by Bayport to the
repayment of the principal amount of a loan made to it by The Taylor
Simpson Group.
7.2.2 The balance of the Supplemental
Capital Contribution shall be contributed by the TSG Group to the
Partnership from time to time, on Notice from the Managing General
Partner as hereinafter provided, to pay the following expenses:
(A) to the extent that the Gross
Revenues and the funds in the Building Reserve Account are at any
time insufficient to pay all of the following which are then due,
the Supplemental Capital Contribution shall be utilized to pay, to
the extent of such insufficiency and in the following order of
priority:
(i) principal and interest payments on
the First Mortgage;
(ii) all other Operating Costs;
(iii) the Guaranteed Payments; and
(iv) Capital Costs;
provided, however, that in no event shall more than $377,486.16 in
the aggregate of the Supplemental Capital Contribution be utilized
pursuant to this subsection 7.2.2(A); and
(B) the remaining balance of the
Supplemental Capital Contribution shall be utilized to pay Leasing
Costs, to the extent that the Gross Revenues and the funds in the
Building Reserve Account are insufficient to pay the same in full
(it being understood that for all purposes of this Agreement
including, without limitation, Section 8.2, the Gross Revenues and
funds in the Building Reserve Account shall be applied first to pay
the items listed in clauses (i) through (iv) of subsection 7.2.2(A),
in the order of priority set forth therein before being utilized for
any other purpose).
7.2.3 The TSG Group shall contribute the
portion of the Supplemental Capital Contribution specified in
subsection 7.2.2 in installments from time to time within 21 days
after the giving of Notice from the Managing General Partner to TSG
and to The Trustees of Princeton University (the "Due Date" shall be
deemed to be the expiration of said 21-day period) specifying the
amount of the required installment, the costs or expenses specified
in subsection 7.2.2 to be paid with such installment and that such
costs or expenses are due or will become due within 60 days after
the giving of such Notice; provided, however, that all amounts so
called for by the Managing General Partner shall be for the payment
of costs or expenses of the nature specified in subsection 7.2.2
which were incurred in accordance with the terms of this Agreement;
and provided further, however, that if any amount so called for by
the Managing General Partner has not been fully expended to pay the
costs and expenses set forth in the Managing General Partner's
Notice within 60 days after the giving of such Notice, such unspent
amount shall be returned to the TSG Group but may thereafter be
called for by the Managing General Partner in accordance with the
terms of this Article 7 to the same extent as if such unspent amount
had never been advanced by the TSG Group; and provided further,
however, that the TSG Group shall have the right to contest in good
faith its obligation to advance all or any portion of any
installment of the Supplemental Capital Contribution called for by
the Managing General Partner pursuant to subsection 7.2.2 by giving
Notice to the Managing General Partner on or prior to the Due Date
specifying the reasons for such contest by the TSG Group. If TSG
gives such a Notice of contest, the period of time within such
installment, or such portion thereof, must be paid shall be extended
until the matter in contest has been resolved. Promptly after the
giving of a Notice of contest, TSG shall meet with Bayport to
attempt to resolve the matter in contest or, if that is not
feasible, to agree upon an expeditious method of resolving the
matter in contest (which may include a declaratory judgment action,
arbitration or alternative dispute resolution). Upon a final
resolution that all or any portion of such contested installment of
the Supplemental Capital Contribution is payable by the TSG Group,
such payable amount shall be paid to the Partnership with interest
thereon from the Due Date of such installment at the rate of 14% per
annum within 15 days after such resolution. Notwithstanding the
foregoing, the TSG Group shall not be required to contribute any
installment of the Supplemental Capital Contribution specified in
subsection 7.2.2 so long as a Default (other than a Default which
consists solely of the failure by the Existing Partners to advance
all or any portion of Requested Capital Funds in the manner and
within the time set forth in Article 8) shall be continuing.
7.2.4 The obligation of the TSG Group to
fund any then-unadvanced portion of its Supplemental Capital
Contribution shall terminate at the end of a calendar year (the
"Commitment Termination Year") if (i) any distribution of Available
Net Income for the Commitment Termination Year and also for the
calendar year immediately preceding the Commitment Termination Year
has been made to the Existing Partners pursuant to Section 11.2
unless (ii) prior to the end of the Commitment Termination Year, the
Existing Partners have contributed the entire amount of such distri-
bution for the Commitment Termination Year to the capital of the
Partnership pursuant to Section 8.1; provided, however, that for the
purpose of enabling the Existing Partners to avoid the termination
of the aforementioned obligation of the TSG Group, the time within
which to satisfy the condition in clause (ii) shall be extended as
follows: if any distribution of Available Net Income for the
Commitment Termination Year is made pursuant to Section 11.2 within
15 days before the end of or is made after the end of such year,
then the Existing Partners shall have the right to contribute such
distribution to the capital of the Partnership within 15 days after
their receipt thereof.
7.3 On the date hereof the residual interest (the
"Percentage Interest") of the TSG Group is 50% and the Percentage
Interest of the Existing Partners is 50%. Such Percentage Interests
shall be allocated to each of the members of the TSG Group and to
each of the Existing Partners as set forth on Exhibit A annexed
hereto. The Percentage Interests of the TSG Group and the Existing
Partners may be adjusted only pursuant to subsections 8.2.5 and
8.2.6 of this Agreement.
7.4 If the TSG Group shall fail on or before the
Due Date to advance in full any installment of the Supplemental
Capital Contribution when required to do so under Section 7.2, then
so long as such failure has not been cured in the manner provided in
Section 7.5, the Existing Partners may at any time exercise one or
more of the rights and remedies set forth below (provided that the
rights set forth in subsections 7.4.1 and 7.4.3 shall be mutually
exclusive):
7.4.1 The Existing Partners may, but shall
not be obligated to, initiate the buy-sell provisions set forth in
Article 21 in accordance with the terms and provisions thereof.
7.4.2 If the amount which the TSG Group so
fails to advance, alone or when added to the amount of any prior
uncured default or defaults of the TSG Group in advancing any
installment(s) of the Supplemental Capital Contribution, in the
aggregate exceeds $100,000 and if, at the time of the latest
default, no Default (other than a Default which consists solely of
the failure by the Existing Partners to advance all or any portion
of Requested Capital Funds in the manner and within the time set
forth in Article 8) shall then be continuing, Bayport may, but shall
not be obligated to, give Notice to TSG that it elects to exercise
its rights under this subsection 7.4.2. Upon the date fixed in such
Notice, which date shall not be earlier than the 15th day after the
giving of such Notice to TSG (it being understood that the TSG Group
may cure such default during such 15-day period and, if it is then
the Managing General Partner of the Partnership, remain as such, by
paying to the Partnership the amount of such installment(s) of the
Supplemental Capital Contribution which the TSG Group has previously
failed to advance, together with interest thereon at the rate of 14%
per annum from the Due Date of each such installment to the date of
such payment), without the necessity of any further act, TSG, if it
is then the Managing General Partner of the Partnership, shall cease
to be such, Bayport shall thereupon become the Managing General
Partner of the Partnership (and if its interest in the Partnership
shall theretofore have been converted to that of a Limited Partner,
such interest shall once again become that of a General Partner) and
TSG shall thereafter have no greater rights with respect to the
management of the affairs of the Partnership than it had on the date
of this Agreement when Bayport was the original Managing General
Partner. The conversion of the interest in the Partnership of TSG
from that of Managing General Partner to that of a General Partner
and the conversion of the interest of Bayport in the Partnership
from that of a Limited Partner to that of Managing General Partner
(i) shall not cause the Partnership to be dissolved and the business
of the Partnership shall continue and be continued after such
conversions and (ii) shall not affect or alter the shares of
Available Net Income, Capital Proceeds, net income, net losses,
gain, loss, deductions and credits of either TSG or Bayport. In
addition, on and after the date fixed in such Notice, unless the TSG
Group cures its default in the manner and within the time provided
for above in this subsection 7.4.2, and whether or not TSG shall
then be the Managing General Partner, TSG shall have no further
right to convert the interest of Bayport from Managing General
Partner to that of a limited partner, notwithstanding the fact that
circumstances may thereafter arise which, but for this sentence,
would entitle TSG so to do; provided, however, that the restriction
on TSG set forth in this sentence shall not apply if (i) after the
date fixed in such Notice, such default of the TSG Group is cured in
the manner provided for in Section 7.5 and (ii) at the time such
default is cured, or at any time thereafter, the TSG Group does not,
by reason of a default by the Existing Partners in funding any
Operating Deficit pursuant to subsection 8.2.1 or 8.2.2 and within
the time period provided for in subsection 8.2.5, which default is
not cured within the time period provided for in subsection
8.2.5(C), receive its Guaranteed Payment when due in any month.
7.4.3 The Existing Partners may, but shall
not be obligated to, cause a sale of the Property in accordance with
the terms and provisions of Article 20.
7.4.4 The Existing Partners may, but shall
not be obligated to, advance to the Partnership an amount equal to
the installment of the Supplemental Capital Contribution, or portion
thereof, which the TSG Group has failed to advance, which advance
shall constitute an installment of the Supplemental Capital
Contribution by the TSG Group and a loan (a "Default Loan") by the
Existing Partners to the TSG Group. Any such Default Loan shall
bear interest at the annual rate of 14%, compounded monthly, shall
be recourse to the TSG Group, on a joint and several basis, and
until such Default Loan is paid in full, all (i) Guaranteed Payments
and all distributions of whatever nature which would otherwise be
paid or made by the Partnership to the TSG Group pursuant to this
Agreement and (ii) all payments which would otherwise be made by the
Existing Partners to the TSG Group pursuant to Section 8.3, shall
instead be paid to the Existing Partners, notwithstanding anything
to the contrary set forth in this Agreement, and shall be applied
first to interest on and then to principal of the Default Loan, but
for all other purposes of this Agreement, such payments and
distributions shall be deemed to have been received by the TSG
Group.
7.4.5 The Existing Partners may exercise any
other rights or remedies which such Partners may have at law or in
equity, including, without limitation, seeking personal recourse
against the TSG Group on a joint and several basis on behalf of the
Partnership and themselves for the unpaid installment of the
Supplemental Capital Contribution, interest thereon from the Due
Date of such installment at the rate of 14% per annum, attorneys'
fees and other costs of the Existing Partners.
7.5 If the TSG Group shall fail to advance in
full any installment of the Supplemental Capital Contribution when
required so to do under Section 7.2 and within the time period
provided for in Section 7.4, and if the TSG Group fails to cure such
default in the manner and within the applicable time period, if any,
provided for in Section 7.4 but such default is subsequently cured
as hereinafter provided, the Existing Partners shall have no further
right to exercise or to continue to exercise remedies consequent on
such default; provided, however, that the provisions of this
sentence shall not be applicable to any remedy the exercise of which
was completed (or, in the case of the remedies provided for in
subsections 7.4.1 and 7.4.3, initiated) by the Existing Partners
pursuant to Section 7.4 prior to such payment and shall not serve to
reinstate TSG as Managing General Partner if the remedy provided for
in subsection 7.4.2 has theretofore been exercised. Any such
default by the TSG Group shall be deemed cured upon the occurrence
of any of the following: (i) payment in full by the TSG Group of the
amount awarded to the Existing Partners in any action instituted by
them pursuant to subsection 7.4.5 by reason of such default;
(ii) payment in full of any Default Loan made by the Existing
Partners by reason of such default, together with all interest due
thereon; and (iii) if cure is effected at any time prior to the
entry of a judgment in any action instituted by the Existing
Partners pursuant to subsection 7.4.5 and no Default Loan has been
made by the Existing Partners by reason of such default, payment to
the Partnership of the amount of the unpaid installment of the
Supplemental Capital Contribution, together with interest thereon
from the Due Date thereof at the rate of 14% per annum.
7.6 On or prior to the date of this Agreement the
Existing Partners (i) are contributing, and hereby do contribute, to
the capital of the Partnership the liabilities set forth on the
balance sheet included in the 1992 Financial Statements (as such
term is defined in the Acquisition Agreement) in respect of
shortfall loans due to them, in the amount of $1,232,516, additional
shortfall loans due to them, in the amount of $3,295,259, and
accrued interest thereon payable in the amount of $2,331,831.00, and
(ii) are causing to be discharged or otherwise satisfied the
liability set forth in such balance sheet in respect of shortfall
loans due to TWC Eleven, Ltd. in the amount of $829,771.
7.7 The TSG Group hereby jointly and severally
represents and warrants to Bayport and the Partnership that the
partners of each of Bayrock Realty Associates L.P. and Westrock
Realty Associates L.P., Ltd. (a) have committed, and are obligated
to fund under the partnership agreements of such partnerships,
amounts which in the aggregate equal the unfunded portion at the
date hereof of the Supplemental Capital Contribution of the TSG
Group, for recontribution by such partnerships to the Partnership
and (b) have sufficient assets to fulfill the obligations set forth
in clause (a) above. The TSG Group further agrees that the
obligations of such partners in the partnership agreements of such
partnerships to contribute such funds shall not be amended, modified
or waived so long as the TSG Group remains obligated to contribute
any portion of the Supplemental Capital Contribution to the
Partnership.
8. Additional Capital Contributions;
Unmatched Capital Contributions.
8.1 If during any calendar year the Existing
Partners shall receive a distribution of Available Net Income
pursuant to Section 11.2, the Existing Partners shall have the
right, but not the obligation, to contribute the entire amount of
such distribution to the capital of the Partnership. If the
Existing Partners make such a capital contribution for any calendar
year, solely for the purpose of subsection 7.2.4, to the extent of
such contribution, the Existing Partners shall not be deemed to have
received a distribution of Available Net Income for the calendar
year in question. If any such contribution is made by the Existing
Partners, the full amount thereof shall be deposited by the
Partnership in the Building Reserve Account, notwithstanding the
fact that the balance in such account may then equal or exceed
$1,000,000. Any capital contribution made by the Existing Partners
pursuant to this Section 8.1 shall constitute an Additional Capital
Contribution and shall not affect any Partner's Percentage Interest.
8.2 It is understood that the Partnership may
from time to time require funds for the ongoing operation, leasing,
maintenance and improvement of the Property for which sufficient
amounts are not available to it from (a) the Gross Revenues, (b)
mortgage and other loans made to the Partnership, (c) the Building
Reserve Account and (d) contributions made and to be made by the TSG
Group to the capital of the Partnership pursuant to Article 7. In
order to help ensure that the Partnership will have required funds
at all times, the Partners agree as follows:
8.2.1 If, as and when the Managing General
Partner shall determine that funds are, or within the immediately
succeeding 60 days will be, required to meet an Operating Deficit of
the Partnership, the Managing General Partner shall, by Notice to
the Existing Partners (the "Operating Deficit Notice"), with a copy
to TSG, specify the amount of what it believes to be the Operating
Deficit of the Partnership at such time (such amount being
hereinafter called the "Requested Operating Funds") and call upon
the Existing Partners to advance the Requested Operating Funds to
the Partnership. The Operating Deficit Notice shall itemize how the
Requested Operating Funds will be applied. Within 21 days after the
date of the giving of the Operating Deficit Notice, the Existing
Partners shall advance to the Partnership the Requested Operating
Funds. Any funds advanced by the Existing Partners to the
Partnership pursuant to this subsection 8.2.1 shall be deemed to be
Additional Capital Contributions, and shall not affect any Partner's
Percentage Interest. The Existing Partners shall not be personally
liable to the Partnership, the TSG Group or any other Person for
their failure to advance funds to the Partnership pursuant to this
subsection 8.2.1, but if the Existing Partners fail to advance any
Requested Operating Funds to the Partnership when due, they shall
thereby become subject to the provisions of subsection 8.2.5.
8.2.2 Notwithstanding anything to the
contrary hereinbefore contained, TSG, if it is not then the Managing
General Partner, shall have the right from time to time, upon its
determination in the exercise of reasonable business judgment that
funds are, or within the immediately succeeding 60 days will be,
needed to meet an Operating Deficit of the Partnership, to give
Notice to the Managing General Partner requesting it to issue an
Operating Deficit Notice to the Existing Partners, specifying the
amount of the Requested Operating Funds which are then required and
itemizing how such funds will be applied. If within 10 days after
the date of giving of such Notice by TSG, the Managing General
Partner has not issued an Operating Deficit Notice to the Existing
Partners for the Requested Operating Funds, TSG may issue such
Operating Deficit Notice without the consent or approval of the
Managing General Partner. Upon the giving of such Operating Deficit
Notice by TSG, the Existing Partners shall advance funds to the
Partnership in accordance with subsection 8.2.1. Notwithstanding
the foregoing, TSG shall not have the right to give either of the
Notices provided for in this subsection 8.2.2, or to exercise any of
the remedies provided for in subsection 8.2.5 upon the failure of
the Existing Partners to advance funds to the Partnership pursuant
to this subsection 8.2.2, if and so long as the TSG Group shall be
in default of its obligations to advance to the Partnership any
installment(s) of the Supplemental Capital Contribution pursuant to
Section 7.2 within the time period provided for in Section 7.4. The
restriction on TSG set forth in the preceding sentence shall cease
to apply (i) after the TSG Group has cured such default pursuant to
the applicable provisions of Article 7 or (ii) if the TSG Group
shall contest in good faith its obligation to advance the
installment of the Supplemental Capital Contribution in question
pursuant to subsection 7.2.3, after a final determination is issued
in such contest which upholds the TSG Group's position or, if such
determination requires payment by the TSG Group of all or part of
such installment, then after issuance of such determination and
payment by the TSG Group of the amount due pursuant to such
determination.
8.2.3 If, as and when the Managing General
Partner shall determine that funds are, or within the immediately
succeeding 60 days will be, required to meet a Capital Deficit of
the Partnership, the Managing General Partner shall, by Notice to
all Partners (the "Capital Deficit Notice"), a copy of which shall
be sent to The Trustees of Princeton University, specify the amount
of what it believes to be the Capital Deficit of the Partnership at
such time (such amount being hereinafter called the "Requested
Capital Funds") and call upon the TSG Group and the Existing
Partners to advance to the Partnership their respective
proportionate shares (calculated in accordance with their respective
Percentage Interests at the time the Capital Deficit Notice is
given) of the Requested Capital Funds. The Capital Deficit Notice
shall itemize how the Requested Capital Funds will be applied.
Within 21 days after the date of the giving of the Capital Deficit
Notice, the TSG Group and the Existing Partners shall advance to the
Partnership their respective proportionate shares of the Requested
Capital Funds; provided, however, that neither the TSG Group nor the
Existing Partners shall be required to contribute Requested Capital
Funds if the other of them shall fail to advance its proportionate
share of the Requested Capital Funds within the time period set
forth above; and provided further, however, that if either the TSG
Group or the Existing Partners shall advance its proportionate share
of the Requested Capital Funds within such time period and the other
of them shall not, the TSG Group or the Existing Partners, whichever
has made such advance, shall be entitled to receive a refund of such
advance from the Partnership. Unless they become Unmatched Capital
Contributions in accordance with subsection 8.2.5 or 8.2.6, any
funds advanced by the Partners to the Partnership pursuant to this
subsection 8.2.3 and not refunded to them pursuant to the
immediately preceding sentence shall be deemed to be Additional
Capital Contributions, and shall not affect any Partner's Percentage
Interest. Neither the TSG Group nor the Existing Partners shall be
personally liable to the Partnership, the other Partners or any
other Person for their failure to advance funds to the Partnership
pursuant to this subsection 8.2.3, but if either the TSG Group or
the Existing Partners shall fail to advance in full when due their
proportionate share of the Requested Capital Funds to the
Partnership when obligated to do so in accordance with this
subsection 8.2.3, the TSG Group or the Existing Partners, as the
case may be, shall thereby become subject to the provisions of
subsection 8.2.5 or 8.2.6, as applicable.
8.2.4 Notwithstanding anything to the
contrary hereinbefore contained, TSG, if it is not then the Managing
General Partner, shall have the right from time to time, upon its
determination in the exercise of reasonable business judgment that
funds are, or within the immediately succeeding 60 days will be,
needed to meet a Capital Deficit of the Partnership, to give Notice
to the Managing General Partner requesting it to issue a Capital
Deficit Notice to the Partners, specifying the amount of the
Requested Capital Funds which are then required and itemizing how
such funds will be applied. If within 10 days after the date of
giving of such Notice by TSG, the Managing General Partner has not
issued a Capital Deficit Notice to the Partners for the Requested
Capital Funds, TSG may issue such Capital Deficit Notice without the
consent or approval of the Managing General Partner. Upon the
giving of such Capital Deficit Notice by TSG, the Existing Partners
and the TSG Group shall advance funds to the Partnership in
accordance with, but subject to the terms of, subsection 8.2.3.
8.2.5 If (a) the Existing Partners shall
fail to advance all or any part of the Requested Operating Funds or
the Requested Capital Funds (collectively, the "Requested Funds")
which they are called upon and requested to advance pursuant to
either an Operating Deficit Notice or a Capital Deficit Notice
within 21 days after the date of giving of such Notice (the "Due
Date" shall be deemed to be the expiration of said 21-day period),
but only provided that the Existing Partners have not been excused
from the making of such advances pursuant to subsection 8.2.2 or
8.2.3, as applicable, or (b) a Default shall occur under Article 17
(other than a Default arising out of a failure to advance funds
referred to in clause (a) above), then and in either event, the TSG
Group may at any time thereafter, but prior to such time, if ever,
as such failure shall have been cured in the manner provided for in
subsection 8.2.5(B) or such Default shall have been cured, exercise
(which, in the case of the remedies provided for in subdivisions (A)
and (D) of this subsection 8.2.5 shall mean the initiation thereof)
one or more of the rights and remedies set forth below (provided
that the rights set forth in subdivisions (A) and (D) of this
subsection 8.2.5 shall be mutually exclusive):
(A) The TSG Group may, but shall not be
obligated to, initiate the buy-sell provisions set forth in
Article 21 in accordance with the terms and provisions thereof.
(B) In the case of a failure by the Existing
Partners of the nature described in clause (a) above, and provided
that in the case of Requested Capital Funds the TSG Group shall have
advanced and not elected to receive a refund of their proportionate
share of such funds, the TSG Group may, but shall not be obligated
to, contribute to the capital of the Partnership an amount equal to
the portion of the Requested Funds which the Existing Partners
failed to contribute. In the event the TSG Group shall contribute
such funds to the capital of the Partnership, TSG shall promptly
thereafter give Notice to Bayport of the making of such
contribution, the amount thereof and the date on which it was made.
If within 15 days after the giving of such Notice the Existing
Partners do not cure such default by paying to TSG the amount of
such contribution, together with interest thereon at the rate of 14%
per annum from the date such contribution was made to the date of
such payment, and provided that the Existing Partners have not
theretofore cured such default pursuant to subsection 8.2.5(C) (to
the extent applicable), the Percentage Interest of the Existing
Partners immediately prior to the making of such contribution by the
TSG Group shall be reduced (i) in the case of a failure by the
Existing Partners to contribute all or any portion of any Requested
Operating Funds, to a percentage equal to the product of such
Percentage Interest and the following fraction:
$4,000,000 x .75
$4,000,000 + (Amount of current (but
not prior) unfunded
Requested Operating Funds),
or (ii) in the case of a failure by the Existing Partners to
contribute all or any portion of their proportionate share of
Requested Capital Funds, to a percentage equal to the product of
such Percentage Interest and the following fraction:
$4,000,000 + (aggregate Additional Capital
Contributions and Unmatched
Capital Contributions theretofore
made by the Existing Partners)
(Above numerator) + (Amount of unfunded Existing
Partners' proportionate share of
current (but not prior) Requested
Capital Funds).
The Percentage Interest of the TSG Group shall be increased by the
same amount by which the Percentage Interest of the Existing
Partners is reduced pursuant to this subsection 8.2.5(B). If the
Existing Partners cure their default within the 15-day period
provided for above, the amount paid by them to the TSG Group
(exclusive of interest) shall as of the date the original amount was
advanced by the TSG Group constitute an Additional Capital
Contribution. If the Existing Partners do not so cure their
default, any amount advanced by the TSG Group pursuant to this
subsection 8.2.5(B) and, in the case of a default by the Existing
Partners in contributing their proportionate share of any Requested
Capital Funds, the amount contributed by the TSG Group as its
proportionate share of such Requested Capital Funds, shall
constitute an Unmatched Capital Contribution.
(C) If (i) the Existing Partners shall fail
prior to the Due Date to contribute their proportionate share of any
Requested Capital Funds when obligated so to do pursuant to
subsection 8.2.3 or, if applicable, subsection 8.2.4, such failure
shall not have been cured pursuant to subsection 8.2.5(B) (to the
extent applicable) and the amount of such default, alone or when
added to the amount of any prior defaults of the Existing Partners
in contributing any amount of Requested Capital Funds to the
Partnership, in the aggregate exceeds $100,000, or (ii) a Default
(other than a Default arising out of a failure to contribute funds
referred to in clause (i) above) shall have occurred and be
continuing, TSG may, but shall not be obligated to, by giving Notice
to the Managing General Partner, change and convert the general
partnership interest of Bayport to a limited partnership interest in
the Partnership. If TSG exercises such right, upon the date fixed
in such Notice, which date shall be not earlier than the 15th day
after the giving of such Notice to the Existing Partners (it being
understood that the Existing Partners may cure a default of the
nature described in clause (i) above during such 15-day period and
remain Managing General Partner by paying to the Partnership its
proportionate share of the Requested Capital Funds in question,
together with interest thereon at the rate of 14% per annum from the
Due Date thereof to the date of such payment) without the necessity
of any further act, the partnership interest of Bayport shall be
converted to that of a Limited Partner and TSG shall thereupon
become the Managing General Partner of the Partnership. From and
after the date of such conversion, (a) TSG shall have all of the
Managing General Partner's rights and responsibilities to manage and
control the Partnership and all of the other rights and obligations
set forth herein with respect to the Managing General Partner and
(b) Bayport, as a Limited Partner of the Partnership, shall be
restricted as to its right to participate in the management of the
Partnership as are all of the other Limited Partners of the
Partnership pursuant to the terms and provisions of this Agreement;
provided, however, that wherever in this Agreement the consent of
Bayport (as opposed to the Managing General Partner) is required to
any act, or any other right is afforded to Bayport (as opposed to
the Managing General Partner), such consent requirement or other
right shall continue in effect notwithstanding the conversion of
Bayport's interest in the Partnership to that of a Limited Partner;
and provided further, however, that notwithstanding the conversion
of Bayport's interest in the Partnership from that of a General
Partner to that of a Limited Partner, Bayport shall continue to
share Available Net Income, Capital Proceeds, net income, net
losses, gain, loss, deductions and credits of the Partnership to the
same extent as it did while a General Partner of the Partnership.
The conversion of the interest in the Partnership of Bayport from
that of a General Partner to that of a Limited Partner shall not
cause the Partnership to be dissolved and the business of the
Partnership shall continue and be continued after such conversion.
Promptly after such conversion, TSG shall prepare and file or cause
to be prepared and filed an amendment to the Certificate of Limited
Partnership of the Partnership which reflects such conversion.
(D) The TSG Group may, but shall not be
obligated to, cause a sale of the Property in accordance with the
terms and provisions of Article 20.
(E) TSG may exercise any other rights or
remedies which the TSG Group may have at law or in equity; provided,
however, that except as otherwise provided in the Acquisition
Agreement, in no event shall the TSG Group be entitled to seek to
enforce any personal liability against the Existing Partners, or any
of them, by reason of such failure to advance or Default.
8.2.6 If the TSG Group fails to advance any
or all of the Requested Capital Funds when required to do so under
Section 8.2.3 in response to a Capital Deficit Notice within 21 days
after the date of giving of such Notice (the "Due Date" shall be
deemed to be the expiration of such 21-day period) and the Existing
Partners have advanced and not elected to receive a refund of their
proportionate share of such Requested Capital Funds, the exclusive
remedy of the Existing Partners shall be that provided for in this
subsection 8.2.6. The Existing Partners may, but shall not be
obligated to, contribute to the capital of the Partnership an amount
equal to the portion of the Requested Capital Funds which the TSG
Group failed to contribute. In the event the Existing Partners
shall contribute such funds to the capital of the Partnership,
Bayport shall give Notice to TSG of the making of such contribution,
the amount thereof and the date on which it was made. If within 15
days after the giving of such Notice the TSG Group does not cure
such default by paying to Bayport the amount of such contribution,
together with interest thereon at the rate of 14% per annum from the
date such contribution was made to the date of such payment, the
Percentage Interest of the TSG Group immediately prior to the making
of such contribution by the Existing Partners shall be reduced to a
percentage equal to the product of such Percentage Interest and the
following fraction:
(Mandatory Capital + (Aggregate Additional Capital
Contribution) Contributions and Unmatched
Capital Contributions thereto-
fore made by the TSG Group)
(Above numerator) + (Amount of unfunded TSG Group's
proportionate share of current
(but not prior) Requested Capital
Funds).
The Percentage Interest of the Existing Partners shall be increased
by the same amount by which the Percentage Interest of the TSG Group
is reduced pursuant to this subsection 8.2.6. If the TSG Group
shall cure its default within the 15-day period provided for above,
the amount paid by the TSG Group to Bayport (exclusive of interest)
shall as of the date the original amount was advanced by the
Existing Partners constitute an Additional Capital Contribution. If
the TSG Group does not so cure its default, any amount advanced by
the Existing Partners pursuant to this subsection 8.2.6 and the
amount contributed by the Existing Partners as their proportionate
share of the Requested Capital Funds as to which the TSG Group is in
default shall constitute an Unmatched Capital Contribution.
8.3 The TSG Group shall have the right, but shall
not be obligated, at any time after December 31, 1998, either to
(A) exercise the buy-sell provisions set forth in Article 21 in
accordance with the terms and provisions thereof or (B) cause a sale
of the Property in accordance with the terms and provisions of
Article 20 if, during calendar years 1997 and 1998, the aggregate
amount of Guaranteed Payments due and made to the TSG Group during
such two-year period, distributions made to the TSG Group in respect
of such two-year period pursuant to Article 11 and distributions
made to the TSG Group during such period pursuant to subsections
12.1.1, 12.1.3 and 12.1.7 was not sufficient to have afforded the
TSG Group during such two-year period an average annual non-
compounded return of 12% on the average amount of its Unrecovered
Capital outstanding in each year included therein. The TSG Group
shall not have the right to exercise any remedy provided for in this
Section 8.3 until and unless TSG shall have given the Existing
Partners at least 30 days' prior Notice setting forth the TSG
Group's calculation of the return received by the TSG Group in such
two-year period, together with the amount which the TSG Group must
receive in order to afford it with its 12% return. The Existing
Partners shall have the right, within the 30-day period specified
above, to pay to the TSG Group the amount required to afford it its
12% return, and if such payment is made, the TSG Group's Notice of
exercise of such remedy shall be deemed to have been withdrawn and
the basis on which such Notice was given shall be deemed no longer
to exist; provided, however, that the amount which the Existing
Partners may pay to the TSG Group pursuant to this sentence shall
not exceed the aggregate amount of distributions made in respect of
such two-year period to the Existing Partners pursuant to Article 11
plus distributions made to the Existing Partners during such two-
year period pursuant to subsections 12.1.4 and 12.1.7. Any such
payment, if made, shall not constitute a capital contribution of the
Existing Partners and shall not affect any Partner's Percentage
Interest.
8.4 If any amount of Requested Funds called for
by the Managing General Partner pursuant to this Article 8 or by TSG
pursuant to subsections 8.2.2 or 8.2.4 has not been fully expended
to pay the costs and expenses set forth in the Notice issued by the
Managing General Partner or TSG, as applicable, within 60 days after
the giving of such Notice, such unspent amount of Requested Funds
shall be returned to the Partners contributing such amounts in
proportion to the contributions made.
8.5 The provisions of Section 8.2 are intended
only to govern the obligations of the Partners inter se, and shall
not be enforceable against the Partners by any creditor of the
Partnership or of any Partner, or by any party claiming by or
through any such creditor.
8.6 Except as expressly provided in Article 7,
this Article 8 or in any other Article of this Agreement, no Partner
shall be required to make any capital contributions or loans to the
Partnership. In no event shall any Additional Capital Contributions
or Unmatched Capital Contributions made by the TSG Group reduce the
amount of the Supplemental Capital Contribution which the TSG Group
is then obligated to make.
8.7 For the purposes of Article 7 and this
Article 8, the TSG Group and the Existing Partners shall each be
deemed to be one partner with one Percentage Interest.
9. Income and Losses.
9.1 For the purposes of this Agreement:
9.1.1 The terms "net income" and "net
losses" for any calendar year, or any fraction thereof, shall mean
the net income or net losses of the Partnership, as the case may be,
for such calendar year or fraction thereof, in each case including
the amount, if any, of tax exempt income received or accrued and
taking into account depreciation and amortization of the cost or
other basis of Partnership property and expenditures of the
Partnership described in Section 705(a)(2)(B) of the Code (including
expenditures treated as described in Section 705(a)(2)(B) of the
Code under Regulations Sec. 1.704-1(b)(2)(iv)(i)), excluding,
however, gain or loss recognized by the Partnership on the sale,
exchange or other disposition of any assets of the Partnership or
upon a transaction of the nature described in Section 12.1 hereof.
The Partnership shall determine all items of net income and net
losses in accordance with principles applicable in determining
taxable income or loss for federal income tax purposes for
partnerships and consistent with accounting methods used by the
Partnership in determining taxable income or loss for federal income
tax purposes. In calculating net income or net losses for any
period, Guaranteed Payments for such period shall be treated as an
expense of the Partnership.
9.1.2 The term "Capital Account" shall mean,
on the date of this Agreement, zero in the case of each of the
Existing Partners (which amount, the parties hereto agree, is the
fair market value of the property of the Partnership, net of the
amount of the First Mortgage, as of the date hereof and which amount
has also been determined after giving effect to (A) the contribution
by the Existing Partners to the Partnership of the liabilities set
forth in the balance sheet included in the 1992 Financial Statements
(as such term is defined in the Acquisition Agreement) in respect of
shortfall loans, in the amount of $1,232,516, additional shortfall
loans, in the amount of $3,295,259, and accrued interest payable in
the amount of $2,331,831, and (B) the discharge or other
satisfaction of the liability set forth in such balance sheet in
respect of shortfall loans due to TWC Eleven, Ltd. in the amount of
$829,771), and, in the case of each member of the TSG Group, the
amount contributed to the Partnership by such member on the date
hereof. Subsequent to the date of this Agreement, the amount of the
Capital Account of each Partner shall be increased by (i) the amount
(including the fair market value of any contributed property, net of
liabilities to which such property is subject) of all capital
contributions, if any, made by such Partner pursuant to Section 7.2,
Section 8.1, Section 8.2 or otherwise, (ii) the amount of all net
income credited to the Capital Account of such Partner pursuant to
Section 9.2, (iii) the amount of all income or gain credited to the
Capital Account of such Partner pursuant to Section 9.4 and (iv) the
amount of any gain credited to the Capital Account of such Partner
pursuant to Sections 12.2 and 23.3, and shall be decreased by (a)
the amount of all net losses charged to the Capital Account of such
Partner pursuant to Section 9.3, (b) the amount of all Available Net
Income distributed to such Partner pursuant to Article 11, (c) all
amounts distributed to such Partner pursuant to Articles 12 and 23,
and (d) the amount of any loss or deduction charged to the account
of such Partner pursuant to Sections 9.4, 12.3 and 23.4. The term
"Hypothetical Capital Account" shall mean the Capital Account of a
Partner, increased by such Partner's share of Minimum Gain and
Partner Nonrecourse Debt Minimum Gain.
9.1.3 If the Percentage Interests in the
Partnership of the TSG Group and the Existing Partners are changed
pursuant to the terms of this Agreement during any calendar year,
then except as may otherwise be required under Section 706 of the
Code, the amount of all items to be credited or charged to the
Capital Accounts of, and the amount of all items to be distributed
to, the TSG Group and the Existing Partners for such entire calendar
year in accordance with their respective Percentage Interests in the
Partnership shall be allocated to the portion of such year which
precedes the date of such change (and if there shall have been a
prior change in such calendar year, which commences on the date of
such prior change) and to the portion of such calendar year which
occurs on and after the date of such change (and if there shall be a
subsequent change in such calendar year, which precedes the date of
such subsequent change), in proportion to the number of days in each
such portion, and the amounts of the items so allocated to each such
portion shall be credited or charged to the Capital Accounts of, or
distributed to, the TSG Group and the Existing Partners in
proportion to their respective Percentage Interests in the
Partnership during each such portion of the calendar year in
question.
9.1.4 For the purposes of this Article 9 and
Articles 12 and 23 it shall be deemed that there are only two
partners of the Partnership, the TSG Group and the Existing
Partners. Any amounts allocated or distributed to the Existing
Partners shall be allocated or distributed among the Existing
Partners in such manner as they may agree to among themselves in
compliance with the requirements of Code Section 704 and the
Regulations thereunder. The Partners included in the Existing
Partners have agreed on allocations and distributions among
themselves pursuant to an agreement of even date herewith. Any
amounts allocated or distributed to the TSG Group shall be allocated
or distributed between or among the members of the TSG Group in
proportion to their respective Percentage Interests set forth in
Exhibit A hereto.
9.2 From and after the date of this Agreement,
all net income of the Partnership for each calendar year or fraction
thereof shall be credited to the Capital Accounts of the Partners as
follows and in the following order of priority:
(A) first, to the TSG Group and the Existing Partners
in proportion to and up to the amount of Available Net Income
distributed to each under subsection 11.2.1 for such calendar year
or fraction;
(B) next, to the TSG Group and the Existing Partners in
proportion to and up to the amount of Available Net Income
distributed to each under subsection 11.2.2 for such calendar year
or fraction; and
(C) any remaining net income shall be credited to the
Capital Accounts of the Partners in accordance with Section 23.3
(without reference to the parenthetical clause in the first sentence
of said Section); provided, however, that in applying such Section
each of the Capital Accounts of the TSG Group and the Existing
Partners shall be deemed to have a balance equal to the balance of
its or their Hypothetical Capital Account.
9.3 From and after the date of this Agreement,
all net losses of the Partnership for each calendar year or fraction
thereof shall be charged to the Capital Accounts of the TSG Group
and the Existing Partners in accordance with Section 23.4 hereof
(without reference to the parenthetical clause in the first sentence
of said Section); provided, however, that in applying such Section
each of the Capital Accounts of the TSG Group and the Existing
Partners shall be deemed to have a balance equal to the balance of
its or their Hypothetical Capital Account.
9.4 Notwithstanding any other provision of this
Agreement, from and after the date of this Agreement, the following
allocations shall be made in the following order of priority:
9.4.1 If the Minimum Gain at the end of any
fiscal year or other period of the Partnership is less than the
Minimum Gain at the end of the immediately preceding fiscal year or
other period, then (before any other allocation of Partnership items
for such fiscal year or other period under this Agreement) there
shall be credited to the capital account of each Partner items of
income and gain for such fiscal year or other period equal to the
Partner's share of the net decrease in Minimum Gain, determined in
accordance with Regulations Section 1.704-2(g). The items of income
and gain referred to in the preceding sentence are to be determined
in accordance with Regulations Section 1.704-2(f)(6). This
subsection 9.4.1 is intended to comply with the minimum gain
chargeback requirement in Regulations Section 1.704-2(f) and shall
be interpreted in a manner that is consistent with such intent.
9.4.2 In the event that any Partner
unexpectedly receives any adjustments, allocations or distributions
described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6)
that causes a negative balance or increases the negative balance in
the Capital Account of such Partner, then items of Partnership gross
income and gain shall be allocated to such Partner in an amount
sufficient to eliminate such negative balance as quickly as
possible; provided, however, that any allocation of income or gain
shall be required under this sentence only if and to the extent that
adjustments, allocations and distributions under this Agreement
(other than this subsection 9.4.2) cause the Capital Account of such
Partner to have an Excess Negative Balance at the end of the fiscal
year or other period of the Partnership to which such adjustments,
allocations and distributions relate. This subsection 9.4.2 is
intended to comply with the requirements of Regulations
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted in a manner
that is consistent with such intent.
9.4.3 In the event any Partner has a
negative Capital Account at the end of any fiscal year or other
period of the Partnership that is in excess of the sum of (i) the
amount such Partner is obligated to restore and (ii) the amount such
Partner is deemed to be obligated to restore pursuant to the
penultimate sentence of Regulations Sections 1.704-2(g)(1) and
1.704-2(i)(5), then items of Partnership income and gain shall be
allocated to such Partner in the amount of such excess as quickly as
possible.
9.4.4 In the event that any Partner bears
the economic risk of loss (within the meaning of Regulations
Section 1.752-2) with respect to any nonrecourse loan of the
Partnership, then (a) the losses, deductions or Section 705(a)(2)(B)
expenditures that are attributable to such nonrecourse loan for any
fiscal year or other period shall be allocated to the Partners who
bear the burden of such economic risk of loss in accordance with
Regulations Section 1.704-2(i), and (b) if in any fiscal year or
other period of the Partnership there is a net decrease in Partner
Nonrecourse Debt Minimum Gain (such net decrease to be determined in
accordance with Regulations Section 1.704-2(i)(4)) attributable to
such nonrecourse loan, each Partner with a share of Partner
Nonrecourse Debt Minimum Gain attributable to such nonrecourse loan
(as determined in accordance with Regulations Section 1.704-2(i)(5))
as of the beginning of such year or other period shall be allocated
items of income and gain for such year or other period (and, if
necessary, for succeeding periods) equal to that Partner's share of
the net decrease in Partner Nonrecourse Debt Minimum Gain. This
subsection 9.4.4 is intended to comply with the requirements of
Regulations Section 1.704-2(i) and shall be interpreted in a manner
that is consistent with such intent.
9.4.5 To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Code
Section 734(b) or 743(b) is required, pursuant to Regulations
Section 1.704-1(b)(2)(iv)(m), to be taken into account in
determining Capital Accounts, the amount of such adjustment to the
Capital Accounts shall, to the extent required by and in a manner
consistent with such Regulations, be treated as an item of gain (if
the adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis), and such gain or loss shall be
allocated to the Partners in a manner consistent with the
adjustments to their Capital Accounts required by such Section of
the Regulations.
9.4.6 For purposes of this Section 9.4, the
term "Excess Negative Balance" shall mean, with respect to any
Partner, an amount, equal to the negative balance, if any, of the
Capital Account of such Partner, determined after crediting to such
Capital Account for this purpose an amount equal to any amount that
such Partner is obligated to restore or is deemed obligated to
restore under the penultimate sentences of Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5) and after charging to such
Capital Account for this purpose the items described in Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6). This subsec-
tion 9.4.6 is intended to comply with Regulations Section 1.704-
1(b)(2)(ii)(d) and shall be interpreted in a manner consistent with
such intent.
9.5 Notwithstanding any other provision of this
Agreement, gain or loss recognized by the Partnership for federal
income tax purposes with respect to any property contributed to the
Partnership shall be allocated so as to take account of the
difference between the fair market value of such property and its
adjusted basis as of the date of such contribution in accordance
with Section 704(c) of the Code.
9.6 Notwithstanding anything contained in this
Agreement to the contrary, if any income or gain is realized by the
Partnership for tax purposes by reason of (a) the contribution by
the Existing Partners to the Partnership of the liabilities set
forth in the balance sheet included in the 1992 Financial Statements
(as such term is defined in the Acquisition Agreement) in respect of
shortfall loans, in the amount of $1,232,516, additional shortfall
loans, in the amount of $3,295,259, and accrued interest payable in
the amount of $2,331,831, or (b) the discharge or other satisfaction
of the liability set forth in such balance sheet in respect of
shortfall loans due to TWC Eleven, Ltd. in the amount of $829,771,
such income or gain shall be allocated to the Existing Partners.
10. Depreciation.
The property and assets of the Partnership shall be
depreciated for federal income tax purposes in accordance with the
Code and, to the extent any elections in respect of depreciation are
permitted by the Code, as may be agreed to by the General Partners.
11. Distribution of Available Net Income;
Guaranteed Payments.
11.1 As used in this Agreement, the term
"Available Net Income" for any calendar year or fraction of a
calendar year shall mean the excess, if any, of the Gross Revenues
for such year, or fraction thereof, over the following paid or
payable in respect of such year or fraction thereof: (a) principal
of and interest on the First Mortgage or any other loan approved as
provided in Section 15.8, (b) other Operating Costs, (c) Guaranteed
Payments, (d) Capital Costs, (e) Leasing Costs and (f) the excess of
$1,000,000 over the balance in the Building Reserve Account.
11.2 From and after the date of this Agreement,
the Available Net Income of the Partnership for each calendar year
or fraction thereof shall be distributed as follows in the following
order of priority:
11.2.1 first, an amount of such Available
Net Income shall be distributed (i) 20% to the Existing Partners and
(ii) 80% to the TSG Group until the TSG Group shall have received on
account of the calendar year in question an amount which, when added
to the Guaranteed Payments made to the TSG Group on account of such
calendar year and any amounts previously distributed to the TSG
Group on account of such calendar year pursuant to this Section 11.2
and subsections 12.1.1, 12.1.3 and 12.1.7, a return of 12% on the
average amount of the Unrecovered Capital of the TSG Group
outstanding during such calendar year, such return to be
appropriately apportioned in the case of a partial calendar year;
and
11.2.2 the balance, if any, of such
Available Net Income shall be distributed to the TSG Group and the
Existing Partners in proportion to their respective Percentage
Interests in the Partnership.
11.3 All of the Available Net Income of the
Partnership for each calendar year or fraction thereof shall be
distributed, unless the Managing General Partner and, so long as
Bayport is the Managing General Partner, TSG, determine otherwise,
as promptly as possible after the close of the calendar year to
which such Available Net Income relates; provided, however, that if
the annual statements provided for in Section 13.3 for any calendar
year indicate that Available Net Income for such year was larger
than had been anticipated, an additional distribution on account of
such calendar year shall be made promptly after such annual
statements are issued.
11.4 If at any time the balance in the Building
Reserve Account is less than $1,000,000, the Partnership shall make
deposits of Available Net Income (calculated without reference to
clause (f) of Section 11.l) in the Building Reserve Account from
time to time until the balance of the Building Reserve Account is at
least equal to $1,000,000, such deposits to be made periodically
during the course of each calendar year.
11.5 The Partnership shall accrue and pay to the
TSG Group Guaranteed Payments on a monthly basis in the applicable
amount, and at the times, provided for in Section 1.34.
12. Proceeds of Mortgage Refinancing,
Partial Condemnation, Etc.
12.1 Any net excess insurance proceeds (other than
proceeds of rental or business interruption insurance), net proceeds
of mortgage refinancing, partial condemnation, sales of easements,
rights of way or similar interests in the property of the
Partnership, and any other similar items which in accordance with
generally accepted accounting principles are attributable to capital
(collectively, "Capital Proceeds", it being understood that for
purposes of this Article 12, rents payable to the Partnership under
Space Leases shall not be deemed to be Capital Proceeds), shall be
distributed as follows and in the following order of priority:
12.1.1 first, there shall be distributed to
the TSG Group up to an amount of Capital Proceeds which, when added
to all Guaranteed Payments previously paid and all distributions
previously made to the TSG Group pursuant to Article 11, this
subsection 12.1.1 and subsections 12.1.3 and 12.1.7, results in the
TSG Group having received a return of 12% per annum, compounded
annually, on the average amount of its Unrecovered Capital
outstanding during each year or any partial year between the date of
this Agreement and the date of such distribution;
12.1.2 next, there shall be distributed to
the TSG Group an amount of Capital Proceeds up to the amount of the
Unrecovered Capital of the TSG Group;
12.1.3 next, there shall be distributed to
the TSG Group up to an amount of Capital Proceeds which, when added
to all Guaranteed Payments previously paid and all distributions
previously made to the TSG Group pursuant to Article 11 and
subsections 12.1.1, 12.1.2, 12.1.3 and 12.1.7 (including, without
limitation, any distributions made to the TSG Group pursuant to
subsections 12.1.1 and 12.1.2 contemporaneously with the making of a
distribution to the TSG Group pursuant to this subsection 12.1.3),
results in the Internal Rate of Return realized by the TSG Group
equalling 14% as of the date of such distribution;
12.1.4 next, there shall be distributed
to the Existing Partners an amount of Capital Proceeds up to the
amount of such proceeds contemporaneously being distributed to the
TSG Group pursuant to subsection 12.1.3;
12.1.5 next, an amount of Capital Proceeds,
up to an amount equal to the then aggregate amount of the
Outstanding Unmatched Capital Contributions of the TSG Group and the
Existing Partners, shall be distributed to the TSG Group and the
Existing Partners in proportion to the then Outstanding Unmatched
Capital Contributions of each;
12.1.6 next, an amount of Capital Proceeds,
up to an amount equal to the aggregate amount of the Outstanding
Additional Capital Contributions of the TSG Group and the Existing
Partners, shall be distributed to the TSG Group and the Existing
Partners in proportion to the then Outstanding Additional Capital
Contributions of each; and
12.1.7 the balance, if any, of Capital
Proceeds shall be distributed to the TSG Group and the Existing
Partners in proportion to their respective Percentage Interests in
the Partnership.
12.2 From and after the date of this Agreement,
any gain realized by the Partnership in connection with any
transaction or proceeds of the nature described in Section 12.1
shall be credited to the Capital Accounts of the Partners in
accordance with Section 23.3 (without reference to the parenthetical
clause in the first sentence of said Section); provided, however,
that in applying such Section each of the Capital Accounts of the
TSG Group and the Existing Partners shall be deemed to have a
balance equal to the balance of its or their Hypothetical Capital
Account.
12.3 From and after the date of this Agreement,
any loss incurred by the Partnership in connection with any
transaction or proceeds of the nature described in Section 12.1
shall be charged to the Capital Accounts of the Partners in
accordance with Section 23.4 (without reference to the parenthetical
clause in the first sentence of said Section); provided, however,
that in applying such Section each of the Capital Accounts of the
TSG Group and the Existing Partners shall be deemed to have a
balance equal to the balance of its or their Hypothetical Capital
Account.
the proceeds of the type mentioned herein shall be distributed to
the Partners promptly after receipt thereof by the Partnership
unless the Managing General Partner and, so long as Bayport is the
Managing General Partner, TSG determine otherwise.
12.5 The provisions of this Article 12 shall not
apply upon the sale of the Property and the liquidation of the
Partnership, it being understood that in such circumstances the
provisions of Article 23 shall apply.
12.6 For the purposes of this Article 12, "net
excess insurance proceeds" shall mean the gross proceeds of any
casualty insurance recovery less (i) the costs of all repairs or
restoration of the damage resulting from such casualty, as approved
by TSG, (ii) the costs of adjusting the loss and (iii) principal and
interest required to be paid as a result of such casualty under the
First Mortgage or any other mortgage approved in accordance with
Section 15.8. In no event shall "net excess insurance proceeds"
include proceeds of rent or business interruption insurance. For
the purposes of this Article 12, "net proceeds" shall mean with
respect to all other transactions covered by Section 12.1, the
amount by which the gross proceeds from such transaction exceed the
sum of (a) the amounts, if any, used to pay unpaid principal and
interest under the First Mortgage or any other mortgage approved in
accordance with subsection 15.8, and (b) reasonable transaction
costs paid to third parties, including, without limitation,
brokerage commissions, transfer taxes, documentary stamp taxes,
insurance premiums, closing costs, origination fees and fees of
counsel to any lender and the Partnership.
13. Books and Records.
Partnership, the Managing General Partner shall keep or cause to be
kept full and complete books of account in which shall be entered
fully and accurately each transaction of the Partnership. All such
books of account, together with an executed copy of this Agreement
and the Certificate of Limited Partnership of the Partnership, any
amendments hereto or thereto and any other records required by the
Act to be maintained by the Partnership, shall at all times be
maintained at the principal office of the Partnership, or at such
other office of the Partnership as may be designated for such
purpose by the Managing General Partner, and shall be open to the
inspection and examination of the Partners and their representatives
during reasonable business hours. Such books shall be kept on the
basis of an accounting period consisting of a calendar year.
13.2 The Managing General Partner shall cause to
be prepared from the books of the Partnership as at the end of each
calendar year (a) a balance sheet, (b) statements of net profits or
losses, changes in the Partners' respective Capital Accounts,
individually and in the aggregate, and changes in the financial
position of the Partnership for the calendar year then ended and
(c) statements of Available Net Income and Capital Proceeds for such
calendar year and the respective shares thereof of the TSG Group and
the Existing Partners. Such financial statements shall be examined
annually in accordance with generally accepted auditing standards by
the independent certified public accountants then regularly retained
by the Partnership and adjusted, to the extent necessary, to make
them conform to generally accepted accounting principles and shall
include an examination of the internal controls of the Partnership.
13.3 The Managing General Partner shall send to
the Partners each year (a) within 90 days after the close of each
calendar year an annual report of the Partnership, including the
balance sheet and financial statements provided for in Section 13.2
and including the opinion of the independent certified public
accountants then regularly retained by the Partnership, and (b)
promptly after the Partnership's tax returns have been approved in
accordance with Section 13.7, an annual statement indicating the
share of each Partner of the net income, net losses, gain, loss,
depreciation and other relevant items of the Partnership for such
calendar year for federal income tax purposes, prepared or reviewed
by the independent certified public accountants then regularly
retained by the Partnership.
13.4 The Managing General Partner shall require,
in each management agreement entered into by the Partnership, that
the managing agent thereunder submit to TSG, simultaneously with
their submission to the Partnership, all statements and reports
submitted by such managing agent to the Partnership in respect of
the Property, including, without limitation, rent rolls, monthly
statements of receipts, disbursements and delinquencies, monthly or
quarterly operating statements and the like. The Managing General
Partner shall deliver or cause to be delivered to TSG (i) promptly
after the execution thereof, a true, correct and complete copy of
each Space Lease and each amendment to a Space Lease hereafter
entered into and (ii) such other data and information available to
the Managing General Partner and relating to the Property as TSG may
from time to time reasonably request.
13.5 The Managing General Partner shall establish
procedures to ensure that all deeds, leases, contracts, title
records, surveys and other documentation, records and financial
information relating to the ownership, maintenance, development and
sale of the Property are maintained in safekeeping and organized and
accessible to the Partners. Each Partner and its representatives
shall have the right, at the expense of the Partner taking such
action or on whose behalf such action is being taken and upon
reasonable Notice, to inspect, examine and copy all books, records,
files and other documents of the Partnership (including, without
limitation, those maintained for the Partnership by its managing
agent) at all reasonable times during normal business hours at the
offices of the Partnership or at such other place as any of the same
may then be regularly maintained pursuant to the management
agreement then in effect with respect to the Property.
13.6 The Partnership will retain the Partnership
Accountants as the independent certified public accountants for the
Partnership.
13.7 Federal, state and local income tax returns
of the Partnership shall be prepared or caused to be prepared by the
Managing General Partner and reviewed by the independent certified
public accountants then regularly retained by the Partnership.
Copies of all tax returns of the Partnership shall be furnished for
review and approval to TSG within 75 days after the close of each
calendar year. If TSG shall fail to approve or disapprove any such
return within 20 days after the same is furnished to TSG, then TSG
shall be deemed to have approved such return. If TSG shall
disapprove any such return in whole or in part within such 20-day
period, or if (a) such 20-day period shall not have expired, (b) TSG
shall have failed to approve or disapprove any such return and
(c) less than 5 days shall remain prior to the date on which an
application for an extension to file such return must be filed with
the appropriate taxing authority, then and in either such event the
Managing General Partner shall file or cause to be filed such an
application with such taxing authority on or prior to such date.
The income and deductions of the Partnership shall be reported for
tax purposes under the accrual method of accounting. The annual
accounting period of the Partnership for tax purposes shall be the
calendar year. Except as may otherwise be provided in this
Agreement, any allocation to a Partner of a portion of the net
income, net losses, gain or loss of the Partnership provided for in
this Agreement shall be deemed an allocation to that Partner of the
same proportionate part or the same amount of each item of income,
gain, loss, deduction or credit as is earned, realized or available
by or to the Partnership for federal income tax purposes.
13.8 Any tax credits available to the Partnership
under any provisions of the Code shall, subject to the applicable
provisions of the Code, be shared equally by the TSG Group and the
Existing Partners. Each item of Partnership income and deduction
shall be separately reported on each Partner's income tax return
pursuant to Income Tax Regulation 1.702-1(a). Tax decisions and
elections for the Partnership not expressly provided for in this
Agreement shall be agreed upon by the General Partners. Prompt
Notice shall be given to TSG or Bayport upon receipt of advice by
either of them that the Internal Revenue Service intends to examine
Partnership income tax returns for any prior year.
13.9 The Managing General Partner at the close of
each tax year of the Partnership shall be the "tax matters partner"
of the Partnership within the meaning of Section 6231(a)(7) of the
Code for such tax year. The tax matters partner shall promptly take
such action as may be necessary to cause Bayport and TSG to become
"notice partners" within the meaning of Section 6231(a)(8) of the
Code. The tax matters partner shall keep Bayport and TSG apprised
of all material matters which come to the attention of the tax
matters partner in its capacity as tax matters partner by giving
Notice thereof to Bayport and TSG within 10 days after the tax
matters partner becomes informed of any such matter or within such
shorter period as required to comply with any applicable statutory
or regulatory provision. The tax matters partner, in its capacity
as tax matters partner, shall not, without the prior approval of TSG
and Bayport in each instance, take any action under any of Sections
6222 through 6232 of the Code or any other action which, under the
terms of this Agreement, requires the approval of TSG. TSG, if it
is not then the Managing General Partner, shall have the right, upon
Notice to Bayport, to assume the duties of the tax matters partner.
13.10 Each of Bayport and TSG shall have the right to
participate in all audits, appeals and other proceedings or
procedures conducted or proposed to be conducted with respect to the
federal, state or local tax returns of the Partnership, and neither
Bayport nor TSG shall take any action in connection with any such
audit, appeal, proceeding or procedure without the prior consent of
the other of them.
14. Bank Accounts.
All funds of the Partnership shall be deposited in one or
more accounts (including a separate account for the Building Reserve
Account) in the name of the Partnership in NationsBank or such other
bank or banks as may be designated by the Managing General Partner
and approved by TSG. Withdrawals from any such bank account or
accounts shall be made only in the regular course of the Partner-
ship's business. All such withdrawals shall be made upon such
signature or signatures as the Managing General Partner may
designate. Notwithstanding the foregoing, one or more Persons
designated by the TSG Group shall at all times be authorized to make
withdrawals from such accounts for Partnership purposes; provided,
however, that the TSG Group agrees that no such Person shall
exercise his right to make any such withdrawals until and unless
either (i) TSG has become the Managing General Partner in accordance
with the terms of this Agreement or (ii) an event of default by the
Existing Partners shall have occurred, in which case any such Person
may exercise its right to make withdrawals solely for the purpose of
curing such event of default, which right may be exercised
(a) immediately in the case of a failure to make Guaranteed
Payments or to pay amounts due under the First Mortgage or (b) in
the case of any other event of default only provided that the
Existing Partners are not proceeding to remedy such event of default
in accordance with the provisions of Article 17 or, in the good
faith judgment of TSG, immediate action must be taken to prevent the
forfeiture of or material damage to the Property. No funds of the
Partnership shall be commingled with the funds of any other Person.
The Managing General Partner shall use reasonable efforts to keep
funds of the Partnership on hand from time-to-time invested in
savings accounts, certificates of deposit, governmental obligations,
repurchase obligations of commercial banks in respect of
governmental obligations or other high grade interest-bearing
obligations. The Managing General Partner shall, promptly after
receipt, send to the TSG Group copies of the monthly statements for
the Partnership's bank accounts and investments made with the funds
from time-to-time on deposit in such accounts.
15. Management and Powers.
15.1 The management and control of the
Partnership's business shall be exercised, and subject to the
restrictions set forth in the further provisions of this Article 15,
all decisions to be made by the Partnership shall in each case be
made, by the Managing General Partner. Whenever in this Agreement
it is provided that consent is required of, or a demand shall be
made by, or an act or thing shall be done by or at the direction of
the Partnership, or any words of like import are used, it is
intended that all such consents, demands, acts and things shall,
subject to the restrictions hereinafter set forth, be made, given or
done by the Managing General Partner.
15.2 Subject to the restrictions set forth in the
further provisions of this Article 15, the Managing General Partner
is hereby authorized and vested with the power on behalf of the
Partnership to execute and/or modify Space Leases, to exercise on
behalf of the Partnership the rights and remedies of the landlord
and to enforce the obligations of the Space Tenants under Space
Leases; to sell or exchange the Property, or any portion thereof,
for property, cash or on terms, or any combination thereof; to alter
or improve the Improvements; to obtain loans for the Partnership,
secured or unsecured, from any source, including one of the
Partners, and to secure the same by mortgaging, assigning for
security purposes, pledging or hypothecating all or any part of the
Partnership property or assets; to prepay in whole or in part,
refinance, recast, increase, modify or extend any mortgage,
assignment, pledge or other security instruments; to operate and
maintain the Property and to pay out of Partnership funds such
expenses as are necessary to carry out the provisions of this
Agreement; to hire managing and leasing agents to perform its
obligations with respect to the management of the Property; and to
take all other actions and to execute any and all other contracts,
documents and instruments as it may deem appropriate to carry out
the intents and purposes of this Agreement. Any Person dealing with
the Partnership may rely on any instrument or document signed by the
Managing General Partner on behalf of the Partnership and shall be
fully protected in so doing; and no Person shall be required to
inquire into the authority of the Managing General Partner to
execute any instrument or document, or to take any other action, on
behalf of the Partnership.
15.3 The General Partners shall meet on a regular
basis, not less frequently than quarterly (except as the General
Partners shall otherwise agree) to review the operations of the
Partnership, to review and, if appropriate, revise the operating and
capital improvement budgets and the Leasing Guidelines theretofore
approved by the General Partners as hereinafter provided and to
consider and pass upon other matters which, pursuant to the further
provisions of this Article 15, are to be submitted to the General
Partners for their approval. One of such meetings each year (the
"Budget Meeting") shall be held not later than 30 days before the
close of the then current calendar year for the purpose of reviewing
and approving the budgets and Leasing Guidelines for the ensuing
calendar year. Unless otherwise agreed upon, all such meetings
shall be held at the principal office of the Managing General
Partner.
15.4 Either General Partner shall have the right
from time to time to call a special meeting of the General Partners
on not less than 15 days' prior Notice to the other General Partner.
Such Notice shall set forth the purpose of such meeting and an
agenda in respect of the same. Unless otherwise agreed upon, each
special meeting shall be held at the principal office of the
Managing General Partner.
15.5 (a) The Managing General Partner agrees to
prepare or cause to be prepared and to submit to TSG annually for
approval at the Budget Meeting an operating budget and a capital
improvement budget with respect to the Property for the next-
succeeding calendar year. Such budgets shall be submitted to TSG at
least 30 days prior to the Budget Meeting. The operating budget
shall set forth the projected income and receipts from the Property
for such next-succeeding calendar year and the Operating Costs to be
incurred during such year, such Operating Costs to be set forth in
reasonable detail with each category of income and expense listed on
a separate line. The capital improvement budget shall set forth in
reasonable detail a description of all capital improvements,
repairs, replacements and alterations in respect of which the
Managing General Partner proposes to incur Capital Costs during the
next-succeeding calendar year and the estimated cost of each
thereof, with each such improvement, repair, replacement or
alteration to be listed on a separate line.
(b) Upon approval by TSG of an operating
budget for the Property, the Managing General Partner shall have the
right, without the further consent or approval of TSG, to incur and
pay the Operating Costs set forth in such approved budget, provided
that in the case of any Operating Cost which is not an
Uncontrollable Expense (as hereinafter defined) the Managing General
Partner shall not have the right to incur or pay the same if it
exceeds by more than 10% the amount set forth on the appropriate
line for the category of expense involved in the approved operating
budget or if such expenditure will cause the aggregate amount of
Operating Costs which are not Uncontrollable Expenses to exceed by
more than 5% the aggregate amount of such Operating Costs provided
for in such approved budget. As used in this subsection 15.5(b),
the term "Uncontrollable Expense" shall mean an item of expense, the
amount of which is not within the power of the Managing General
Partner to control and shall include real estate taxes, debt service
payable in respect of any mortgage or other loans obtained in
accordance with the terms of this Agreement, premiums for insurance
approved by the General Partners, fixed charges under contracts
entered into in accordance with the terms of this Agreement and
utility charges. Upon approval by TSG of a capital improvement
budget for the Property, the Managing General Partner shall
similarly have the right, without further consent or approval of
TSG, to make the capital improvements, repairs, replacements and
alterations set forth in such budget and to pay the Capital Costs
thereof, provided that the Capital Cost of any such capital
improvement, repair, replacement or alteration does not exceed by
more than 10% the amount thereof set forth for such item in the
approved capital improvement budget and provided that the Capital
Cost of all such capital improvements, repairs, replacements and
alterations does not exceed by more than 5% the aggregate amount set
forth in such capital improvement budget.
(c) If at any time the Managing General
Partner desires to make a capital improvement, repair, replacement
or alteration, the cost of which will constitute a Capital Cost, or
to incur an Operating Cost, which is not provided for in an approved
capital improvement or operating budget, the Managing General
Partner shall not proceed with such improvement, repair, replacement
or alteration, or shall not incur such cost, without TSG's prior
consent. If at any time it becomes evident to the Managing General
Partner that the Capital Cost of any capital improvement, repair,
replacement or alteration provided for in an approved capital
improvement budget will exceed by more than 10% the amount budgeted
therefor in such budget, or the aggregate amount of the Capital
Costs of all capital improvements, repairs, replacements and
alterations provided for in such budget will exceed by more than 5%
the amount budgeted therefor in such budget, the Managing General
Partner shall not proceed further with the making of such capital
improvement, repair, replacement or alteration or, where the
aggregate amount set forth in an approved capital improvement budget
will be exceeded by more than 5%, with any of such capital
improvements, repairs, replacements or alterations, without the
consent of TSG. Similarly, if at any time it becomes evident to the
Managing General Partner that any Operating Cost which is not an
Uncontrollable Expense will exceed by more than 10% the amount set
forth in respect thereof in the relevant approved operating budget,
or that all Operating Costs which are not Uncontrollable Expenses
will exceed by more than 5% the aggregate amount budgeted therefor
in such operating budget, the Managing General Partner shall not
incur the Operating Cost in question, or, where the aggregate amount
of such Operating Costs will exceed by more than 5% the aggregate
amount budgeted for in such approved operating budget, the Managing
General Partner shall not incur any of such Operating Costs, without
the consent of TSG. Notwithstanding anything to the contrary set
forth in this subsection, if in the reasonable good-faith judgment
of the Managing General Partner any capital improvement, repair,
replacement or alteration must at any time be undertaken, or any
Operating Cost incurred, immediately in order to protect the
Property or any portion thereof or to avoid accident or injury to
Persons, the Managing General Partner shall make such capital
improvement, repair, replacement or alteration or incur such
Operating Cost without regard to the approved budgets and without
first securing the approval of TSG, provided that the Managing
General Partner shall use its reasonable efforts to limit the work
performed to the minimum required to remedy the emergency condition
pending approval by TSG of more extensive work and the Managing
General Partner shall notify TSG promptly of any such expenditure
made or incurred which exceeds $10,000.
(d) If at the beginning of any calendar year
any capital improvement budget or operating budget or any item
contained in any such budget shall not have been approved by TSG,
then any items in such capital improvement budget or operating
budget which have been approved shall become operative immediately,
no other amounts provided for in such capital improvement budget
shall be expended by the Managing General Partner until and unless
approved by TSG, and the Managing General Partner shall have the
right to expend in respect of items not approved by TSG in such
operating budget up to (i) the amount provided for in respect
thereof in the operating budget for the calendar year then ended,
multiplied by (ii) the percentage, if any, by which the CPI
increased between the month of November in the calendar year then
ended and the month of November in the preceding calendar year.
(e) The TSG Group and the Existing Partners
agree that the operating budget should provide for such
expenditures, and in such amounts, as are necessary for the
maintenance and operation of the Improvements as a first-class
office building in the Tampa, Florida, metropolitan area. In the
event of a dispute between the Managing General Partner and TSG over
whether an expenditure should be included in the operating budget
for any year, the Managing General Partner and TSG, in attempting
to resolve such dispute, shall be guided by the practices then being
followed in respect of such expenditure at the office buildings set
forth on Exhibit F. In the event of a dispute between the Managing
General Partner and TSG over the amount included in respect of any
expenditure in the operating budget for any year, TSG shall have the
right to require that the Managing General Partner obtain two or
more competitive bids from qualified Persons with respect to such
expenditure, and the lowest such bid, or such other bid as shall be
acceptable to both the Managing General Partner and TSG, shall be
the amount included in the operating budget in respect of such
expenditure.
(f) The TSG Group and the Existing Partners
understand that certain expenditures provided for in a capital
improvement budget may be for repairs and replacements that must be
made for the Improvements and their systems to continue to function
(e.g., major roof repairs, replacement of air conditioning
compressors and the like). The TSG Group and the Existing Partners
recognize that if a dispute arises between them as to whether or not
to make any expenditure of such nature, the issue will likely be
whether and the extent to which such expenditure must be made during
the year to which the capital budget then being considered relates.
In order to resolve any such dispute, the Managing General Partner
shall furnish to TSG a list of at least three reputable engineers or
other appropriate experts in the Tampa, Florida, area, none of whom
shall be an Affiliate or in the regular employ of the Managing
General Partner or any Affiliate thereof, from which TSG shall
choose one. The engineer or other expert so chosen by TSG shall
then determine whether and to what extent the expenditure in dispute
should be made, which determination shall be binding on the TSG
Group and the Existing Partners with respect to the capital
improvement budget then being considered. In the event of a dispute
between the Managing General Partner and TSG over the amount
included in respect of any expenditure in a capital improvement
budget, TSG shall have the right to require that the Managing
General Partner obtain two or more competitive bids from qualified
Persons with respect to such expenditure, and the lowest such bid,
or such other bid as shall be acceptable to both the Managing
General Partner and TSG, shall be the amount included in such budget
in respect of such expenditure.
(g) The TSG Group, provided it has not
theretofore defaulted in contributing any installment of the
Supplemental Capital Contribution to the Partnership pursuant to
Section 7.2 or, if it has, such default has theretofore been cured
as provided in Article 7, shall have the right, in its discretion,
and without the consent of the Existing Partners, to add to the
approved capital improvement budgets for calendar years 1995, 1996
and thereafter up to the following amounts for the purpose of paying
the costs of capital improvements, other than repairs and
replacements of structural elements of the Improvements or the
mechanical, electrical, plumbing, HVAC, fire safety or fire
protection systems of the Improvements, which the TSG Group, in its
discretion, determines should be made: (i) up to $200,000 to the
calendar year 1995 approved capital improvement budget; (ii) up to
the excess of $300,000 over the amount added by the TSG Group to the
approved capital improvement budget for calendar year 1995 pursuant
to this subsection 15.5(g) to the calendar year 1996 approved
capital improvement budget; and (iii) to the approved capital
improvement budget for each calendar year after 1996, up to the
excess of $400,000 over the aggregate amount added by the TSG Group
to the approved capital improvement budgets for all prior calendar
years pursuant to this subsection 15.5(g). Any such additions shall
be made by Notice by TSG to the Existing Partners not later than 15
days after the capital improvement budget for the calendar year in
question has been approved by setting forth in such Notice a general
identification of the items sought to be added to any capital
improvement budget. Any amount added by the TSG Group to a capital
improvement budget pursuant to this subsection 15.5(g) shall be
funded in one of the following two ways as selected by the Existing
Partners, which selection shall be made by Notice to TSG given
within 15 days after Notice of the addition of such amount has been
given by TSG to the Existing Partners: (a) such added amount may be
funded in the same manner as any other expenditures provided for in
the approved capital improvement budget for such year - i.e., funded
out of Gross Revenues, the Building Reserve Account and capital
contributions made pursuant to subsection 8.2.3 or 8.2.4, as
applicable; provided, however, that if the funding option provided
for in this clause (a) is selected by the Existing Partners and the
Existing Partners then fail to advance their proportionate share of
any capital call made pursuant to subsection 8.2.3 or 8.2.4 to fund
in whole or in part the additional amount so added to the approved
capital improvement budget in question, the sole remedy of the TSG
Group for such failure shall be that provided for in subsection
8.2.5(B) and such remedy shall be exercisable by the TSG Group only
if the TSG Group has advanced to the Partnership as an Unmatched
Capital Contribution the full amount of such capital call; or (b)
such additional amount may be funded in its entirety by the TSG
Group, which funding shall constitute a non-recourse loan by the TSG
Group to the Partnership, such loan to bear interest at the rate of
12% per annum, to be payable as to interest annually in arrears
(such interest payment to be deemed to be an Operating Expense for
all purposes of this Agreement) and to be payable as to principal
(and any unpaid interest) upon the dissolution and liquidation of
the Partnership before any distributions are made to the Partners.
If the Existing Partners fail to make the selection provided for in
the preceding sentence within the time period set forth therein,
they shall be deemed to have selected the option set forth in clause
(b) above.
(h) TSG shall have the right to require that
the Managing General Partner obtain two or more competitive bids
from qualified Persons, none of whom shall be an Affiliate or in the
regular employ of the Managing General Partner or any Affiliate
thereof, with respect to any expenditure provided for in the
approved operating budget or the approved capital improvement budget
for any calendar year, but only if TSG gives the Managing General
Partner Notice of such requirement in respect of any such
expenditure before the Managing General Partner has committed to
retain or engage any Person to perform the service or furnish the
materials covered by such expenditure. Where bids are obtained in
accordance with the immediately preceding sentence, the Managing
General Partner shall retain or engage the lowest bidder, or such
other bidder as shall be acceptable to both the Managing General
Partner and TSG.
(i) The operating budget and capital
improvement budget for the portion of 1993 remaining after the date
hereof have heretofore been submitted to and approved by TSG.
15.6 (a) At least 30 days before each Budget
Meeting, the Managing General Partner shall submit to TSG for its
approval a schedule setting forth an acceptable range of net
effective rent per square foot (the "Net Effective Rent") for each
space held for rental in the Improvements which is then vacant or
the Space Lease of which will expire during the ensuing calendar
year (the "Vacant Space"). Net Effective Rent shall be the total
annual base rent per square foot to be charged for any Vacant Space
over the proposed lease term less the sum of (i) the cost or amount
per square foot of any concessions (other than free or reduced rent)
to be granted in connection with the leasing of such Vacant Space,
(ii) the amount of any leasing commissions per square foot to be
incurred in connection with the leasing of such Vacant Space, (iii)
the costs per square foot to be incurred by the Partnership for
tenant alterations and/or allowances in lieu thereof in respect of
such Vacant Space and (iv) estimated annual base operating costs and
real estate taxes per square foot for such Vacant Space which will
be payable by the Partnership over the proposed lease term, which
difference shall be divided by the number of years (including any
fraction of a year expressed as a fraction) in the proposed lease
term for such Vacant Space. The Managing General Partner shall also
submit to TSG with such schedule for TSG's approval:
(A) a range of concessions and/or free rent
per square foot to be offered to prospective
tenants of each Vacant Space;
(B) a range of costs for tenant alterations
and/or allowances in lieu thereof per square foot
for each Vacant Space based on varying assumptions
as to the size of the Vacant Space being rented,
the length of the term of the Space Lease and the
amount of the annual rent which is to be received
for such space; and
(C) a range of lease terms for each Vacant
Space.
For the purposes of this Agreement, the schedule of Net Effective
Rent and the information described in clauses (A), (B) and (C)
above, as approved by TSG from time to time, shall be referred to
herein as the "Leasing Guidelines." If the Managing General Partner
and TSG shall be unable to agree upon any of the items in proposed
Leasing Guidelines submitted by the Managing General Partner by the
commencement of the calendar year to which such Leasing Guidelines
relate, the Managing General Partner shall promptly submit to TSG a
list of four or more reputable leasing brokers which are active in
the Tampa, Florida, area, none of whom shall be an Affiliate or in
the regular employ of the Managing General Partner or any Affiliate
thereof, from which TSG shall select three. The item or items in
dispute shall then be submitted separately to each of such three
brokers for its opinion as to what such item or items should be,
based on then-current market conditions. The average of the
responses received from such three brokers in respect of any such
items shall be incorporated into the Leasing Guidelines for such
calendar year.
(b) Upon approval of the Leasing Guidelines,
the Managing General Partner shall lease space in the Property in
accordance with the provisions of this Article 15. The Managing
General Partner shall cooperate and consult with Alan C. Vaughan,
Paul E. Taylor III or any other person hereafter designated by TSG
in a Notice to the Managing General Partner as a leasing
representative of the TSG Group (collectively, the "TSG Leasing
Representative") on efforts to rent the Vacant Space in the ensuing
calendar year. The Managing General Partner shall have the right to
submit leasing proposals to prospective tenants for any of the
Vacant Space, provided that each such proposal does not deviate from
any of the standards set forth in the approved Leasing Guidelines,
except as follows:
(i) Net Effective Rent shall not be less than 90%
of the Net Effective Rent for such space in such Leasing
Guidelines,
(ii) the lease term shall not be less than 90% of
the shortest lease term for such space in such Leasing
Guidelines and shall not be longer than the longest lease
term proposed for such space in such Leasing Guidelines,
(iii) the concessions and/or free rent shall not be
greater than 110% of the amounts thereof for such space
in such Leasing Guidelines and
(iv) the costs of tenant alterations and/or
allowances in lieu thereof shall not be greater than 110%
of the amounts thereof for such space in such Leasing
Guildines;
and provided that each such proposal is first submitted to TSG's
Leasing Representative, it being understood that the prior consent
of TSG's Leasing Representative shall not be required for the
submission by the Managing General Partner to a prospective tenant
of any lease proposal which meets the requirements set forth above
in this sentence and in a notice sent in accordance with the last
sentence of this subsection 15.6(b). The TSG Leasing Representative
shall have the right to require the Managing General Partner or its
agent to submit and pursue a leasing proposal to a prospective
tenant provided such proposal meets the requirements of the
preceding sentence. The Managing General Partner will keep the TSG
Leasing Representative informed of leasing inquiries or proposals by
prospective tenants or their brokers or agents and of lease renewal
or extension or space expansion inquiries or proposals made by
current Space Tenants or their brokers or agents; and the Managing
General Partner shall not refuse to pursue and shall not reject any
such inquiry or proposal received by it without first consulting
with the TSG Leasing Representative. If a lease proposal submitted
to a prospective tenant in accordance with this subsection 15.6(b)
is accepted by the prospective tenant, and provided that any
modification of such proposal agreed to by the Managing General
Partner (in consultation with the TSG Leasing Representative) does
not cause such proposal to cease to meet the requirements of the
second sentence of this subsection, the Managing General Partner
shall cause a lease to be prepared embodying the terms of such
proposal and shall submit the same to the prospective tenant and the
TSG Leasing Representative. The Managing General Partner shall then
use its reasonable efforts to cause the prospective tenant to agree
to the terms of such lease. After a lease is negotiated with a
prospective tenant (it being understood that the TSG Leasing
Representative shall have the right to participate in such
negotiations), the Managing General Partner shall submit to the TSG
Leasing Representative for review and approval such negotiated lease
and a summary of any material variations of such negotiated lease
from the Partnership's standard form of lease and shall not enter
into such lease until and unless such variations have been approved
by the TSG Leasing Representative. In no event shall a lease be
entered into with a prospective tenant until and unless the
creditworthiness of such prospective tenant has been approved by the
TSG Leasing Representative and the Managing General Partner. The
Partnership shall not provide services called for by Space Leases
nor shall the Managing General Partner enter into any lease or
transaction or conduct any activity upon notification by the TSG
Leasing Representative that such services, lease, transaction or
activity would cause or would be likely to cause any constituent
entity of the TSG Group exempt from income taxation pursuant to Code
Section 501 to have any "unrelated business taxable income" (as that
term is defined in Code Section 512).
(c) TSG shall have the right from time to
time to meet with the Property manager, the leasing agent for the
Property and the Partnership Accountants and the right to visit and
inspect the Property, in each case after giving prior Notice thereof
to Bayport (which in this instance only may be by telephone or
facsimile transmission). The Existing Partners shall not have the
right to have any Person acting on their behalf present at any such
meeting or visit.
(d) The TSG Group and the Existing Partners
hereby agree that the management and leasing agent for the Property
shall be Wilson Management Company until and unless such agent is
changed pursuant to Section 15.8.
15.7 At or prior to each regularly scheduled
meeting of the General Partners, but in no event less frequently
than once in each calendar quarter, the Managing General Partner
shall submit to TSG reports which set forth for the elapsed portion
of the then current calendar year, to the extent of information then
obtainable for the Property, (i) the rental and other income
received by the Partnership, (ii) the status of the Partnership's
efforts in renting Vacant Space or extending expiring Space Leases,
setting forth the rents per square foot being obtained, the amount
of any concessions or free rent being granted, the amount of any
leasing commissions being paid or incurred and the tenant
alterations or allowance expense per square foot being incurred,
(iii) a schedule of any vacancies which occurred during the calendar
year in question and which were not set forth on the Leasing
Guidelines, setting forth for such vacant space the information in
respect thereof which would have been included in the Leasing
Guidelines submitted to TSG in connection with the Budget Meeting if
the Managing General Partner had known at that time that the space
in question would become vacant, (iv) updated capital improvement
and operating budgets, setting forth in comparative form the amounts
provided for in the approved budgets, the amounts actually incurred
to date and the estimated amounts to be incurred during the
remainder of the calendar year in question, (v) a description of any
advertising and promotion programs undertaken or to be undertaken
during such calendar year, and (vi) a description of all pending
litigations instituted by or against the Partnership and the status
of each. In addition, at the end of the second quarter in each
calendar year, the Managing General Partner shall submit to TSG
updated Leasing Guidelines which shall incorporate changes in the
Leasing Guidelines previously approved for such year by TSG which
may be necessary to reflect then-current market conditions and which
shall be subject to the approval of TSG.
15.8 Notwithstanding anything to the contrary set
forth in this Article 15 or elsewhere in this Agreement, it is
agreed that the Managing General Partner shall not have the right or
power on behalf of the Partnership, without the prior consent of
TSG, to take any of the following actions:
15.8.1 except as may otherwise be provided
in Articles 8, 20 and 21, sell, exchange, transfer, convey, assign
or otherwise dispose of or encumber the Property or any portion
thereof or any interest therein (other than the sale of items of
Personal Property which are being replaced by items of like value
and utility);
15.8.2 acquire or lease any property, except
as contemplated by an approved budget and the applicable provisions
of this Agreement;
15.8.3 make any expenditure or incur any
obligation except in accordance with an approved budget and the
applicable provisions of this Agreement;
15.8.4 prepay in whole or in part,
refinance, recast, increase, modify or extend any mortgage,
assignment, pledge or other security instrument;
15.8.5 extend credit or make any loans in an
aggregate amount in excess of $10,000 at the time outstanding or
make any investments except as provided in Article 14;
15.8.6 enter into, modify, amend, terminate
or renew any property management and/or leasing agreement for the
Property or any maintenance agreement with respect to common areas
on the Property and adjoining property or any occupancy agreement
with respect to the Parking Area (as defined in the Declaration of
Restrictions and Easements for Bayport Plaza dated August 27, 1985
between the Partnership and TWC Eleven, Ltd., as amended (the
"Declaration")); provided, however, that TSG hereby approves the
existing property management and leasing agreement dated May 28,
1985 with Wilson Management Company, as amended by a first amendment
dated December 17, 1991 and by a second amendment dated as of the
date hereof;
15.8.7 dismiss Wilson Management Company as
property manager and leasing agent for the Property or engage any
other property manager and/or leasing agent or agents for the
Property;
15.8.8 initiate or undertake any course of
defense in connection with any litigation, arbitrations or dispute
resolution proceedings brought against the Partnership, or settle
any claim involving the Partnership or the Property, except for the
settlement or defense of claims against the Partnership where the
claims and the cost of defense thereof are covered by insurance;
15.8.9 settle any casualty insurance claim
involving an amount in excess of $50,000;
15.8.10 dismiss KPMG Peat Marwick or their
successors as the certified public accountants for the Partnership
or engage any other certified public accountants for the
Partnership;
15.8.11 agree to the settlement of any
proceeding brought for the taking of all or any portion of the
Property in condemnation or by eminent domain, or to the sale of all
or any portion of the Property in lieu of such a taking;
15.8.12 implement any insurance program with
respect to the Property or modify any such insurance program;
15.8.13 make any tax election not provided
for elsewhere in this Agreement;
15.8.14 assume any obligations of a Space
Tenant under a lease of space in a building not owned by the
Partnership;
15.8.1Lease for use in the Improvements or make any material modifications
in any standard form of Space Lease previously approved by TSG;
15.8.16 dissolve, liquidate or reorganize
the Partnership, except as provided in this Agreement;
15.8.17 compromise or otherwise settle
accounts receivable in excess of $10,000 in the aggregate in any
fiscal year of the Partnership;
15.8.18 become a surety, guarantor, endorser
or accommodation endorser for any Person as to an aggregate amount
in excess of $10,000 at any time outstanding;
15.8.19 borrow any money on behalf of the
Partnership;
15.8.20 dismiss Annis, Mitchell, Cockey,
Edwards & Roehn as legal counsel for the Partnership or engage any
other legal counsel for the Partnership;
15.8.21 consent to any assessment or
statement of audit changes proposed by the Internal Revenue Service
or any state or local authorities which would result in the altering
of any amount entered on a tax return of the Partnership by more
than $5,000 or would result in altering the character of any item
entered on a tax return of the Partnership;
15.8.22 amend, terminate or give any
approval, consent or waiver under (i) the Covenants, Restrictions
and Land Management Agreement dated July 23, 1984 among the
Partnership, TWC Eleven, Ltd. and Tampa Port Authority, (ii) the
Declaration or (iii) the Consent Agreement regarding Bayport Plaza
Encroachments dated the date of this Agreement between the
Partnership and TWC Eleven, Ltd.; or
15.8.23 commit an Act of Insolvency of the
nature described in Section 19.3(i), (ii), (iv), (v) or (vi).
15.9 Subject to the availability of requisite
funds to the Partnership, the Managing General Partner shall cause
the Partnership to comply with the First Mortgage, the Space Leases
and all other material agreements and shall not suffer or permit a
default on the part of the Partnership to occur thereunder.
15.10 The Managing General Partner agrees, at the
request of any Partner, to cause the Partnership, if it has not
already done so, to make an election under Section 754 of the Code,
or under the comparable provisions of any subsequent law, to adjust
the basis of the Partnership's property under Sections 734 and 743
of the Code as of the date of this Agreement. It is understood that
the books and records of the Partnership shall be kept, and all
allocations of net income, net losses, gain and loss hereunder shall
be made, without taking into account the effects of such election,
which effects shall be reflected only in the tax returns of the
Partnership.
15.11 In the event that the Managing General
Partner shall request the consent or approval (an "Approval
Request") of TSG or the TSG Leasing Representative pursuant to any
of the terms and provisions of this Agreement, unless a different
time period for a response is specified elsewhere in this Agreement,
TSG or the TSG Leasing Representative shall have 10 days from the
time Notice of the Approval Request is received by TSG or the TSG
Leasing Representative to approve or deny the Approval Request. If
TSG or the TSG Leasing Representative fails to give Notice of its
approval or denial of any Approval Request within such 10-day
period, TSG or the TSG Leasing Representative shall be conclusively
deemed to have approved the matter or matters to which such Approval
Request relates. Any Approval Request to which this Section 15.11
applies shall contain a heading in capital letters to the effect
that if a response is not given by TSG or the TSG Leasing
Representative within 10 days after its receipt of such Approval
Request, the matter or matters to which such Approval Request
relates shall be deemed approved. The provisions of this Section
15.11 shall not apply to approvals of TSG of the operating budget,
the capital improvement budget or the Leasing Guidelines but shall
apply in respect of such budgets and Leasing Guidelines to requests
by the Managing General Partner for approval (i) to make
expenditures not provided for in an approved budget, (ii) to make
expenditures provided for in an approved budget which exceed the
budgeted amount by more than the latitude granted to the Managing
General Partner in Article 15 or (iii) to enter into a Space Lease
which deviates from any of the Leasing Guidelines by more than the
latitude granted to the Managing General Partner in Article 15 or in
which material changes have been made in the approved standard form
of Space Lease. The provisions of this Section 15.11 shall also not
apply to the approval by TSG of Partnership tax returns.
15.12 If Dean Witter Realty Growth Properties, L.P.
shall cease to be the general partner of Bayport and Bayport is at
the time the Managing General Partner, TSG may, but shall not be
obligated to, by giving Notice to the Managing General Partner,
change and convert the general partnership interest of Bayport to a
limited partnership interest in the Partnership. If TSG exercises
such right, upon the date fixed in such Notice, without the
necessity of any further act, the partnership interest of Bayport
shall be converted to that of a limited partner and TSG shall
thereupon become the Managing General Partner of the Partnership.
From and after the date of such conversion, (a) TSG shall have all
of the Managing General Partner's rights and responsibilities to
manage and control the Partnership and all of the other rights and
obligations set forth herein with respect to the Managing General
Partner and (b) Bayport, as a Limited Partner of the Partnership,
shall be restricted as to its right to participate in the management
of the Partnership as are all of the other Limited Partners of the
Partnership pursuant to the terms and provisions of this Agreement;
provided, however, that wherever in this Agreement the consent of
Bayport (as opposed to the Managing General Partner) is required to
any act, or any other right is afforded to Bayport (as opposed to
the Managing General Partner), such consent requirement or other
right shall continue in effect notwithstanding the conversion of
Bayport's interest in the Partnership to that of a Limited Partner;
and provided further, however, that notwithstanding the conversion
of Bayport's interest in the Partnership from that of a General
Partner to that of a Limited Partner, Bayport shall continue to
share Available Net Income, Capital Proceeds, net income, net
losses, gain, loss, deductions and tax credits of the Partnership to
the same extent as it did while a General Partner of the
Partnership. The conversion of the interest in the Partnership of
Bayport from that of a General Partner to that of a Limited Partner
shall not cause the Partnership to be dissolved and the business of
the Partnership shall continue and be continued after such conver-
sion. Promptly after such conversion, TSG shall prepare and file or
cause to be prepared and filed an amendment to the Certificate of
Limited Partnership of the Partnership.
15.13 Contemporaneously with the giving or receipt
by the Managing General Partner of any notice or communication under
(i) the Covenants, Restrictions and Land Management Agreement dated
July 23, 1984 among the Partnership, TWC Eleven, Ltd. and Tampa Port
Authority (ii) the Declaration, or (iii) the Consent Agreement
regarding Bayport Plaza Encroachments dated the date of this
Agreement between the Partnership and TWC Eleven, Ltd., the Managing
General Partner shall give a copy thereof to TSG.
16. Rights and Duties of Partners.
16.1 The Managing General Partner shall be res-
ponsible for the affairs of the Partnership and the supervision of
its business activities. The Managing General Partner agrees to
devote to the Partnership such of its time and to render such
services as may be required for the efficient conduct of the
business of the Partnership and to carry out the purposes of this
Agreement. Without limiting the generality of the foregoing, the
Managing General Partner shall have the authority and obligation to
obtain casualty, comprehensive general liability, rent or business
interruption insurance and any other form of insurance to protect
the Partnership's interest in the Property, subject to the
provisions of subsection 15.8.12. No compensation shall be paid to
the Managing General Partner for such services (other than
distributions to which the Managing General Partner may otherwise be
entitled to under the terms of this Agreement by virtue of its
partnership interest in the Partnership), but the Managing General
Partner shall be entitled to charge the Partnership, or to be
reimbursed by the Partnership, for all out-of-pocket expenses
reasonably incurred by it in connection with the Partnership's
business and which are provided for in the applicable approved
operating budget, but shall not include overhead expenses of the
Managing General Partner.
16.2 Subject to the applicable provisions of Article
15 and Section 16.4, the Managing General Partner may engage, on
behalf of the Partnership, such Persons as it, in its judgment,
shall deem advisable in the operation and management of the business
of the Partnership, including, without limitation, architects,
engineers, attorneys, accountants, leasing agents, managing agents,
appraisers and experts, on such terms and for such compensation as
the Managing General Partner, in its discretion, shall determine,
but subject to compliance with the approved operating budget or
capital improvement budget, as applicable, and the provisions of
Article 15 relating thereto. Unless TSG agrees, the Partnership
shall have no employees.
16.3 It is expressly understood that any Partner and
the partners of any Partner which is a partnership may engage in any
other business, investment or profession, including the
construction, development or ownership of or the investment in real
estate and the operation and management of real estate, whether
located in the State of Florida or elsewhere and whether or not in
direct competition with the Property, and neither the Partnership
nor any of the other Partners shall have any rights in and to said
businesses, investments or professions, or the income or profits
derived therefrom.
16.4 Provided that TSG first consents thereto, the
fact that an Affiliate of the Managing General Partner is directly
or indirectly interested in or connected with any Person employed by
the Partnership to render or perform a service or from which or to
whom the Partnership may buy or sell merchandise or other property
shall not prohibit the Managing General Partner from employing such
Person or from dealing with it on competitive terms and at
competitive rates of compensation, and neither the Partnership nor
any Partner thereof shall have any right in or to any income or
profits derived therefrom.
16.5 No General Partner shall be liable, responsible
or accountable in damages or otherwise to the Partnership or any
Partners for any acts performed within the scope of the authority
conferred on it by this Agreement or for its failure or refusal to
perform any acts except those expressly required by or pursuant to
the terms of this Agreement or for any loss in connection with the
affairs of the Partnership unless such General Partner acts in bad
faith or is guilty of willful misconduct, gross negligence or fraud.
16.6 The Partnership shall indemnify each General
Partner and its agents, employees, partners, officers, directors and
shareholders, from and against all claims, losses, damages,
assessments, charges and liabilities (including reasonable attorneys
fees and expenses) which may be asserted against, imposed on or
incurred by such General Partner, its agents, employees, partners,
officers, directors or shareholders, by reason of its being a
General Partner of the Partnership or as a result of the performance
of its duties or rights hereunder; provided, however, that the
foregoing indemnity shall not apply to any claim, loss, damage,
assessment, charge or liability resulting from bad faith, willful
misconduct, gross negligence or fraud of such General Partner.
Recourse by such General Partner under the indemnification provided
for in this Section 16.6 shall be limited to the assets of the
Partnership.
16.7 In the event the Partnership is obligated to
indemnify Liberty Street/Bayport, Ltd., a Florida limited
partnership (the "Investor Manager"), pursuant to Section 8(b) of
that certain Investor Office Management Agreement dated May 28, 1985
by and between the Partnership and the Investor Manager (the
"Investor Agreement"), Bayport shall indemnify the Partnership from
and against all costs of such indemnification by the Partnership of
the Investor Manager.
16.8 Except as otherwise expressly provided in this
Agreement, no Partner shall have the right to withdraw from the
Partnership or demand the return of all or any part of its
contribution to the capital of the Partnership until the Partnership
shall have been dissolved and terminated, and then only to the
extent provided in this Agreement, nor shall any Partner have the
right to demand or receive property other than cash in return of its
contribution.
16.9 The Managing General Partner shall use
reasonable efforts to include in any contract, document or
instrument executed by the Managing General Partner on behalf of the
Partnership a clause limiting the liability of the General Partners
under such contract, document or instrument to the assets of the
Partnership.
16.10 The Limited Partners shall not take part in
the management of the Partnership's business or transact any
business for the Partnership, and shall have no power to sign for or
bind the Partnership.
16.11 Except as otherwise provided in this Agreement,
so long as there shall be more than one General Partner, the General
Partner which is not the Managing General Partner shall have no
right or power to sign for or bind the Partnership, or otherwise to
act on behalf of the Partnership.
17. Default by Existing Partners.
17.1 The occurrence of any of the following events
shall constitute an "event of default" on the part of the Existing
Partners:
17.1.1 (a) Any defect in the Partnership's
title to the Property exists on the date of this Agreement and is
not disclosed on the owner's title insurance policy issued to the
Partnership by Chicago Title Insurance Company (the "Title Company")
in connection with the entering into of this Agreement by the TSG
Group, and (b) the Title Company disclaims liability for such defect
by reason of knowledge of such defect by any of the Existing
Partners.
17.1.2 A default shall occur under the
First Mortgage which is not solely attributable to (i) a failure by
the TSG Group to fund in a timely fashion any installment of its
Supplemental Capital Contribution when due in accordance with this
Agreement, (ii) the failure of the TSG Group or any member thereof
to comply with any covenant specifically applicable to it in any of
the documents which evidence and secure the First Mortgage loan or
in this Agreement, (iii) the failure or refusal by TSG to approve
any expenditure or other action, the making or taking of which
requires the approval of TSG under this Agreement and the failure to
make or take which constitutes an event of default under the First
Mortgage or (iv) a sale of the Property brought about by the TSG
Group, or if the provisions of any First Mortgage which refinances
the First Mortgage existing at the date hereof make such acquisition
a default thereunder, the acquisition by the TSG Group of the
interests of the Existing Partners in the Partnership pursuant to
Article 21 where the TSG Group is the Electing Partner.
17.1.3 The discovery prior to the second
anniversary of the date of this Agreement of an event, circumstance
or condition (including, without limitation, any condition on, in or
under the Property or the area surrounding the Property), which
occurred or existed prior to the date of this Agreement and is not
disclosed in the Environmental Reports (as such term is defined in
the Acquisition Agreement) and now or hereafter constitutes or
creates a violation or liability with respect to the Property and/or
the Partnership under Environmental Laws (any such event,
circumstance or condition, if any, is hereafter referred to as the
"Pre-Existing Environmental Problem") and Bayport shall (a) fail, at
its expense, promptly to cure or remediate any Pre-Existing
Environmental Problem and/or to prosecute such cure or remediation
with due diligence through to completion and/or shall fail to engage
an environmental consultant reasonably satisfactory to the TSG Group
to advise Bayport and assist in the formulation and implementation
of an appropriate remediation plan or (b) in the event a lien is
filed against the Property as a result of any Pre-Existing
Environmental Problem, Bayport shall fail, at its expense, to have
such lien bonded, satisfied or discharged with due diligence or
(c) in the event a third party claim is brought against the
Partnership as a result of any Pre-Existing Environmental Problem,
Bayport shall fail at its expense diligently to defend or settle
such claim and/or to pay any amount due in respect of such claim in
accordance with any settlement thereof agreed to by Bayport or any
final judgment determined in respect thereof.
17.1.4 The Existing Partners, or any of
them, shall default in complying with or performing any of their
agreements, obligations and undertakings contained in this
Agreement.
17.1.5 Bayport defaults in complying with
or performing any of its obligations under Section 5.3 of the
Acquisition Agreement.
17.2 An event of default under Section 17.1 shall
not constitute a default under this Agreement (a "Default") until
and unless:
17.2.1 in the case of an event of default
of the nature described in subsection 17.1.1, 17.1.4 or 17.1.5, TSG
shall have given Notice to Bayport specifying such event of default
and such event of default shall not be cured within 30 days after
receipt of such Notice by Bayport (with rejection of delivery to
constitute receipt), or if such event of default cannot be cured
solely by the payment of money and is capable of being cured but not
within a period of 30 days, Bayport shall not commence to cure such
event of default within such 30-day period or shall not pursue the
curing of such event of default with diligence and continuity;
provided, however, that, in the case of an event of default of the
nature described in subsection 17.1.1, the Existing Partners shall
have the right in good faith to dispute with the Title Company
whether its disclaimer of liability was proper;
17.2.2 in the case of an event of default
of the nature described in subsection 17.1.2, such default is not
cured within the applicable grace period, if any, provided for in
the First Mortgage; or
17.2.3 in the case of an event of default
of the nature described in subsection 17.1.3, the Existing Partners
shall not undertake with diligence and continuity the curing and
discharge of the violation or liability in question, it being
understood that the Existing Partners shall be afforded reasonable
amounts of time for investigation, preparation of reports by
consultants, formulation and negotiation of plans for remediation or
other curative action, investigation as to whether liability rests
with an adjoining landowner, a prior owner of the Property or any
other Person and, if the Existing Partners in good faith determine
that the violation or liability should be contested, for contesting
the same.
17.3 Notwithstanding anything to the contrary set
forth in this Article 17, Bayport shall have the right, by giving
Notice to TSG within the 30-day period provided for in subsection
17.2.1, to dispute with the TSG Group in good faith the existence of
any event of default other than an event of default of the nature
described in subsection 17.1.2, 17.1.3 or 17.1.5. Promptly after
the giving of a Notice of dispute, Bayport shall meet with TSG to
attempt to resolve the dispute or, if that is not feasible, to agree
upon an expeditious method of resolving the dispute (which may
include a declaratory judgment action, arbitration or alternative
dispute resolution). If Bayport and TSG are not able to resolve the
dispute, or to agree on a method for resolving the dispute, within a
period (the "Dispute Period") ending on the earlier of the 21st day
after the giving of the above mentioned Notice by Bayport to TSG and
the last day of the 30-day period provided for in subsection 17.2.1,
then the period of time within which such event of default (if in
fact it exists) must be cured, as set forth in subsection 17.2.1,
shall commence to run at the end of such Dispute Period.
17.4 Following the occurrence of a Default, and
prior to the curing thereof, TSG shall be entitled to exercise the
rights and remedies specified in Article 8.
17.5 It is understood that in order to induce the
First Mortgagee to reinstate the First Mortgage and modify the terms
thereof, Dean Witter Realty Growth Properties, L.P., the general
partner of Bayport, is entering into an Environmental Indemnity
Agreement for the benefit of the First Mortgagee. Under the terms
of such Environmental Indemnity Agreement, Dean Witter Realty Growth
Properties, L.P. has agreed to indemnify the First Mortgagee from
and in respect of liabilities arising under Environmental Laws at
the Property. The Partners hereby agree with respect to such
Environmental Indemnity Agreement as follows:
17.5.1 such indemnity obligation of Dean
Witter Realty Growth Properties, L.P. under the Environmental
Indemnity Agreement is and shall be for the sole benefit of the
First Mortgagee and shall not in any way be deemed to be for the
benefit of the Partnership or any Partner;
17.5.2 the failure of Dean Witter Realty
Growth Properties, L.P. to perform any of its obligations under such
Environmental Indemnity Agreement, notwithstanding the fact that
such failure may constitute a default under Paragraph 2.01 of the
First Mortgage, shall not constitute an event of default or a
Default by Bayport under this Agreement (including, without
limitation, subsection 17.1.2) or the Acquisition Agreement and
shall not give rise to any liability on the part of Bayport or Dean
Witter Realty Growth Properties, L.P. to the Partnership or any
Partner;
17.5.3 the Partnership's obligations, if
any, to comply with Environmental Laws, to cure or remediate
violations of Environmental Laws and to pay third party claims based
on Environmental Laws or any violations thereof shall be unaffected
by the existence of such Environmental Indemnity Agreement and for
the purposes of determining how and in what manner the Partnership
shall fulfill any such obligations it shall be deemed that such
Environmental Indemnity Agreement does not exist; and
17.5.4 if Dean Witter Realty Growth
Properties, L.P. makes any payment or incurs any costs or expenses
under such Environmental Indemnity Agreement, Dean Witter Realty
Growth Properties, L.P. shall be entitled to be reimbursed therefor
by the Partnership to the extent that (i) the amounts so paid or
incurred by Dean Witter Realty Growth Properties, L.P. constitute
obligations or expenses of the Partnership that would have been paid
or incurred by the Partnership in the absence of such Environmental
Indemnity Agreement and (ii) payment of such costs or expenses is
not the obligation of Bayport under subsection 17.1.3 or
Section 5.3(a)(iv) of the Acquisition Agreement. Dean Witter Realty
Growth Properties, L.P. shall not seek recourse against the personal
assets of any Partner for reimbursement of payments made or costs or
expenses incurred under such Environmental Indemnity Agreement.
Nothing contained in this Section 17.5 shall impair, abrogate or
otherwise affect the obligations of Bayport under subsection 17.1.3
or under Section 5.3(a)(iv) of the Acquisition Agreement.
18. Transfer of Partnership Interests.
18.1 No Partner shall sell, transfer, assign, pledge
or otherwise dispose of, or mortgage, hypothecate or otherwise
encumber, or permit or suffer any encumbrance of, all or part of its
interest in the Partnership, (all of the foregoing transactions
being referred to as a "Transfer") except in accordance with this
Article 18, subsection 8.2.5, subsection 8.2.6 and Article 21, and
any Transfer not so excepted shall be void.
18.2 The admission to a General Partner of any
additional or substitute general partner or the transfer of any
general partnership interest in a General Partner, or the transfer
of voting control of any corporate General Partner or any corporate
general partner of a General Partner, shall be deemed a Transfer,
provided that (i) so long as The Trustees of Princeton University or
an Affiliate thereof shall remain a limited partner of TSG or
Westrock Realty Associates L.P. Ltd., ("Westrock") TSG shall have
the right from time to time to admit as an additional general
partner or as a substitute general partner in TSG any Person
approved from time to time by The Trustees of Princeton University
or such Affiliate, and such admission (and any related withdrawal of
a general partner) shall not constitute a Transfer for purposes of
this Article 18 and shall not require the consent of any Partner,
(ii) so long as The Trustees of Princeton University or an Affiliate
thereof shall remain a limited partner of TSG or Westrock, the
transfer of voting control of any corporate general partner of TSG
to one or more persons approved by The Trustees of Princeton
University or such Affiliate shall not constitute a Transfer for
purposes of this Article 18 and shall not require the consent of any
Partner, and (iii) the transfer of voting control of the corporate
general partner of the TSG Group to one or more of the persons who
at the time of transfer are partners of the TSG Group shall not
constitute a Transfer for purposes of this Article 18 and shall not
require the consent of any Partner; provided further, however, that
no general partner may be admitted or substituted in the TSG Group
and no transfer may be made of voting control of any corporate
general partners of the TSG Group as described in clauses (i), (ii)
and (iii) above if any such action violates the provisions of the
First Mortgage, unless prior consent of the holder of the First
Mortgage is obtained.
18.3 Each Limited Partner shall have the right to
make one or more Transfers with respect to its Partnership interest
without restriction; provided, however, that no Person to whom all
or any portion of the interest of a Limited Partner is hereafter
assigned or otherwise transferred shall be admitted to the
Partnership as a Limited Partner except as provided in Section 18.5,
it being understood that until and unless any such transferee is so
admitted to the Partnership it shall have no right to exercise any
of the rights of a Limited Partner hereunder or at Law, but shall be
entitled to all allocations and distributions of net income, net
losses, Available Net Income, gain and loss, credits and amounts to
be distributed under Sections 12.1 and 23.5 to which the interest or
portion thereof assigned or transferred to it is entitled.
18.4 Except as otherwise provided in this Agreement
in the case of the conversion of Bayport from a Limited Partner to
the Managing General Partner, no Person shall be admitted to the
Partnership as a General Partner without the consent of all of the
Partners.
18.5 No transferee of all or any portion of a
Limited Partner's interest in the Partnership shall be admitted to
the Partnership as a Limited Partner without the prior consent of
Bayport and TSG.
18.6 In addition to all other limitations on
assignment contained in this Agreement, no assignment of all or any
part of the interest of a Partner otherwise permitted to be made
under this Article 18 shall be permitted or be binding on any
Partners or on the Partnership unless (i) the assignee shall execute
and acknowledge an instrument, in form reasonably satisfactory to
the Managing General Partner, whereby it agrees to assume and be
bound by all of the covenants, terms and conditions of this
Agreement as the same may have been amended, (ii) a duplicate
original of such assignment (or other instrument of transfer) and
assumption, duly executed and acknowledged by the assignor and
assignee, is delivered to the Managing General Partner, (iii) the
assignee shall (if required) execute and acknowledge a certificate
amending the Certificate of Limited Partnership of the Partnership
in order to reflect such change or take any other action that may be
required in connection therewith, (iv) the assignor or assignee
shall pay all reasonable expenses in connection with its admission
as a Partner, including, but not limited to, the cost (including
reasonable attorneys' fees and disbursements) of preparing and
filing the certificate referred to in subdivision (iii) above,
(v) all required consents of mortgagees or other Persons to such
assignment shall have been obtained in writing and delivered to the
Managing General Partner and the assignee shall be able to make the
representations specified in clause (vi) below, and (vi) the
assignee shall, at least 15 days prior to consummation of such
proposed assignment, execute and acknowledge an instrument, in form
and substance satisfactory to the Managing General Partner,
representing that the covenants contained in Subparagraph 1.14(d) of
the First Mortgage, or any like covenants in a substitute First
Mortgage, will not be rendered untrue after giving effect to the
proposed assignment.
19. Retirement, Withdrawal, Bankruptcy
or Dissolution of Partners.
19.1 No Partner shall retire or withdraw from the
Partnership except as provided in Articles 18, 19, 21 and 22.
19.2 Each General Partner shall maintain its
existence as a legal entity throughout the term of this Agreement
and shall not terminate or dissolve without being reconstituted or
reincorporated.
19.3 An "Act of Insolvency" means with respect to
any Person one of the following circumstances: (i) such Person makes
an assignment for the benefit of creditors; (ii) such Person files a
voluntary petition in bankruptcy; (iii) such Person is adjudicated a
bankrupt or insolvent, or has entered against it an order for relief
in any bankruptcy or insolvency proceeding; (iv) such Person files a
petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any statute, law or regulation; (v) such Person
files an answer or other pleading admitting or failing to contest
the material allegations of a petition filed against such Person in
any proceeding of the nature described in subdivision (iv) above;
(vi) such Person seeks, consents to or acquiesces in the appointment
of a trustee, receiver or liquidator of such Person or of all or any
substantial part of such Person's properties; (vii) within 60-days
after the commencement of any proceeding against such Person seeking
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or regulation,
the proceeding has not been dismissed; (viii) within 60-days after
the appointment without such Person's consent or acquiescence of a
trustee, receiver or liquidator of such Person or of all or any
substantial part of such Person's properties, the appointment is not
vacated or stayed; or (ix) within 60 days after the expiration of
any such stay, the appointment is not vacated. A Partner shall be
deemed to be dissolved for the purposes of this Section 19.3 in the
following circumstances: (i) in the case of a Partner who is a
natural Person, upon his death or upon the entry by a court of
competent jurisdiction of an order adjudicating him incompetent to
manage his person or property; (ii) in the case of a Partner who is
acting as Partner by virtue of being a trustee of a trust, upon the
termination of the trust (but not merely by substitution of a new
trustee); (iii) in the case of a Partner that is a separate
partnership, upon the dissolution and commencement of winding up of
the separate partnership; (iv) in the case of a Partner that is a
corporation, upon its filing of a certificate of dissolution or the
revocation of its charter or certificate of incorporation; or (v) in
the case of a Partner that is an estate, upon the distribution by
the fiduciary of the estate's entire interest in the Partnership.
In the event of the withdrawal, retirement or dissolution of a
General Partner or the commission of an Act of Insolvency by a
General Partner, the Partnership shall thereupon be dissolved and
shall be forthwith terminated as provided in Section 22.3.
19.4 Notwithstanding anything contained in
Section 19.3 to the contrary, the business of the Partnership shall
be continued after the withdrawal, retirement or dissolution of a
General Partner or the commission of an Act of Insolvency by a
General Partner if there is a surviving General Partner or, if there
is no surviving General Partner, within 90 days after the date of
such withdrawal, retirement, dissolution or Act of Insolvency (or if
there has been more than one such Act, then after the date of the
first such Act), the remaining Partners elect to continue the
business of the Partnership and appoint a new General Partner which
shall be granted at least a 1% interest in the Partnership. If
(a) the business of the Partnership is continued after the
withdrawal, retirement, dissolution of or commission of an Act of
Insolvency by a General Partner, or (b) Dean Witter Realty Growth
Properties, L.P. commits an Act of Insolvency, the interest of such
General Partner in the case of clause (a) above or the interest of
Bayport in the case of clause (b) above, shall be converted to that
of a Limited Partner with the same interest in Available Net Income,
Capital Proceeds, net income, net losses, gain, loss and other items
as such Partner had prior to said conversion and the surviving or
newly-appointed General Partner shall become (if it is not already)
the Managing General Partner. If such withdrawal, retirement,
dissolution or commission of an Act of Insolvency shall occur with
respect to Bayport, then except as provided in the immediately
preceding sentence, Bayport shall have no further rights to consent
or any other right afforded to Bayport (as opposed to the Managing
General Partner).
19.5 No Limited Partner may withdraw from the
Partnership. Upon dissolution of a Limited Partner or the
commission of an Act of Insolvency by a Limited Partner, the
Partnership shall not be dissolved and the personal representative,
guardian or other successor in interest of such Limited Partner
shall be entitled to all distributions, allocations and credits to
which such Limited Partner would be entitled but shall not be
admitted to the Partnership as a limited partner without the written
consent of the General Partners.
19.6 Mention in Sections 19.3 and 19.4 of the
withdrawal or retirement of a General Partner shall not be construed
as authorizing any General Partner to withdraw from the Partnership
or retire in violation of the provisions of Section 19.1, whether by
dissolution, Act of Insolvency or otherwise, or as relieving a
General Partner which does so from liability to the Partnership and
the other Partners.
20. Forced Sale of the Property.
20.1 In the event that either the TSG Group or the
Existing Partners shall become entitled under Article 7 or 8 to sell
the Property in accordance with the provisions of this Article, then
the TSG Group or the Existing Partners, whichever has become so
entitled to sell the Property (the "Selling Partner"), shall have
the right, exercisable by Notice to the other of them (the "Other
Partner"), to require the Partnership to sell the Property for cash
or for cash subject to the First Mortgage (if the First Mortgage is
assumable or the First Mortgagee consents to such a sale). Such
sale shall be made on an arms-length basis to the Person(s) who will
pay the Partnership the highest amount of cash net of all closing
costs and mortgage loans required to be prepaid or assumed in
connection with such sale; provided, however, that unless the Other
Partner consents thereto, in no event shall the Selling Partner, any
Affiliate thereof or any other Person in which the Selling Partner,
or any Person having a direct or indirect interest in the Selling
Partner, has a direct or indirect interest, have the right to bid on
or to purchase the Property. The Other Partner, any Affiliate
thereof or any other Person in which the Other Partner, or any
Person having a direct or indirect interest in the Other Partner,
has a direct or indirect interest shall have the right to bid on and
purchase the Property; provided, however, that the Selling Partner
shall have no obligation to accept any such bid but shall not have
the right to sell the Property for an amount which is lower than the
amount of such bid unless, after accepting such bid, the party
making the same fails to purchase the Property in accordance with
the terms of such bid within 90 days after such bid is accepted.
20.2 The Other Partner shall cooperate with the
Selling Partner in effectuating any sale of the Property made
pursuant to this Article 20, shall provide all information con-
cerning the Property reasonably requested by the Selling Partner and
available to the Other Partner and shall execute, acknowledge, if
required, and deliver all documents and take such further action as
may be necessary to consummate any sale negotiated by the Selling
Partner that meets the requirements set forth in Section 20.1;
provided, however, that the Selling Partner shall be authorized to
execute the contract of sale, deed and any other documents in
connection with such sale of the Property on behalf of the
Partnership to consummate any sale that meets the requirements set
forth in Section 20.1 provided any such document does not commit any
Limited Partner to any liability thereunder; and provided further,
however, that no Limited Partner included in the Other Partner
(including, without limitation, any General Partner that elects to
convert its interest to that of a Limited Partner pursuant to
Section 20.3) shall be required to execute the contract of sale or
any other documents in connection with such sale of the Property.
20.3 The Selling Partner shall provide the Other
Partner with a copy of the contract of sale for any such sale no
less than five days prior to its execution and copies of the closing
documents to be executed by the Partnership at least five days prior
to the closing of title or as soon thereafter as they become
available. If any Partner included in the Other Partner is a
General Partner at the time the contract of sale is about to be
entered into by or at the direction of the Selling Partner, such
Partner shall have the right, by giving Notice to the Selling
Partner, to convert its interest in the Partnership to that of a
Limited Partner, and the Selling Partner agrees that it will not
enter into or commit to enter into any contract of sale pursuant to
this Article until at least 5 days after an execution copy thereof
has been delivered to the Other Partner. If such Notice is given
prior to the expiration of such 5 day period (or prior to the
commencement thereof), the General Partner included in the Other
Partner shall automatically, upon the giving of such Notice, be and
become a Limited Partner of the Partnership. The conversion of such
Partner to a Limited Partner shall not affect the share of such
Partner of Available Net Income, Capital Proceeds, net income, net
losses, gain loss, deductions and tax credits and shall not cause
the Partnership to be dissolved after such conversion, and prior to
the execution of the contract of sale, the Selling Partner shall
prepare and file or cause to be prepared and filed an amendment to
the Certificate of Limited Partnership of the Partnership reflecting
such conversion.
20.4 The consent or approval of the Other Partner
shall not be required (a) for any such sale negotiated by the
Selling Partner or to the terms or conditions of any contract,
agreement or instrument to be entered into in connection therewith,
provided the conditions set forth in the preceding Sections of this
Article 20 are satisfied, or (b) for the retention by the Selling
Partner of counsel to represent it and the Partnership in connection
with such sale. All of the costs and expenses of the Partnership in
selling the Property (including, without limitation, reasonable
attorneys' fees and disbursements and transfer taxes) shall be
deducted from the proceeds of such sale prior to the application of
such proceeds pursuant to the applicable provisions of this
Agreement. In the event of the sale of the Property pursuant to
this Article 20, the Partnership shall be terminated in accordance
with Article 22 and the net proceeds of such sale shall be
distributed in accordance with Section 23.5, after crediting or
charging gain or loss pursuant to Section 23.3 or 23.4.
21. Buy-Sell.
21.1 In the event that either the TSG Group or the
Existing Partners shall become entitled under Article 7 or 8 to
initiate the buy-sell pursuant to this Article 21, then the TSG
Group or the Existing Partners, whichever has become so entitled to
initiate the buy-sell (the "Electing Partner"), shall have the right
to serve upon whichever of the TSG Group and the Existing Partners
is not the party entitled so to initiate the buy-sell (the "Non-
Electing Partner") a Notice (the "Initiating Notice") stating that
the Electing Partner intends to institute the buy-sell procedures
hereinafter set forth in this Article.
21.2 The Initiating Notice shall set forth an amount
which shall be a valuation of all assets of the Partnership (the
"Stated Valuation"). The Initiating Notice shall constitute an
offer by the Electing Partner either to sell its interests in the
Partnership to the Non-Electing Partner or to purchase the Non-
Electing Partner's interests in the Partnership for the purchase
price specified below. The Initiating Notice shall be accompanied
by a statement of the Electing Partner's calculation of the amount
which would be distributed to the Electing Partner and the Non-
Electing Partner if (i) the assets of the Partnership were sold for
cash equal to the Stated Valuation, (ii) all net income or net
losses, gain or loss of the Partnership through the last day of the
month immediately preceding the giving of the Initiating Notice (the
"Buy-Sell Effective Date") were credited or charged in accordance
with Section 9.2 or 9.3 and Section 12.2 or 12.3, (iii) all amounts
distributable to the Electing Partner and the Non-Electing Partner
through the Buy-Sell Effective Date were distributed pursuant to
Sections 11.2 and 12.1, (iv) the net gain or net loss from such sale
were credited or charged to the Capital Accounts of the Partners
pursuant to Section 23.3 or 23.4, (v) the First Mortgage, or any
substitute mortgage approved in accordance with Section 15.8
(together with any prepayment penalty due thereon), and all other
debts and obligations of the Partnership on the Buy-Sell Effective
Date, were paid on the Buy-Sell Effective Date, (vi) the Partnership
incurred no expenses in connection with such sale, and (vii) the net
proceeds of such sale were distributed in accordance with Section
23.5, without setting aside any reserves. The statement of the
Electing Partner described in the preceding sentence shall be
subject to confirmation or adjustment by the Partnership
Accountants, and the Electing Partner shall promptly instruct such
accountants to review such statement and to give the Partners notice
of such confirmation or of any required adjustment within 30 days
after the giving of the Initiating Notice. The determination of
such accountants to confirm or adjust such statement, absent
manifest error, shall be conclusive and binding on the Partners,
provided that in case of an adjustment, if the Partnership
Accountants' calculation of amounts which would be distributed to
the Electing Partner and the Non-Electing Partner shall vary from
that of the Electing Partner's statement by more than 1%, the
Electing Partner shall have the right to revoke its offer to
purchase or sell by giving notice to that effect to the Non-Electing
Partner at any time on or before the 10th day after delivery by the
Partnership Accountants of their determination. The purchase price
of the interests of the Electing Partner or the Non-Electing
Partner, which are being sold in accordance with this Section 21,
shall be the amount, if any, which (as confirmed or adjusted by the
Partnership Accountants as aforesaid) would be distributed as
described above to such Partner, but subject to adjustment and
updating as hereafter provided in Section 21.5. The parties
understand and acknowledge that the Stated Valuation may result in
the Non-Electing Partner, if it exercises or is deemed to exercise
the Sale Option, receiving a purchase price of zero and that the
Stated Valuation may have no relationship to actual market value.
21.3 The Non-Electing Partner shall have the option,
exercisable by Notice to the Electing Partner given within 90 days
after the date of receipt of the Partnership Accountants'
determination pursuant to Section 21.2, either to (i) agree to
purchase from the Electing Partner all of its Partnership interests
for the purchase price determined as provided in Section 21.2 (the
"Purchase Option") or (ii) accept the Electing Partner's offer to
purchase all of the Non-Electing Partner's Partnership interests for
the purchase price determined as provided in Section 21.2 (the "Sale
Option"), provided that if the Existing Partners exercise the Sale
Option, or if the Existing Partners are the Electing Partner and the
TSG Group exercises the Purchase Option, it shall be a condition of
the Existing Partner's obligation to sell that the TSG Group shall
pay to them, at the closing of the sale, all principal due on any
Default Loans, together with interest accrued thereon to the date of
closing. If the Non-Electing Partner shall fail to exercise the
Purchase Option or the Sale Option within such 90-day period, it
shall be deemed to have exercised the Sale Option on the last day of
such period. If, following the Non-Electing Partner's exercise of
the Purchase Option, the Non-Electing Partner fails to consummate
the purchase of the Electing Partner's interests in the Partnership
in accordance with the provisions of this Article 21, then, as its
sole remedy, the Electing Partner shall have the option, exercisable
by Notice to the Non-Electing Partner given within 90 days after
such failure by the Non-Electing Partner, to purchase the Non-
Electing Partner's interests in the Partnership pursuant to this
Section 21.3 as if the Non-Electing Partner had exercised the Sale
Option, but in such case the purchase price payable by the Electing
Partner to the Non-Electing Partner shall be equal to 90% of the
amount called for by Section 21.2 (but in no event less than zero).
Similarly, if following the Non-Electing Partner's exercise of the
Sale Option, the Electing Partner fails to consummate the purchase
of the Non-Electing Partner's interests in the Partnership in
accordance with the provisions of this Article 21, then as its sole
remedy, the Non-Electing Partner shall have the option, exercisable
by Notice to the Electing Partner given within 90 days after such
failure by the Electing Partner, to purchase the Electing Partner's
interests in the Partnership pursuant to this Section 21.3 as if the
Non-Electing Partner had exercised the Purchase Option, but in such
case the purchase price payable by the Non-Electing Partner to the
Electing Partner shall be equal to 90% of the amount called for by
Section 21.2 (but in no event less than zero).
21.4 If the Existing Partners exercise the Sale
Option, or if the TSG Group exercises the Purchase Option, and in
either such case TSG has not theretofore become the Managing General
Partner, it shall become the Managing General Partner on the
effective date of such exercise; provided, however, that if the TSG
Group fails to consummate the purchase of the Existing Partner's
interests, Bayport shall once again become the Managing General
Partner of the Partnership effective as of the date of such failure.
21.5 The closing of the sale pursuant to
Section 21.3 shall take place at the office of the Managing General
Partner on the 180th day after the Non-Electing Partner becomes
obligated to purchase by the exercise of its Purchase Option or the
Electing Partner becomes obligated to purchase by the exercise by
the Non-Electing Partner of its Sale Option, or on any earlier day
designated by the purchasing parties by at least 20 days' prior
Notice to the selling parties. At such closing, the selling parties
shall assign and transfer their interests in the Partnership, free
and clear of all liens, encumbrances and adverse claims, to the
purchasing parties or their designee or designees and shall deliver
to the purchasing parties or their designee or designees such
instruments of transfer with respect to their interests in the
Partnership (which, if required by the title company engaged by the
purchasing parties, shall include one or more quitclaim deeds to the
Property) and such evidence of due authorization, execution and
delivery and of the absence of any liens, encumbrances or adverse
claims as the purchasing parties shall reasonably request, against
receipt of the purchase price; provided, however, that the selling
parties shall not be obligated to make any warranties or
representations in any such instruments or documents other than that
they own their respective interests in the Partnership, free and
clear of all liens, encumbrances and adverse claims, and have not
previously assigned or transferred the same or any interests
therein. The purchase price shall be paid by the purchasing parties
to the selling parties by wire transfer of federal funds to a bank
account designated by the selling parties. The selling parties
shall be responsible for any stamp, recording and similar
transaction taxes payable upon such transfer but only to the extent
that the amount of such taxes do not exceed the amount of the
purchase price payable to the selling parties pursuant to this
Article 21. At least 5 days prior to the closing, the purchasing
parties shall deliver to the selling parties an update of the
statement provided for in Section 21.2 prepared by the Partnership's
Accountants, which statement shall update the amounts shown on the
original statement as distributable to each of the Electing Partner
and the Other Partner as of a date as close to the date of closing
as is feasible and shall reflect any changes in the Percentage
Interests of the Partners since the Buy-Sell Effective Date, which
statement shall be binding upon the selling parties and the
purchasing parties in the absence of manifest error. The amount
shown in such updated statement as distributable to the selling
parties shall be the purchase price payable by the purchasing
parties to the selling parties pursuant to this Article 21. If any
selling party is not present at such closing or otherwise defaults
and the sale of such defaulting party's interest in the Partnership
to the purchasing parties or their designee or designees is not
closed as a result, from and after the date fixed for such closing,
such defaulting party shall have no further rights or interests
under this Agreement or in or to the Partnership other than to
receive the purchase price, or the portion thereof to which such
party is entitled, without interest, upon delivering a duly
acknowledged assignment of such party's interest in compliance with
this Section 21.5. The selling parties, or any of them, are
authorized and directed to make any filings necessary or appropriate
under the Act to confirm or effect the withdrawal of the selling
parties, including any selling party which is not present at
closing.
21.6 Notwithstanding anything to the contrary set
forth in this Article 21, it is agreed that if the consent of the
First Mortgagee is required by the terms of any First Mortgage which
refinances or replaces the First Mortgage encumbering the Property
at the date hereof for the Non-Electing Partner to purchase the
Electing Partner's interest in the Partnership, then the Non-
Electing Partner, if it exercises the Purchase Option, shall not be
obligated to consummate the purchase of the Electing Partner's
interest in the Partnership pursuant to the buy-sell procedures if
the consent of such First Mortgagee is not delivered at the closing
of such purchase pursuant to this Article 21, and if such consent is
not obtained and so delivered, the buy-sell procedures shall be
terminated. Once the buy-sell procedures have been terminated as a
result of the Electing Partner's failure to obtain the First
Mortgagee's consent, the TSG Group or the Existing Partners,
whichever were the Electing Partner in the terminated procedures,
may not once again serve an Initiating Notice so long as any First
Mortgage remains in effect against the Property under which such
consent is required without first procuring the First Mortgagee's
consent and delivering a copy thereof to the other of them. Each of
the TSG Group and the Existing Partners shall cooperate in
attempting to obtain the consent of the First Mortgagee to the
purchase of either of their interests by the other in a buy-sell
transaction and shall accept any reasonable conditions which may be
imposed by the First Mortgagee in connection therewith that do not
affect the economic terms of the buy-sell transaction or of the
First Mortgage in question.
22. Termination of the Partnership.
22.1 The Partnership may be terminated at any time
upon the consent of both TSG and Bayport.
22.2 Unless the General Partners agree otherwise,
from and after the seventh anniversary of the date of this
Agreement, the General Partners shall attempt in good faith to sell
the Property to an unrelated third party in an arm's length
transaction as promptly as reasonably possible. The Managing
General Partner (or if it shall fail to so do with reasonable
promptness, the other General Partner) shall list the Property with
real estate brokers jointly selected by the General Partners and
shall attempt to develop bids for sale of the Property based on an
all-cash payment or an all-cash payment subject to the First
Mortgage if it is assumable or the First Mortgagee consents to such
a sale; provided, however, that unless TSG and Bayport consent
thereto, in no event shall any Partner, any Affiliate thereof or any
other Person in which a Partner, or any Person having a direct or
indirect interest in a Partner, has a direct or indirect interest,
have the right to bid on or to purchase the Property. The
Partnership shall accept an offer to purchase the Property if
jointly approved by TSG and Bayport. If TSG and Bayport have not
agreed to sign a letter of intent or a contract to sell the Property
within 9 months from the date the Property is first listed with real
estate brokers, or if a closing of the sale of the Property has not
occurred within 12 months from such date, at any time thereafter,
but prior to the time that a letter of intent or contract to sell
the Property has been executed by TSG and Bayport, either the TSG
Group or the Existing Partners may, but shall not be obligated to,
initiate the buy-sell provisions set forth in Article 21 in
accordance with the terms and provisions thereof, provided that the
Stated Valuation offered by either the TSG Group or the Existing
Partners may not be lower than the highest offer received for
purchase of the Property during the period that the Property was
being marketed.
22.3 Upon the voluntary termination of the
Partnership pursuant to Section 19.3 or 22.1, the sale of the
Property pursuant to Article 20, Section 22.2 or otherwise or the
taking in condemnation or by eminent domain of the Property or
substantially all of the Property or any other termination of the
Partnership without reconstitution in accordance with the provisions
of this Agreement or pursuant to applicable Laws, the Partnership
shall wind up its affairs and, except in the case of a termination
resulting by reason of the acquisition by the TSG Group or the
Existing Partners of all of the interests in the Partnership of the
other of them, shall then be liquidated as provided in Article 23.
Notwithstanding the foregoing, if in connection with the sale of the
property and assets of the Partnership, the Partnership, with the
consent of the General Partners, receives a purchase-money mortgage
or other purchase-money obligation in partial payment of the sale
price, the Partnership, if the General Partners so agree, shall
continue in existence to hold and collect such purchase-money
mortgage or obligation until the same has been paid in full.
23. Gain, Loss and Distributions on Liquidation.
Upon any termination of the Partnership, each of
the following shall be accomplished:
23.1 The property and assets of the Partnership
shall be liquidated as promptly as possible, but in an orderly and
businesslike manner so as not to involve undue sacrifice.
23.2 The Partnership Accountants shall make a final
audit of the records of the Partnership and shall determine the
Available Net Income on hand as of the dissolution date and the
amount of any additional cash held by the Partnership on such date
(including without limitation the Building Reserve Account).
23.3 Any net gain realized by the Partnership upon
the sale of its property and assets shall be credited to the Capital
Accounts of the Partners (after crediting or charging thereto the
appropriate portion of all net income or net losses, gain or loss of
the Partnership for the then current year in accordance with
Sections 9.2, 9.3 and/or 9.4 and Section 12.2 or 12.3, and after
giving effect to all amounts distributed or to be distributed to the
Partners for such year pursuant to Sections 11.2 and 12.1) as
follows and in the following order of priority:
(A) First, to the Capital Accounts of the
Partners with negative Capital Account balances (if any), in the
amount necessary, and in proportion to the amount necessary, to
cause such Capital Account balances to equal zero.
(B) Next, to the Capital Accounts of the TSG
Group, in the amount necessary for the aggregate balance of the
Capital Accounts of the TSG Group to equal an amount which, when
added to all Guaranteed Payments previously paid and all
distributions previously made to the TSG Group pursuant to Article
11 and subsections 12.1.1, 12.1.3 and 12.1.7, is the amount
necessary (assuming such amount were being distributed to the TSG
Group) for the TSG Group to have received a return of 12% per annum,
compounded annually, on the average amounts of its Unrecovered
Capital outstanding during each year or any partial year between the
date of this Agreement and the date of such allocation.
(C) Next, to the Capital Accounts of the TSG
Group, in the amount necessary for the aggregate balance of the
Capital Accounts of the TSG Group to equal the sum of (i) the amount
specified in clause (B) and (ii) the Unrecovered Capital of the TSG
Group.
(D) Next, to the Capital Accounts of the TSG
Group in the amount necessary for the aggregate balance of the
Capital Accounts of the TSG Group to equal the sum of (i) the amount
specified in clause (C) and (ii) an amount (assuming such amount
were being distributed to the TSG Group) which, when added to all
Guaranteed Payments previously paid, all distributions previously
made to the TSG Group pursuant to Article 11 and subsections 12.1.1,
12.1.2, 12.1.3 and 12.1.7 and all amounts credited to the Capital
Accounts of the TSG Group under clauses (B) and (C) (assuming the
amounts so credited were being distributed to the TSG Group) results
in the Internal Rate of Return realized by the TSG Group equalling
14%, determined as of the date of distribution pursuant to
Section 23.5.
(E) Next, to the Capital Accounts of the
Existing Partners until the aggregate balance of the Capital
Accounts of the Existing Partners shall equal the amount of gain
credited to the Capital Accounts of the TSG Group pursuant to clause
(D)(ii).
(F) Next, to the Capital Accounts of the
Partners, in the amount necessary, and in proportion to the amount
necessary, (i) for the aggregate balance of the Capital Accounts of
the TSG Group to equal the sum of (a) the amount set forth in
clause (D) and (b) the Outstanding Unmatched Capital Contributions
of the TSG Group, and (ii) for the aggregate balance of the Capital
Accounts of the Existing Partners to equal the sum of (a) the amount
set forth in clause (E) and (b) the Outstanding Unmatched Capital
Contributions of the Existing Partners.
(G) Next, to the Capital Accounts of the
Partners, in the amount necessary, and in proportion to the amount
necessary, (i) for the aggregate balance of the Capital Accounts of
the TSG Group to equal the sum of (a) the amount set forth in clause
(F)(i) and (b) the Outstanding Additional Capital Contributions of
the TSG Group, and (ii) for the aggregate balance of the Capital
Accounts of the Existing Partners to equal the sum of (a) the amount
set forth in clause (F)(ii) and (b) the Outstanding Additional
Capital Contributions of the Existing Partners.
(H) Next, if the aggregate balance of the
Capital Accounts of the TSG Group exceeds the sum set forth in
clause (G)(i) (the "TSG Excess"), or the aggregate balance of the
Capital Accounts of the Existing Partners exceeds the sum set forth
in clause (G)(ii) (the "Existing Partner Excess"), to the Capital
Accounts of the Partners to the extent necessary so that the ratio
of the TSG Excess to the Existing Partner Excess shall equal the
ratio of the Percentage Interest of the TSG Group to the Percentage
Interest of the Existing Partners.
(I) Any remaining gain shall be credited to the
Capital Accounts of the TSG Group and the Capital Accounts of the
Existing Partners in proportion to the respective Percentage
Interests of the TSG Group and the Existing Partners.
23.4 Any net loss incurred by the Partnership upon
the sale of its property and assets shall be charged to the Capital
Accounts of the Partners (after crediting or charging thereto the
appropriate portion of all net income or net losses, gain or loss of
the Partnership for the then-current year in accordance with
Sections 9.2, 9.3 and/or 9.4 and Section 12.2 or 12.3, and after
giving effect to all amounts distributed or to be distributed to the
Partners for such year pursuant to Sections 11.2 and 12.1) as
follows and in the following order of priority:
(A) First, to the Capital Accounts of the TSG
Group and the Capital Accounts of the Existing Partners to the
extent necessary so that the ratio of the TSG Excess to the Existing
Partner Excess is as set forth in clause (H) of Section 23.3.
(B) Next, to the Capital Accounts of the TSG
Group and the Capital Accounts of the Existing Partners in
proportion to the respective Percentage Interests of the TSG Group
and the Existing Partners until the TSG Excess and the Existing
Partner Excess each shall equal zero.
(C) Next, to the Capital Accounts of the TSG
Group and the Capital Accounts of the Existing Partners in the
amount necessary, and in proportion to the amount necessary, (i) for
the aggregate balance of the Capital Accounts of the TSG Group to
equal the amount set forth in clause (F)(i) of Section 23.3, and
(ii) for the aggregate balance of the Capital Accounts of the
Existing Partners to equal the amount set forth in clause (F)(ii) of
Section 23.3.
(D) Next, to the Capital Accounts of the TSG
Group and the Capital Accounts of the Existing Partners in the
amount necessary, and in proportion to the amount necessary, (i) for
the aggregate balance of the Capital Accounts of the TSG Group to
equal the amount set forth in clause (D) of Section 23.3 and
(ii) for the aggregate balance of the Capital Accounts of the
Existing Partners to equal the amount set forth in clause (E) of
Section 23.3.
(E) Next, to the Capital Accounts of the
Existing Partners in the amount necessary for the aggregate balance
of the Capital Accounts of the Existing Partners to equal zero.
(F) Next, to the Capital Accounts of the TSG
Group in the amount necessary for the aggregate balance of the
Capital Accounts of the TSG Group to equal zero.
(G) Any remaining loss shall be charged to the
Capital Accounts of the General Partner(s) in proportion to their
respective Percentage Interests.
23.5 The proceeds of sale and all other assets of
the Partnership (including, without limitation, any balance in the
Building Reserve Account), after all distributions for the then
current year have been made pursuant to Sections 11.2 and 12.1,
shall be applied and distributed as follows and in the following
order of priority:
23.5.1 to the payment of the debts and
liabilities of the Partnership and the expenses of liquidation;
23.5.2 next, to the setting up of any
reserves which the General Partners determine are reasonably neces-
sary for any contingent unforeseen liabilities or obligations of the
Partnership or of the General Partners arising out of, or in
connection with, the Partnership. Such reserves may, in the
discretion of the General Partners, be paid over to an escrow agent
selected by them to be held by such escrow agent for the purpose of
disbursing such reserves in payment of any of the aforementioned
contingencies, and at the expiration of such period as the General
Partners may deem advisable, to pay or distribute the balance
thereafter remaining, if any, as provided in subsection 23.5.3; and
23.5.3 any remaining proceeds shall be
distributed to the TSG Group and the Existing Partners in proportion
to the amounts of the aggregate positive balances in their
respective Capital Accounts, as such Capital Accounts have been
adjusted pursuant to Section 23.3 or 23.4 to reflect the gain or
loss realized or incurred upon the sale of the Partnership's
property and assets.
23.6 A taking of all or substantially all of the
Partnership's property and assets in condemnation or by eminent
domain shall be treated in all respects as a sale of the
Partnership's property and assets upon the dissolution and
liquidation of the Partnership pursuant to this Article 23. In such
event any portion of the property and assets of the Partnership not
so taken shall be sold and the proceeds, together with the
condemnation award, shall be distributed in the manner provided for
in this Article 23.
23.7 The Managing General Partner shall establish the
amount and types of reserves, if any, reasonably necessary to pay
for the anticipated liabilities or obligations of the Partnership
which are expected to be charged subsequent to the dissolution and
liquidation of the Partnership pursuant to this Article 23 and the
length of time for which such reserves are to be held; provided,
however, that if Bayport has been converted, or has elected to
convert itself, from the Managing General Partner to a Limited
Partner pursuant to Article 20 or 21 (other than a conversion
pursuant to Section 8.2.5), the amount and types of reserves and the
length of time they are to be held shall be subject to Bayport's
approval, not to be unreasonably withheld or delayed.
23.8 The provisions of Section 23.7 are intended
only to govern the obligations of the Partners inter se, and shall
not be enforceable against the Partners by any creditor of the
Partnership or of any Partner, or by any party claiming by or
through any such creditor or any Partner. The obligations of the
Partners under Section 23.7 shall survive a termination and winding
up of the Partnership and the distribution of all of its assets.
Claims and expenses paid after such date which would have been
obligations of the Partnership before such date shall be obligations
of the Partnership. Losses attributable to such claims and expenses
paid after such date shall be allocated to the Capital Accounts of
the Partners according to the terms and conditions of this
Agreement.
23.9 Intentionally Omitted
24. Investment Representations.
Each of the members of the TSG Group represents that it
is acquiring its interest as a Partner for its own account for
investment and not with a view to the distribution or resale thereof
and with no present intention of distributing or reselling all or
any portion thereof. Each assignee or transferee of the whole or
any portion of the interest of any Partner in the Partnership shall,
by executing the assumption agreement provided for in Section 18.6,
be deemed to have made the foregoing representation.
25. Brokerage.
Each of the TSG Group and the Existing Partners (the
"Warranting Party") hereby represent and warrant to the other of
them (the "Other Party") that the Warranting Party has not dealt
with any broker, consultant, finder or like agent who might be
entitled to a commission or compensation on account of introducing
the Warranting Party and the Other Party to each other or the
negotiation and execution of this Agreement or any of the
instruments and agreements contemplated herein. The Warranting
Party hereby further agrees to indemnify and hold the Other Party,
and their successors and assigns, harmless against and from all
claims, losses, liabilities and expenses, including reasonable
attorneys' fees, arising out of any breach of its foregoing warranty
and representation.
26. Notices.
26.1 All notices, requests, demands, consents,
approvals and other communications which may or are required to be
served or given hereunder (collectively, "Notices") shall be in
writing and shall be sent by registered or certified mail, return
receipt requested, or by reputable overnight delivery service,
postage prepaid, or by hand delivery, addressed as follows:
If to the Partnership, Bayport or
the Existing Partners:
Dean Witter Realty, Inc.
Two World Trade Center - 64th Floor
New York, New York 10048
Attention: Mr. E. Davisson Hardman, Jr.
with a copy to:
Dean Witter Realty, Inc.
130 Liberty Street
New York, New York 10006
Attention: Matthew M. Horgan, Esq.
If to the TSG Group or TSG:
The Taylor Simpson Group
One Rockefeller Plaza
New York, New York 10020
Attention: Paul E. Taylor III
with a copy to the same address
to the attention of Kenneth H. Simpson
and with a copy to:
Breed Abbott & Morgan
Citicorp Center
153 East 53rd Street
New York, New York 10043
Attention: John O'Callahan, Esq.
If to The Trustees of Princeton
University:
The Trustees of Princeton University
22 Chambers Street
Princeton, New Jersey 08542
Attention: Mr. Randall A. Hack
with a copy to the same address
to the attention of Mr. Robert Honstein
and to
John D. Sweeney III
Director
Office of Investment Administration
Princeton University
2 New South Building
Princeton, NJ 08544
26.2 Either party may, by Notice given as aforesaid,
change its address for all subsequent Notices, except that no party
may require Notices to it to be sent to more than two addresses.
26.3 Except where otherwise expressly provided to
the contrary herein, Notices shall be deemed given or made three
business days after the date of the mailing thereof in the case of
Notices mailed by registered or certified mail or upon receipt
thereof, if overnight delivery service or hand delivery is used,
with failure to accept delivery constituting delivery for this
purpose.
27. Captions.
All section and article titles or captions contained in
this Agreement and the table of contents are for convenience only
and shall not be deemed a part of this Agreement.
28. Variation of Pronouns.
All pronouns and all variations thereof shall be deemed
to refer to the masculine, feminine or neuter, singular or plural,
as the identity of the Person or Persons may require.
29. Counterparts.
This Agreement may be executed in any number of
counterpart copies, each of which shall constitute an original and
all of which, when taken together, shall constitute the same
Agreement.
30. Governing Law.
This Agreement is made pursuant to the provisions of the
laws of the State of Florida and shall be construed accordingly.
31. Successors and Assigns.
This Agreement shall be binding upon the parties hereto
and their respective successors and assigns, shall inure to the
benefit of the parties hereto and, except as otherwise provided
herein, their respective successors and assigns, but shall not inure
to the benefit of or be enforceable by any other Person.
32. Exculpation of the General Partners.
The Partners agree that the obligations of each of the
General Partners under or with respect to this Agreement shall not
constitute personal obligations of any general partner or any
limited partner of such General Partner, and shall not create or
involve any claim against, or personal liability on the part of, any
such general partner or any such limited partner, and that the
Partners will look solely to the assets of such General Partner for
satisfaction of any liability of such General Partner under or in
respect of this Agreement and will not seek recourse against any
general partner or any limited partner of such General Partner, or
its or their personal assets, for such satisfaction.
33. Further Assurances.
Each Partner hereby agrees to execute, acknowledge (if
necessary) and deliver such other documents, instruments, agreements
or certificates as may be required by law, or which may in the
reasonable opinion of the Managing General Partner be otherwise
necessary or advisable to carry out the intents and purposes of this
Agreement.
34. Partial Invalidity.
If any provision of this Agreement or the application
thereof to any Person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the
application of such provision to other Persons or circumstances
shall not be affected thereby and shall be enforceable to the
fullest extent permitted by law.
35. Representatives.
It is understood that throughout the term of this
Agreement TSG shall act as the representative of the TSG Group and
Bayport shall act as the representative of the Existing Partners.
In furtherance of the foregoing sentence, (i) the Existing Partners
agree that TSG and the TSG Group shall be fully protected (a) in
relying on all consents, Notices, directions, elections,
instructions and other communications given by Bayport on behalf of
the Existing Partners and may conclusively rely thereon to the same
extent as if they had been joined in by all of the Existing
Partners, and (b) in making all distributions, and all payments of
principal and interest on loans, to which the Existing Partners are
entitled under this Agreement to Bayport, on behalf of the Existing
Partners, and (ii) the TSG Group agrees that Bayport and the
Existing Partners shall be fully protected (a) in relying on all
consents, Notices, directions, elections, instructions and other
communications given by TSG (or, in the case of matters covered by
Section 15.6, TSG or any of the Persons then acting as a TSG Leasing
Representative) on behalf of the TSG Group and may conclusively rely
thereon to the same extent as if they had been joined in by all of
the members of the TSG Group, and (b) in making all distributions,
and all payments of principal and interest on loans, to which the
TSG Group is entitled under this Agreement to TSG, on behalf of the
TSG Group. Each of TSG and Bayport may rely on any Notice, consent,
direction, election, instruction or other communication purported to
be signed or otherwise given by an authorized officer or partner of
the other of them (and in the case of Bayport, as to matters covered
by Section 15.6, by any one of the Persons then acting as a TSG
Leasing Representative) and shall not be required to inquire as to
the authorization of the party so purporting to act on behalf of the
other of them. Whenever the Managing General Partner is obligated
or desires to give a Notice to the TSG Leasing Representative or to
afford the TSG Leasing Representative with the opportunity to
participate in negotiations, to review lease proposals or take any
other action pursuant to Section 15.6, the Managing General Partner
may give such Notice or afford such opportunity to any one of the
Persons who is then acting as a TSG Leasing Representative and need
not give Notice or afford such opportunity to any other Person who
is then so acting.
36. Entire Agreement.
This Agreement and the documents, instruments,
certificates and agreements referred to herein or attached hereto as
Exhibits embody the entire agreement and understanding between the
parties relating to the subject matter hereof and may not be
amended, waived or discharged except by an instrument in writing
executed by the party against which enforcement of such amendment,
waiver or discharge is sought.
<PAGE>
In WITNESS WHEREOF, the parties have duly executed
this Agreement as of the day and year first above written.
Managing General Partner
BAYPORT, LTD., a Florida limited
partnership
By: DEAN WITTER REALTY GROWTH
PROPERTIES, L.P., a Delaware
limited partnership,
General Partner
By: DEAN WITTER REALTY
GROWTH PROPERTIES, INC.,
a Delaware corporation
Managing General Partner
/s/E. Davisson Hardman, Jr. By:/s/E. Davisson Hardman,Jr.
as to E. Davisson E. Davisson Hardman, Jr.,
Hardman, Jr., President
President
By:/s/Charles M. Charrow
Charles M. Charrow
Assistant Secretary
GENERAL PARTNER
BAYROCK REALTY ASSOCIATES L.P., LTD.
a Delaware limited partnership
/s/Paul E. Taylor III
as to Paul E. Taylor III, By: BAYROCK REALTY, INC.,
Vice President a Delaware corporation
d/b/a BAYROCK TAMPA REALTY,
INC.
By: /s/Paul E. Taylor III
Name: Paul E. Taylor III
Vice President
<PAGE>
LIMITED PARTNERS
TWC TEN, INC., a Florida
corporation
/s/Jack Wilson
as to Jack Wilson,
President By:/s/Jack Wilson
Jack Wilson, President
/s/Jack Wilson
Jack Wilson
/s/Jack Wilson
as to Jack Wilson
TWC TEN POP LTD., a Florida limited
partnership
By: TWC TEN, INC., a Florida
corporation, General
Partner
/s/Jack Wilson
as to Jack Wilson
President By:/s/Jack Wilson
Jack Wilson, President
/s/David T. Smith
David T. Smith
/s/David T. Smith
as to David T.
Smith
/s/James Swartz
James Swartz
/s/James Swartz
as to James Swartz
/s/David E. Schaughency
David E. Schaughency
/s/David E. Schaughency
as to David E.
Schaughency
<PAGE>
/s/Larry Finch
Larry Finch
/s/Larry Finch
as to Larry Finch WESTROCK REALTY ASSOCIATES L.P.,
a Delaware limited partnership
By: BAYROCK REALTY, INC.
a Delaware corporation
/s/Paul E. Taylor III By: /s/Paul. E. Taylor
as to Paul E. Taylor III Name Paul E. Taylor III
Vice President Vice President
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EXHIBIT A
Partners and Percentage Interests
EXISTING PARTNERS
Managing General Partner Percentage Interest
Bayport, Ltd. 46.25%
c/o Dean Witter Realty Inc.
2 World Trade Center
New York, New York 10048
Limited Partners
TWC Ten, Inc., Jack Wilson, 3.75%
James Swartz, David T. Smith, TWC Ten
Pop, Ltd., David E. Schaughency, and
Larry Finch
TSG GROUP PARTNERS
General Partner
Bayrock Realty Associates L.P., Ltd. 1.0%
c/o The Taylor Simpson Group
One Rockefeller Plaza
New York, New York 10020
49.0%
Limited Partners
Westrock Realty Associates L.P., Ltd.
c/o The Taylor Simpson Group
One Rockefeller Plaza
New York, New York 10020
Exhibit 10(j)
____________
AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF
CAMPUS DRIVE INVESTMENT COMPANY
(A California Limited Partnership)
Dated as of December 27, 1985
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AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP dated as of December 27,
1985, among PENINSULA/DW ASSOCIATES, a
California general partnership ("DW"),
PENINSULA OFFICE PARK, a California limited
partnership ("POP"), the limited partners
listed in Exhibit A (the "Limited Partners");
DW and POP are hereinafter sometimes
collectively referred to as the "General
Partners"; POP and the Limited Partners are
hereinafter sometimes collectively referred
to as the "Original Partners"; and the
General Partners and the Limited Partners are
hereinafter sometimes collectively referred
to as the "Partners").
Preliminary Statement
Campus Drive Investment Company, a California limited
partnership (the "Partnership"), was originally formed as a general
partnership pursuant to a General Partnership Agreement dated
December 28, 1973, as amended by a First Amended General Partnership
Agreement dated December 29, 1973. The Partnership was converted to
a limited partnership under the California Uniform Limited
Partnership Act pursuant to a Second Amended Partnership Agreement
dated December 29, 1976 (the "Second Amended Partnership
Agreement"). The Second Amended Partnership Agreement was amended
pursuant to an Amendment to Second Amended Partnership Agreement
dated September 8, 1981. (The Second Amended Partnership Agreement
as so amended is hereinafter referred to as the "Initial Partnership
Agreement"). A Certificate of Limited Partnership for the
Partnership dated December 30, 1976, was recorded January 28, 1977,
in Volume 7370, Page 63 of the Official Records of the County
Recorder, County of San Mateo, State of California (the "Original
Certificate"). The Original Certificate was amended and restated by
the First Amendment to Certificate of Limited Partnership dated
December 30, 1976, and recorded February 23, 1977, in Volume 7389,
Page 386 of the Official Records of the County Recorder, County of
San Mateo, State of California (the "Amended and Restated
Certificate"). The Amended and Restated Certificate was amended by
the Second Amendment to Certificate of Limited Partnership dated
September 2, 1980, and recorded on November 28, 1980, in Book 743,
at Page 610 of the Official Records of the County Recorder, County
of San Mateo, State of California. (The Amended and Restated
Certificate, as so amended, is hereinafter referred to as the
"Certificate.")
DW has acquired portions of the Partnership interests in the
Partnership heretofore held by certain of the Original Partners
pursuant to a Sale, Purchase and Contribution Agreement dated as of
December 27, 1985, between DW and the Partnership (the "Purchase
Agreement"). DW desires to have the entire partnership interest
which it has acquired be in the form of a general partnership
interest and desires to be admitted as a General Partner of the
Partnership, and DW and the Original Partners desire to make certain
changes in the Initial Partnership Agreement and the Certificate.
The parties hereto are entering into this Agreement to evidence
their agreements on such matters and to set forth the respective
rights and obligations of the parties hereto to each other and to
the Partnership.
In consideration of the foregoing, and of the mutual
covenants, conditions and agreements hereinafter set forth, the
parties hereto hereby agree that the Initial Partnership Agreement
is hereby amended and restated in its entirety to read as follows:
ARTICLE I
Continuation of the Partnership
SECTION 1.01. Continuation. The Partnership shall, on the
terms and conditions hereof, continue its existence, without
interruption, as a limited partnership under and subject to the
Uniform Limited Partnership Act of the State of California. DW
shall be admitted as a General Partner of the Partnership and an
amendment to the Certificate (the "New Certificate") shall be filed
in the Office of the County Recorder of San Mateo County to reflect
such admission and the other matters contained herein.
SECTION 1.02. Effectiveness. The provisions hereof shall be
effective upon the closing of the purchase (the "Closing"; the date
on which the Closing occurs is referred to as the "Closing Date") by
DW pursuant to the Purchase Agreement of portions of Partnership
Interests (as defined in Section 1.07) heretofore held by the
Original Partners and shall continue to be effective until
termination and liquidation of the Partnership in accordance with
the provisions hereof.
SECTION 1.03. Name. The name of the Partnership shall be
CAMPUS DRIVE INVESTMENT COMPANY.
SECTION 1.04. Place of Business. The principal office and
place of business of the Partnership shall be located at 2929 Campus
Drive, San Mateo, California 94403, or such other place or places as
may from time to time be Approved by the General Partners (as
defined in Section 2.01).
SECTION 1.05. Purpose. The business of the Partnership shall
be to acquire, own, improve, manage, operate, lease, mortgage (or
otherwise encumber) or otherwise deal with the real property
described in Exhibit B (the "Property") and to engage in any other
business as shall be Approved by the General Partners (as defined in
Section 2.01).
SECTION 1.06. Authority of Partners. Except as expressly
provided in this Agreement, no Partner shall have any authority to
act for, or to assume any obligations or responsibility on behalf
of, the other Partners or the Partnership.
SECTION 1.07. Partnership Interests. The "Partnership
Interest" of a Partner shall mean the proportional interest of each
Partner in the Partnership. The initial Partnership Interests and
capital contributions of the Partners are set forth in Exhibit C
hereto.
ARTICLE II
Management
SECTION 2.01. Management of the Partnership. (a) Subject to
the terms hereof, the General Partners, collectively, shall have
full, exclusive and complete discretion in the management and
control of the business and affairs of the Partnership and in no
event shall the Limited Partners take part in the conduct or control
of the business and affairs of the Partnership or have any right or
authority to act for or bind the Partnership. Except as expressly
provided herein to the contrary, only those Major Decisions (as
hereinafter defined) with respect to the management and control of
the Partnership which are Approved by the General Partners shall be
binding on the Partnership and the Partners. When the phrase
"Approved by the General Partners" is used in this Agreement, such
phrase shall mean approved by all General Partners. A General
Partner shall be deemed to have given approval of a particular
action or decision under this Agreement unless such General Partner
disapproves (in writing) of such action or decision within 30 days
(or 7 days in the case of a particular Major Decision under section
2.01(b)(iv), (v), (xii) or (xiii)) after giving of written notice to
such General Partner in accordance with Section 9.02 of request for
such approval. The Property shall be managed by a manager (the
"Manager"), who shall be designated pursuant to Section 2.02. The
Manager shall be responsible for the implementation of the decisions
of the General Partners with respect to the Property and for
conducting the ordinary and usual business and affairs of the
Partnership concerning the Property as more fully set forth in
Section 2.03 and as limited by this Agreement and any management
agreement between the Partnership and the Manager. The general
affairs of the Partnership shall be managed by the managing general
partner (the "Managing General Partner"), who shall be designated
pursuant to Section 2.10.
(b) No action shall be taken, sum expended, decision
made or obligation incurred by the Partnership, the Manager or any
Partner with respect to a matter within the scope of any of the
major decisions enumerated below (the "Major Decisions"), unless
Approved by the General Partners. The Major Decisions shall
include:
(i) the acquisition of any land, or other improved
or unimproved real property, or any improvements thereon or
interest therein;
(ii) subject to Article III, the incurrence of any
indebtedness for borrowed money by, or the refinancing of any
indebtedness of, the Partnership, including, without
limitation, the financing or refinancing of the Property or
the operations of the Partnership;
(iii) the sale or other disposition of, or the
granting of any mortgage, lien or other encumbrance (other
than tenant leases) on, the Property or any part thereof;
(iv) entering into any lease or other arrangement
that (A) involves or would result in the leasing of 5,000 or
more square feet of net rentable space in the Property
pursuant to a single lease or under multiple leases to the
same lessee (or its affiliates), (B) provides for annual
rental or other terms less favorable to the Partnership than
the rental and other terms, if any, set forth in any written
guidelines Approved by the General Partners (which guidelines
shall include, without limitation, terms for free rent and
other concessions, effective rent, tenant improvements and
expense stop and shall be confirmed or revised as Approved by
the General Partners no less frequently than quarterly), (C)
provides for a term which, with renewals, is equal to or
greater than six years or (D) otherwise varies in any material
respect that is adverse to the Partnership from lease forms
and rent schedules previously Approved by the General
Partners;
(v) the termination or material modification of
any lease or other arrangement involving space in the Property
if such lease or other arrangement was required (or would have
been required if this Agreement had been in effect when such
lease or other arrangement was entered into) to be Approved by
the General Partners pursuant hereto or if such modification
would result in a modified lease or other arrangement that, if
it were a new lease, would be required to be Approved by the
General Partners pursuant hereto;
(vi) the construction of any capital improvements,
repairs, alterations or changes (other than tenant
improvements pursuant to a lease or other arrangement which
has been Approved by the General Partners or which does not
require such approval) in excess of $2,500 in the aggregate in
any one fiscal year (unless specifically set forth in a Budget
(as defined in Section 2.04) theretofore Approved by the
General Partners), or the making of any lease termination
payments (other than pursuant to the terms of a lease or other
arrangement which has been Approved by the General Partners or
which does not require such approval) in excess of $1,000 in
the aggregate in any one fiscal year;
(vii) the selection or variation of depreciation
and accounting methods and other decisions with respect to the
treatment of various Partnership transactions for accounting,
bookkeeping or tax purposes, and the filing of tax returns by
or on behalf of the Partnerships in each case subject to and
consistent with the other provisions hereof (including
Sections 2.08 and 2.09);
(viii) the approval of all construction and
architectural contracts and all architectural plans,
specifications and drawings prior to the construction of any
new improvements or alterations contemplated thereby (other
than tenant improvements pursuant to a lease or other
arrangement which has been Approved by the General Partners or
which does not require such approval);
(ix) the selection of all counsel, accountants,
engineers and architects to be engaged by the Partnership;
(x) distributions to the Partners, except as set
forth in Article IV or V;
(xi) the approval of each Annual Business Plan (as
defined in Section 2.04) pursuant to Section 2.04;
(xii) the payment or incurrence of any obligation
(other than obligations under the express terms of a lease or
other arrangement which has been Approved by the General
Partners or under a lease that does not require such approval
or other obligations incurred in the ordinary course of
business to cure violations of law or to cover other
nondiscretionary operating expenses) in any fiscal year
involving a sum which (A) when added to the other expenditures
of the Partnership for such fiscal year, would result in the
Partnership having cumulative expenditures in excess of the
Budget Approved by the General Partners for such year of more
than $5,000, (B) when added to all expenditures in the same
category for such fiscal year, would exceed 105% of the amount
set forth for such category of expenditures in the Budget
Approved by the General Partners for the then lapsed portion
of such fiscal year, or (C) is not provided for in or
contemplated by the specific categories of expenditures set
forth in the Budget Approved by the General Partners;
provided, however, that, in each of the foregoing cases the
Manager shall have the right, without the consent of the
General Partners if the Manager shall have first used its best
efforts under the circumstances to obtain such consent (except
in the case of expenditures not exceeding $1,000, where no
such efforts shall be required), to make such repairs and
alterations to the Property and to expend such funds (not to
exceed $5,000 per incident) as in its reasonable judgment are
immediately necessary or advisable in the event of an
emergency in order to avoid a violation of law or to prevent
injuries to persons or damage to property;
(xiii) the initiation, defense, adjustment,
settlement or compromise of any claim, action, suit or
judgment by or against the Partnership involving an amount in
excess of $10,000 or any claim for equitable relief;
(xiv) subject to Section 2.02(b) and except as
provided in any management agreement relating to the Property
which has been Approved by the General Partners, the entering
into of any management or real estate brokerage agreement
(whether oral or written) in respect of the Property or any
termination or material modification thereof;
(xv) any modification with respect to the type or
amount of insurance coverage to be maintained by the
Partnership as set forth in the insurance guidelines attached
as Exhibit D hereto (as so revised from time to time, the
"Insurance Guidelines");
(xvi) entering into any service, maintenance,
employment or similar contract or agreement which is not
terminable without penalty on an annual basis on not more than
90 days' notice or which provides for monthly payments by the
Partnership (whether actual or accrued) in excess of $500 per
month, provided that this $500 limitation shall not apply in
any fiscal year if such item is covered in the Budget Approved
by the General Partners pursuant to Section 2.04 hereof; and
(xvii) any other decision or action that is
required to be Approved by the General Partners pursuant
hereto or that may hereafter be Approved by the General
Partners as a Major Decision.
(c) A General Partner shall not be liable, responsible
or accountable in damages or otherwise to any other Partner for any
act or omission pursuant to the authority granted by this Agreement
if such General Partner acted in good faith and in a manner it
reasonably believed to be within the scope of the authority granted
by this Agreement and in or not opposed to the best interests of the
Partnership, provided that such General Partner shall not be
relieved of liability in respect of any claim, issue or matter as to
which such General Partner shall have been adjudged to be liable for
gross negligence, wilful misconduct or material breach of this
Agreement in the performance of its fiduciary duty to the Limited
Partners; and, subject to such limitation in the case of any such
judgment of liability, the Partnership shall indemnify each General
Partner against any loss or damage incurred by it and against
expenses (including attorneys' fees) actually and reasonably
incurred by it (which may be paid as incurred) in connection with
the defense or settlement of any threatened, pending or completed
action or suit by any person in connection therewith.
SECTION 2.02. Appointment, Replacement and Resignation of
Manager. (a) The General Partners hereby approve the continuation
of William Wilson & Associates, as the initial manager of the
Property (the "Initial Manager") pursuant to the Management
Agreement dated as of December 27, 1985, between the Partnership and
the Initial Manager (the "Initial Management Agreement").
(b) For so long as DW shall be a General Partner hereof
and a general partner of POP, the right of the Partnership to
terminate or not renew the Initial Management Agreement (or any
subsequent management agreement) pursuant to Section 5.01(a) of the
Initial Management Agreement (or the corresponding provisions of any
such subsequent management agreement) and, subject to the following,
to hire a replacement manager, shall be exercisable by DW on behalf
of the Partnership. If DW shall elect to exercise such right of
termination or nonrenewal on behalf of the Partnership or if the
Initial Manager (or any subsequent Manager) shall resign as Manager
or for any other reason cease to be Manager, as soon as reasonably
practicable thereafter a list shall be Approved by the General
Partners (such approval not to be unreasonably withheld or delayed)
which shall set forth the names of three or more responsible parties
who will be requested to submit proposals for assuming the role of
Manager. In connection with the replacement of the Initial Manager
(or any subsequent Manager), Borel Estate Company (the "Ream
Company") shall be included on such list, provided that such company
is still active in managing office buildings in the San Mateo area.
Within 10 days after receipt of such proposals from all persons on
such list (and in any event no later than 20 days after such list
shall have been Approved by the General Partners), DW shall give
each other General Partner a written notice setting forth the name
of the party that it has on behalf of the Partnership selected to
act as the Manager from among the choices designated on the
aforementioned list and the terms of such engagement; provided,
however, that if the Manager so selected by DW shall be an affiliate
of DW, such appointment shall require the prior written approval of
the general partners of POP (other than DW) (which approval shall
not be unreasonably withheld or delayed). Upon receipt by the other
General Partners of any such notice referred to in the preceding
sentence (and granting of such consent required from them, if any),
the General Partners shall execute on behalf of the Partnership a
management agreement with such party and perform such other acts as
may be required to appoint such party as the Manager.
SECTION 2.03. Duties of Manager. The Manager shall implement
or cause to be implemented all Major Decisions Approved by the
General Partners related to the operation and management of the
Property and shall conduct or cause to be conducted the ordinary and
usual business and affairs of the Partnership related to the
Property in accordance with and as limited by this Agreement and the
applicable management agreement. In no event shall the Manager have
any authority to make any expenditure or incur any obligation on
behalf of the Partnership unless such expenditure or obligation has
been specifically provided for in this Agreement or Approved by the
General Partners or is made pursuant to an Annual Business Plan
Approved by the General Partners.
SECTION 2.04. Annual Business Plan. Each management
agreement shall provide that, not later than 60 days after the
effective date of such agreement, and, thereafter, not later than 60
days prior to the end of each fiscal year, the Manager shall prepare
and submit to the General Partners an annual report (the "Annual
Business Plan") in respect of the Property setting forth (i) an
analysis of the business prospects for the Property for the
succeeding fiscal year, including an analysis of competitive factors
affecting the Property, such as vacancy rates for the local market
and rental rates charged for space of similar quality in the area,
(ii) a statement of proposed capital and other improvements to be
made in the succeeding fiscal year, including cost and timing
estimates therefor and (iii) a proposed operating and capital budget
(the "Budget") setting forth the estimated receipts, expenditures,
escrow deposits and reserves, if any, of the Partnership for the
next succeeding fiscal year. If and when the Annual Business Plan
(including the Budget set forth therein, and any modification
required by the General Partners) is Approved by the General
Partners, the Manager shall implement it and shall be authorized,
subject to the requirements of Section 2.01, without the need for
further approval by the General Partners, to make the expenditures
and incur the obligations provided for in the Budget as so approved.
SECTION 2.05. Arrangements with Affiliates. (a) Except as
may be expressly provided for herein or in the Initial Management
Agreement or as may hereafter be Approved by General Partners, no
payment shall be made by the Partnership to a Partner, or any
affiliate or employee of a Partner, for the services of such Partner
or any affiliate or employee of such Partner. No part of a
Partner's central office overhead or general or administrative
expenses shall be deemed to be an expense of the Partnership;
provided, however, that the reasonable travel and other expenses for
twelve trips during the first twelve months following the Closing
Date (and such number of trips in succeeding periods as shall
reasonably be required) by an officer, partner, employee or
representative of DW or any affiliate of DW to attend meetings of
the General Partners, to inspect the Property or to examine the
books and operations of the Partnership shall be expenses of the
Partnership.
(b) The Partnership shall not enter into any contract,
agreement, lease or other arrangement for the furnishing to or by
the Partnership of goods, services or space with any person or
entity related to or affiliated with a Partner unless such contract,
agreement, lease or other arrangement has been specifically Approved
by the General Partners; provided, however, that the foregoing shall
not restrict the ability of William Wilson III ("Wilson") or his
affiliates to bid on providing services (including tenant
improvement work) to the Partnership and, if such bid is the lowest
or is Approved by the General Partners, from being awarded such
contract.
SECTION 2.06. Fiscal Year. The fiscal year of the
Partnership shall end on the last day of December of each year.
SECTION 2.07. Books and Records; Accountants. (a) The books
of account of the Partnership shall be kept and maintained at all
times at the place or places Approved by the General Partners and
shall be maintained on an accrual basis in accordance with generally
accepted accounting principles consistently applied.
(b) Each Partner shall have the right at all reasonable
times during usual business hours to audit, examine and make copies
of or extracts from the books of account of the Partnership. Such
right may be exercised through any agent, representative, partner or
employee of a Partner designated by it or by an independent public
accountant designated by such Partner. Each Partner shall bear all
expenses incurred in any examination made by such Partner.
(c) At the expense of the Partnership, the books of the
Partnership shall be examined, audited and certified annually as of
the end of each fiscal year by the independent public accounting
firm of Peat, Marwick, Mitchell & Co. Such independent public
accountants for the Partnership may be changed to any firm of
independent public accountants of nationally recognized standing
Approved by the General Partners. Peat, Marwick, Mitchell & Co., or
any subsequently selected independent public accountants, shall
prepare a balance sheet, an income and expense statement and a
statement of changes in financial position, all in comparative form
and in reasonable detail, and a report setting forth the amount of
Net Cash Flow (as defined in Section 4.01) of the Partnership, and
the share of the net profits and losses of the Partnership (as
defined in Section 6.07) and Net Cash Flow allocable to each
Partner, for each fiscal year. The Managing General Partner shall
use its best efforts to cause such accountants to prepare such
financial statements within 90 days after the end of each fiscal
year, and copies of such financial statements and report shall
promptly be transmitted by the Managing General Partner to the
Partners, together with the report of such accountants covering the
results of their audit. Peat, Marwick, Mitchell & Co., or such
other accountants, shall also prepare the tax returns of the
Partnership (which tax returns shall be satisfactory in form and
substance to each General Partner), and the Managing General Partner
shall use its best efforts to cause such accountants to prepare such
tax returns within 60 days after the end of each fiscal year. The
Managing General Partner shall use its best efforts to cause such
tax returns to be filed on a timely basis and shall, promptly after
the receipt thereof from such accountants, transmit copies thereof
to each Partner.
SECTION 2.08. Depreciation. All depreciation attributable to
any step-up in basis of the Property caused by the transactions
contemplated by the Purchase Agreement (a "Step-Up") shall be
allocated to DW. Each Partner agrees to cooperate with DW and
agrees not to contest or take a position inconsistent with DW's
obtaining the Step-Up under Section 754 or any other applicable
Section of the Internal Revenue Code of 1954, as amended (the
"Code"). The basis of the Partnership's depreciable assets and its
methods of depreciation shall not be changed without the express
approval of DW. The Partnership's real property shall be
depreciated using the straight line method of cost recovery and the
shortest cost recovery period permitted by the Code. The
Partnership's personal property shall be depreciated using
accelerated cost recovery.
SECTION 2.09. Tax Elections. (a) All elections required or
permitted to be made by the Partnership under the Code shall be made
by the Partnership in such manner as DW may reasonably determine
from time to time. In connection with the Step-Up, the Partnership
shall make an election pursuant to Section 754 of the Code to adjust
the basis of the assets of the Partnership with respect to the
transfer to DW of its Partnership Interest pursuant to the Purchase
Agreement and the transfer of the "DW Interest" (as defined in the
Sale, Purchase and Contribution Agreement dated as of December 27,
1985, between POP and DW) to the extent it represents an indirect
interest in the Partnership and shall make an election pursuant to
Proposed Treasury Regulation sec. 1.704-1(b)(2)(iv)(c)(1) to make
corresponding adjustments to the capital account of DW. Elections
which are required or permitted to be made because of a change in
the Code (or the enactment of any successor statute) after the date
hereof shall be subject to the reasonable approval of the other
General Partners; provided that for so long as DW shall own a
partnership interest in POP the other General Partners may not
withhold any such approval if failure to grant such approval would
have a material adverse effect on DW. No such election shall be
inconsistent with the other terms and conditions of this Agreement.
Unless otherwise Approved by the General Partners, DW shall be the
"tax matters partner" of the Partnership pursuant to Section
6231(a)(7) of the Code. The "tax matters partner" shall not
compromise any claim by the Internal Revenue Service with respect to
the Partnership or appeal any ruling or decision thereof with
respect to the Partnership unless Approved by the General Partners.
(b) Notwithstanding Section 2.09(a), if a Partner
transfers all or part of his interest in the Partnership, any basis
adjustment attributable to such transfer, whether made under Section
754 of the Code or otherwise, shall be allocated solely to the
transferee (and the Partnership, on request, will make any
appropriate elections in connection with such basis adjustment).
SECTION 2.10. Managing General Partner. (a) The General
Partners hereby approve the appointment of POP as the initial
Managing General Partner. If at any time the Managing General
Partner ceases to be a General Partner, such person shall
immediately cease to be the Managing General Partner and a successor
shall be appointed from among the remaining General Partners as
Approved by the General Partners. The Partnership shall reimburse
the Managing General Partner for the reasonable out-of-pocket
expenses incurred by him or it in performing his or its obligations
as Managing General Partner (as distinguished from his or its
obligations as a General Partner).
(b) The Managing General Partner shall be responsible
for (i) supervising the performance of the Manager under the
applicable management agreement, (ii) implementing or causing to be
implemented all Major Decisions Approved by the General Partners to
the extent not the responsibility of the Manager under the
applicable management agreement and (iii) conducting or causing to
be conducted the ordinary and usual business and affairs of the
Partnership in accordance with and as limited by this Agreement to
the extent not the responsibility of the Manager under the
applicable management agreement. In no event shall the Managing
General Partner have any authority to make any expenditure or incur
any obligation on behalf of the Partnership unless such expenditure
or obligation has been specifically provided for in this Agreement,
Approved by the General Partners or made pursuant to an Annual
Business Plan Approved by the General Partners. The parties
expressly acknowledge that the position of Managing General Partner
is ministerial in nature and is not intended to confer upon the
Managing General Partner powers or rights greater than those of any
other General Partner.
SECTION 2.11. Investment Management Fee. For so long as an
investment management agreement between the Partnership and
RMS/Liberty Street Associates, an affiliate of DW ("Liberty
Street"), shall be in effect, within 30 days after the end of each
fiscal quarter and prior to any distribution to Partners pursuant to
Section 5.01 the Partnership shall pay to Liberty Street, as an
investment management fee (the "Investment Management Fee"), an
amount equal to 1% of the Gross Income of the Partnership (as
defined in Section 4.01) for such period. Amounts payable under
this Section 2.11 shall be paid prior to distributions to Partners
pursuant to Section 4.02 or 5.01. To the extent that for any period
Adjusted Cash Flow (as defined in Section 3.02(g)) after making
payments required pursuant to Section 3.02(e) is insufficient to pay
the Investment Management Fee, the unpaid portion thereof shall be
accrued (without interest) and paid in subsequent periods out of
Adjusted Cash Flow or Adjusted Capital Proceeds (as defined in
Section 3.02(g)), in each case to the extent available after making
payments required pursuant to Section 3.02(e) and this Section
2.11.
ARTICLE III
Capital Contributions and Loans
SECTION 3.01. Capital Contributions. (a) Subject and
pursuant to the terms and conditions of the Purchase Agreement, on
the Closing Date DW shall make a capital contribution to the
Partnership in immediately available funds of $30,000 and POP shall
make a capital contribution to the Partnership in immediately
available funds of $30,000. Such capital contributions shall be
used to establish a working capital reserve for the Partnership (the
"Working Capital Reserve") which shall be used to fund tenant
improvements, leasing commissions, other capital expenditures and
operating deficits to the extent Approved by the General Partners.
(b) DW and POP agree to make additional capital
contributions to the Partnership from time to time after the Closing
Date (up to a maximum aggregate additional capital contribution of
$118,295 for DW and $138,457 for POP to the extent necessary to
cause the Working Capital Reserve as of the end of any calendar
month not to be less than $25,000, and in any event to fund the full
amount of its additional capital contributions required under this
Section 3.01(b) by December 31, 1988 (upon notice as provided
herein). DW and POP agree to make such additional capital
contributions to the Partnership in immediately available funds
within 10 days after written request therefor from the Manager or
the Managing General Partner. Any such request shall specify the
amount of the Working Capital Reserve as of the end of the calendar
month preceding the date of such notice and the amount of the
additional capital contribution to be made by DW pursuant to this
Section 3.01(b), and in no event may such requests be made more
frequently than monthly. Such additional capital contributions
shall be added to the Working Capital Reserve and applied as
provided in this Agreement.
(c) Beginning in January 1989, and annually thereafter,
amounts held in the Working Capital Reserve may if so Approved by
the General Partners be distributed to the Partners in proportion to
their Partnership Interests.
(d) A Partner shall not have any obligation to the
Partnership or to any other Partner to restore any negative balance
in the capital account of such Partner. No Partner may withdraw
capital or receive any distributions except as specifically provided
herein. No interest shall be paid by the Partnership on any capital
contributions to the Partnership.
SECTION 3.02. Shortfall Loans. (a) If at any time prior to
December 31, 1993, the Partnership shall require funds in excess of
the capital contributions required under Section 3.01 for working
capital in connection with the operation and maintenance of the
Property, DW shall from time to time make loans to the Partnership
(the "First Shortfall Loans") in an aggregate principal amount of up
to $127,100 (determined on a cumulative basis).
If a General Partner (or any general partner of POP)
reasonably determines that the Partnership requires a First
Shortfall Loan as contemplated by the preceding paragraph, such
General Partner (or partner) shall give DW notice (each a "First
Shortfall Notice") setting forth the specific purpose for which such
First Shortfall Loan is required and the amount required to be
loaned by DW (determined as provided above). DW shall within 20
days of receiving a First Shortfall Notice deposit the amount
required to be loaned by DW in an account Approved by the General
Partners and such funds shall be applied to the purposes Approved by
the General Partners consistent with such First Shortfall Notice.
All First Shortfall Loans shall mature on December 31, 1995, or upon
the earlier termination of the Partnership, and may be repaid out of
the proceeds of Additional Shortfall Loans (as defined below) as
provided in Section 3.02(b) or Special Shortfall Loans (as defined
below) as provided in Section 3.02(c).
(b) If the Partnership shall (i) require funds in excess
of the capital contributions required under Section 3.01 and the
First Shortfall Loans required pursuant to Section 3.02(a) for
working capital in connection with the operation and maintenance of
the Property or (ii) require funds to repay First Shortfall Loans or
Additional Shortfall Loans (as hereinafter defined) at the maturity
thereof (except upon termination of the Partnership), the Partners
shall from time to time make loans ("Additional Shortfall Loans") to
the Partnership in an aggregate principal amount of up to the
Maximum Additional Shortfall Loan Amount (determined on a cumulative
basis). Each such Additional Shortfall Loan shall be made by the
Partners pro rata based upon their Partnership Interests at the time
of the funding of each such Loan; provided, however, that the
obligation of the Limited Partners to make Additional Shortfall
Loans shall be limited to funds available in the Pollock Account (as
defined in Section 3.02(d) ); provided, further, that the
obligations of the Partners to make Additional Shortfall Loans may
terminate as provided in Section 3.02(d).
If a General Partner (or any general partner of POP)
reasonably determines that the Partnership requires an Additional
Shortfall Loan as contemplated by the preceding paragraph, such
General Partner (or partner) shall give the other Partners notice
(each a "Shortfall Notice") setting forth the specific purpose for
which such Additional Shortfall Loan is required and the amount
required to be loaned by each Partner (determined as provided
above). Each Partner within 20 days of giving or receiving, as the
case may be, a Shortfall Notice shall deposit the amount required to
be loaned by such Partner in an account Approved by the General
Partners and such funds shall be applied to the purposes Approved by
the General Partners consistent with such Shortfall Notice. Each
Additional Shortfall Loan shall mature on the tenth anniversary of
the funding of such Loan, or upon the earlier termination of the
Partnership. First Shortfall Loans and Additional Shortfall Loans
are sometimes collectively referred to herein as "Mandatory
Shortfall Loans."
(c) If the Partnership shall (i) require funds in excess
of the capital contributions required under Section 3.01 and the
Mandatory Shortfall Loans required under this Section 3.02 for
working capital in connection with the operation and maintenance of
the Property or (ii) require funds to repay Shortfall Loans (as
hereinafter defined) at the maturity thereof (except upon
termination of the Partnership) and such funds shall not be
available to the Partnership on reasonable terms from third party
sources, POP may, but shall not be required to, make loans ("Special
Shortfall Loans") to the Partnership from time to time. Each
Special Shortfall Loan shall mature on the tenth anniversary of the
funding of such Loan, or upon the earlier termination of the
Partnership.
First Shortfall Loans, Additional Shortfall Loans and Special
Shortfall Loans are sometimes collectively referred to herein as
"Shortfall Loans."
(d) Pursuant to Section 4(F) of the Purchase Agreement,
23.3817% of the Available Cash (as defined therein) after making all
adjustments as contemplated by such Section 4(F) shall be deposited
in an interest bearing reserve account with a financial institution
Approved by the General Partners for the benefit of the Limited
Partners (the "Pollock Account"). Funds on deposit in the Pollock
Account shall be used to fund the Limited Partners' share of
Additional Shortfall Loans, except that interest earned on the funds
in the Pollock Account shall be distributed to the Limited Partners
within 30 days after the end of each fiscal quarter. On or before
January 1, 1989, the General Partners shall determine whether the
funds, if any, on deposit in the Pollock Account are necessary for
future working capital requirements of the Partnership. If the
General Partners in their sole discretion determine that the funds
remaining in the Pollock Account are no longer required to be held
in reserve, all such funds shall be distributed to the Limited
Partners pro rata based upon their Partnership Interests as of the
date of distribution of such funds. If the General Partners in
their sole discretion determine that such funds are necessary for
future working capital requirements of the Partnership, all such
funds shall be retained in the Pollock Account and applied as
provided herein until such time, if ever, as the General Partners in
their sole discretion determine that such funds are no longer
required to be held in reserve (whereupon they shall be distributed
as provided above). The obligations of all Partners to make
Additional Shortfall Loans shall terminate upon the distribution of
funds (other than interest) from the Pollock Account to the Limited
Partners pursuant to this Section 3.02(d).
(e) Each Shortfall Loan shall be evidenced by a note for
each lending Partner maturing as provided in this Section 3.02,
setting forth the principal amount of the Shortfall Loan made by
such lending Partner and providing for the accrual of interest at
the Prime Rate from the date such Shortfall Loan was made pursuant
to this Section 3.02. Except as provided in the succeeding
sentence, each note shall provide that the principal thereof and the
interest thereon shall be due and payable ratably with all other
such notes then outstanding. The notes shall be due and payable as
follows: (i) current accrued and unpaid interest earned on the
notes during any fiscal year of the Partnership shall be due and
payable to the extent of, or out of, 100% of the Adjusted Cash Flow
for such year, such current interest to be paid quarterly; (ii)
unpaid principal on the First Shortfall Loans made by DW shall be
due and payable quarterly to the extent of, or out of, 100% of the
Adjusted Cash Flow for any fiscal year of the Partnership remaining
after payments pursuant to (i) above; (iii) accrued and unpaid
interest earned on the notes during prior fiscal years of the
Partnership and the principal of the notes (other than principal on
the First Shortfall Loans made by DW) shall be due and payable
quarterly to the extent of, and out of, 100% of any Adjusted Cash
Flow remaining after payments pursuant to (i) and (ii) above; (iv)
accrued and unpaid interest (whenever earned) on and principal of
(including principal on the First Shortfall Loans) the notes shall
be due and payable to the extent of, and out of, 100% of all
Adjusted Capital Proceeds; and (v) accrued and unpaid interest
(whenever earned) on and principal of (including principal on the
First Shortfall Loans) the notes shall be due and payable at
maturity thereof. All payments with respect to the notes shall be
subordinate with respect to all indebtedness of the Partnership to
unaffiliated third parties incurred in accordance with this
Agreement. No Partner shall be personally liable to pay any
indebtedness evidenced by such notes, and in the event any judgment
is obtained by the payee of any such note, enforcement of such
judgment shall be limited and restricted to Adjusted Cash Flow and
Adjusted Capital Proceeds and any other assets of the Partnership.
(f) DW has agreed to make its Mandatory Shortfall Loans
in reliance upon the other Partners' agreements to make their
Mandatory Shortfall Loans, and the other Partners have agreed to
make their Mandatory Shortfall Loans in reliance upon DW's agreement
to make its Mandatory Shortfall Loans. The parties acknowledge that
such agreements were an inducement, sine qua non, to make their
investments in the Partnership and, accordingly, that the
performance of such agreements is the basis, sine qua non, on which
each of the Partners is to be entitled to receive its interest in
Net Cash Flow, Capital Proceeds and each item of income, gain, loss,
deduction or tax credit of the Partnership. Therefore, in the event
that DW fails to make any Mandatory Shortfall Loan pursuant to this
Section 3.02, in whole or in part, within the time specified in this
Section 3.02 for such Mandatory Shortfall Loan, the other General
Partners (or any general partner of POP on behalf of POP) may send
an additional notice to DW setting forth such fact and the amount
unpaid, and DW shall have a further period of 10 days to make the
full amount of such Mandatory Shortfall Loan. If at the end of such
10-day period DW shall still have failed to make such Mandatory
Shortfall Loan, in whole or in part, the other Partners may make
such Mandatory Shortfall Loan. If the other Partners make such
Mandatory Shortfall Loan to the Partnership, the Partnership
Interests of DW and the other Partners shall each automatically be
modified as of the date of such loan so that (y) the Partnership
Interest of each Partner (other than DW) shall then be the sum of
(i) such Partner's Partnership Interest prior to the making of such
loan by such Partner plus (ii) one percent for every $6,000 (pro
rated for any portion thereof) then being loaned by such Partner in
lieu of the amount required to be loaned by DW; and (z) the
Partnership Interest of DW shall then automatically become 100%
minus the aggregate of the Partnership Interests (adjusted as
aforesaid) of the other Partners.
In the event that any Partner (other than DW) fails to make
any Mandatory Shortfall Loan pursuant to this Section 3.02, in whole
or in part, within the time specified in this Section 3.02 for such
Mandatory Shortfall Loan, DW may send an additional notice to such
Partner setting forth such fact and the amount unpaid, and such
Partner shall have a further period of 10 days to make the full
amount of such Mandatory Shortfall Loan. If at the end of such 10-
day period such other Partner shall still have failed to make such
Mandatory Shortfall Loan (and no other Partner shall have made such
Mandatory Shortfall Loan on his or its behalf), in whole or in part,
DW may make the Mandatory Shortfall Loan required of such other
Partner. If the DW makes such Mandatory Shortfall Loan to the
Partnership, the Partnership Interests of DW and such other Partner
shall each automatically be modified as of the date of such loan so
that (yy) the Partnership Interest of DW shall then be the sum of
(A) its Partnership Interest prior to the making of such loan by DW
plus (B) one percent for every $6,000 (pro rated for any portion
thereof) then being loaned by DW in lieu of the amount required to
be loaned by such other Partner; and (zz) the Partnership Interest
of such other Partner shall then automatically become 100% minus the
aggregate of the Partnership Interests (adjusted as aforesaid) of
all Partners (other than the Partner whose Partnership Interest is
being adjusted pursuant to this clause (zz)).
The foregoing rights under this Section 3.02(f) shall be
the sole remedy against DW or any other Partner for failing to make
any Mandatory Shortfall Loan. If at any time the adjustments to
Partnership Interests pursuant to this Section 3.02(f) would cause a
technical termination of the Partnership under Section 708 of the
Code, the effectiveness of such adjustments shall, unless otherwise
determined by the Partner(s) funding such Shortfall Loan,
automatically be delayed until the earliest time at which they could
be made without causing such a termination.
The provisions of this Section 3.02 shall inure solely to
the benefit of the Partners and are not made for and shall not
benefit any third party. In no event shall any person other than a
Partner have any right to enforce the obligations of the General
Partners to make Mandatory Shortfall Loans as provided in this
Section 3.02.
(g) As used in this Agreement, the following terms shall
have the meanings set forth below:
"Adjusted Capital Proceeds" shall mean Capital Proceeds
(as defined in Section 5.01) without reduction for any interest or
principal payments on Shortfall Loans or for payments of the
Investment Management Fee pursuant to Section 2.11.
"Adjusted Cash Flow" shall mean Net Cash Flow (as defined
in Section 4.01) without reduction for any interest or principal
payments on Shortfall Loans or for payments of the Investment
Management Fee pursuant to Section 2.11.
"Maximum Additional Shortfall Loan Amount" shall mean the
amount obtained by dividing (i) the amount initially deposited in
the Pollock Account pursuant to Section 3.02(d) divided by (ii)
0.233817.
"Prime Rate" shall mean a rate equal to the sum of the
rate publicly announced by Chemical Bank from time to time at its
principal office in New York, New York, as its prime rate (or
equivalent rate) plus 1% per year (based on the actual number of
days elapsed in a 360-day year and with any change in the Prime Rate
being effective as of the date announced), compounded monthly, but
in no event greater than the highest rate permitted by applicable
law.
SECTION 3.03. Conversion of a General Partner. Various
provisions of this Agreement provide that, upon the occurrence of
specified events ("Conversion Events"), a General Partner(s) of the
Partnership (the "Former General Partner(s)") may be converted to a
Limited Partner(s) of the Partnership automatically upon the
occurrence of a Conversion Event or at the direction of some other
Partner (the "Directing Partner"). In the case of such conversions
requiring action by the Directing Partner, the Directing Partner may
at any time within 60 days of receiving actual written knowledge of
a Conversion Event deliver a notice to all Partners directing that
such a conversion occur, effective upon the date of said delivery.
Upon any conversion of the general partnership interests of
Wilson in POP to limited partnership interests in POP pursuant to
Section 3.03 of the POP Partnership Agreement, DW shall have the
right, in its sole discretion, to terminate the Initial Management
Agreement and all other agreements entered into between the
Partnership and Wilson or his affiliates. Upon any conversion of
the general partnership interests of Miller Ream ("Ream") in POP to
limited partnership interests in POP pursuant to Section 3.03 of the
POP Partnership Agreement, DW shall have the right, in its sole
discretion, to terminate any agreements (including any management
agreement) entered into between the Partnership and Ream or his
affiliates.
A conversion under this Section shall not affect any
liabilities of the Former General Partner(s) arising with respect to
the period prior to the date of said conversion and, except for the
obligation to make Mandatory Shortfall Loans pursuant to Section
3.02 (which shall remain in full force and effect as provided
therein), the Former General Partner(s) shall following such
conversion (i) only have such liabilities to the Partners and third
parties as a Limited Partner would have hereunder and under
California law with respect to the period following such conversion,
(ii) have no rights thereafter as a General Partner, or as POP or
DW, as the case may be, hereunder and (iii) only have such rights as
a Limited Partner hereunder. Notwithstanding the foregoing
sentence, any Former General Partner(s) shall have the same right to
receive Net Cash Flow, Capital Proceeds, and each item of income,
gain, loss, deduction or tax credit of the Partnership as it would
have had if not so converted.
This Agreement shall be deemed amended to reflect a conversion
pursuant to this Section or the dilution of a Partner's Partnership
Interest pursuant to Section 3.02(f) without any action required of
the Partners and the Partners agree to execute all documents,
agreements and instruments, and to do all things necessary to give
effect to this Section and Section 3.02(f) and POP (and any other
person that hereafter becomes a General Partner) hereby grant an
irrevocable power of attorney to DW, and DW hereby grants an
irrevocable power of attorney to such other General Partners, to
execute and deliver all such instruments, documents and agreements
on their behalf, and each such power of attorney is coupled with an
interest and is irrevocable.
ARTICLE IV
Distribution of Net Cash Flow
SECTION 4.01. Definition of Net Cash Flow. As used herein,
the term "Net Cash Flow" for any period shall mean Gross Income for
such period minus (i) Operating Expenses, (ii) payments on
indebtedness of the Partnership (including Shortfall Loans),
(iii) leasing commissions, (iv) capital expenditures, (v) costs of
putting any tenant into possession and (vi) payments required
pursuant to Section 2.11, in each case for the same period. "Gross
Income" in respect of any period shall mean the gross amount of all
revenues received by the Partnership, calculated on a cash or
accrual basis, whichever is less, for such period, including rent,
additional rent and insurance proceeds paid in respect of a business
interruption or rental income interruption, but shall not include
capital contributions, Shortfall Loans or other loans by the
Partners to the Partnership or Capital Proceeds. "Operating
Expenses" in respect of any period shall mean the total amount of
all costs and expenses accrued by the Partnership in connection with
the collection of Gross Income and in the maintenance, management,
administration, operation, repair and replacement (other than
capital improvements) of the property for such period, including,
without limitation, advertising costs; real and personal property
taxes, assessments and other charges; all taxes upon the gross
rental income derived from the Property; water and sewer charges;
insurance premiums; annual charges for licenses, permits and
inspections; heat, lights, power, steam, and any other utility
charges; janitorial services; maintenance and service agreements on
equipment servicing the Property; window cleaning; garbage services;
costs of air conditioning; costs of supplies, materials, equipment
and tools; the cost of contesting the applicability to the Property
or the validity of any statute, ordinance, rule or regulation
affecting the Property; attorneys' and accountants' fees incurred in
connection with the ordinary course of business; and reasonable
reserves for working capital, capital expenditures and
contingencies.
SECTION 4.02. Distribution of Net Cash Flow. Within 30 days
after the end of each fiscal quarter, Net Cash Flow for such fiscal
quarter shall be distributed among the Partners pro rata in
accordance with their Partnership Interests.
ARTICLE V
Proceeds of Sale and Refinancing
SECTION 5.01. Distribution of Capital Proceeds. (a) As used
herein, the term "Capital Proceeds" shall mean any net proceeds
(after payment of all Partnership debts (other than accounts payable
incurred in the ordinary course of business which are reserved for)
then due and payable, (including, without limitation, all Shortfall
Loans and other borrowings of the Partnership, discount points,
sales expenses, legal costs, marketing costs, loan fees, and any
other costs associated with the sale, exchange, condemnation,
casualty or other disposition of the Property or a part thereof),
the establishment of appropriate reserves as Approved by the General
Partners and the making of payments required pursuant to Section
2.11 arising from (i) the sale, exchange, or other disposition of
the Property or any part thereof or underlying interest associated
therewith or (ii) the financing or refinancing (but not including
any loans made by Partners), condemnation (or transfer in lieu
thereof) or casualty of the Property or any part thereof or
underlying interest associated therewith (to the extent such
proceeds of casualty or condemnation are not used for repair or
restoration and excluding insurance proceeds paid in respect of a
business interruption or rental income interruption) (a "Capital
Transaction").
(b) Capital Proceeds shall be distributed among the
Partners pro rata in accordance with their Partnership Interests;
provided, however, that Capital Proceeds from a disposition of all
or substantially all the Property and any Capital Proceeds
distributed upon liquidation shall be distributed in accordance with
the Partners' capital accounts as adjusted pursuant to Article VI
for all Partnership operations up to and including such liquidation.
ARTICLE VI
Profits and Losses
SECTION 6.01. Capital Accounts. There shall be established
for each Partner on the books of the Partnership a capital account.
The capital account of each Partner on the Closing Date shall be as
set forth in Exhibit C. Each Partner's capital account on the
Closing Date shall thereafter be credited with the amount of all
cash contributions by a Partner to the Partnership made after the
Closing Date. It shall be increased by the amount of any income or
gain allocated to a Partner pursuant to Sections 6.02 and 6.03 and
by the Partner's share of any income of the Partnership exempt from
tax, and decreased by (i) the amount of all losses allocated to a
Partner pursuant to Sections 6.02 and 6.04 and by the Partner's
share of any expenditures of the Partnership not deductible in
computing its taxable income and not properly chargeable to the
capital account and (ii) all amounts distributed to a Partner (and
not returned by such Partner) pursuant to Sections 4.02 and 5.01.
The making, repayment and payment of interest on loans by Partners
to the Partnership (including Shortfall Loans) shall not affect
capital accounts. Unless such income or expenditures is directly
traceable to any Partner, each Partner's share of income of the
Partnership exempt from tax and of any expenditures of the
Partnership not deductible in computing its taxable income and not
properly chargeable to capital account for any fiscal year shall
equal such Partner's share of the Partnership's net profits or
losses (as the case may be) for such fiscal year.
SECTION 6.02. Net Profits and Losses. Subject to Sections
6.03 and 6.04, the net profits and losses of the Partnership and
each item of income, gain, loss, deduction or credit entering into
the computation thereof shall be allocated among the Partners and
credited to the capital accounts of the Partners in accordance with
their respective Partnership Interests; provided, however, that
until DW's capital account equals zero all net losses of the
Partnership shall be allocated 53.33% to POP and 46.67% to DW.
Notwithstanding anything else contained herein, any depreciation or
other tax benefits attributable to the Step-Up shall be allocated
solely to DW.
SECTION 6.03. Capital Profits. The net profits of the
Partnership arising from a Capital Transaction shall be allocated
among, and credited to the capital accounts of, the Partners in the
following order of priority:
(a) first, an amount of net profits equal to the
aggregate negative capital accounts (as reflected on the books of
the Partnership immediately prior to such Capital Transaction after
allocating all net profits and losses and charging for prior
distributions) of all Partners who have such negative capital
accounts shall be allocated among such Partners in proportion to
their respective negative capital accounts;
(b) second, an amount of any remaining net profits equal
to the excess of (x) the Capital Proceeds to be distributed to the
Partners with respect to such Capital Transaction pursuant to
Section 5.01 (without regard to the proviso set forth in Section
5.01(b)), over (y) the aggregate capital accounts (as adjusted to
reflect the allocation of net profits pursuant to subparagraph (a)
above) of all Partners shall be allocated among all Partners to whom
such Capital Proceeds are to be distributed in proportion to their
respective shares of such excess of (x) over (y) in order to bring
the capital account balance of each Partner up to an amount equal to
the amount of Capital Proceeds to be distributed to such Partner
pursuant to Section 5.01 (without regard to the proviso set forth in
Section 5.01(b)); and
(c) any remaining net profits shall be allocated in the
same proportions that an amount of Capital Proceeds equal to such
remaining net profits would be distributed pursuant to Section 5.01
were such Capital Proceeds to be distributed in addition to the
Capital Proceeds actually distributed to the Partners pursuant to
Section 5.01 (without regard to the proviso set forth in Section
5.01(b)).
SECTION 6.04. Capital Losses. The net losses of the
Partnership arising from a Capital Transaction shall be allocated
among and charged to the capital accounts of the Partners in the
following order of priority:
(a) first, an amount of loss equal to the excess of (x)
the aggregate positive capital accounts (as reflected on the books
of the Partnership prior to such Capital Transaction) of all
Partners who have positive capital accounts over (y) the aggregate
Capital Proceeds to be distributed to such Partners with respect to
such Capital Transaction pursuant to Section 5.01 (without regard to
the proviso set forth in Section 5.01(b)) shall be allocated among
such Partners in proportion to their respective shares pursuant to
Section 5.01 (without regard to the proviso set forth in Section
5.01 (b)) of such excess of (x) over (y); and
(b) any remaining loss shall be allocated among Partners
pro rata in accordance with their Partnership Interests.
SECTION 6.05. Distribution in Kind. In case any of the
assets of the Partnership are distributed in kind, the capital
account of the Partners receiving such assets shall be adjusted as
if the Partnership had sold the distributed assets for their fair
market value on the date of distribution and the resulting gain or
loss had been allocated to the Partners pursuant to Section 6.03 or
6.04, as the case may be.
SECTION 6.06. Depreciation Recapture. Any gain recognized
upon a Capital Transaction that is characterized as ordinary income
pursuant to Sections 1245 or 1250 of the Code and any recapture of
investment tax credit shall, to the extent possible, without
increasing the total gain allocated to a Partner on such Capital
Transaction pursuant to Section 6.03, be allocated to the Partners
in the same proportions that the Partners shared the depreciation
deductions giving rise to such ordinary income or such investment
tax credit.
SECTION 6.07. Definition of Net Profits and Losses. The "net
profits" and "net losses" of the Partnership shall be the net
profits and losses of the Partnership for Federal income tax
purposes as determined by the independent public accountants
referred to in Section 2.07(c) and Approved by the General Partners.
ARTICLE VII
Transfers; Termination
SECTION 7.01. Transfer of General Partner's Interests. (a)
A General Partner may sell, assign, mortgage, pledge, grant a
security interest in or otherwise transfer its Partnership Interest,
whether voluntarily or by operation of law, only as provided in this
Agreement. Any unpermitted sale, assignment, mortgage, pledge or
transfer of, or grant of a security interest in, the Partnership
Interest of a General Partner shall be null and void.
(b) Except as provided in Sections 7.03(d) and 7.07,
neither a proposed additional General Partner in the Partnership nor
a proposed successor to a withdrawing, retiring or removed General
Partner shall be admitted as a General Partner unless such person is
accepted as a General Partner by all the other General Partners.
Such proposed additional or successor General Partner shall be
admitted as a General Partner immediately after such acceptance is
given and upon such person's assumption, in writing, of all the
rights, powers and obligations of a General Partner under this
Agreement.
SECTION 7.02. Options on Bankruptcy, Etc. (a) If DW shall
be bankrupt, then the other General Partners (or the general
partners of POP (other than DW) acting on behalf of POP), at their
option, shall have the right, in addition to any other rights or
claims for damages or specific performance, to purchase the entire
Partnership Interest of DW at the fair market value thereof (as
determined pursuant to Section 7.09) and/or to cause DW's entire
Partnership Interest to be converted to a limited Partnership
Interest pursuant to Section 3.03. Any purchase of the Partnership
Interests of DW hereunder shall be consummated within 90 days after
the final determination of the purchase price therefor and the
purchase price shall be paid by certified check or by wire transfer
of immediately available funds to an account to be designated by DW.
(b) If any General Partner (other than DW) shall be
bankrupt (such General Partner being hereinafter called the
"Bankrupt Partner"), then DW (at its option) shall have the right,
in addition to any other rights or claims for damages or specific
performance, to purchase the entire Partnership Interest of the
Bankrupt Partner at the fair market value thereof (as determined
pursuant to Section 7.09) and/or to cause such Bankrupt Partner's
entire Partnership Interest to be converted to a limited Partnership
Interest pursuant to Section 3.03. Any purchase of the Partnership
Interests of the Bankrupt Partner hereunder shall be consummated
within 90 days after the final determination of the purchase price
therefor and the purchase price shall be paid by certified check or
by wire transfer of immediately available funds to an account to be
designated by the Bankrupt Partner.
(c) If any General Partner shall be dead, insane,
incompetent, incapacitated, dissolved, liquidated or its existence
shall be otherwise terminated, such General Partner's entire
Partnership Interest shall automatically, without further act by any
Partner, become converted to a limited Partnership Interest pursuant
to Section 3.03 as of the date of the occurrence of such event.
SECTION 7.03. Right of First Offer. (a) At any time after
the eighth anniversary of the Closing Date if there shall be more
than one General Partner, the Partners (other than DW) as a group
(the "Other Partners") shall have the right to sell all (but not
part) of their Partnership Interests to any third party and DW shall
have the right to sell all (but not part) of its Partnership
Interests to any third party; provided, however, that DW shall first
be obligated to offer to sell all its Partnership Interests to the
other General Partners (the "Other General Partners"), and the Other
Partners shall first be obligated to offer to sell all their
Partnership Interests to DW, in each case pursuant to the provisions
of this Section 7.03. In order to initiate its right to sell its
Partnership Interest to a third party, the Other Partners or DW, as
the case may be (hereinafter called "Seller") shall deliver a
notification to the General Partner or General Partners, as the case
may be, entitled pursuant to the preceding sentence to be given a
right of offer (the "First Offer Notification") describing a
proposed offer to sell such Partnership Interests for a price
specified in such First Offer Notification (the "First Offer Sale
Price"). The First Offer Notification shall (i) advise that Seller
desires to sell all its Partnership Interests to a third party
(which third party need not be named or then known), (ii) state the
proposed First Offer Sale Price, (iii) set forth the other material
terms of the proposed offer, which must include an earnest money
deposit equal to at least 5% of the cash portion of the First Offer
Sale Price (the "First Offer Deposit") and a statement of who will
pay for transfer taxes and other closing costs (the "Other First
Offer Sale Terms"), and (iv) give DW or the other General Partners,
as the case may be, the option to purchase such Partnership
Interests at the First Offer Sale Price and upon the Other First
Offer Sale Terms or to consent to the sale of the entire Property on
terms directly proportional to the First Offer Sale Price (e.g., if
the Selling General Partner's Partnership Interest is 50%, the
entire Property may be sold at a price equal to 200% of the First
Offer Sale Price) and consistent with the Other First Offer Sale
Terms.
(b) Within 30 days after the giving of the First Offer
Notification, DW or the Other General Partners, as the case may be,
shall give notice to Seller (which in the case of the Other Partners
as a group as Seller may be given to any of the Other General
Partners as representative of the Other Partners) of either:
(i) Election to purchase such Partnership Interest, in
which event such notice shall be sent with evidence that the
First Offer Deposit has been paid to an escrow holder approved
by the Seller, to be distributed as provided herein, together
with appropriate acknowledgment under California law of the
First Offer Deposit as liquidated damages in the event of a
default; or
(ii) Election to consent to the sale of the entire
Property, in which event the Seller shall use all reasonable
efforts to arrange for such sale; or
(iii) Election not to purchase such Partnership Interest
or to consent to the sale of the entire Property, in which
event the Seller shall have the right to offer to sell and to
sell such Partnership Interest to any third party upon terms
and conditions no less favorable to the Selling General
Partner than the First Offer Sale Price and the Other First
Offer Sale Terms; provided such a sale is the subject of a
binding contract within 12 months of, and closes within 18
months of, the giving of the First Offer Notification.
If DW or the Other General Partners, as the case may be, do not give
notice to the Seller in answer to the First Offer Notification
within the 30-day period as provided herein, it or they shall be
deemed to have given the answer set forth in clause (iii) above.
(c) The closing of any purchase and sale of Partnership
Interests pursuant to Section 7.03(b)(i) shall take place not later
than 180 days after the Seller gives the First Offer Notification.
(d) At the closing of a sale of Partnership Interests
pursuant to Section 7.03(b)(i) or (iii), the Partnership and the
Partners shall execute and deliver such instruments as shall be
appropriate to transfer such Partnership Interests and, if
necessary, to admit such purchaser as a General Partner in respect
of the General Partnership Interests so transferred (and as a
Limited Partner in respect of the Limited Partnership Interests so
transferred), such purchaser shall simultaneously pay to the Seller
the cash portion of the First Offer Sale Price (less the amount of
the First Offer Deposit already paid, which shall be released from
escrow to the Seller) and the Partners and the purchaser shall
perform the Other First Offer Sale Terms to be performed by them.
(e) In the event that DW or the Other General Partners,
as the case may be, default in any obligation to purchase a
Partnership Interest pursuant to this Section 7.03, then the Seller
shall be paid the First Offer Deposit as liquidated damages and may,
at any time for a period of 18 months after such default sell all
its Partnership Interests to any person at such price and on such
terms as Seller may determine.
(f) Notwithstanding anything contained herein to the
contrary, if DW exercises its rights under Section 7.03(a) hereof
concurrently with the exercise of its rights under 7.03(a) of the
POP Partnership Agreement, the other General Partners hereunder
shall be required to make and shall be deemed to have made the same
election under Section 7.03(b) hereof as the election made by the
"Other General Partners" (as defined in Section 7.03(a) of the POP
Partnership Agreement) under Section 7.03(b) of the POP Partnership
Agreement.
SECTION 7.04. Transfer of Limited Partner's Interests. (a)
The bankruptcy, dissolution, death, insanity, incompetency or legal
incapacity of a Limited Partner shall not dissolve or terminate the
Partnership. Upon the occurrence of any such event, the legal
representative of such Limited Partner shall be deemed to be the
assignee of such Limited Partner's Partnership Interest and may
become a substituted Limited Partner upon the terms and conditions
set forth in Section 7.05.
(b) A Limited Partner may sell, assign, mortgage,
pledge, grant a security interest in or otherwise transfer its
Partnership Interest, whether voluntarily or by operation of law,
only as provided in this Agreement. Any unpermitted sale,
assignment, mortgage, pledge or transfer of, or grant of a security
interest in, the Partnership Interest of a Limited Partner shall be
null and void. Except as otherwise provided in this Agreement, a
Limited Partner may assign all or any portion of its Partnership
Interest to a Permitted Transferee of such Limited Partner. A
Limited Partner may assign all (but not part) of its Partnership
Interest to a third party if such assignment is Approved by the
General Partners, such approval not to be unreasonably withheld.
Any other assignment by a Limited Partner of its Partnership
Interest may occur only if Approved by the General Partners, which
approval may be arbitrarily withheld. Upon any approved assignment
pursuant to this Section 7.04(b), the assignee of such interest
shall become a substituted Limited Partner only upon the terms set
forth in Section 7.05.
SECTION 7.05. Substituted Limited Partners. (a) If Approved
by the General Partners (which approval may be granted or denied in
their sole discretion), any person who acquires the Partnership
Interest, or any part thereof, of a Partner may be admitted as a
substituted Limited Partner.
(b) The admission of an assignee as a substituted
Limited Partner shall be conditioned upon the assignee's written
acceptance and adoption of all the terms and provisions of this
Agreement. Any such assignee not admitted as a substituted Limited
Partner shall not have any rights of a Limited Partner but shall
have only the right to receive a ratable portion of the Net Cash
Flow, Capital Proceeds and net profits and losses relating to the
Partnership Interest or part thereof assigned.
(c) Any person who acquires all or any part of a
Partner's Partnership Interest shall, whether or not admitted to the
Partnership as a Partner, acquire the rights to the ratable portion
of the Net Cash Flow, Capital Proceeds, and net profits and losses
relating to such Partnership Interest or part thereof assigned.
SECTION 7.06. Restrictions on Transfer. (a) In addition to
any other limitations contained in this Agreement, no Partner shall
assign, sell, mortgage, pledge, grant a security interest in or
otherwise transfer, whether voluntarily or by operation of law, its
Partnership Interest or its share of the net profits and losses, Net
Cash Flow or Capital Proceeds (i) for a period of 18 months
following the Closing Date, (ii) unless such Partner complies with
the applicable provisions of Federal and state securities laws or
(iii) at any time prior to the eighth anniversary of the Closing
Date if such action would cause a technical termination of the
Partnership under Section 708 of the Code.
(b) Notwithstanding anything contained in this Agreement
to the contrary, no Partner shall be permitted to assign, sell,
mortgage, pledge, grant a security interest in or otherwise transfer
its Partnership Interest or its share of the net profits and losses,
Net Cash Flow or Capital Proceeds after a General Partner has given
a First Offer Notification if the effect of such action would be to
prevent such General Partner from selling its Partnership Interest
pursuant to Section 7.03 as a result of the restrictions contained
in Section 7.06(a). The foregoing restriction shall remain in
effect until such General Partner has so sold its Partnership
Interest pursuant to Section 7.03 or until the right to so sell its
Partnership Interest after giving any such notice shall expire,
whichever shall occur first.
SECTION 7.07. Syndication. Notwithstanding anything to the
contrary contained in this Agreement, POP/DW Associates, a
California Limited Partnership ("POP/DW"), a general partner of DW,
shall have the right (in its sole discretion) at any time to
implement a plan of syndication (the "Plan of Syndication") of the
limited partnership interests in POP/DW and/or to assign all or any
portion of its partnership interests in DW to Dean Witter Realty
Growth Properties, L.P. ("Growth Properties") (and, in the case of
an assignment of all its partnership interests in DW to Growth
Properties, Growth Properties may become a General Partner hereunder
and assume all the rights and obligations of DW hereunder provided
that Growth Properties agrees in writing to be bound hereby).
Additionally, the partnership interests of DW (and of its partners)
shall be subject only to those transfer restrictions, if any, which
DW (or its partners), in their sole discretion, shall elect to
impose; provided, however, that at all times (except after a sale by
DW of its Partnership Interests pursuant to Section 7.03) an
affiliate of Dean Witter Reynolds Inc. or a person controlled by
John J. Preotle, Jr., William B. Smith, E. Davisson Hardman, Jr.,
Warren B. Lane and Peter J. Carr, or any of them, or of which any of
them shall be general partners, shall be or remain a general partner
of DW. All Partners agree to cooperate fully with DW and POP/DW in
connection with the implementation of the Plan of Syndication but
only to the extent that such cooperation does not make them an
"issuer" under the Securities Act of 1933, as amended (the
"Securities Act"), or does not otherwise create additional liability
for them under the Securities Act or the Securities Exchange Act of
1934, as amended (the "Exchange Act"). POP/DW agrees to permit the
general partners of POP (other than DW) to review and approve all
offering materials used in connection with the Plan of Syndication,
such approval not to be unreasonably withheld and to be deemed given
if written objection to such materials is not received by POP/DW
within 15 days after receipt of such materials by such general
partners. POP/DW agrees that the Plan of Syndication will be
conducted in accordance with all applicable Federal and state
securities laws. POP/DW further agrees to indemnify and hold
harmless the Partners from and against any and all losses, claims,
damages, liabilities, costs and expenses (including reasonable
attorney's fees) to which they may become subject under the
Securities Act, Exchange Act, any other Federal or state law,
statute, or regulation, at common law, or otherwise, arising out of
or based on (i) any untrue statement or alleged untrue statement of
a material fact made in connection with any sale of limited
partnership interest in POP/DW through the Plan of Syndication, (ii)
the omission or alleged omission to state a material fact required
to be stated or necessary to make the statements made in connection
with any such sale not misleading, (iii) the failure to register or
qualify such sales under the Securities Act or under state
securities laws or (iv) any violation of any rule or regulation
promulgated under the Securities Act, the Exchange Act or any
Federal or state statute or regulation applicable to any such sale.
Notwithstanding anything to the contrary contained in this
Agreement, this indemnity shall not apply to any losses, claims,
damages or liabilities arising out of or based upon any untrue
statement of a material fact or omission of any material fact made
in reliance upon and in conformity with (i) representations and
warranties of the Partnership in the Purchase Agreement or of POP in
the POP Purchase Agreement or (ii) information (including financial
statements) furnished in writing by any General Partner (other than
DW) or any general partner of POP (other than DW) expressly for use
in connection with any such sale.
SECTION 7.08. Termination. (a) The Partnership shall
terminate upon the first to occur of any of the following events or
dates:
(i) by mutual agreement of the General Partners;
(ii) December 31, 2025;
(iii) the sale or other disposition of all the assets of
the Partnership and receipt of consideration therefor; or
(iv) in the event of the bankruptcy, death, insanity,
incompetence, liquidation, termination or legal incapacity of
a General Partner (except in any case in which a General
Partner which is a partnership shall be reconstituted by its
remaining partners following any liquidation or dissolution
caused by the legal incapacity of one or more of its
partners), unless any of the remaining General Partners elect
within 60 days of the termination required under this clause
(iv) to continue the business of the Partnership for the
balance of the term specified in Section 1.02.
(b) Contemporaneously with any disposition of the
Property pursuant to any provision of this Article VII or upon
termination of the Partnership under Section 7.08(a), the
Partnership shall, to the extent (but only to the extent) of the
assets of the Partnership, discharge the obligations (including
establishment of necessary reserves) and pay the indebtedness of the
Partnership (including Shortfall Loans) and distribute the balance,
if any, of the assets of the Partnership to the Partners in the
order of priority set forth in Section 5.01. After the foregoing
has been accomplished, the Partnership shall be deemed liquidated
and this Agreement shall terminate and no Partner shall have any
further rights or obligations hereunder. The liquidation of the
Partnership and the termination of the business and affairs of the
Partnership shall be conducted by the General Partners jointly.
During such period, the business and affairs of the Partnership
shall be conducted so as to maintain and preserve the assets of the
Partnership in a manner consistent with the liquidation of the
Partnership.
SECTION 7.09. Appraisal. In the event that it becomes
necessary, under the terms of this Agreement, to determine the fair
market value of a Partnership Interest, such value shall be
determined by appraisal, made by a board of three reputable real
estate appraisers, each of whom shall be a member of the American
Institute of Real Estate Appraisers and shall have no disqualifying
interest, as that term is hereinafter defined. One appraiser shall
be appointed by the person or persons holding such Partnership
Interest and a second appraiser shall be appointed by the Partner
desiring to purchase the same. A third appraiser shall be appointed
by the first two appraisers. If the first two appraisers are unable
to agree on a third appraiser within thirty (30) days after the
appointment of the second of them to be appointed, or if either side
refuses, is unable to or neglects to appoint an appraiser as herein
provided, then such third appraiser or such other appraiser whose
appointment was not made as aforesaid shall be appointed by the then
President of the American Institute of Real Estate Appraisers or
such successor body hereafter constituted exercising similar
functions, unless such President shall have any direct or indirect
financial or other business interest in any of the parties having a
power to appoint an appraiser, jointly or alone, other than
financial holdings of not more than one percent (1%) of the value of
any class of securities issued by any such party or by any
corporation or partnership affiliated therewith (hereinafter
referred to as a "disqualifying interest"), in which case the third
appraiser or such other appraiser whose appointment was not made as
aforesaid shall be appointed by the highest ranking officer of the
American Institute of Real Estate Appraisers or such successor body
who shall not have a disqualifying interest. Each appraiser shall
within 60 days after the appointment of the third appraiser make his
valuation on the basis of the value of an interest irrespective of
the proportion of ownership or control of the Partnership such
interest represents or whether it is a general or limited
Partnership Interest. If the determinations of any two or all three
of the appraisers shall be identical in amount, such amount shall be
deemed to be the fair market value of the interest in question. If
the determinations of all three appraisers shall be different in
amount the highest value shall be averaged with the middle value
(the average being hereinafter referred to as Sum A), the lowest
appraised value shall be averaged with the middle value (the average
being hereinafter referred to as Sum B), and the fair market value
of the interest in question shall be determined as follows:
(a) if neither Sum A nor Sum B differs from the middle
appraised value by more than five percent (5%) of such middle
appraised value, then the fair market value of the interest in
question shall be deemed to be the average of the three appraisals;
(b) if either Sum A or Sum B (but not both of the sums)
differs from the middle appraised value by more than five percent
(5%) of such middle appraised value, then the fair market value of
the interest in question shall be deemed to be the average of the
middle appraised value and the appraised value closest in amount to
the middle value; and
(c) if both Sum A and Sum B differ from the middle
appraised value by more than five percent (5%) of such middle
appraised value, the appraisal shall have no force and effect, and
the fair market value of the interest in question shall be similarly
determined by a panel of three qualified real estate appraisers who
shall be members of the American Institute of Real Estate Appraisers
and who shall have no disqualifying interest. Such panel shall be
appointed by the then President of the American Institute of Real
Estate Appraisers or such successor body hereafter constituted
exercising similar functions, unless such President shall have a
disqualifying interest, in which case the panel shall be appointed
by the highest ranking officer of the American Institute of Real
Estate Appraisers or such successor body hereafter constituted
exercising similar functions who shall not have a disqualifying
interest.
The costs of this appraisal procedure shall be borne equally
by the buying and selling Partner.
ARTICLE VIII
Liabilities
SECTION 8.01. Liabilities. The liabilities of the
Partnership or of the Partners and the partners in the Partners as a
part of or arising out of any of the activities of the Partnership
shall be covered by appropriate policies of public liability
insurance to be purchased by the Partnership. (It being the
intention of the parties that all potential liabilities be covered
by insurance consistent with the Insurance Guidelines from time to
time Approved by the General Partners.) In the event that any
liability arising out of any activities of the Partnership shall not
be adequately covered by such public liability insurance, the amount
of liability not so insured shall, subject to Section 8.02, first be
satisfied out of the assets of the Partnership, and if such assets
are not sufficient fully to satisfy the amount of the liability not
so insured each Partner which shall have been a General Partner
during such period shall be responsible for the balance of any
amount due in proportion to the amount its Partnership Interest
bears to the aggregate of the Partnership Interests of all such
General Partners; provided, however, that for purposes of this
Section 8.01 the aggregate Partnership Interests of the General
Partners (other than DW) shall be equal to the aggregate Partnership
Interests of all Partners (other than DW). In the event a General
Partner shall have paid an amount in excess of its share of any such
liability, the other of such General Partners and the Limited
Partners to the extent of their Partnership Interests shall promptly
reimburse such General Partner to the extent of such excess.
Nothing in this Section 8.01 shall be deemed to affect the
obligations of the Partners to make capital contributions or
otherwise contribute funds to the Partnership pursuant to this
Agreement.
SECTION 8.02. Indemnification; No Recourse. (a) Each
Partner shall Indemnify each other Partner and hold harmless each
such other Partner against and from all claims, demands, actions,
damages, losses, liabilities, costs and expenses which shall or may
arise by virtue of anything done or omitted to be done by the former
(or by any of its partners, agents, employees or other
representatives) which is outside the scope, or in breach of the
terms, of this Agreement or which constitutes gross negligence or
wilful misconduct. Any Partner having any claim, demand, action or
right of action against any other Partner and seeking
indemnification or any other remedies therefor whether under this
Section or Section 8.01 shall look only to the interest of the
indemnifying Partner in the Partnership, and no Partner shall seek
satisfaction of such indemnity from any other assets of any other
Partner or any partner of any other Partner; provided, however, that
the foregoing limitations shall not be applicable with respect to
(i) any claim for indemnity based upon gross negligence or wilful
misconduct or (ii) any amount paid to third persons by any General
Partner in excess of its share of any liability and for which it
seeks reimbursement from any other General Partner pursuant to the
second to last sentence of Section 8.01 or (iii) any claim for
indemnity arising out of the covenants to make capital contributions
pursuant to Section 3.01. In no event shall any Partner seek
satisfaction of any claim for indemnity against a limited partner of
any other Partner, except to the extent that such limited partner
shall have guaranteed any obligations of such other Partner pursuant
to a separate agreement and then only in accordance with such
separate agreement. Nothing contained in this Section 8.02 shall be
construed to limit or restrict the rights of DW under the Purchase
Agreement or the POP Purchase Agreement (including, without
limitation, under Sections 10 and 11 thereof).
(b) Any Partner claiming an indemnity under this
Agreement shall give notice of the existence of the claim as soon as
practicable to the indemnifying party (provided that failure to give
such notice shall not relieve the indemnifying party of its
liabilities except to the extent it is prejudiced thereby), and the
indemnifying party shall control the defense or settlement of any
third party claim, demand or action which it is indemnifying in its
entirety.
(c) Notwithstanding anything contained in Sections 8.01
and 8.02 to the contrary, in computing Net Cash Flow and Capital
Proceeds any liabilities which pursuant to Section 4(D) of the
Purchase Agreement shall not be the responsibility of DW (and which
have not been previously paid to DW or to the creditors of the
Partnership for the account of DW by the other Partners) and any
other unpaid claim of DW for indemnification under the Purchase
Agreement which shall have been established by arbitration or court
order or consented to, shall be charged to the Partners (other than
DW) in proportion to their Partnership Interests.
ARTICLE IX
General
SECTION 9.01. Other Businesses. Each Partner shall have the
right to engage in other businesses and ventures of every nature,
including, without limitation, the ownership, management,
improvement and operation of other real estate, including real
estate located in the vicinity of and/or competitive with the
Property, provided that each of Wilson and Ream will act in good
faith in conducting business for and with the Partnership and, in
determining good faith, transactions of each of them will be
considered as a whole on an ongoing basis (as opposed to an
individual basis), and provided further, that Wilson and Ream and
their affiliates shall not divulge any nonpublic information with
respect to the Partnership or the Property to any third persons for
the benefit of, or in connection with, any other project or venture
(other than POP).
SECTION 9.02. Notices. All notices, demands or other
communications hereunder shall be in writing and shall be deemed to
have been given on (i) the date of delivery, if delivered by hand,
(ii) upon confirmation of receipt if sent by independent courier
service guaranteeing one-day delivery, or (iii) the seventh day
after mailing, if mailed first-class, postage prepaid, United States
registered or certified mail; in each case, to the parties at the
addresses set forth below or at such other addresses as such parties
may designate by notice to the other parties:
(i) if to DW, in care of:
Dean Witter Realty Inc.
130 Liberty Street
New York, New York 10005
Attention of Ronald DiPietro,
with a copy to
Cravath, Swaine & Moore
One Chase Manhattan Plaza
New York, N.Y. 10005
Attention of William P. Dickey, Esq.
(ii) if to POP (or any of its partners), at:
William Wilson & Associates
2929 Campus Drive
Suite 450
San Mateo, California 94403
with a copy to
Farella, Braun & Martel
235 Montgomery Street
San Francisco, California
Attention of Lee Van Boven, Esq.
with a copy to
Pollock Partnership, a California limited
partnership
801 Welch Road
Palo Alto, California 94304
(iii) if to the Limited Partners, at their addresses set
forth in Exhibit A.
SECTION 9.03. Applicable Law. This Agreement and the
obligations of the parties hereunder shall be interpreted, construed
and enforced in accordance with the laws of the State of California.
[???] any of its acts or actions, and each party hereto hereby
agrees to indemnify and hold harmless the others from and against
all liabilities, costs, damages and expenses from any such claims.
SECTION 9.04. [Intentionally Omitted.]
SECTION 9.05. Entire Agreement. This Agreement contains the
entire agreement among the parties hereto relative to the
continuation and operations of the Partnership.
SECTION 9.06. Waiver. No consent or waiver, express or
implied, by any party hereto of any breach or default by any other
party hereto in the performance of its obligations hereunder shall
be deemed or construed to be a consent or waiver to or of any other
breach or default in the performance by such party of the same or
any other obligations of such party hereunder. Failure on the part
of any party to complain of any act or failure to act of another
party or to declare another party in default, irrespective of how
long such failure continues, shall not constitute a waiver by such
party of its rights hereunder.
SECTION 9.07. Severability. If any provision of this
Agreement or the application thereof to any person or circumstance
shall be invalid or unenforceable to any extent, the remainder of
this Agreement and the application of such provisions to other
persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
SECTION 9.08. Relationship of the Partners. The relationship
between the Partners shall be limited to the performance of the
transactions contemplated by this Agreement and in accordance with
the terms of this Agreement. The relationship set forth in this
Agreement shall be construed and deemed to be a limited partnership
under the laws of the State of California created for the sole
purpose of carrying out the transactions contemplated hereby.
Nothing herein shall be construed to authorize any Partner to act as
general agent for any other. Nothing in this Agreement shall be
deemed to create any right in any creditor or other person not a
party hereto (other than the successors and assigns of a party
hereto and, to the extent expressly provided herein, the general
partners of POP and the general partners of DW) and this instrument
shall not be construed in any respect to be a contract in whole or
in part for the benefit of any other party except as aforesaid.
Except as otherwise provided herein, all provisions of this
Agreement shall be binding upon, inure to the benefit of and be
enforceable by and against the respective heirs, executors,
administrators, legal representatives, successors and permitted
assigns of the Partners. Any permitted assignee of DW's entire
Partnership Interest shall succeed to all the rights and obligations
of DW hereunder provided such assignee agrees to be bound hereby,
and upon such assignment and assumption DW shall be released from
its obligations hereunder.
SECTION 9.09. Further Assurances. The parties hereto shall
execute and deliver such further instruments and do such further
acts and things as may be required to carry out the intent and
purposes of this Agreement.
SECTION 9.10. Counterparts. This Agreement may be executed
in counterparts and as so executed shall constitute one agreement.
SECTION 9.11. Captions. Captions contained in this Agreement
are inserted only as a matter of convenience and in no way define,
limit, extend or describe the scope of this Agreement or the intent
of any provision hereof.
SECTION 9.12. Waiver of Partition. Each Partner hereby
irrevocably waives any right to partition the Property.
SECTION 9.13. Certain Definitions. (a) Whenever the context
may require, any pronouns used herein shall include the
corresponding masculine, feminine or neuter forms, and the singular
form of nouns and pronouns shall include the plural and vice versa.
Terms such as "herein," "hereby," "hereunder" and "hereof," unless
the context otherwise requires, refer to this Agreement as a whole
and not to the Articles, Sections or other subdivisions where the
terms appear. References herein to any agreement or other
instrument shall, unless the context otherwise requires, be deemed
references to the same as it may from time to time be changed,
amended or extended in accordance with its terms.
(b) The term "person" shall include an individual,
corporation, partnership, association, trust, joint stock company or
unincorporated organization.
(c) An "affiliate" of a specified person is a person
who, directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the
person specified.
(d) The "bankruptcy" of a person shall be deemed to
have occurred or a person shall be deemed "bankrupt" upon the
happening of any of the following: (i) the filing of an application
by such person for, or a consent to, the appointment of a trustee of
its or his assets; (ii) the filing by such person of a voluntary
petition in bankruptcy or the seeking of relief under Title 11 of
the United States Code, as now constituted or hereafter amended, or
the filing of a pleading in any court of record admitting in writing
its or his inability to pay its or his debts as they come due;
(iii) the making by such person of a general assignment for the
benefit of creditors; (iv) the filing by such person of an answer
admitting the material allegations of, or its or his consenting to,
or defaulting in answering, a bankruptcy petition filed against it
or him in any bankruptcy proceeding or petition seeking relief under
Title 11 of the United States Code, as now constituted or as
hereafter amended; or (v) the entry of an order, judgment or decree
by any court of competent jurisdiction adjudicating such person a
bankrupt or appointing a trustee of its or his assets, and such
order, judgment or decree continues unstayed and in effect for a
period of 60 consecutive days.
(e) The term "POP Partnership Agreement" shall mean the
Amended and Restated Agreement of Limited Partnership of POP dated
as of the date hereof, as amended from time to time. The term "POP
Purchase Agreement" shall mean the Sale, Purchase and Contribution
Agreement dated as of December 27, 1985, between POP and DW.
(f) The term "Permitted Transferee" shall mean, with
respect to any person, such person under declaration of trust, or
any parent, spouse, brother, sister, lineal descendant or adopted
descendant of such person. Any transfer of a Partnership Interest
to a Permitted Transferee may be by declaration of trust, inter
vivos gift, specific testamentary disposition or for consideration.
SECTION 9.14. Power of Attorney. Each Limited Partner hereby
irrevocably constitutes and appoints each General Partner and any
person hereafter admitted pursuant to this Agreement as a successor
or additional General Partner, acting singly or collectively (the
"Attorneys"), in each case with full power of substitution, the true
and lawful attorney-in-fact of such Limited Partner, with full power
and authority in such Limited Partner's name, place and stead, to
make, execute, verify, consent to, swear to, make oath as to,
acknowledge, publish, record and file all of the following:
(i) the New Certificate or any amendment thereto and any
other agreements, certificates, consents or other instruments said
Attorneys, or any of them, deem necessary or appropriate for the
purpose of giving effect to the provisions of this Agreement and to
preserve the character of the Partnership as a limited partnership,
the execution and delivery by any of said Attorneys of any such
agreement, certificate, consent or other instrument being conclusive
evidence that said execution and delivery was authorized hereby;
(ii) any and all amendments to or modifications of this
Agreement and of the instruments described in subparagraph (i)
hereof (including, without limitation, amendments of this Agreement
necessary to effect the addition, removal or substitution of one or
more General or Limited Partners or changes in Partnership Interests
pursuant to Section 3.02(f) or otherwise), provided that each such
amendment of this Agreement is adopted in accordance with or made
pursuant to the terms of this Agreement, the execution and delivery
by any of said Attorneys of any such amendment or modification being
conclusive evidence that such execution and delivery was authorized
hereby;
(iii) any and all certificates and other instruments
which may be required to effectuate the dissolution and termination
of the Partnership pursuant to the provisions of this Agreement, the
execution and delivery by any of said Attorneys of any such
certificate or other instrument being conclusive evidence that such
execution and delivery was authorized hereby; and
(iv) all such other instruments as shall be Approved by
the General Partners as necessary or desirable to carry out fully
the provisions of this Agreement in accordance with its terms, the
execution and delivery of such instruments by any of said Attorneys
being conclusive evidence that said execution and delivery was
authorized hereby.
Each Limited Partner acknowledges that the Power of Attorney
hereby granted is coupled with an interest and is irrevocable. Said
Power of Attorney shall survive the death or incapacity of such
Limited Partner, or, if such Limited Partner is a partnership,
corporation, trust or other entity, the dissolution, liquidation or
termination thereof, or the assignment of such Limited Partner's
limited Partnership Interest or any part thereof. If such Limited
Partner transfers its limited Partnership Interest, the Power of
Attorney granted hereby shall remain in effect for the purpose of
and for the length of time necessary to effectuate and complete such
transfer.
SECTION 9.15. Amendments. Except as provided in this
Agreement, this Agreement may not be modified or amended unless (i)
such modification or amendment has been Approved by the General
Partners and (ii) in the case of any modification or amendment
increasing the obligation of the Limited Partners to make capital
contributions or Shortfall Loans, decreasing the rights of Limited
Partners hereunder to Net Cash Flow or Capital Proceeds or amending
this Section 9.15, such modification or amendment has been approved
in writing by each Limited Partner.
<PAGE>
IN WITNESS WHEREOF, this Agreement is executed as of the date
first set forth above.
GENERAL PARTNERS:
PENINSULA/DW ASSOCIATES
by POP/DW ASSOCIATES,
a California Limited
Partnership, General
Partner,
by POP/LIBERTY STREET
ASSOCIATES, a
California Limited
Partnership, General
Partner,
/s/Warren B. Lane
by ________________
Warren B. Lane
General Partner
by DEAN WITTER REALTY GROWTH
PROPERTIES, L.P.,
General Partner,
by DEAN WITTER REALTY
GROWTH PROPERTIES
INC., Managing General
Partner,
/s/Warren B. Lane
by _________________
Warren B. Lane
Sr. Vice President
PENINSULA OFFICE PARK
by PENINSULA/DW ASSOCIATES, General
Partner,
by POP/DW ASSOCIATES,
a California Limited
Partnership, General
Partner,
by POP/LIBERTY STREET
ASSOCIATES,
a California Limited
Partnership, General
Partner,
/s/Warren B. Lane
by _________________
Warren B. Lane
General Partner
by DEAN WITTER REALTY GROWTH
PROPERTIES, L.P.,
General Partner,
by DEAN WITTER REALTY GROWTH
PROPERTIES INC.,
Managing General Partner,
/s/Warren B. Lane
by __________________
Warren B. Lane
Sr. Vice President
/s/William Wilson
by _______________________
William Wilson III
General Partner
/s/Miller Ream
by ______________________
Miller Ream
General Partner
LIMITED PARTNERS: By: James E. Bateman, as Attorney-in-Fact for
James Pollock, Attorney-in-Fact for the
limited partners whose names are set forth
below:
The Pollock Partnership, a California
limited partnership
Roland E. Brandel
Ira Michael Heyman
David E. Nelson
Virginia C. Taylor
Michael G. Fleishman, Trustee for
Matthew Couch and Whitney A. Couch
J. Richard McMichael
James Pollack
/s/James. E. Bateman
By: __________________________
James E. Bateman
Attorney-in-Fact
Exhibit 10(k)
____________
AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
OF
PENINSULA OFFICE PARK
(A California Limited Partnership)
Dated as of December 27, 1985
<PAGE>
AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP dated as of December 27, 1985, among
PENINSULA/DW ASSOCIATES, a California general
partnership ("DW"), WILLIAM WILSON III ("Wilson"),
MILLER REAM ("Ream"), the limited partners listed
in Exhibit A (the "Limited Partners") and the
persons listed in Exhibit A-1 (the "Withdrawing
Partners"); DW, Wilson and Ream are hereinafter
sometimes collectively referred to as the "General
Partners"; Wilson, Ream, the Limited Partners and
the Withdrawing Partners are hereinafter sometimes
collectively referred to as the "Original
Partners"; and the General Partners and the Limited
Partners are hereinafter sometimes collectively
referred to as the "Partners").
Preliminary Statement
Peninsula Office Park, a California limited partnership
(the "Partnership"), was formed pursuant to a Limited Partnership
Agreement and Certificate dated October 1, 1971 (the "Original
Agreement"). A Certificate of Limited Partnership for the
Partnership was executed by the parties to the Original Agreement,
dated October 1, 1971, and recorded October 6, 1971, in Volume 6025,
Page 457 of the Official Records of the County Recorder, County of
San Mateo, State of California (the "Original Certificate"). The
Partnership was continued and the Original Agreement, as theretofore
amended, was amended and restated by a Restatement of Limited
Partnership Agreement and Certificate dated as of June 1, 1977 (the
"Restated Agreement'). The Original Certificate was amended and
restated by the First Amendment to Certificate of Limited
Partnership dated July 1, 1977, and recorded July 21, 1977 in Volume
7551, Page 120 of the Official Records of the County Recorder,
County of San Mateo, State of California (the "Amended and Restated
Certificate"). The Amended and Restated Certificate was amended by
the Second Amendment to Certificate of Limited Partnership dated
June 29, 1982, and recorded September 30, 1982, as Document Number
82083974 of the Official Records of the County Recorder, County of
San Mateo, State of California. The Amended and Restated
Certificate was further amended by the Third Amendment to
Certificate of Limited Partnership dated June 30, 1982, and recorded
December 15, 1982, as Document Number 82110539 of the Official
Records of the County Recorder, County of San Mateo, State of
California. (The Amended and Restated Certificate, as amended by
the Second and Third Amendments to Certificate of Limited
Partnership, is hereinafter referred to as the "Certificate"). The
Restated Agreement was amended by the First Amendment to Restatement
of Limited Partnership Agreement dated June 30, 1982, and the Second
Amendment to Restatement of Limited Partnership Agreement dated
February 15, 1984 (the Restated Agreement, as so amended, is
hereinafter referred to as the "Initial Partnership Agreement").
DW has acquired portions of the Partnership interests in
the Partnership heretofore held by the Original Partners pursuant to
a Sale, Purchase and Contribution Agreement dated as of December 27,
1985, between DW and the Partnership (the "Purchase Agreement"). DW
desires to have the entire partnership interest which it has
acquired be in the form of a general partnership interest and
desires to be admitted as a General Partner of the Partnership, and
DW and the Original Partners desire to make certain changes in the
Initial Partnership Agreement and the Certificate. The parties
hereto are entering into this Agreement to evidence their agreements
on such matters and to set forth the respective rights and
obligations of the parties hereto to each other and to the
Partnership.
In consideration of the foregoing, and of the mutual
covenants, conditions and agreements hereinafter set forth, the
parties hereto hereby agree that the Initial Partnership Agreement
is hereby amended and restated in its entirety to read as follows:
ARTICLE I
Continuation of the Partnership
SECTION 1.01. Continuation. The Partnership shall, on
the terms and conditions hereof, continue its existence, without
interruption, as a limited partnership under and subject to the
Uniform Limited Partnership Act of the State of California. DW
shall be admitted as a General Partner of the Partnership and an
amendment to the Certificate (the "New Certificate") shall be filed
in the Office of the County Recorder of San Mateo County to reflect
such admission and the other matters contained herein.
SECTION 1.02. Effectiveness. The provisions hereof
shall be effective upon the closing of the purchase (the "Closing";
the date on which the Closing occurs is referred to as the "Closing
Date") by DW pursuant to the Purchase Agreement of portions of
Partnership Interests (as defined in Section 1.07) heretofore held
by the Original Partners and shall continue to be effective until
termination and liquidation of the Partnership in accordance with
the provisions hereof.
SECTION 1.03. Name. The name of the Partnership shall
be PENINSULA OFFICE PARK.
SECTION 1.04. Place of Business. The principal office
and place of business of the Partnership shall be located at 2929
Campus Drive, San Mateo, California 94403, or such other place or
places as may from time to time be Approved by the General Partners
(as defined in Section 2.01).
SECTION 1.05. Purpose. The business of the Partnership
shall be to acquire, own, improve, manage, operate, lease, mortgage
(or otherwise encumber) or otherwise deal with the real property and
interests in real property described in Exhibit B (the "Property")
and the general partnership interest of the Partnership in Campus
Drive (the "Campus Drive Interest") and to engage in any other
business as shall be Approved by the General Partners (as defined in
Section 2.01). The Property and the Campus Drive Interest are
hereinafter sometimes collectively referred to as the "Partnership
Assets".
SECTION 1.06. Authority of Partners. Except as
expressly provided in this Agreement, no Partner shall have any
authority to act for, or to assume any obligations or responsibility
on behalf of, the other Partners or the Partnership.
SECTION 1.07. Partnership Interests. The "Partnership
Interest" of a Partner shall mean the proportional interest of each
Partner in the Partnership. The initial Partnership Interests and
capital contributions of the Partners are set forth in Exhibit C
hereto.
ARTICLE II
Management
SECTION 2.01. Management of the Partnership.
(a) Subject to the terms hereof, the General Partners,
collectively, shall have full, exclusive and complete discretion in
the management and control of the business and affairs of the
Partnership and in no event shall the Limited Partners take part in
the conduct or control of the business and affairs of the
Partnership or have any right or authority to act for or bind the
Partnership. Except as expressly provided herein to the contrary,
only those Major Decisions (as hereinafter defined) with respect to
the management and control of the Partnership which are Approved by
the General Partners shall be binding on the Partnership and the
Partners. When the phrase "Approved by the General Partners" is
used in this Agreement, such phrase shall mean (i) for so long as
DW, Wilson and Ream remain General Partners, approved by DW and
either Wilson or Ream and (ii) if any of DW, Wilson or Ream ceases
to be a General Partner, approved by all General Partners. A
General Partner shall be deemed to have given approval of a
particular action or decision under this Agreement unless such
General Partner disapproves (in writing) of such action or decision
within 30 days (or 7 days in the case of a particular Major Decision
under Section 2.01(b)(iv), (v), (xii) or (xiii) or (xvii) to the
extent that such decision under the Campus Drive Partnership
Agreement must be made within 7 days) after giving of written notice
to such General Partner in accordance with Section 9.02 of request
for such approval. The Property shall be managed by a manager (the
"Manager"), who shall be designated pursuant to Section 2.02. The
Manager shall be responsible for the implementation of the decisions
of the General Partners with respect to the Property and for
conducting the ordinary and usual business and affairs of the
Partnership concerning the Property as more fully set forth in
Section 2.03 and as limited by this Agreement and any management
agreement between the Partnership and the Manager. The general
affairs of the Partnership shall be managed by the managing general
partner (the "Managing General Partner"), who shall be designated
pursuant to Section 2.10.
(b) No action shall be taken, sum expended,
decision made or obligation incurred by the Partnership, the Manager
or any Partner with respect to a matter within the scope of any of
the major decisions enumerated below (the "Major Decisions"), unless
Approved by the General Partners. The Major Decisions shall
include:
(i) the acquisition of any land, or other improved
or unimproved real property, or any improvements thereon or interest
therein;
(ii) subject to Article III, the incurrence of any
indebtedness for borrowed money by, or the refinancing of any
indebtedness of, the Partnership, including, without limitation, the
financing or refinancing of the Property or the operations of the
Partnership;
(iii) the sale or other disposition of, or the
granting of any mortgage, lien or other encumbrance (other than
tenant leases) on, the Partnership Assets or any part thereof;
(iv) entering into any lease or other arrangement
that (A) involves or would result in the leasing of 5,000 or
more square feet of net rentable space in the Property
pursuant to a single lease or under multiple leases to the
same lessee (or its affiliates), (B) provides for annual
rental or other terms less favorable to the Partnership than
the rental and other terms, if any, set forth in any written
guidelines Approved by the General Partners (which guidelines
shall include, without limitation, terms for free rent and
other concessions, effective rent, tenant improvements and
expense stop and shall be confirmed or revised as Approved by
the General Partners no less frequently than quarterly), (C)
provides for a term which, with renewals, is equal to or
greater than six years or (D) otherwise varies in any material
respect that is adverse to the Partnership from lease forms
and rent schedules previously Approved by the General
Partners;
(v) the termination or material modification of any
lease or other arrangement involving space in the Property if
such lease or other arrangement was required (or would have
been required if this Agreement had been in effect when such
lease or other arrangement was entered into) to be Approved by
the General Partners pursuant hereto or if such modification
would result in a modified lease or other arrangement that, if
it were a new lease, would be required to be Approved by the
General Partners pursuant hereto;
(vi) the construction of any capital improvements,
repairs, alterations or changes (other than tenant
improvements pursuant to a lease or other arrangement which
has been Approved by the General Partners or which does not
require such approval) in excess of $10,000 in the aggregate
in any one fiscal year (unless specifically set forth in a
Budget (as defined in Section 2.04) theretofore Approved by
the General Partners), or the making of any lease termination
payments (other than pursuant to the terms of a lease or other
arrangement which has been Approved by the General Partners or
which does not require such approval) in excess of $5,000 in
the aggregate in any one fiscal year;
(vii) the selection or variation of depreciation and
accounting methods and other decisions with respect to the
treatment of various Partnership transactions for accounting,
bookkeeping or tax purposes, and the filing of tax returns by
or on behalf of the Partnership, in each case subject to and
consistent with the other provisions hereof (including
Sections 2.08 and 2.09);
(viii) the approval of all construction and
architectural contracts and all architectural plans,
specifications and drawings prior to the construction of any
new improvements or alterations contemplated thereby (other
than tenant improvements pursuant to a lease or other
arrangement which has been Approved by the General Partners or
which does not require such approval);
(ix) the selection of all counsel, accountants,
engineers and architects to be engaged by the Partnership;
(x) distributions to the Partners, except as set forth
in Article IV or V;
(xi) the approval of each Annual Business Plan (as
defined in Section 2.04) pursuant to Section 2.04;
(xii) the payment or incurrence of any obligation
(other than obligations under the express terms of a lease or
other arrangement which has been Approved by the General
Partners or under a lease that does not require such approval
or other obligations incurred in the ordinary course of
business to cure violations of law or to cover other
nondiscretionary operating expenses) in any fiscal year
involving a sum which (A) when added to the other expenditures
of the Partnership for such fiscal year, would result in the
Partnership having cumulative expenditures in excess of the
Budget Approved by the General Partners for such year of more
than $25,000, (B) when added to all expenditures in the same
category for such fiscal year, would exceed 105% of the amount
set forth for such category of expenditures in the Budget
Approved by the General Partners for the then lapsed portion
of such fiscal year, or (C) is not provided for in or
contemplated by the specific categories of expenditures set
forth in the Budget Approved by the General Partners;
provided, however, that, in each of the foregoing cases the
Manager shall have the right, without the consent of the
General Partners if the Manager shall have first used its best
efforts under the circumstances to obtain such consent (except
in the case of expenditures not exceeding $1,000, where no
such efforts shall be required), to make such repairs and
alterations to the Property and to expend such funds (not to
exceed $5,000 per incident) as in its reasonable judgment are
immediately necessary or advisable in the event of an
emergency in order to avoid a violation of law or to prevent
injuries to persons or damage to property;
(xiii) the initiation, defense, adjustment, settlement
or compromise of any claim, action, suit or judgment by or
against the Partnership involving an amount in excess of
$10,000 or any claim for equitable relief;
(xiv) subject to Section 2.02(b) and except as
provided in any management agreement relating to the Property
which has been Approved by the General Partners, the entering
into of any management or real estate brokerage agreement
(whether oral or written) in respect of the Property or any
termination or material modification thereof;
(xv) any modification with respect to the type or amount
of insurance coverage to be maintained by the Partnership as
set forth in the insurance guidelines attached as Exhibit D
hereto (as so revised from time to time the "Insurance
Guidelines");
(xvi) entering into any service, maintenance,
employment or similar contract or agreement which is not
terminable without penalty on an annual basis on not more than
90 days' notice or which provides for monthly payments by the
Partnership (whether actual or accrued) in excess of $500 per
month, provided that this $500 limitation shall not apply in
any fiscal year if such item is covered in the Budget Approved
by the General Partners pursuant to Section 2.04 hereof;
(xvii) except as contemplated by Section 3.02(c), the
exercise of any right or power or the granting of any approval
or consent as a general partner of Campus Drive pursuant to
the Campus Drive Partnership Agreement or otherwise (other
than those actions within the scope of authority of the
Partnership as the "Managing General Partner" of Campus Drive,
which shall be performed by the Managing General Partner
hereunder); and
(xviii) any other decision or action that is required
to be Approved by the General Partners pursuant hereto or that
may hereafter be Approved by the General Partners as a Major
Decision.
(c) A General Partner shall not be liable, responsible
or accountable in damages or otherwise to any other Partner for any
act or omission pursuant to the authority granted by this Agreement
if such General Partner acted in good faith and in a manner it
reasonably believed to be within the scope of the authority granted
by this Agreement and in or not opposed to the best interests of the
Partnership, provided that such General Partner shall not be
relieved of liability in respect of any claim, issue or matter as to
which such General Partner shall have been adjudged to be liable for
gross negligence, wilful misconduct or material breach of this
Agreement in the performance of its fiduciary duty to the Limited
Partners; and, subject to such limitation in the case of any such
judgment of liability, the Partnership shall indemnify each General
Partner against any loss or damage incurred by it and against
expenses (including attorneys' fees) actually and reasonably
incurred by it (which may be paid as incurred) in connection with
the defense or settlement of any threatened, pending or completed
action or suit by any person in connection therewith.
(d) At any time when there shall be only one General
Partner, there shall be no sale or other disposition of all or any
substantial portion of the Partnership Assets unless such sale or
disposition shall have been either approved by the Limited Partners
as provided in Section 7.03(f) or approved in writing by a majority
in interest of the Limited Partners (based upon Partnership
Interests).
SECTION 2.02. Appointment, Replacement and Resignation
of Manager. (a) The General Partners hereby approve the
continuation of William Wilson & Associates, as the initial manager
of the Property (the "Initial Manager") pursuant to the Management
Agreement dated as of December 27, 1985, between the Partnership and
the Initial Manager (the "Initial Management Agreement").
(b) The right of the Partnership to terminate or not
renew the Initial Management Agreement (or any subsequent management
agreement) pursuant to Section 5.01(a) of the Initial Management
Agreement (or the corresponding provisions of any such subsequent
management agreement) and, subject to the following, to hire a
replacement manager, shall be exercisable by DW on behalf of the
Partnership. If DW shall elect to exercise such right of
termination or nonrenewal on behalf of the Partnership or if the
Initial Manager (or any subsequent Manager) shall resign as Manager
or for any other reason cease to be Manager, as soon as reasonably
practicable thereafter a list shall be Approved by the General
Partners (such approval not to be unreasonably withheld or delayed)
which shall set forth the names of three or more responsible parties
who will be requested to submit proposals for assuming the role of
Manager. In connection with the replacement of the Initial Manager
(or any subsequent Manager), Borel Estate Company (the "Ream
Company") shall be included on such list, provided that such company
is still active in managing office buildings in the San Mateo area.
Within 10 days after receipt of such proposals from all persons on
such list (and in any event no later than 20 days after such list
shall have been Approved by the General Partners), DW shall give
each other General Partner a written notice setting forth the name
of the party that it has on behalf of the Partnership selected to
act as the Manager from among the choices designated on the
aforementioned list and the terms of such engagement; provided,
however, that if the Manager so selected by DW shall be an affiliate
of DW, such appointment shall require the prior written approval of
the other General Partners (which approval shall not be unreasonably
withheld or delayed). Upon receipt by the other General Partners of
any such notice referred to in the preceding sentence (and granting
of such consent required from them, if any), the General Partners
shall execute on behalf of the Partnership a management agreement
with such party and perform such other acts as may be required to
appoint such party as the Manager.
SECTION 2.03. Duties of Manager. The Manager shall
implement or cause to be implemented all Major Decisions Approved by
the General Partners related to the
operation and management of the Property and shall conduct or cause
to be conducted the ordinary and usual business and affairs of the
Partnership related to the Property in accordance with and as
limited by this Agreement and the applicable management agreement.
In no event shall the Manager have any authority to make any
expenditure or incur any obligation on behalf of the Partnership
unless such expenditure or obligation has been specifically provided
for in this Agreement or Approved by the General Partners or is made
pursuant to an Annual Business Plan Approved by the General
Partners.
SECTION 2.04. Annual Business Plan. Each management
agreement shall provide that, not later than 60 days after the
effective date of such agreement, and, thereafter, not later than 60
days prior to the end of each fiscal year, the Manager shall prepare
and submit to the General Partners an annual report (the "Annual
Business Plan") in respect of the Property setting forth (i) an
analysis of the business prospects for the Property for the
succeeding fiscal year, including an analysis of competitive factors
affecting the Property, such as vacancy rates for the local market
and rental rates charged for space of similar quality in the area,
(ii) a statement of proposed capital and other improvements to be
made in the succeeding fiscal year, including cost and timing
estimates therefor and (iii) a proposed operating and capital budget
(the "Budget") setting forth the estimated receipts, expenditures,
escrow deposits and reserves, if any, of the Partnership for the
next succeeding fiscal year. If and when the Annual Business Plan
(including the Budget set forth therein, and any modification
required by the General Partners) is Approved by the General
Partners, the Manager shall implement it and shall be authorized,
subject to the requirements of Section 2.01, without the need for
further approval by the General Partners, to make the expenditures
and incur the obligations provided for in the Budget as so approved.
SECTION 2.05. Arrangements with Affiliates. (a) Except
as may be expressly provided for herein or in the Initial Management
Agreement or as may hereafter be Approved by the General Partners,
no payment shall be made by the Partnership to a Partner, or any
affiliate or employee of a Partner, for the services of such Partner
or any affiliate or employee of such Partner. No part of a
Partner's central office overhead or general or administrative
expenses shall be deemed to be an expense of the Partnership;
provided, however, that the reasonable travel and other expenses for
twelve trips during the first twelve months following the Closing
Date (and such number of trips in succeeding periods as shall
reasonably be required) by an officer, partner, employee or
representative of DW or any affiliate of DW to attend meetings of
the General Partners, to inspect the Property or to examine the
books and operations of the Partnership shall be expenses of the
Partnership.
(b) The Partnership shall not enter into any contract,
agreement, lease or other arrangement for the furnishing to or by
the Partnership of goods, services or space with any person or
entity related to or affiliated with a Partner unless such contract,
agreement, lease or other arrangement has been specifically Approved
by the General Partners; provided, however, that the foregoing shall
not restrict the ability of Wilson or his affiliates to bid on
providing services (including tenant improvement work) to the
Partnership and, if such bid is the lowest or is Approved by the
General Partners, from being awarded such contract.
SECTION 2.06. Fiscal Year. The fiscal year of the
Partnership shall end on the last day of December of each year.
SECTION 2.07. Books and Records; Accountants. (a) The
books of account of the Partnership shall be kept and maintained at
all times at the place or places Approved by the General Partners
and shall be maintained on an
accrual basis in accordance with generally accepted accounting
principles consistently applied.
(b) Each Partner shall have the right at all reasonable
times during usual business hours to audit, examine and make copies
of or extracts from the books of account of the Partnership. Such
right may be exercised through any agent, representative, partner,
or employee of a Partner designated by it or by an independent
public accountant designated by such Partner. Each Partner shall
bear all expenses incurred in any examination made by such Partner.
(c) At the expense of the Partnership, the books of the
Partnership shall be examined, audited and certified annually as of
the end of each fiscal year by the independent public accounting
firm of Peat, Marwick, Mitchell & Co. Such independent public
accountants for the Partnership may be changed to any firm of
independent public accountants of nationally recognized standing
Approved by the General Partners. Peat, Marwick, Mitchell & Co., or
any subsequently selected independent public accountants, shall
prepare a balance sheet, an income and expense statement and a
statement of changes in financial position, all in comparative form
and in reasonable detail, and a report setting forth the amount of
Net Cash Flow (as defined in Section 4.01) of the Partnership, and
the share of the net profits and losses of the Partnership (as
defined in Section 6.07) and Net Cash Flow allocable to each
Partner, for each fiscal year. The Managing General Partner shall
use its best efforts to cause such accountants to prepare such
financial statements within 90 days after the end of each fiscal
year, and copies of such financial statements and report shall
promptly be transmitted by the Managing General Partner to the
Partners, together with the report of such accountants covering the
results of their audit. Peat, Marwick, Mitchell & Co., or such
other accountants, shall also prepare the tax returns of the
Partnership (which tax returns shall be satisfactory in form and
substance to each General Partner), and the Managing General Partner
shall use its best efforts to cause such accountants to prepare such
tax returns within 60 days after the end of each fiscal year. The
Managing General Partner shall use its best efforts to cause such
tax returns to be filed on a timely basis and shall, promptly after
the receipt thereof from such accountants, transmit copies thereof
to each Partner.
SECTION 2.08. Depreciation. All depreciation
attributable to any step-up in basis of the Property caused by the
transactions contemplated by the Purchase Agreement (a "Step-Up")
shall be allocated to DW. Each Partner agrees to cooperate with DW
and agrees not to contest or take a position inconsistent with DW's
obtaining the Step-Up under Section 754 or any other applicable
Section of the Internal Revenue Code of 1954, as amended (the
"Code"). The basis of the Partnership's depreciable assets and its
methods of depreciation shall not be changed without the express
approval of DW. The Partnership's real property shall be
depreciated using the straight line method of cost recovery and the
shortest cost recovery period permitted by the Code. The
Partnership's personal property shall be depreciated using
accelerated cost recovery.
SECTION 2.09. Tax Elections. (a) All elections required
or permitted to be made by the Partnership under the Code shall be
made by the Partnership in such manner as DW may reasonably
determine from time to time. In connection with the Step-Up, the
Partnership shall make an election pursuant to Section 754 of the
Code to adjust the basis of the assets of the Partnership with
respect to the transfer to DW of its Partnership Interest pursuant
to the Purchase Agreement and shall make an election pursuant to
Proposed Treasury Regulation sec. 1.704-1(b) (2)(iv) (c) (1) to make
corresponding adjustments to the capital account of DW. Elections
which are required or permitted to be made because of a change in
the Code (or the enactment of any successor statute) after the date
hereof shall be subject to the reasonable approval of the other
General Partners; provided that the other General Partners shall not
withhold any such approval if failure to grant such approval would
have a material adverse effect on DW. No such election shall be
inconsistent with the other terms and conditions of this Agreement.
Unless otherwise Approved by the General Partners, DW shall be the
"tax matters partner" of the Partnership pursuant to Section
6231(a)(7) of the Code. The "tax matters partner" shall not
compromise any claim by the Internal Revenue Service with respect to
the Partnership or appeal any ruling or decision thereof with
respect to the Partnership unless Approved by the General Partners.
(b) Notwithstanding Section 2.09(a), if a Partner
transfers all or part of its interest in the Partnership, any basis
adjustment attributable to such transfer, whether made under Section
754 of the Code or otherwise, shall be allocated solely to the
transferee (and the Partnership, on request, will make any
appropriate elections in connection with such basis adjustment).
SECTION 2.10. Managing General Partner. (a) The General
Partners hereby approve the appointment of Wilson as the initial
Managing General Partner. If at any time the Managing General
Partner ceases to be a General Partner, such person shall
immediately cease to be the Managing General Partner and a successor
shall be appointed from among the remaining General Partners as
Approved by the General Partners. The Partnership shall reimburse
the Managing General Partner for the reasonable out-of-pocket
expenses incurred by him in performing his obligations as Managing
General Partner (as distinguished from his obligations as a General
Partner).
(b) The Managing General Partner shall be responsible
for (i) supervising the performance of the Manager under the
applicable management agreement, (ii) implementing or causing to be
implemented all Major Decisions Approved by the General Partners to
the extent not the responsibility of the Manager under the
applicable management agreement and conducting or causing to be
conducted the ordinary and usual business and affairs of the
Partnership in accordance with and as limited by this Agreement to
the extent not the responsibility of the Manager under the
applicable management agreement. In no event shall the Managing
General Partner have any authority to make any expenditure or incur
any obligation on behalf of the Partnership unless such expenditure
or obligation has been specifically provided for in this Agreement,
Approved by the General Partners or made pursuant to an Annual
Business Plan Approved by the General Partners. The parties
expressly acknowledge that the position of managing General Partner
is ministerial in nature and is not intended to confer upon the
Managing General Partner powers or rights greater than those of any
other General Partner.
SECTION 2.11. Appointment of Denison as a General
Partner. If at any time both Wilson and Ream cease to be General
Partners and at such time the aggregate Partnership Interests of the
Limited Partners exceed 25%, then a majority in interest of the
Limited Partners (based upon Partnership Interests) shall have the
right (exercisable within 60 days after both Wilson and Ream shall
have ceased to be General Partners) to appoint Paul M. Denison
("Denison") as a General Partner provided that he at that time
satisfies the requirement set forth in Section 7.01(e)(i). If
Denison shall be so appointed, upon his assumption, in writing, of
all the rights, powers and obligations of a General Partner under
this Agreement he shall become a General Partner and his limited
Partnership Interest shall be converted to a General Partnership
Interest (but he shall have the same right to receive Net Cash Flow,
Capital Proceeds, and each item of income, gain, loss, deduction or
tax credit of the Partnership as he would have had if not so
converted).
SECTION 2.12. Investment Management Fee. For so long as
an investment management agreement between the Partnership and
RMS/Liberty Street Associates, an affiliate of DW ("Liberty
Street"), shall be in effect, within 30 days after the end of each
fiscal quarter and prior to any distribution to Partners pursuant to
Section 5.01 the Partnership shall pay to Liberty Street, as an
investment management fee (the "Investment Management Fee"), an
amount equal to 1% of the Gross Income of the Partnership (as
defined in Section 4.01, but excluding for purposes of this
calculation distributions of cash from Campus Drive to the
Partnership) for such period. Amounts payable under this Section
2.12 shall be paid prior to distributions to Partners pursuant to
Section 4.02 or 5.01. To the extent that for any period Adjusted
Cash Flow (as defined in Section 3.02(f)) after making payments
required pursuant to Section 3.02(d) is insufficient to pay the
Investment Management Fee, the unpaid portion thereof shall be
accrued (without interest) and paid in subsequent periods out of
Adjusted Cash Flow or Adjusted Capital Proceeds (as defined in
Section 3.02 (f)), in each case to the extent available after making
payments required pursuant to Section 3.02(d) and this Section 2.12.
SECTION 2.13. Additional Development. The Partners
acknowledge that the Property includes a parcel of land adjacent to
the Building No. 8 which is suitable for future development as an
office building. Under current zoning and land use restrictions, an
office building containing approximately 60,000 square feet could be
built on such site. It is the intention of the Partners that the
Partnership will proceed with the development of that site when it
becomes economically advantageous to do so, and Partnership funds
may be expended for predevelopment activities, such as soils and
engineering studies, schematic design, permit and approval
processing and the like as Approved by the General Partners.
However, the Partnership will not commit or expend funds for the
preparation of construction documents or for actual construction
purposes until the development and the method of financing the same
shall have been Approved by the General Partners. Nothing contained
in this Section 2.13 shall be deemed to create any obligation on the
part of any Partner to make any capital contributions or Shortfall
Loans to fund the development or construction of improvements on
such site.
ARTICLE III
Capital Contributions and Loans
SECTION 3.01. Capital Contributions. (a) Subject and
pursuant to the terms and conditions of the Purchase Agreement, on
the Closing Date DW shall make a capital contribution to the
Partnership in immediately available funds of $510,000 and the other
Partners shall make capital contributions to the Partnership
aggregating $165,471. Such capital contributions shall be used to
establish a working capital reserve for the Partnership (the
"Working Capital Reserve") which shall be used to fund tenant
improvements, leasing commissions, other capital expenditures and
operating deficits to the extent Approved by the General Partners
and for funding the Partnership's required capital contribution to
Campus Drive pursuant to Section 3.01(a) of the Campus Drive
Partnership Agreement.
(b) DW agrees to make additional capital contributions
to the Partnership from time to time after the Closing Date (up to a
maximum aggregate additional capital contribution of $1,676,234) to
the extent necessary to cause the Working Capital Reserve as of the
end of any calendar month not to be less than $200,000 and to fund
the Partnership's required capital contribution to Campus Drive
pursuant to Section 3.01(b) of the Campus Drive event to the full
amount of its additional capital contributions required under this
Section 3.01(b) by December 31, 1988 (upon notice as provided
herein). DW agrees to make such additional capital contributions to
the Partnership immediately available funds within 10 days after
written request therefor from the Manager or the Managing General
Partner. Any such request shall specify the amount of the Working
Capital Reserve as of the end of the calendar month preceding the
date of such notice and the amount of the additional capital
contribution to be made by DW pursuant to this Section 3.01 (b), and
in no event may such requests be made more frequently than monthly.
Such additional capital contributions shall be added to the Working
Capital Reserve and applied as provided in this Agreement.
(c) After DW has made the maximum additional capital
contribution required of it pursuant to Section 3. 01(b) , and in
any event by December 31, 1988 (upon notice as provided herein), the
Partners (other than DW) agree to make an additional capital
contribution to the Partnership of $-0- (to be allocated among them
in accordance with their Partnership Interests). Such additional
capital contribution shall be made in immediately available funds
within 10 days after written request therefor from the Manager or
any General Partner specifying that DW has made its maximum
additional contribution as aforesaid and the amount of the
additional capital contribution to be made by such Partner pursuant
to this Section 3.01(c).
(d) Beginning in January 1989, and annually thereafter,
amounts held in the Working Capital Reserve may if so Approved by
the General Partners be distributed to the Partners in proportion to
their Partnership Interests.
(e) A Partner shall not have any obligation to the
Partnership or to any other Partner to restore any negative balance
in the capital account of such Partner. No Partner may withdraw
capital or receive any distributions except as specifically provided
herein. No interest shall be paid by the Partnership on any capital
contributions to the Partnership.
SECTION 3.02. Shortfall Loans. (a) If at any time
prior to December 31, 1993, the Partnership shall require funds in
excess of the capital contributions required under Section 3.01 for
working capital in connection with the operation and maintenance of
the Property, DW shall from time to time make loans to the
Partnership (the "First Shortfall Loans") in an aggregate principal
amount of up to $872,900 (determined on a cumulative basis). In no
event may First Shortfall Loans be used to fund the capital
requirements of Campus Drive without the prior written consent of
DW.
If a General Partner reasonably determines that the
Partnership requires a First Shortfall Loan as contemplated by the
preceding paragraph, such General Partner shall give DW notice (each
a "First Shortfall Notice") setting forth the specific purpose for
which such First Shortfall Loan is required and the amount required
to be loaned by DW (determined as provided above). DW shall within
20 days of receiving a First Shortfall Notice deposit the amount
required to be loaned by DW in an account Approved by the General
Partners and such funds shall be applied to the purposes Approved by
the General Partners consistent with such First Shortfall Notice.
All First Shortfall Loans shall mature on December 31, 1995, or upon
the earlier termination of the Partnership, and may be repaid out of
the proceeds of Additional Shortfall Loans (as defined below) as
provided in Section 3.02(b).
(b) If the Partnership shall (i) require funds in
excess of the capital contributions required under Section 3.01 and
the First Shortfall Loans required pursuant to Section 3.02(a) for
working capital in connection with the operation and maintenance of
the Property, (ii) require funds to meet its obligation as a general
partner of Campus Drive to make "Additional Shortfall Loans" to
Campus Drive (as defined in and pursuant to the Campus Drive
Partnership Agreement), or (iii) require funds to repay First
Shortfall Loans or Additional Shortfall Loans (as hereinafter
defined) at the maturity thereof (except upon termination of the
Partnership), each Partner shall from time to time make loans
("Additional Shortfall Loans") to the Partnership pro rata based
upon their Partnership Interests at the time of the funding of each
such Loan.
If a General Partner reasonably determines that the
Partnership requires an Additional Shortfall Loan as contemplated by
the preceding paragraph, such General Partner shall give the other
Partners notice (each a "Shortfall Notice") setting forth the
specific purpose for which such Shortfall Loan is required and the
amount required to be loaned by each Partner (determined as provided
above) . Each Partner within 20 days of giving or receiving, as the
case may be, a Shortfall Notice shall deposit the amount required to
be loaned by such Partner in an account Approved by the General
Partners and such funds shall be applied to the purposes Approved by
the General Partners consistent with such Shortfall Notice. Each
Additional Shortfall Loan shall mature on the tenth anniversary of
such Loan, or upon the earlier termination of the Partnership.
(c) If Campus Drive shall require funds in excess of
the capital contributions and "Mandatory Shortfall Loans" required
under the Campus Drive Partnership Agreement for working capital in
connection with the operation and maintenance of its property or
shall require funds to repay Special Shortfall Loans (as hereinafter
defined) at the maturity thereof (except upon termination of the
Partnership) and such funds shall not be available to campus Drive
on reasonable terms from third party sources, each Partner shall
from time to time make loans ("Special Shortfall Loans") to the
Partnership in the following proportions: 23.2883% by DW, 11.6908%
by Wilson, 11.6908% by Ream and the balance by all Partners
(including DW, Wilson and Ream) pro rata based upon their
Partnership Interests at the time of the funding of each such Loan.
If a General Partner reasonably determines that the
Partnership requires a Special Shortfall Loan as contemplated by the
preceding paragraph, such General Partner shall give the other
Partners notice (each a "Special Shortfall Notice") setting forth
the specific purpose for which such Special Shortfall Loan is
required and the amount required to be loaned by each Partner
(determined as provided above). Each Partner within 20 days of
giving or receiving, as the case may be, a Special Shortfall Notice
shall deposit the amount required to be loaned by such Partner in an
account Approved by the General Partners and such funds shall be
applied to the purposes Approved by the General Partners consistent
with such Special Shortfall Notice. Each Special Shortfall Loan
shall mature on the tenth anniversary of the funding of such Loan,
or upon the earlier termination of the Partnership.
The obligations of DW, Wilson and Ream under this Section
3.02(c) shall continue in full force and effect notwithstanding the
conversion of any of them to Limited Partners pursuant to Section
3.03 and shall be binding upon their respective heirs, executors,
administrators, legal representatives, successors and permitted
assigns and enforceable against them as provided in Section 3.02(e).
First Shortfall Loans, Additional Shortfall Loans and
Special Shortfall Loans are sometimes collectively referred to
herein as "Shortfall Loans".
(d) Each Shortfall Loan shall be evidenced by a note
for each lending Partner maturing as provided in this Section 3.02,
setting forth the principal amount of the Shortfall Loan made by
such lending Partner and providing for the accrual of interest at
the Prime Rate from the date such Shortfall Loan was made pursuant
to this Section 3.02. Except as provided in the succeeding
sentence, each note shall provide that the principal thereof and the
interest thereon shall be due and payable ratably with all other
such notes then outstanding. The notes shall be due and payable as
follows: (i) current accrued and unpaid interest earned on the
notes during any fiscal year of the Partnership shall be due and
payable to the extent of, or out of, 100% of the Adjusted Cash Flow
for such year, such current interest to be paid quarterly; (ii)
unpaid principal on the First Shortfall Loans made by DW shall be
due and payable quarterly to the extent of, or out of, 100% of the
Adjusted Cash Flow for any fiscal year of the Partnership remaining
after payments pursuant to (i) above; (iii) accrued and unpaid
interest earned on the notes during prior fiscal years of the
Partnership and the principal of the notes (other than principal on
the First Shortfall Loans made by DW) shall be due and payable
quarterly to the extent of, and out of, 100% of any Adjusted Cash
Flow remaining after payments pursuant to (i) and (ii) above; (iv)
accrued and unpaid interest (whenever earned) on and principal of
(including principal on the First Shortfall Loans) the notes shall
be due and payable to the extent of, and out of, 100% of all
Adjusted Capital Proceeds; and (v) accrued and unpaid interest
(whenever earned) on and principal of (including principal on the
First Shortfall Loans) the notes shall be due and payable at
maturity thereof. All payments with respect to the notes shall be
subordinate with respect to all indebtedness of the Partnership to
unaffiliated third parties incurred in accordance with this
Agreement. No Partner shall be personally liable to pay any
indebtedness evidenced by such notes, and in the event any judgment
is obtained by the payee of any such note, enforcement of such
judgment shall be limited and restricted to Adjusted Cash Flow and
Adjusted Capital Proceeds and any other assets of the Partnership.
(e) DW has agreed to make its Shortfall Loans in
reliance upon the other Partners' agreements to make their Shortfall
Loans, and the other Partners have agreed to make their Shortfall
Loans in reliance upon DW's agreement to make its Shortfall Loans.
The parties acknowledge that such agreements were an inducement,
sine qua non, to make their investments in the Partnership and,
accordingly, that the performance of such agreements is the basis,
sine qua non, on which each of the Partners is to be entitled to
receive its interest in Net Cash Flow, Capital Proceeds and each
item of income, gain, loss, deduction or tax credit of the
Partnership. Therefore, in the event that DW fails to make any
Shortfall Loan pursuant to this Section 3.02, in whole or in part,
within the time specified in this Section 3.02 for such Shortfall
Loan, the other General Partners may send an additional notice to DW
setting forth such fact and the amount unpaid, and DW shall have a
further period of 10 days to make the full amount of such Shortfall
Loan. If at the end of such 10-day period DW shall still have
failed to make such Shortfall Loan, in whole or in part, the other
Partners may make such Shortfall Loan. If the other Partners make
such Shortfall Loan to the Partnership, the Partnership Interests of
DW and the other Partners shall each automatically be modified as of
the date of such loan so that (y) the Partnership Interest of each
Partner (other than DW) shall then be the sum of (i) such Partner's
Partnership Interest prior to the making of such loan by such
Partner plus (ii) 1/10 of 1% for every $5,000 (pro rated for any
portion thereof) then being loaned by such Partner in lieu of the
amount required to be loaned by DW; and (z) the Partnership Interest
of DW shall then automatically become 100% minus the aggregate of
the Partnership Interests (adjusted as aforesaid) of the other
Partners.
In the event that any Partner (other than DW) fails to
make any Shortfall Loan pursuant to this Section 3.02 (and no other
Partner shall have made such Mandatory Shortfall Loan on his or its
behalf), in whole or in part, within the time specified in this
Section 3.02 for such Shortfall Loan, DW may send an additional
notice to such Partner (with a copy to the other General Partners)
setting forth such fact and the amount unpaid, and such Partner
shall have a further period of 10 days to make the full amount of
such Shortfall Loan. If at the end of such 10-day period such other
Partner shall still have failed to make such Shortfall Loan, in
whole or in part, DW may make the Shortfall Loan required of such
other Partner. If DW makes such Shortfall Loan to the Partnership,
the Partnership Interests of DW and such other Partner shall each
automatically be modified as of the date of such loan so that (yy)
the Partnership Interest of DW shall then be the sum of (A) its
Partnership Interest prior to the making of such loan by DW plus (B)
1/10 of 1% for every $5,000 (prorated for any portion thereof) then
being loaned by DW in lieu of the amount required to be loaned by
such other Partner; and (zz) the Partnership Interest of such other
Partner shall then automatically become 100% minus the aggregate of
the Partnership Interests (adjusted as aforesaid) of all Partners
(other than the Partner whose Partnership Interest is being adjusted
pursuant to this clause (zz)).
The foregoing rights under this Section 3.02(e) shall be
the sole remedy against DW or any other Partner for failing to make
any Shortfall Loan. If at any time the adjustments to Partnership
Interests pursuant to this Section 3.02(e) would cause a technical
termination of the Partnership under Section 708 of the Code, the
effectiveness of such adjustments shall, unless otherwise determined
by the Partner(s) funding such Shortfall Loan, automatically be
delayed until the earliest time at which they could be made without
causing such a termination.
In the event that the Partnership Interest of DW shall be
reduced below 20% for any reason, including as a result of dilution
of Partnership Interests pursuant to this Agreement, the other
General Partners shall have the right, in their sole discretion, to
cause DW's general Partnership Interests in the Partnership to be
converted to limited Partnership Interests in accordance with
Section 3.03.
The provisions of this Section 3.02 shall inure solely to
the benefit of the Partners and are not made for and shall not
benefit any third party. In no event shall any person other than a
Partner have any right to enforce the obligations of the General
Partners to make Shortfall Loans as provided in this Section 3.02.
(f) As used in this Agreement, the following terms
shall have the meanings set forth below:
"Adjusted Capital Proceeds" shall mean Capital Proceeds
(as defined in Section 5.01) without reduction for any interest or
principal payments on Shortfall Loans or for payments of the
Investment Management Fee pursuant to Section 2.12.
"Adjusted Cash Flow" shall mean Net Cash Flow (as defined
in Section 4.01) without reduction for any interest or principal
payments on Shortfall Loans or for payments of the Investment
Management Fee pursuant to Section 2.12.
"Prime Rate" shall mean a rate equal to the sum of the
rate publicly announced by Chemical Bank from time to time at its
principal office in New York, New York, as its prime rate (or
equivalent rate) plus 1% per year (based on the actual number of
days elapsed in a 360-day year and with any change in the Prime Rate
being effective as of the date announced) , compounded monthly, but
in no event greater than the highest rate permitted by applicable
law.
SECTION 3.03. Conversion of a General Partner. Various
provisions of this Agreement provide that, upon the occurrence of
specified events ("Conversion Events"), a General Partner(s) of the
Partnership (the "Former General Partner(s)") may be converted to a
Limited Partner(s) of the Partnership automatically upon the
occurrence of a Conversion Event or at the direction of some other
Partner (the "Directing Partner"). In the case of such conversions
requiring action by the Directing Partner, the Directing Partner may
at any time within 60 days of receiving actual written knowledge of
a Conversion Event deliver a notice to all Partners directing that
such a conversion occur, effective upon the date of said delivery.
Upon any conversion of Wilson's general Partnership
Interests under this Section, DW shall have the right, in its sole
discretion, to terminate the Initial Management Agreement and all
other agreements entered into between the Partnership and Wilson or
his affiliates. A conversion under this Section shall not affect
any liabilities of the Former General Partner(s) arising with
respect to the period prior to the date of said conversion and,
except as provided in Section 3.02(c), the Former General Partner(s)
shall following such conversion (i) only have such liabilities to
the Partners and third parties as a Limited Partner would have
hereunder and under California law with respect to the period
following such conversion, (ii) have no rights thereafter as a
General Partner, or as Wilson, Ream or DW, as the case may be,
hereunder and (iii) only have such rights as a Limited Partner
hereunder. Notwithstanding the foregoing sentence, any Former
General Partner(s) shall have the same right to receive Net Cash
Flow, Capital Proceeds, and each item of income, gain, loss,
deduction or tax credit of the Partnership as it would have had if
not so converted.
Upon the conversion of the Partnership Interests of
Wilson or Ream under this Section (or upon the purchase of the
Partnership Interests of either of them by DW), their rights
hereunder which are exercisable by them jointly shall automatically
be exercisable by whichever of them remains a General Partner
hereunder.
This Agreement shall be deemed amended to reflect a
conversion pursuant to this Section or the dilution of a Partner's
Partnership Interest pursuant to Section 3.02(e) without any action
required of the Partners and the Partners agree to execute all
documents, agreements and instruments and to do all things necessary
to give effect to this Section and Section 3.02 (e) and the General
Partners (other than DW) hereby grant an irrevocable power of
attorney to DW, and DW hereby grants an irrevocable power of
attorney to such other General Partners, to execute and deliver all
such instruments, documents and agreements on their behalf, and each
such power of attorney is coupled with an interest and is
irrevocable.
ARTICLE IV
Distribution of Net Cash Flow
SECTION 4.01. Definition of Net Cash Flow. As used
herein, the term "Net Cash Flow" for any period shall mean Gross
Income for such period minus (i) Operating Expenses, (ii) payments
on indebtedness of the Partnership (including Shortfall Loans),
(iii) leasing commissions, (iv) capital expenditures, (v) costs of
putting any tenant into possession and (vi) payments required
pursuant to Section 2.12, in each case for the same period. "Gross
Income" in respect of any period shall mean the gross amount of all
revenues received by the Partnership, calculated on a cash or
accrual basis, whichever is less, for such period, including rent,
additional rent, insurance proceeds paid in respect of a business
interruption or rental income interruption and distributions to the
Partnership from Campus Drive (other than distributions of "Capital
Proceeds" as defined in the Campus Drive Partnership Agreement), but
shall not include capital contributions, Shortfall Loans or other
loans by the Partners to the Partnership or Capital Proceeds.
"Operating Expenses" in respect of any period shall mean the total
amount of all costs and expenses accrued by the Partnership in
connection with the collection of Gross Income and in the
maintenance, management, administration, operation, repair and
replacement (other than capital improvements) of the Property for
such period, including, without limitation, advertising costs; real
and personal property taxes, assessments and other charges; all
taxes upon the gross rental income derived from the Property; water
and sewer charges; insurance premiums; annual charges for licenses,
permits and inspections; heat, lights, power, steam, and any other
utility charges; janitorial services; maintenance and service
agreements on equipment servicing the Property; window cleaning;
garbage services; costs of air conditioning; costs of supplies,
materials, equipment and tools; the cost of contesting the
applicability to the Property or the validity of any statute,
ordinance, rule or regulation affecting the Property; attorneys' and
accountants' fees incurred in connection with the ordinary course of
business; and reasonable reserves for working capital, capital
expenditures and contingencies.
SECTION 4.02. Distribution of Net Cash Flow. Within 30
days after the end of each fiscal quarter, Net Cash Flow for such
fiscal quarter shall be distributed among the Partners pro rata in
accordance with their Partnership Interests.
ARTICLE V
Proceeds of Sale and Refinancing
SECTION 5.01. Distribution of Capital Proceeds. (a) As
used herein, the term "Capital Proceeds" shall mean any net proceeds
(including distributions to the Partnership from Campus Drive of
"Capital Proceeds" as defined in the Campus Drive Partnership
Agreement) after payment of all Partnership debts (other than
accounts payable incurred in the ordinary course of business which
are reserved for) then due and payable (including, without
limitation, all Shortfall Loans and other borrowings of the
Partnership, discount points, sales expenses, legal costs, marketing
costs, loan fees, and any other costs associated with the sale,
exchange, condemnation, casualty or other disposition of the
Property or a part thereof), the establishment of appropriate
reserves as Approved by the General Partners and the making of
payments required pursuant to Section 2.12 arising from (i) the
sale, exchange, or other disposition of the Partnership Assets or
any part thereof or underlying interest associated therewith or (ii)
the financing or refinancing (but not including any loans made by
Partners), condemnation (or transfer in lieu thereof) or casualty of
the Partnership Assets or any part thereof or underlying interest
associated therewith (to the extent such proceeds of casualty or
condemnation are not used for repair or restoration and excluding
insurance proceeds paid in respect of a business interruption or
rental income interruption) (a "Capital Transaction").
(b) Capital Proceeds shall be distributed among the
Partners pro rata in accordance with their Partnership Interests;
provided, however, that Capital Proceeds from a disposition of all
or substantially all the Partnership Assets and any Capital Proceeds
distributed upon liquidation shall be distributed in accordance with
the Partners' capital accounts as adjusted pursuant to Article VI
for all Partnership operations up to and including such liquidation.
ARTICLE VI
Profits and Losses
SECTION 6.01. Capital Accounts. There shall be
established for each Partner on the books of the Partnership a
capital account. The capital account of each Partner on the Closing
Date shall be as set forth in Exhibit C. Each Partner's capital
account on the Closing Date shall thereafter be credited with the
amount of all cash contributions by a Partner to the Partnership
made after the Closing Date. It shall be increased by the amount of
any income or gain allocated to a Partner pursuant to Sections 6.02
and 6.03 and by the Partner's share of any income of the Partnership
exempt from tax, and decreased by (i) the amount of all losses
allocated to a Partner pursuant to Sections 6.02 and 6.04 and by the
Partner's share of any expenditures of the Partnership not
deductible in computing its taxable income and not properly
chargeable to the capital account and (ii) all amounts distributed
to a Partner (and not returned by such Partner) pursuant to Sections
4.02 and 5.01. The making, repayment and payment of interest on
loans by Partners to the Partnership (including Shortfall Loans)
shall not affect capital accounts. Unless such income or
expenditures is directly traceable to any Partner, each Partner's
share of income of the Partnership exempt from tax and of any
expenditures of the Partnership not deductible in computing its
taxable income and not properly chargeable to capital account for
any fiscal year shall equal such Partner's share of the
Partnership's net profits or losses (as the case may be) for such
fiscal year.
SECTION 6.02. Net Profits and Losses. Subject to
Sections 6.03 and 6.04, the net profits and losses of the
Partnership and each item of income, gain, loss, deduction or credit
entering into the computation thereof shall be allocated among the
Partners and credited to the capital accounts of the Partners and
credited to the capital accounts of the Partners in accordance with
their respective Partnership Interests; provided, however, that
until DW's capital account equals zero all net losses of the
Partnership shall be allocated 100% to DW. Notwithstanding anything
else contained herein, any depreciation or other tax benefits
attributable to the Step-Up shall be allocated solely to DW.
SECTION 6.03. Capital Profits. The net profits of the
Partnership arising from a Capital Transaction (whether of the
Partnership or campus Drive) shall be allocated among, and credited
to the capital accounts of, the Partners in the following order of
priority:
(a) first, an amount of net profits equal to the
aggregate negative capital accounts (as reflected on the books of
the Partnership immediately prior to such Capital Transaction after
allocating all net profits and losses and charging for prior
distributions) of all Partners who have such negative capital
accounts shall be allocated among such Partners in proportion to
their respective negative capital accounts;
(b) second, an amount of any remaining net profits
equal to the excess of (x) the Capital Proceeds to be distributed to
the Partners with respect to such Capital Transaction pursuant to
Section 5.01 (without regard to the proviso set forth in Section
5.01(b)), over (y) the aggregate capital accounts (as adjusted to
reflect the allocation of net profits pursuant to subparagraph (a)
above) of all Partners shall be allocated among all Partners to whom
such Capital Proceeds are to be distributed in proportion to their
respective shares of such excess of (x) over (y) in order to bring
the capital account balance of each Partner up to an amount equal to
the amount of Capital Proceeds to be distributed to such Partner
pursuant to Section 5.01 (without regard to the proviso set forth in
Section 5.01(b)); and
(c) any remaining net profits shall be allocated in the
same proportions that an amount of Capital Proceeds equal to such
remaining net profits would be distributed pursuant to Section 5.01
were such Capital Proceeds to be distributed in addition to the
Capital Proceeds actually distributed to the Partners pursuant to
Section 5.01 (without regard to the proviso set forth in Section
5.01(b)).
SECTION 6.04. Capital Losses. The net losses of the
Partnership arising from a Capital Transaction (whether of the
Partnership or Campus Drive) shall be allocated among and charged to
the capital accounts of the Partners in the following order of
priority:
(a) first, an amount of loss equal to the excess of (x)
the aggregate positive capital accounts (as reflected on the books
of the Partnership prior to such Capital Transaction) of all
Partners who have positive capital accounts over (y) the aggregate
Capital Proceeds to be distributed to such Partners with respect to
such Capital Transaction pursuant to Section 5.01 (without regard to
the proviso set forth in Section 5.01(b)) shall be allocated among
such Partners in proportion to their respective shares pursuant to
Section 5.01 (without regard to the proviso set forth in Section
5.01(b)) of such excess of (x) over (y); and
(b) any remaining loss shall be allocated among
Partners pro rata in accordance with their Partnership Interests.
SECTION 6.05. Distribution in Kind. In case any of the
assets of the Partnership are distributed in kind, the capital
account of the Partners receiving such assets shall be adjusted as
if the Partnership had sold the distributed assets for their fair
market value on the date of distribution and the resulting gain or
loss had been allocated to the Partners pursuant to Section 6.03 or
6.04, as the case may be.
SECTION 6.06. Depreciation Recapture. Any gain
recognized upon a Capital Transaction that is characterized as
ordinary income pursuant to Sections 1245 or 1250 of the Code and
any recapture of investment tax credit shall, to the extent
possible, without increasing the total gain allocated to a Partner
on such Capital Transaction pursuant to Section 6.03, be allocated
to the Partners in the same proportions that the Partners shared the
depreciation deductions giving rise to such ordinary income or such
investment tax credit.
SECTION 6.07. Definition of Net Profits and Losses. The
"net profits" and "net losses" of the Partnership shall be the net
profits and losses of the Partnership for Federal income tax
purposes as determined by the independent public accountants
referred to in Section 2.07(c) and Approved by the General Partners.
ARTICLE VII
Transfers; Termination
SECTION 7.01. Transfer of General Partner's Interests.
(a) A General Partner may sell, assign, mortgage, pledge, grant a
security interest in or otherwise transfer its Partnership Interest,
whether voluntarily or by operation of law, only as provided in this
Agreement. Any unpermitted sale, assignment, mortgage, pledge or
transfer of, or grant of a security interest in, the Partnership
Interest of a General Partner shall be null and void.
(b) Except as provided in Sections 2.11, 7.03(d) and
(f) and 7.07, neither a proposed additional General Partner in the
Partnership nor a proposed successor to a withdrawing, retiring or
removed General Partner shall be admitted as a General Partner
unless such person is accepted as a General Partner by all the other
General Partners. Such proposed additional or successor General
Partner shall be admitted as a General Partner immediately after
such acceptance is given and upon such person's assumption, in
writing, of all the rights, powers and obligations of a General
Partner under this Agreement.
(c) Wilson agrees that he (i) shall, at all times while
William Wilson & Associates is the Manager, be active in the
management and decision-making process of such corporation and own
at least 51% of the stock thereof, (ii) shall own (individually or
together with his Permitted Transferees, as defined in Section
9.13), at all times, Partnership Interests (general and/or limited)
aggregating at least 10% and (iii) shall not sell, assign, mortgage,
pledge, grant a security interest in or otherwise transfer any
portion of such Partnership Interests in the Partnership without the
prior written approval of DW or as otherwise permitted by this
Agreement; provided, however, that Wilson may assign portions of his
Partnership Interest (in the form of limited Partnership Interests)
to (x) his Permitted Transferees (provided that such transfer is
subject to a limitation that no further assignment, sale, mortgage,
pledge or other transfer of such interest may be made except to
Wilson or a Permitted Transferee of Wilson) and (y) to third parties
so long as after giving effect to such assignment Wilson
(individually or together with his Permitted Transferees) shall
retain Partnership Interests aggregating at least 10%. If Wilson
fails, at any time, to satisfy any of the requirements set forth in
this Section 7.01(c) for any reason, including as a result of any
dilution pursuant to the terms of this Agreement or as a result of
the decision of any court or other governmental body, DW shall have
the right (which shall be its sole remedy for a breach of these
requirements), exercisable in its sole discretion within 90 days
after DW has knowledge of the event giving rise to such right, to
cause all of Wilson's Partnership Interests to be converted to
limited Partnership Interests pursuant to Section 3.03 and/or to
terminate the Initial Management Agreement and/or to terminate all
other agreements entered into between the Partnership and Wilson or
his affiliates.
(d) Ream agrees that he (i) shall, at all times while
the Ream Company is the Manager, if any, be active in the management
and decision-making process of such corporation and own at least 51%
of the stock thereof, (ii) shall own (individually or together with
his Permitted Transferees), at all times, Partnership Interests
(general and/or limited) aggregating at least 10% and (iii) shall
not sell, assign, mortgage, pledge, grant a security interest in or
otherwise transfer any portion of such Partnership Interests in the
Partnership without the prior written approval of DW or as otherwise
permitted by this Agreement; provided, however, that Ream may assign
portions of his Partnership Interest (in the form of limited
Partnership Interests) to (x) his Permitted Transferees (provided
that such transfer is subject to a limitation that no further
assignment, sale, mortgage, pledge or other transfer of such
interest may be made except to Ream or a Permitted Transferee of
Ream) any (y) to third parties so long as after giving effect to
such assignment Ream (individually or together with his Permitted
Transferees) shall retain Partnership Interests aggregating at least
10%. If Ream fails, at any time, to satisfy any of the requirements
set forth in this Section 7.01(d) for any reason, including as a
result of any dilution pursuant to the terms of this Agreement or as
a result of the decision of any court or other governmental body, DW
shall have the right (which shall be its sole remedy for a breach of
these requirements), exercisable in its sole discretion within 90
days after DW has knowledge of the event giving rise to such right,
to cause all of Ream's Partnership Interests to be converted to
limited Partnership Interests pursuant to Section 3.03 and/or to
terminate all agreements (including any management agreement)
entered into between the Partnership and Ream or his affiliates.
(e) Denison agrees that if he shall become a General
Partner of the Partnership pursuant to Section 2.11, he (i) shall
own (individually or together with his Permitted Transferees), at
all times thereafter, Partnership Interests (general and/or limited)
aggregating at least 10% and (ii) shall not thereafter sell, assign,
mortgage, pledge, grant a security interest in or otherwise transfer
any portion of such Partnership Interests in the Partnership without
the prior written approval of DW or as otherwise permitted by this
Agreement; provided, however, that Denison may assign portions of
his Partnership Interest (in the form of limited Partnership
Interests) to his Permitted Transferees (provided that such transfer
is subject to a limitation that no further assignment, sale,
mortgage, pledge or other transfer of such interest may be made
except to Denison or a Permitted Transferee of Denison). If Denison
fails, at any time, to satisfy any of the requirements set forth in
this Section 7.01(e) for any reason, including as a result of any
dilution pursuant to the terms of this Agreement or as a result of
the decision of any court or other governmental body, DW shall have
the right (which shall be its sole remedy for a breach of these
requirements), exercisable in its sole discretion within 90 days
after DW has knowledge of the event giving rise to such right, to
cause all of Denison's Partnership Interests to be converted to
limited Partnership Interests pursuant to Section 3.03.
SECTION 7.02. Options on Bankruptcy, Etc. (a) If DW
shall be bankrupt, then the other General Partners (at their option)
shall have the right, in addition to any other rights or claims for
damages or specific performance, to purchase the entire Partnership
Interest of DW at the fair market value thereof (as determined
pursuant to Section 7.09) and/or to cause DW's entire Partnership
Interest to be converted to a limited Partnership Interest pursuant
to Section 3.03. Any purchase of the Partnership Interests of DW
hereunder shall be consummated within 90 days after the final
determination of the purchase price therefor and the purchase price
shall be paid by certified check or by wire transfer of immediately
available funds to an account to be designated by DW.
(b) If any General Partner (other than DW) shall be
bankrupt (such General Partner being hereinafter called the
"Bankrupt Partner"), then DW (at its option) shall have the right,
in addition to any other rights or claims for damages or specific
performance, to purchase the entire Partnership Interest of the
Bankrupt Partner at the fair market value thereof (as determined
pursuant to Section 7.09) and/or to cause such Bankrupt Partner's
entire Partnership Interest to be converted to a limited Partnership
Interest pursuant to Section 3.03. Any purchase of the Partnership
Interests of the Bankrupt Partner hereunder shall be consummated
within 90 days after the final determination of the purchase price
therefor and the purchase price shall be paid by certified check or
by wire transfer of immediately available funds to an account to be
designated by the Bankrupt Partner.
(c) If any General Partner shall be dead, insane,
incompetent, incapacitated, dissolved, liquidated or its existence
shall be otherwise terminated, such General Partner's entire
Partnership Interest shall automatically, without further act by any
Partner, become converted to a limited Partnership Interest pursuant
to Section 3.03 as of the date of the occurrence of such event.
SECTION 7.03. Right of First Offer. (a) At any time
after the eighth anniversary of the Closing Date if there shall be
more than one General Partner the Partners (other than DW) as a
group (the "Other Partners") shall have the right to sell all (but
not part) of their Partnership Interests to any third party and DW
shall have the right to sell all (but not part) of its Partnership
interests to any third party; provided, however, that DW shall
first be obligated to offer to sell all its Partnership Interests to
the Other Partners (the "Other General Partners"), and the Other
Partners shall first be obligated to offer to sell all their
Partnership Interests to DW, in each case pursuant to the provisions
of this Section 7.03; provided, further, that upon the sale of any
General Partnership Interests by any of the Other General Partners
pursuant to this Section 7.03 (other than to DW) such general
Partnership Interests shall automatically be deemed converted to
limited Partnership Interests pursuant to Section 3.03. In order to
initiate its right to sell its Partnership Interests to a third
party, the Other Partners or DW, as the case may be (hereinafter
called "Seller") shall deliver a notification to the General Partner
or General Partners, as the case may be, entitled pursuant to the
preceding sentence to be given a right of offer (the "First Offer
Notification") describing a proposed offer to sell such Partnership
Interests for a price specified in such First Offer Notification
(the "First Offer Sale Price"). The First Offer Notification shall
(i) advise that Seller desires to sell all its Partnership Interests
to a third party (which third party need not be named or then
known), (ii) state the proposed First Offer Sale Price, (iii) set
forth the other material terms of the proposed offer, which must
include an earnest money deposit equal to at least 5% of the cash
portion of the First Offer Sale Price (the "First Offer Deposit")
and a statement of who will pay for transfer taxes and other closing
costs (the "Other First Offer Sale Terms"), and (iv) give DW or the
Other General Partners, as the case may be, the option to purchase
such Partnership Interests at the First Offer Sale Price and upon
the Other First Offer Sale Terms or to consent to the sale of the
Partnership Assets (which in the case of the Campus Drive Interest
may be through the sale of all such Interest or the underlying
property, as Seller may elect) at a price not less than a price
directly proportional to the First Offer Sale Price (e.g., if the
Selling General Partner's Partnership Interest is 50%, then all
Partnership Assets may be sold at a price equal to 200% of the First
Offer Sale Price) and consistent with the Other First Offer Sale
Terms.
(b) Within 30 days after the giving of the First Offer
Notification, DW or the Other General Partners, as the case may be,
shall give notice to the Seller (which in the case of the Other
Partners as a group as Seller may be given to any of the Other
General Partners as representative of the Other Partners) of either:
(i) Election to purchase such Partnership Interest, in
which event such notice shall be sent with evidence that the
First Offer Deposit has been paid to an escrow holder approved
by the Seller, to be distributed as provided herein, together
with appropriate acknowledgment under California law of the
First Offer Deposit as liquidated damages in the event of a
default; or
(ii) Election to consent to the sale of all the
Partnership Assets, in which event the Seller shall use all
reasonable efforts to arrange for such sale; or
(iii) Election not to purchase such Partnership Interest
or to consent to the sale of all the Partnership Assets, in
which event the Seller shall have the right to offer to sell
and to sell such Partnership Interests to any third party upon
terms and conditions no less favorable to the Seller than the
First Offer Sale Price and the Other First Offer Sale Terms;
provided such a sale is the subject of a binding contract
within 12 months of, and closes within 18 months of, the
giving of the First Offer Notification.
If DW or the Other General Partners, as the case may be, do not give
notice to the Seller in answer to the First Offer Notification
within the 30-day period as provided herein, it or they shall be
deemed to have given the answer set forth in clause (iii) above.
(c) The closing of any purchase and sale of Partnership
Interests pursuant to Section 7.03 (b) (i) shall take place not
later than 180 days after the Seller gives the First Offer
Notification.
(d) At the closing of the sale of Partnership Interests
pursuant to Section 7.03(b)(i) or (iii), the Partnership and the
Partners shall execute and deliver such instruments as shall be
appropriate to transfer such Partnership Interests and, if
necessary, in the case a sale by the Other Partners to admit such
purchaser as a Limited Partner (and in the case of a sale by DW, to
admit such purchaser as a General Partner), such purchaser shall
simultaneously pay to the Seller the cash portion of the First Offer
Sale Price (less the amount of the First Offer Deposit already paid,
which shall be released from escrow to the Seller) and the Partners
and the purchaser shall perform the Other First Offer Sale Terms to
be performed by them.
(e) In the event that DW or the Other General Partners,
as the case may be, default in any obligation to purchase a
Partnership Interest pursuant to this Section 7.03, then the Seller
shall be paid the First Offer Deposit as liquidated damages and may,
at any time for a period of 18 months after such default, sell all
its Partnership Interests to any person at such price and on such
terms as Seller may determine.
(f) At any time after the eighth anniversary of the
Closing Date if there shall be only one General Partner such General
Partner shall have the right to sell all (but not part) of its
Partnership Interests (general and limited) to any third party,
subject to the limitations of this Section 7.03(f). In order to
initiate its right to sell all its Partnership Interests to a third
party, such General Partner shall deliver to the Limited Partners a
notification (the "Sole GP Notification") which shall (i) advise
that such General Partner desires to sell all its Partnership
Interests to a third party (which third party and the terms of such
sale need not be specified or then known) and (ii) give the Limited
Partners the option to consent to the sale of all the Partnership
Assets (which in the case of the Campus Drive Interest may be
through the sale of such Interest or the underlying property, as
such General Partner may elect) on such terms as such General
Partner, in good faith, deems to be fair and reasonable. Within 30
days after the giving of the Sole GP Notification, a majority in
interest of the Limited Partners (based upon Partnership Interests)
shall give notice to such General Partner of either:
(i) Election to consent to the sale of all the
Partnership Assets, in which event such General Partner shall
use all reasonable efforts to arrange for such sale; or
(ii) Election not to consent to the sale of all the
Partnership Assets, in which event such General Partner shall
have the right at any time thereafter to offer to sell and to
sell all its Partnership Interests to any third party upon
such terms and conditions as it in its sole discretion deems
appropriate; provided such a sale closes within 18 months of
the giving of the Sole GP Notification.
If a majority in interest of the Limited Partners (based upon
Partnership Interests) does not give notice to the General Partner
in answer to the Sole GP Notification within the 30-day period as
provided herein, they shall be deemed to have given the answer set
forth in clause (ii) above. At the closing of any purchase and sale
of Partnership Interests pursuant to this Section 7.03(f), the
Partnership and the Partners shall execute and deliver such
instruments as shall be appropriate to transfer such Partnership
Interests and admit such purchaser as the General Partner.
SECTION 7.04. Transfer of Limited Partner's Interests.
(a) The bankruptcy, dissolution, death, insanity, incompetency or
legal incapacity of a Limited Partner shall not dissolve or
terminate the Partnership. Upon the occurrence of any such event,
the legal representative of such Limited Partner shall be deemed to
be the assignee of such Limited Partner's Partnership Interest and
may become a substituted Limited Partner upon the terms and
conditions set forth in Section 7.05.
(b) A Limited Partner may sell, assign, mortgage,
pledge, grant a security interest in or otherwise transfer its
Partnership Interest, whether voluntarily or by operation of law,
only as provided in this Agreement. Any unpermitted sale,
assignment, mortgage, pledge or transfer of, or grant of a security
interest in, the Partnership Interest of a Limited Partner shall be
null and void. Except as otherwise provided in this Agreement, a
Limited Partner may assign all or any portion of its Partnership
Interest to a Permitted Transferee of such Limited Partner. A
Limited Partner may assign all (but not part) of its Partnership
Interest to a third party if such assignment is Approved by the
General Partners, such approval not to be unreasonably withheld.
Any other assignment by a Limited Partner of its Partnership
Interest may occur only if Approved by the General Partners, which
approval may be arbitrarily withheld. Upon any approved assignment
pursuant to this Section 7.04(b), the assignee of such interest
shall become a substituted Limited Partner only upon the terms set
forth in Section 7.05.
SECTION 7.05. Substituted Limited Partners. (a) If
Approved by the General Partners (which approval may be granted or
denied in their sole discretion), any person who acquires the
Partnership Interest, or any part thereof, of a Partner may be
admitted as a substituted Limited Partner.
(b) The admission of an assignee as a substituted
Limited Partner shall be conditioned upon the assignee's written
acceptance and adoption of all the terms and provisions of this
Agreement. Any such assignee not admitted as a substituted Limited
Partner shall not have any rights of a Limited Partner but shall
have only the right to receive a ratable portion of the Net Cash
Flow, Capital Proceeds and net profits and losses relating to the
Partnership Interest or part thereof assigned.
(c) Any person who acquires all or any part of a
Partner's Partnership Interest shall, whether or not admitted to the
Partnership as a Partner, acquire the rights to the ratable portion
of the Net Cash Flow, Capital Proceeds, and net profits and losses
relating to such Partnership Interest or part thereof assigned.
SECTION 7.06. Restrictions on Transfer. (a) In
addition to any other limitations contained in this Agreement, no
Partner shall assign, sell, mortgage, pledge, grant a security
interest in or otherwise transfer, whether voluntarily or by
operation of law, its Partnership Interest or its share of the net
profits and losses, Net Cash Flow or Capital Proceeds (i) for a
period of 18 months following the Closing Date, (ii) unless such
Partner complies with the applicable provisions of Federal and state
securities laws or (iii) at any time prior to the eighth anniversary
of the Closing Date if such action would cause a technical
termination of the Partnership under Section 708 of the Code.
(b) Notwithstanding anything contained in this
Agreement to the contrary, no Partner shall be permitted to assign,
sell, mortgage, pledge, grant a security interest in or otherwise
transfer its Partnership Interest or its share of the net profits
and losses, Net Cash Flow or Capital Proceeds after a General
Partner has given a First Offer Notification or a Sole GP
Notification if the effect of such action would be to prevent such
General Partner from selling its Partnership Interest pursuant to
Section 7.03 as a result of the restrictions contained in Section
7.06(a). The foregoing restriction shall remain in effect until
such General Partner has so sold its Partnership Interest pursuant
to Section 7.03 or until the right to so sell its Partnership
Interest after giving any such notice shall expire, whichever shall
occur first.
SECTION 7.07. Syndication. Notwithstanding anything to
the contrary contained in this Agreement, POP/DW Associates, a
California Limited Partnership ("POP/DW") , a general partner of DW,
shall have the right (in its sole discretion) at any time, to
implement a plan of syndication (the "Plan of Syndication") of the
limited partnership interests in POP/DW and/or to assign all or any
portion of its partnership interests in DW to Dean Witter Realty
Growth Properties, L.P. ("Growth Properties") (and, in the case of
an assignment of all its partnership interests in DW to Growth
Properties, Growth Properties may become a General Partner hereunder
and assume all the rights and obligations of DW hereunder provided
that Growth Properties agrees in writing to be bound hereby).
Additionally, the partnership interests of DW (and of its partners)
shall be subject only to those transfer restrictions, if any, which
DW (or its partners), in their sole discretion, shall elect to
impose; provided, however, that at all times (except after a sale by
DW of its Partnership Interests pursuant to Section 7.03) an
affiliate of Dean Witter Reynolds Inc. or a person controlled by
John J. Preotle, Jr., William B. Smith, E. Davisson Hardman, Jr.,
Warren B. Lane and Peter J. Carr, or any of them, or of which any of
them shall be general partners, shall be or remain a general partner
of DW. All Partners agree to cooperate fully with DW and POP/DW in
connection with the implementation of the Plan of Syndication but
only to the extent that such cooperation does not make them an
"issuer" under the Securities Act of 1933, as amended (the
"Securities Act"), or does not otherwise create additional liability
for them under the Securities Act or the Securities Exchange Act of
1934, as amended (the "Exchange Act"). POP/DW agrees to permit the
other General Partners to review and approve all offering materials
used in connection with the Plan of Syndication, such approval not
to be unreasonably withheld and to be deemed given if written
objection to such materials is not received by POP/DW within 15 days
after receipt of such materials by the other General Partners. All
out-of-pocket expenses incurred by the General Partners in
connection with such review (up to a maximum of $5,000) shall be
reimbursed by the Partnership. POP/DW agrees that the Plan of
Syndication will be conducted in accordance with all applicable
Federal and state securities laws. POP/DW further agrees to
indemnify and hold harmless the Partners from and against any and
all losses, claims, damages, liabilities, costs and expenses
(including reasonable attorney's fees) to which they may become
subject under the Securities Act, Exchange Act, any other Federal or
state law, statute, or regulation, at common law or otherwise,
arising out of or based on (i) any untrue statement or alleged
untrue statement of a material fact made in connection with any sale
of limited partnership interest in POP/DW through the Plan of
Syndication, (ii) the omission or alleged omission to state a
material fact required to be stated or necessary to make the
statements made in connection with any such sale not misleading,
(iii) the failure to register or qualify such sales under the
Securities Act or under state securities laws or (iv) any violation
of any rule or regulation promulgated under the Securities Act, the
Exchange Act or any Federal or state statute or regulation
applicable to any such sale. Notwithstanding anything to the
contrary contained in this Agreement, this indemnity shall not apply
to any losses, claims, damages or liabilities arising out of or
based upon any untrue statement of a material fact or omission of
any material fact made in reliance upon and in conformity with (i)
representations and warranties of the Partnership in the Purchase
Agreement or of Campus Drive in the Campus Drive Purchase Agreement
or (ii) information (including financial statements) furnished in
writing by any General Partner (other than DW) expressly for use in
connection with any such sale.
SECTION 7.08. Termination. (a) The Partnership shall
terminate upon the first to occur of any of the following events or
dates:
(i) by mutual agreement of the General Partners;
(ii) December 31, 2025;
(iii) the sale or other disposition of all the assets of
the Partnership and receipt of consideration therefor; or
(iv) in the event of the bankruptcy, death, insanity,
incompetence, liquidation, termination or legal incapacity of
a General Partner (except in any case in which a General
Partner which is a partnership shall be reconstituted by its
remaining partners following any liquidation or dissolution
caused by the legal incapacity of one or more of its
partners), unless any of the remaining General Partners elect
within 60 days of the termination required under this clause
(iv) to continue the business of the Partnership for the
balance of the term specified in Section 1.02.
(b) Contemporaneously with any disposition of the
Partnership Assets pursuant to any provision of this Article VII or
upon termination of the Partnership under Section 7.08(a), the
Partnership shall, to that extent (but only to the extent) of the
assets of the Partnership, discharge the obligations (including
establishment of necessary reserves) and pay the indebtedness of the
Partnership (including Shortfall Loans) and distribute the balance,
if any, of the assets of the Partnership to the Partners in the
order of priority set forth in Section 5.01. After the foregoing
has been accomplished, the Partnership shall be deemed liquidated
and this Agreement shall terminate and no Partner shall have any
further rights or obligations hereunder. The liquidation of the
Partnership and the termination of the business and affairs of the
Partnership shall be conducted by the General Partners jointly.
During such period, the business and affairs of the Partnership
shall be conducted so as to maintain and preserve the assets of the
Partnership in a manner consistent with the liquidation of the
Partnership.
SECTION 7.09. Appraisal. In the event that it becomes
necessary, under the terms of this Agreement, to determine the fair
market value of a Partnership Interest, such value shall be
determined by appraisal, made by a board of three reputable real
estate appraisers, each of whom shall be a member of the American
Institute of Real Estate Appraisers and shall have no disqualifying
interest, as that term is hereinafter defined. One appraiser shall
be appointed by the person or persons holding such Partnership
Interest and a second appraiser shall be appointed by the Partner
desiring to purchase the same. A third appraiser shall be appointed
by the first two appraisers. If the first two appraisers are unable
to agree on a third appraiser within thirty (30) days after the
appointment of the second of them to be appointed, or if either side
refuses, is unable to or neglects to appoint an appraiser as herein
provided, then such third appraiser or such other appraiser whose
appointment was not made as aforesaid shall be appointed by the then
President of the American Institute of Real Estate Appraisers or
such successor body hereafter constituted exercising similar
functions, unless such President shall have any direct or indirect
financial or other business interest in any of the parties having a
power to appoint an appraiser, jointly or alone, other than
financial holdings of not more than one percent (1%) of the value of
any class of securities issued by any such party or by any
corporation or partnership affiliated therewith (hereinafter
referred to as a "disqualifying interest"), in which case the third
appraiser or such other appraiser whose appointment was not made as
aforesaid shall be appointed by the highest ranking officer of the
American Institute of Real Estate Appraisers or such successor body
who shall not have a disqualifying interest. Each appraiser shall
within 60 days after the appointment of the third appraiser make his
valuation on the basis of the value of an interest irrespective of
the proportion of ownership or control of the Partnership such
interest represents or whether it is a general or limited
Partnership Interest. If the determinations of any two or all three
of the appraisers shall be identical in amount, such amount shall be
deemed to be the fair market value of the interest in question. If
the determinations of all three appraisers shall be different in
amount the highest value shall be averaged with the middle value
(the average being hereinafter referred to as Sum A), the lowest
appraised value shall be averaged with the middle value (the average
being hereinafter referred to as Sum B), and the fair market value
of the interest in question shall be determined as follows:
(a) if neither Sum A nor Sum B differs from the middle
appraised value by more than five percent (5%) of such middle
appraised value, then the fair market value of the interest in
question shall be deemed to be the average of the three appraisals;
(b) if either Sum A or Sum B (but not both of the sums)
differs from the middle appraised value by more than five percent
(5%) of such middle appraised value, then the fair market value of
the interest in question shall be deemed to be the average of the
middle appraised value and the appraised value closest in amount to
the middle value; and
(c) if both Sum A and Sum B differ from the middle
appraised value by more than five percent (5%) of such middle
appraised value, the appraisal shall have no force and effect, and
the fair market value of the interest in question shall be similarly
determined by a panel of three qualified real estate appraisers who
shall be members of the American Institute of Real Estate Appraisers
and who shall have no disqualifying interest. Such panel shall be
appointed by the then President of the American Institute of Real
Estate Appraisers or such successor body hereafter constituted
exercising similar functions, unless such President shall have a
disqualifying interest, in which case the panel shall be appointed
by the highest ranking officer of the American Institute of Real
Estate Appraisers or such successor body hereafter constituted
exercising similar functions who shall not have a disqualifying
interest.
The costs of this appraisal procedure shall be borne
equally by the buying and selling Partner.
ARTICLE VIII
Liabilities
SECTION 8.01. Liabilities. The liabilities of the
Partnership or of the Partners and the partners in the Partners as a
part of or arising out of any of the activities of the Partnership
shall be covered by appropriate policies of public liability
insurance to be purchased by the Partnership. (It being the
intention of the parties that all potential liabilities be covered
by insurance consistent with the Insurance Guidelines from time to
time Approved by the General Partners.) In the event that any
liability arising out of any activities of the Partnership shall not
be adequately covered by such public liability insurance, the amount
of liability not so insured shall, subject to Section 8.02, first be
satisfied out of the assets of the Partnership, and if such assets
are not sufficient fully to satisfy the amount of the liability not
so insured each Partner which shall have been a General Partner
during such period shall be responsible for the balance of any
amount due in proportion to the amount its Partnership Interest
bears to the aggregate of the Partnership Interests of all such
General Partners; provided, however, that for purposes of this
Section 8.01 the aggregate Partnership Interests of the General
Partners (other than DW) shall be equal to the aggregate Partnership
Interests of all Partners (other than DW). In the event a General
Partner shall have paid an amount in excess of its share of any such
liability, the other of such General Partners and the Limited
Partners to the extent of their interests in the Partnership shall
promptly reimburse such General Partner to the extent of such
excess. Nothing in this Section 8.01 shall be deemed to affect the
obligations of the Partners to make capital contributions or
otherwise contribute funds to the Partnership pursuant to this
Agreement.
SECTION 8.02. Indemnification; No Recourse. (a) Each
Partner shall indemnify each other Partner and hold harmless each
such other Partner against and from all claims, demands, actions,
damages, losses, liabilities, costs and expenses which shall or may
arise by virtue of anything done or omitted to be done by the former
(or by any of its partners, agents, employees or other
representatives) which is outside the scope, or in breach of the
terms, of this Agreement or which constitutes gross negligence or
wilful misconduct. Any Partner having any claim, demand, action or
right of action against any other Partner and seeking
indemnification or any other remedies therefor whether under this
Section or Section 8.01 shall look only to the interest of the
indemnifying Partner in the Partnership, and no Partner shall seek
satisfaction of such indemnity from any other assets of any other
Partner or any partner of any other Partner; provided, however, that
the foregoing limitations shall not be applicable with respect to
(i) any claim for indemnity based upon gross negligence or wilful
misconduct or (ii) any amount paid to third persons by any General
Partner in excess of its share of any liability and for which it
seeks reimbursement from any other General Partner pursuant to the
second to last sentence of Section 8.01 or (iii) any claim for
indemnity arising out of the covenants to make capital contributions
pursuant to Section 3.01. In no event shall any Partner seek
satisfaction of any claim for indemnity against a limited partner of
any other Partner, except to the extent that such limited partner
shall have guaranteed any obligations of such other Partner pursuant
to a separate agreement and then only in accordance with such
separate agreement. Nothing contained in this Section 8.02 shall be
construed to limit or restrict the rights of DW under the Purchase
Agreement (including, without limitation, under Sections 10 and 11
thereof).
(b) Any Partner claiming an indemnity under this
Agreement shall give notice of the existence of the claim as soon as
practicable to the indemnifying party (provided that failure to give
such notice shall not relieve the indemnifying party of its
liabilities except to the extent it is prejudiced thereby), and the
indemnifying party shall control the defense or settlement of any
third party claim, demand or action which it is indemnifying in its
entirety.
(c) Notwithstanding anything contained in sections 8.01
and 8.02 to the contrary, in computing Net Cash Flow and Capital
Proceeds any liabilities which pursuant to Section 4(D) of the
Purchase Agreement shall not be the responsibility of DW (and which
have not been previously paid to DW or to creditors of the
Partnership for the account of DW by the other Partners), and any
other unpaid claim of DW for indemnification under the Purchase
Agreement which shall have been established by arbitration or court
order or consented to, shall be charged to the Partners (other than
DW) in proportion to their Partnership Interests.
ARTICLE IX
General
SECTION 9.01. Other Businesses. Each Partner shall have
the right to engage in other businesses and ventures of every
nature, including, without limitation, the ownership, management,
improvement and operation of other real estate, including real
estate located in the vicinity of and/or competitive with the
Property, provided that each of Wilson and Ream will act in good
faith in conducting business for and with the Partnership and, in
determining good faith, transactions of each of them will be
considered as a whole on an ongoing basis (as opposed to an
individual basis), and provided further, that Wilson and Ream and
their affiliates shall not divulge any nonpublic information with
respect to the Partnership or the Property to any third persons for
the benefit of, or in connection with, any other project or venture
(other than Campus Drive).
SECTION 9.02. Notices. All notices, demands or other
communications hereunder shall be in writing and shall be deemed to
have been given on (i) the date of delivery, if delivered by hand,
(ii) upon confirmation of receipt if sent by independent courier
service guaranteeing one-day delivery, or (iii) the seventh day
after mailing, if mailed first-class, postage prepaid, United States
registered or certified mail; in each case, to the parties at the
addresses set forth below or at such other addresses as such parties
may designate by notice to the other parties:
(i) if to DW, in care of:
Dean Witter Realty Inc.
130 Liberty Street
New York, New York 10005
Attention of Ronald DiPietro,
with a copy to
Cravath, Swaine & Moore
One Chase Manhattan Plaza
New York, N.Y. 10005
Attention of William P. Dickey, Esq.
(ii) if to Wilson, at:
William Wilson & Associates
2929 Campus Drive
Suite 450
San Mateo, California 94403
with a copy to
Farella, Braun & Martel
235 Montgomery Street
San Francisco, California
Attention of Lee Van Boven, Esq.
(iii) if to Ream, at:
Borel Estate Company
2988 Campus Drive
Suite 300
San Mateo, California 94403
(iv) if to the Limited Partners, at their addresses set
forth in Exhibit A.
SECTION 9.03. Applicable Law. This Agreement and the
obligations of the parties hereunder shall be interpreted, construed
and enforced in accordance with the laws of the State of California.
SECTION 9.04. Brokers. [Intentionally Omitted.]
SECTION 9.05. Entire Agreement. This Agreement contains
the entire agreement among the parties hereto relative to the
continuation and operations of the Partnership.
SECTION 9.06. Waiver. No consent or waiver, express or
implied, by any party hereto of any breach or default by any other
party hereto in the performance of its obligations hereunder shall
be deemed or construed to be a consent or waiver to or of any other
breach or default in the performance by such party of the same or
any other obligations of such party hereunder. Failure on the part
of any party to complain of any act or failure to act of another
party or to declare another party in default, irrespective of how
long such failure continues, shall not constitute a waiver by such
party of its rights hereunder.
SECTION 9.07. Severability. If any provision of this
Agreement or the application thereof to any person or circumstance
shall be invalid or unenforceable to any extent, the remainder of
this Agreement and the application of such provisions to other
persons or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by law.
SECTION 9.08. Relationship of the Partners. The
relationship between the Partners shall be limited to the
performance of the transactions contemplated by this Agreement and
in accordance with the terms of this Agreement. The relationship
set forth in this Agreement shall be construed and deemed to be a
limited partnership under the laws of the State of California
created for the sole purpose of carrying out the transactions
contemplated hereby. Nothing herein shall be construed to authorize
any Partner to act as general agent for any other. Nothing in this
Agreement shall be deemed to create any right in any creditor or
other person not a party hereto (other than the successors and
assigns of a party hereto and, to the extent expressly provided
herein, the general partners of DW) and this instrument shall not be
construed in any respect to be a contract in whole or in part for
the benefit of any other party except as aforesaid. Except as
otherwise provided herein, all provisions of this Agreement shall be
binding upon, inure to the benefit of and be enforceable by and
against the respective heirs, executors, administrators, legal
representatives, successors and permitted assigns of the Partners.
Any permitted assignee of DW's entire Partnership Interest shall
succeed to all the rights and obligations of DW hereunder provided
such assignee agrees to be bound hereby, and upon such assignment
and assumption DW shall be released from its obligations hereunder.
SECTION 9.09. Further Assurances. The parties hereto
shall execute and deliver such further instruments and do such
further acts and things as may be required to carry out the intent
and purposes of this Agreement.
SECTION 9.10. Counterparts. This Agreement may be
executed in counterparts and as so executed shall constitute one
agreement.
SECTION 9.11. Captions. Captions contained in this
Agreement are inserted only as a matter of convenience and in no way
define, limit, extend or describe the scope of this Agreement or the
intent of any provision hereof.
SECTION 9.12. Waiver of Partition. Each Partner hereby
irrevocably waives any right to partition the Partnership Assets.
SECTION 9.13. Certain Definitions. (a) Whenever the
context may require, any pronouns used herein shall include the
corresponding masculine, feminine or neuter forms, and the singular
form of nouns and pronouns shall include the plural and vice versa.
Terms such as "herein," "hereby," "hereunder" and "hereof," unless
the context otherwise requires, refer to this Agreement as a whole
and not to the Articles, Sections or other subdivisions where the
terms appear. References herein to any agreement or other
instrument shall, unless the context otherwise requires, be deemed
references to the same as it may from time to time be changed,
amended or extended in accordance with its terms.
(b) The term "person" shall include an individual,
corporation, partnership, association, trust, joint stock company or
unincorporated organization.
(c) An "affiliate" of a specified person is a person
who, directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the
person specified.
(d) The "bankruptcy" of a person shall be deemed to
have occurred or a person shall be deemed "bankrupt" upon the
happening of any of the following: (i) the filing of an application
by such person for, or a consent to, the appointment of a trustee of
its or his assets; (ii) the filing by such person of a voluntary
petition in bankruptcy or the seeking of relief under Title 11 of
the United States Code, as now constituted or hereafter amended, or
the filing of a pleading in any court of record admitting in writing
its or his inability to pay its or his debts as they come due; (iii)
the making by such person of a general assignment for the benefit of
creditors; (iv) the filing by such person of an answer admitting the
material allegations of, or its or his consenting to, or defaulting
in answering, a bankruptcy petition filed against it or him in any
bankruptcy proceeding or petition seeking relief under Title 11 of
the United States Code, as now constituted or as hereafter amended;
or (v) the entry of an order, judgment or decree by any court of
competent jurisdiction adjudicating such person a bankrupt or
appointing a trustee of its or his assets, and such order, judgment
or decree continues unstayed and in effect for a period of 60
consecutive days.
(e) The term "Campus Drive" shall mean Campus Drive
Investment Company, a California limited partnership. The term
"Campus Drive Partnership Agreement" shall mean the Amended and
Restated Agreement of Limited Partnership of Campus Drive dated as
of the date hereof, as amended from time to time.
(f) The term "Permitted Transferee" shall mean, with
respect to any person, such person under declaration of trust, or
any parent, spouse, brother, sister, lineal descendant or adopted
descendant of such person. Any transfer of a Partnership Interest
to a Permitted Transferee may be by declaration of trust, inter
vivos gift, specific testamentary disposition or for consideration.
SECTION 9.14. Power of Attorney. Each Limited Partner
hereby irrevocably constitutes and appoints each General Partner and
any person hereafter admitted pursuant to this Agreement as a
successor or additional General Partner, acting singly or
collectively (the "Attorneys"), in each case with full power of
substitution, the true and lawful attorney-in-fact of such Limited
Partner, with full power and authority in such Limited Partner's
name, place and stead, to make, execute, verify, consent to, swear
to, make oath as to, acknowledge, publish, record and file all of
the following:
(i) the New Certificate or any amendment thereto and any
other agreements, certificates, consents or other instruments said
Attorneys, or any of them, deem necessary or appropriate for the
purpose of giving effect to the provisions of this Agreement and to
preserve the character of the Partnership as a limited partnership,
the execution and delivery by any of said Attorneys of any such
agreement, certificate, consent or other instrument being conclusive
evidence that said execution and delivery was authorized hereby;
(ii) any and all amendments to or modifications of this
Agreement and of the instruments described in subparagraph (i)
hereof (including, without limitation, amendments of this Agreement
necessary to effect the addition, removal or substitution of one or
more General or Limited Partners or changes in Partnership Interests
pursuant to Section 3.02(e) or otherwise), provided that each such
amendment of this Agreement is adopted in accordance with or made
pursuant to the terms of this Agreement, the execution and delivery
by any of said Attorneys of any such amendment or modification being
conclusive evidence that such execution and delivery was authorized
hereby;
(iii) any and all certificates and other instruments
which may be required to effectuate the dissolution and termination
of the Partnership pursuant to the provisions of this Agreement, the
execution and delivery by any of said Attorneys of any such
certificate or other instrument being conclusive evidence that such
execution and delivery was authorized hereby; and
(iv) all such other instruments as shall be Approved by
the General Partners as necessary or desirable to carry out fully
the provisions of this Agreement in accordance with its terms, the
execution and delivery of such instruments by any of said Attorneys
being conclusive evidence that said execution and delivery was
authorized hereby.
Each Limited Partner acknowledges that the Power of
Attorney hereby granted is coupled with an interest and is
irrevocable. Said Power of Attorney shall survive the death or
incapacity of such Limited Partner, or, if such Limited Partner is a
partnership, corporation, trust or other entity, the dissolution,
liquidation or termination thereof, or the assignment of such
Limited Partner's limited Partnership Interest or any part thereof.
If such Limited Partner transfers its limited Partnership Interest,
the Power of Attorney granted hereby shall remain in effect for the
purpose of and for the length of time necessary to effectuate and
complete such transfer.
SECTION 9.15. Amendments. Except as provided in this
Agreement, this Agreement may not be modified or amended unless (i)
such modification or amendment has been Approved by the General
Partners and (ii) in the case of any modification or amendment
increasing the obligation of the Limited Partners to make capital
contributions or increasing their proportionate share of Shortfall
Loans (other than as a result of changes in Partnership Interests in
accordance with this Agreement), decreasing the rights of Limited
Partners hereunder to Net Cash Flow or Capital Proceeds, or amending
Section 2.01(d) or this Section 9.15, such modification or amendment
has been approved in writing by a majority in interest of the
Limited Partners (based upon Partnership Interests).
IN WITNESS WHEREOF, this Agreement is executed as of the
date first set forth above.
GENERAL PARTNERS:
PENINSULA/DW ASSOCIATES
by POP/DW Associates, a California
Limited Partnership, General
Partner
by: POP/Liberty Street
Associates, a California
Limited Partnership,
General Partner
/s/Warren B. Lane
by:___________________
Warren B. Lane
General Partner
by: Dean Witter Realty Growth
Properties, L.P., General
Partner
by: Dean Witter Realty
Growth Properties
Inc.,
Managing General
Partner
/s/Warren B. Lane
by:___________________
Warren B. Lane
Sr. Vice
President
/s/William Wilson III
__________________________________
William Wilson III
/s/Miller Ream
__________________________________
Miller Ream
LIMITED PARTNERS: By: William Wilson III as Attorney-in-Fact
for the limited partners whose names are
set forth below:
John W. Leyerzaph
Paul Moore Denison, Trustee
under Trust Agreement
dated April 6, 1976
C. David Robinson
David H. Knott
Dr. Albert C. Hass
Richard M. Lavenstein, Trustee
of the Richard M. Lavenstein Trust
dated April 30, 1975
Ceasar Villano
Roger C. and Carmen
Stuhlmuller
Gilbert E. Bovet
Webcor Investment Company,
a California limited partnership
/s/William Wilson III
________________________________
William Wilson, III
H. Whitwell Wales
by Miller Ream as his Attorney-in-Fact
/s/Miller Ream
_____________________________
Miller Ream
OUTGOING PARTNERS: BOREL DEVELOPMENT COMPANY
a partnership
By: Borel Estate Company, general
partner
By: Ream Wilson, a limited
partnership, general partner
/s/William Wilson III
By:____________________________
William Wilson III,
general partner
/s/Miller Ream
By:____________________________
Miller Ream,
general partner
/s/Gilbert E. Bovet
By: _________________________________
Gilbert E. Bovet, general partner
/s/Miller Ream
By: ___________________________
Miller Ream, attorney-in-fact
By: Wilson & Ream, general partner
/s/William Wilson III
By:____________________________
William Wilson III,
general partner
/s/Miller Ream
By:____________________________
Miller Ream, general partner
By: Borel Estate Company,
general partner
By: Ream Wilson, a limited
partnership, general partner
/s/William Wilson III
By:________________________
William Wilson III,
general partner
/s/Miller Ream
By:________________________
Miller Ream, general partner
/s/Gilbert E. Bovet
By:_______________________________
Gilbert E. Bovet, general partner
/s/Miller Ream
By:_________________________
Miller Ream,
Attorney-in-Fact
The following outgoing partners by William
Wilson III as their attorney-in-fact:
Peter V. Hall
Gate King Properties, Inc.
Carolyn Henley
Roberta McWilliams Mathews
Kevin S. McWilliams
Keith B. McWilliams
Richard D. Freemon, Trustee
under Inter Vivos Trust of
Richard D. Freemon dated
August 1, 1980
Harold J. Freemon
Webcor Builders Inc.
Profit Sharing Fund
/s/William Wilson III
_______________________________
William Wilson III
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Registrant is a limited partnership which invests in real estate and real
estate joint ventures. In accordance with industry practice, its balance
sheet is unclassified. For full information, refer to the accompanying
audited financial statements.
</LEGEND>
<CIK> 0000765923
<NAME> DEAN WITTER REALTY GROWTH PROPERTIES L.P.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 2,072,917
<SECURITIES> 0
<RECEIVABLES> 1,671,728
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 41,836,913<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (18,728,278)<F2>
<TOTAL-LIABILITY-AND-EQUITY> 41,836,913<F3>
<SALES> 0
<TOTAL-REVENUES> 28,731,324<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 25,791,552
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,327,001
<INCOME-PRETAX> (2,387,229)<F5>
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,387,229)
<DISCONTINUED> 0
<EXTRAORDINARY> 1,938,645
<CHANGES> 0
<NET-INCOME> (448,584)
<EPS-PRIMARY> (5.22)<F6>
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash and receivables, total assets include net investments
in real estate of $30,927,112, real estate held for sale of $2,021,342, net
deferred expenses of $1,277,687, restricted cash of $3,570,238 and
other assets of $295,889.
<F2>Represents partners' capital deficiency.
<F3>Liabilities include mortgage notes payable of $42,000,000,
investments in unconsolidated partnerships of $7,510,575, due to
affiliates of $6,385,499, minority interests of $1,583,135 and
accounts payable and other liabilities of $3,085,982.
<F4>Total revenue includes hotel operating revenue of $27,351,396, rental
revenue of $1,236,740 and interest and other revenue of $143,188.
<F5>Net loss includes loss on real estate sold of $1,249,457.
<F6>Represents net loss per Unit of limited partnership interest.
</FN>
</TABLE>
