<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 28, 1997
REGISTRATION NO. 333-36471
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 04-6613783
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
</TABLE>
------------------------
FIVE CAMBRIDGE CENTER, 9TH FLOOR
CAMBRIDGE, MASSACHUSETTS 02142-1493
(617) 234-3000
(ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
Copies to:
<TABLE>
<S> <C>
COPY TO:
PETER BRAVERMAN JOSEPH L. GETRAER, ESQ.
WINTHROP FINANCIAL ASSOCIATES ROSENMAN & COLIN LLP
FIVE CAMBRIDGE CENTER, 9TH FLOOR 575 MADISON AVENUE
CAMBRIDGE, MASSACHUSETTS 02142-1493 NEW YORK, NEW YORK 10022
TELEPHONE: (617) 234-3000 TELEPHONE: (212) 940-8800
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR
SERVICE)
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box / /
-------------------------
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /x/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Information contained herein is subject to completion or amendment. A proxy
statement and registration statement relating to these securities has been filed
with the Securities and Exchange Commission. These securities may not be sold
nor may offers to buy be accepted prior to the time the proxy statement and the
registration statement becomes effective. This proxy statement and prospectus
shall not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such State.
PRELIMINARY CONSENT MATERIAL SUBJECT TO COMPLETION DATED OCTOBER 28, 1997
PROXY STATEMENT AND PROSPECTUS
460 UNITS REPRESENTING
PREFERRED LIMITED PARTNERSHIP INTERESTS
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
This Proxy Statement and Prospectus is furnished to holders (the
'Unitholders') of limited partnership interests (the 'Units') of 1999 Broadway
Associates Limited Partnership (the 'Partnership'), a Delaware limited
partnership. The Partnership is hereby soliciting the consent (the 'Consent') of
Unitholders to a proposal (the 'Proposal') which, if adopted, would result in
the creation of a class of 12% cumulative, non-compounded preferred units (each,
a 'Preferred Unit') representing a limited partnership interest in the
Partnership. This Proxy Statement and Prospectus also serves as a Prospectus
under the Securities Act of 1933 (the 'Act') for the issuance by the
Partnership, subject to the receipt of the Consent, of Preferred Units. The
Partnership is issuing to the Unitholders of record as of the close of business
on October 27, 1997 (the 'Record Date') one subscription right (each, a 'Right')
for each Unit held. Each Right entitles the Unitholder to purchase, subject to
the receipt of the Consent, at any time prior to 5:00 p.m., New York City time,
on December , 1997 (as such date may be extended as herein provided, the
'Expiration Date'), at a subscription price of $23,250 (the 'Subscription
Price'), one Preferred Unit. The Rights are evidenced by subscription
certificates (the 'Subscription Certificates') which are being mailed to
Unitholders herewith. The Rights are not transferable. Each Unitholder who
exercises his Right will be entitled to exercise an over-subscription privilege
(the 'Over-Subscription Privilege') for all or any of the Preferred Units that
are not purchased by other Unitholders. If all Rights are exercised, there will
be no Over-Subscription Privilege. There is no limit on the number of Preferred
Units for which a Unitholder who exercises his Right may seek to subscribe
pursuant to the Over-Subscription Privilege. Available Preferred Units will be
allocated pro rata among those Unitholders who exercise the Over-Subscription
Privilege. See 'The Offering.'
EXERCISING UNITHOLDERS WILL HAVE NO RIGHT TO RESCIND A PURCHASE AFTER THE
PARTNERSHIP HAS RECEIVED A COMPLETED SUBSCRIPTION CERTIFICATE. IF THE
PARTNERSHIP DOES NOT RECEIVE THE CONSENT, ALL SUBSCRIPTIONS SHALL BE DEEMED NULL
AND VOID, AND ALL PAYMENTS RECEIVED BY THE PARTNERSHIP IN RESPECT THEREFOR WILL
BE RETURNED TO THE EXERCISING UNITHOLDERS. ALL EXERCISING UNITHOLDERS MUST REMIT
PAYMENT IN FULL WITH THEIR COMPLETED SUBSCRIPTION CERTIFICATES FOR ALL PREFERRED
UNITS SUBSCRIBED THROUGH THE EXERCISE OF THE RIGHTS AND THE OVER-SUBSCRIPTION
PRIVILEGE.
Bronco, L.L.C. (the 'Guarantor'), a Unitholder and an affiliate of Winthrop
Financial Associates, A Limited Partnership (the 'General Partner'), the general
partner of the Partnership, has agreed (i) to exercise its Right as a Unitholder
and (ii) to subscribe for all unsubscribed Preferred Units (the 'Subscription
Guaranty'). Accordingly, subject to receipt of the Consent, the Partnership is
assured of receiving gross proceeds from this offering (the 'Offering') in an
amount equal to approximately $10.695 million. No fee is being paid to the
Guarantor in connection with the Subscription Guaranty.
Each Preferred Unit will entitle the holder thereof to receive from the
available cash flow of the Partnership an amount in cash equal to a cumulative,
non-compounded preferred annual return of 12% (the 'Annual Return') on his
preferred invested capital of $23,250. In addition, each Preferred Unit will
entitle the holder thereof to receive an aggregate cumulative cash distribution
(prior to any distribution to Unitholders and to the General Partner on account
of the Units and the general partnership interests held by them) equal to the
greater of (i) $46,500 (200% of such investor's preferred invested capital) or
(ii) an amount equal to the Subscription Price paid by an investor, together
with a cumulative, compounded annual return thereon of 15%, in each case
exclusive of the Annual Return, from the net cash proceeds, if any, received by
the Partnership from capital transactions or upon liquidation of the
Partnership. See 'Description of Securities.' For a discussion of certain tax
consequences to Unitholders who exercise their Rights, see 'Certain Income Tax
Considerations.'
There is no existing market for the Preferred Units and it is anticipated
that a market for the Preferred Units will not develop. The Partnership does not
intend to apply to list the Preferred Units on any securities exchange.
The Offering is subject to withdrawal and cancellation at any time, without
notice, and is subject to the receipt of the Consent.
THE GENERAL PARTNER BELIEVES THAT THE ADOPTION OF THE PROPOSAL IS IN THE
BEST LONG-TERM INTERESTS OF THE PARTNERSHIP AND THE UNITHOLDERS AND RECOMMENDS
THAT UNITHOLDERS VOTE IN FAVOR OF THE PROPOSAL. THE CONSENT WILL BE DEEMED
OBTAINED AND THE PROPOSAL WILL BE ADOPTED UNLESS UNITHOLDERS OWNING A MAJORITY
OF THE OUTSTANDING UNITS VOTE AGAINST THE PROPOSAL BY DECEMBER , 1997 (THE
'APPROVAL DATE'). Unitholders are urged to return the enclosed Consent form
within one week after receipt, but in no event later than the Approval Date. The
General Partner recommends that you vote FOR the Proposal set forth herein by
signing, dating and promptly returning the enclosed Consent form in the postage
pre-paid, self-addressed envelope enclosed for your convenience. If the Proposal
is adopted, the Partnership will then have sufficient funds to enable it to
distribute $10,000 per Unit to all Unitholders on a pro rata basis. The Proposal
is more particularly described under 'Description of the Proposal' in this Proxy
Statement and Prospectus.
------------------------
PROSPECTIVE PURCHASERS OF THE PREFERRED UNITS SHOULD CONSIDER THE SPECIFIC
INVESTMENT CONSIDERATIONS SET FORTH UNDER 'INVESTMENT CONSIDERATIONS' ON PAGES
7 TO 11.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE
MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
<TABLE>
<CAPTION>
PROCEEDS TO THE
SUBSCRIPTION PRICE PARTNERSHIP(1)
<S> <C> <C>
Per Unit............................................................... $23,250 $23,250
Total.................................................................. $10,695,000 $10,695,000
</TABLE>
(1) Before deducting expenses payable by the Partnership estimated at $200,000.
No underwriting discount or commission will be paid in connection with the
Offering.
THE APPROXIMATE DATE ON WHICH THIS PROXY STATEMENT AND PROSPECTUS AND THE
ENCLOSED FORM OF CONSENT WERE FIRST SENT OR GIVEN TO THE UNITHOLDERS WAS
OCTOBER _______, 1997.
THE DATE OF THIS PROXY STATEMENT AND PROSPECTUS IS OCTOBER _______, 1997
<PAGE>
AVAILABLE INFORMATION
The Partnership is subject to the informational requirements of the
Securities Exchange Act of 1934 (the 'Exchange Act') and, in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the 'Commission'). Such reports and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the Commission's regional offices at 7 World Trade Center,
13th floor, New York, New York 10048 and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. The Commission maintains a Web site that
contains reports, proxy and information statements and other information
regarding issuers, such as the Partnership, that file electronically with the
Commission and the address of such Web site is http://www.sec.gov.
The Partnership has filed with the Commission a proxy statement and
registration statement on Form S-3 (herein, together with all amendments and
exhibits, referred to as the 'Proxy and Registration Statement') under the
Securities Act of 1933 (the 'Securities Act') with respect to the registration
of the securities offered hereby. This Proxy Statement and Prospectus does not
contain all the information set forth in the Proxy and Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. Statements contained herein concerning the contents of any
documents are not necessarily complete and, in each instance, reference is made
to the copy of such document filed as an exhibit to the Proxy and Registration
Statement. Each such statement is qualified in its entirety by such reference.
The Proxy and Registration Statement, as well as items of information omitted
from this Proxy Statement and Prospectus but contained in the Proxy and
Registration Statement and reports and other information filed by the
Partnership, may be inspected without charge at the public reference facilities
referred to above and copies of all or any part thereof may be obtained from the
Commission upon request and payment of the prescribed fee.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Partnership with the Commission
pursuant to the Exchange Act are incorporated herein by reference:
(a) The Partnership's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1996, filed on March 31, 1997 (File No. 0-20273) (the
'Form 10-K');
(b) The Partnership's Quarterly Report on Form 10-QSB for the fiscal
quarter ended March 31, 1997, filed on May 14, 1997 (File No. 0-20273) (the
'March 1997 Form 10-Q'); and
(c) The Partnership's Quarterly Report on Form 10-QSB for the fiscal
quarter ended June 30, 1997, filed on August 13, 1997 (File No. 0-20273)
(together with the March 1997 Form 10-Q, the 'Form 10-Qs').
All documents filed by the Partnership with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Proxy Statement and Prospectus and prior to the termination of the offering
of the securities described herein shall be deemed to be incorporated by
reference into this Proxy Statement and Prospectus and to be a part hereof from
the respective dates of the filings of such documents.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Proxy Statement and Prospectus to the extent that a
statement contained herein or in any subsequently filed document which also is
or is deemed to be incorporated herein by reference modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Proxy
Statement and Prospectus.
The Partnership undertakes to provide, without charge, to each person,
including any beneficial owner, to whom this Proxy Statement and Prospectus is
delivered, upon the written or oral request of such person, a copy of any and
all of the documents incorporated herein by reference (other than exhibits to
such documents unless such exhibits are specifically incorporated by reference
herein). Requests for such documents should be directed to the Partnership at
Five Cambridge Center, 9th Floor, Cambridge, Massachusetts 02142-1493,
Attention: Carolyn Tiffany. Telephone requests for such copies should be
directed to the Partnership at (617) 234-3000.
2
<PAGE>
SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information and financial statements appearing elsewhere or
incorporated by reference in this Proxy Statement and Prospectus.
THE PARTNERSHIP AND PURPOSE OF THE OFFERING
1999 Broadway Associates Limited Partnership (the 'Partnership'), a
Delaware limited partnership, is a general partner of, and owns a 99.9% general
partnership interest in, 1999 Broadway Partnership (the 'Operating
Partnership'), a Delaware general partnership. The Operating Partnership
beneficially owns and operates a 42-story Class A office tower located at 1999
Broadway, Denver, Colorado (the 'Office Tower') and a parking garage located one
and one-half blocks northeast of the Office Tower at 2099 Welton Street (the
'Parking Garage', and together with the Office Tower, the 'Property'). See 'The
Partnership' and 'The Property.'
During the fall of 1995, leases relating to approximately 138,000 square
feet at the Office Tower expired and were not renewed by vacating tenants. As a
result of such nonrenewals, the occupancy rate at the Office Tower and the
Property's operating revenue significantly declined, thereby impairing the
Operating Partnership's ability to meet its obligations, including, amounts
payable to the holder (the 'Lender') of the mortgage loan (the 'Loan')
encumbering the Property. In response to the Lender's efforts to appoint a
receiver to manage the Property, the Operating Partnership commenced a voluntary
petition for relief under Chapter 11 of the United States Bankruptcy Code. In
November, 1996, the Lender and the Operating Partnership entered into an
agreement pursuant to which the Lender agreed to vote in favor of a Plan of
Reorganization (the 'Plan') submitted by the Operating Partnership. The Plan
modified the Loan and was confirmed by the Bankruptcy Court. See 'The
Reorganization.'
Following the confirmation of the Plan, the Operating Partnership commenced
a comprehensive leasing program for the Property. To that end, the Operating
Partnership recently entered into leases (the 'New Leases') for approximately
166,000 square feet of office space (the 'Newly Leased Space') at the Office
Tower, thereby increasing the Office Tower's occupancy rate from 63% at the time
the Plan was confirmed to approximately 90%. Capital improvement obligations
both with respect to the New Leases and 57,000 square feet of existing leased
space expected to be renewed in the next 12 months, together with attendant
leasing commissions (such capital improvements and leasing commissions are
collectively referred to herein as the 'Tenant Improvements'), are anticipated
to require the Operating Partnership to expend approximately $7.5 million in
1997 and 1998. For a more complete description of the New Leases, see 'Purpose
of the Offering.'
At present, the Operating Partnership does not have sufficient funds or
revenues to complete the expected $7.5 million of Tenant Improvements and to
satisfy its debt service payments under the Loan. During 1996, the Operating
Partnership had a negative debt service coverage ratio of approximately .4:1. As
a result, the Operating Partnership was required to utilize a part of its
capital reserve to make current debt service payments. Winthrop Financial
Associates, A Limited Partnership, the general partner of the Partnership (the
'General Partner'), believes that the failure to consummate the Offering will,
in all likelihood, cause the Operating Partnership to default under the New
Leases and/or the Loan, as well as hinder its ability to renew existing leases.
If the Operating Partnership were to default under the Loan either prior to, or
at its maturity, the Operating Partnership would risk losing the Property
through foreclosure. Further, if the Tenant Improvements are not completed
and/or the occupancy level at the Property remains low, the value of the
Property will be impaired which will make it difficult to refinance the Loan or
to obtain sufficient proceeds upon a sale of the Property to repay the Loan.
However, if the Offering is consummated, the General Partner believes that the
Operating Partnership will have sufficient funds to complete the Tenant
Improvements. Increased revenues from the New Leases will enable the Operating
Partnership to meet its debt service obligations and increase the likelihood
that the Loan can be refinanced at or prior to its maturity. Upon consummation
of the Offering, or as soon as practical thereafter, the Operating Partnership
will seek to reduce its interest expense by refinancing the Loan with a new loan
having a reduced principal balance and a lower interest rate. There can be no
assurance, however, that the Operating Partnership will be able to refinance the
Loan on favorable terms.
Accordingly, the General Partner has determined, subject to receipt of the
Consent (as herein defined), to raise additional capital and increase the
Partnership's equity by means of the offering (the 'Offering') being
3
<PAGE>
made by this Proxy Statement and Prospectus. The Partnership will utilize the
proceeds of the Offering to complete the Tenant Improvements and to reduce the
outstanding principal indebtedness of the Operating Partnership at the time of
the refinancing of the Loan. In addition, if the Offering is completed, the
Partnership will distribute approximately $4.6 million, previously held by the
Partnership as a working capital reserve, to Unitholders on a pro rata basis.
DEEMED CONSENT TO THE PROPOSAL
The Partnership's Amended and Restated Partnership Agreement (the
'Partnership Agreement') provides that the Partnership may not issue equity
interests in the Partnership, other than Units, without the consent of holders
('Unitholders') of its limited partnership interests owning in excess of 50% of
the aggregate number of Units owned by all Unitholders. The Partnership
Agreement further provides that consent of Unitholders shall be deemed to be
granted if the General Partner makes a written request for the consent of the
Unitholders to a particular action, unless the General Partner receives written
refusal to consent within 30 days of the request from Unitholders owning in the
aggregate 50% or more of the Units owned by all Unitholders. Accordingly, if the
General Partner does not receive on or prior to the Approval Date written
refusals to consent to the issuance of the Preferred Units from Unitholders
owning in the aggregate 50% or more of the Units owned by all Unitholders, the
Unitholders shall be deemed to have consented to the issuance of the Preferred
Units.
The General Partner recommends that each Unitholder use the attached Proxy
Card to vote in favor of the creation and issuance of the Preferred Units and
the amendments to the Partnership Agreement required to reflect the rights and
preferences of the Preferred Units as described in this Proxy Statement and
Prospectus.
THE OFFERING
The Partnership is issuing to the holders (the 'Unitholders') of its
limited partnership interests (the 'Units') of record as of the close of
business on October 27, 1997 (the 'Record Date') one subscription right (each, a
'Right') for each Unit held. Each Right entitles the Unitholder to purchase,
conditioned upon the receipt of the consent (the 'Consent') of the Unitholders
to permit the creation and issuance of a class of 12% cumulative, non-compounded
preferred units (each, a 'Preferred Unit') representing limited partnership
interests in the Partnership, at any time prior to 5:00 p.m., New York City
time, on December , 1997 (as such date may be extended by the General Partner
as herein provided, the 'Expiration Date'), one Preferred Unit at a subscription
price of $23,250 (the 'Subscription Price') per Preferred Unit. The Rights are
evidenced by subscription certificates (the 'Subscription Certificates') which
are being mailed to Unitholders herewith. The Rights are not transferable. See
'The Offering.'
The subscription period shall commence on , 1997 and, unless
extended by the General Partner, will terminate at 5:00 p.m. New York time on
the Expiration Date.
Rights may be exercised by completing a Subscription Certificate and
delivering it, together with payment, by means of a check, to the Partnership.
Each Unitholder who desires to exercise its Right shall be required to
subscribe for a minimum number of Preferred Units equal to the number of Units
held by such Unitholder as of the Record Date. Each Unitholder who exercises his
Right will be entitled to exercise an over-subscription privilege (the
'Over-Subscription Privilege') for all or any of the Preferred Units that are
not purchased by other Unitholders. If all Rights are exercised, there will be
no Over-Subscription Privilege. There is no limit on the number of Preferred
Units for which a Unitholder who exercises his Right may seek to subscribe
pursuant to the Over-Subscription Privilege. Any Over-Subscription Privilege may
only be exercised with respect to whole (and not fractional) Preferred Units.
Available Preferred Units will be allocated pro rata among those Unitholders who
exercise the Over-Subscription Privilege. See 'The Offering--Payment for
Securities.'
Bronco, L.L.C. (the 'Guarantor'), an affiliate of the General Partner and a
Unitholder, has agreed to (i) exercise its Right as a Unitholder and (ii)
subscribe for all unsubscribed Preferred Units (the 'Subscription Guaranty')
which will ensure full subscription of the Offering. If no Rights are exercised
by Unitholders other than the Guarantor, the Guarantor would purchase and own
all 460 Preferred Units. As a result of the
4
<PAGE>
Subscription Guaranty, subject to receipt of the Consent, the Partnership is
assured of receiving gross proceeds from the Offering in an amount equal to
approximately $10.695 million. No fee is being paid to the Guarantor on account
of the Subscription Guaranty.
There is no existing market for the Preferred Units and it is anticipated
that a market for the Preferred Units will not develop. The Partnership does not
intend to apply to list the Preferred Units on any securities exchange.
Each Preferred Unit will entitle the holder thereof to receive from the
available cash flow of the Partnership an amount in cash equal to a cumulative,
non-compounded preferred annual return of 12% (the 'Annual Return') on his
preferred invested capital of $23,250. In addition, each Preferred Unit will
entitle the holder thereof to receive an aggregate cumulative cash distribution
(prior to any distribution to Unitholders and to the General Partner on account
of the Units and the general partnership interests held by them) equal to the
greater of (i) $46,500 (or 200% of an investor's preferred invested capital, on
a per Preferred Unit basis) or (ii) an amount equal to the Subscription Price
paid by an investor, together with a cumulative, compounded return thereon of
15%, in each case exclusive of any payments received with respect to the Annual
Return, from the net cash proceeds, if any, received by the Partnership from
capital transactions or upon liquidation of the Partnership. See 'Description of
Securities.'
For a discussion of certain tax consequences to holders who exercise their
Rights, see 'Certain Income Tax Considerations.'
ALL EXERCISING UNITHOLDERS MUST REMIT PAYMENT IN FULL WITH THEIR COMPLETED
SUBSCRIPTION CERTIFICATES FOR ALL PREFERRED UNITS SUBSCRIBED FOR THROUGH THE
EXERCISE OF THE RIGHTS AND THE OVER- SUBSCRIPTION PRIVILEGE. EXERCISING
UNITHOLDERS WILL HAVE NO RIGHT TO RESCIND A PURCHASE AFTER THE PARTNERSHIP HAS
RECEIVED A COMPLETED SUBSCRIPTION CERTIFICATE UNLESS THE CONSENT IS NOT
RECEIVED, IN WHICH CASE ALL SUBSCRIPTIONS SHALL BE DEEMED NULL AND VOID, AND ALL
PAYMENTS RECEIVED BY THE PARTNERSHIP IN RESPECT THEREFOR WILL BE RETURNED TO THE
EXERCISING UNITHOLDERS.
INVESTMENT CONSIDERATIONS
See 'Investment Considerations' for information that should be considered
by the Unitholders.
USE OF PROCEEDS
The estimated proceeds of the Offering (net of expenses of approximately
$200,000) will be applied approximately as follows:
<TABLE>
<S> <C>
Tenant Improvements.................................................. $ 7,500,000
Reduction of outstanding principal indebtedness of the Partnership at
the time of refinancing of the Loan................................ 2,000,000
Closing and other expenses relating to the refinancing of the Loan... 500,000
Working Capital of the Partnership................................... 495,000
-------------
$ 10,495,000
-------------
-------------
</TABLE>
In addition, if the Offering is completed, the Partnership intends to
distribute $10,000 per Unit, or an aggregate of approximately $4.6 million, to
Unitholders on a pro rata basis.
5
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER UNIT INFORMATION)
The selected consolidated financial data set forth below with respect to
the fiscal years ended December 31, 1992, 1993, 1994, 1995 and 1996 are derived
from the Partnership's audited consolidated financial statements. The selected
consolidated financial data for the six months ended June 30, 1996 and 1997 are
derived from the Partnership's unaudited consolidated financial statements which
in the opinion of management include all normal, recurring adjustments necessary
to state fairly the data included therein in accordance with generally accepted
accounting principles for interim financial information. Interim results are not
necessarily indicative of the results to be expected for the entire fiscal year.
All of the data set forth below should be read in conjunction with the
'Management's Discussion and Analysis of Financial Condition and Results of
Operations' section and the Consolidated Financial Statements and the notes
thereto appearing in the Form 10-K and the Form 10-Qs incorporated herein by
reference.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------------------------------- --------------------
1992 1993 1994 1995 1996 1996 1997
------- --------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
DATA:
Total revenue........................ $ 7,907 $ 7,672 $ 8,126 $ 7,526 $ 5,281 $ 2,676 $ 2,822
Total expenses....................... 5,364 11,664 5,423 6,260 6,000 2,911 2,974
------- --------- -------- -------- -------- -------- --------
Income (loss) from operations........ 2,543 (3,992) 2,703 1,266 (719) (235) (152)
Total other income (expense), net.... (2,392) (1,898) (1,877) (2,208) (3,139) (1,111) (1,163)
------- --------- -------- -------- -------- -------- --------
Net Income (Loss).................... $ 151 $ (5,890) $ 826 $ (942) $ (3,858) $ (1,346) $ (1,315)
------- --------- -------- -------- -------- -------- --------
------- --------- -------- -------- -------- -------- --------
Net Income (Loss) Allocated to
General Partner.................... 5 $ (59) $ 25 $ (9) $ (39) $ (13) $ (13)
------- --------- -------- -------- -------- -------- --------
------- --------- -------- -------- -------- -------- --------
Net Income (Loss) Allocated to
Limited Partners................... $ 146 $ (5,831) $ 801 $ (933) $ (3,819) $ (1,333) $ (1,302)
------- --------- -------- -------- -------- -------- --------
------- --------- -------- -------- -------- -------- --------
Net Income (Loss) Per Unit of Limited
Partnership Interest Outstanding... $ 318 $ (12,676) $ 1,742 $ (2,028) $ (8,302) $ (2,898) $ (2,830)
------- --------- -------- -------- -------- -------- --------
------- --------- -------- -------- -------- -------- --------
OTHER DATA:
Net Income (Loss).................... $ 151 $ (5,890) $ 826 $ (942) $ (3,858) $ (1,346) $ (1,315)
Depreciation and amortization........ 1,488 1,604 1,693 1,770 1,873 945 902
Reduction in Carrying Value of Income
Producing Properties............... -- 6,256 -- -- -- -- --
Total other (income) expense......... 2,392 1,898 1,877 2,208 3,139 1,111 1,163
------- --------- -------- -------- -------- -------- --------
Net Operating Income................. $ 4,031 $ 3,868 $ 4,396 $ 3,036 $ 1,154 $ 710 $ 750
------- --------- -------- -------- -------- -------- --------
------- --------- -------- -------- -------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF JUNE 30,
-------------------------------------------------------- --------------
1992 1993 1994 1995 1996 1997
------- --------- -------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Total assets............................... $53,010 $ 47,245 $ 47,602 $ 47,452 $ 40,830 $ 37,248
Total liabilities.......................... 31,936 32,061 31,593 32,385 29,621 27,354
PARTNERS' EQUITY (DEFICIT):
Investor limited partners' equity, 460
units authorized, issued and
outstanding............................ 22,422 16,591 17,392 16,459 12,640 11,338
General partners' deficit................ (1,348) (1,407) (1,383) (1,392) (1,431) (1,444)
Total partners' equity..................... 21,074 15,184 16,009 15,067 11,209 9,894
Total liabilities and partners' equity .... 53,010 47,245 47,602 47,452 40,830 37,248
</TABLE>
6
<PAGE>
THE PARTNERSHIP
1999 Broadway Associates Limited Partnership (the 'Partnership'), a
Delaware limited partnership, is a general partner of, and owns a 99.9% general
partnership interest in, 1999 Broadway Partnership (the 'Operating
Partnership'), a Delaware general partnership. The remaining 0.1% interest in
the Operating Partnership is owned by 1999 Broadway Partners L.P., a Delaware
limited partnership and the managing general partner (the 'Managing General
Partner') of the Operating Partnership. Winthrop Financial Associates, A Limited
Partnership (the 'General Partner'), is the general partner of both the Managing
General Partner and the Partnership, and therefore controls the activities of
the Partnership. The Operating Partnership beneficially owns and operates a
42-story Class A office tower located at 1999 Broadway, Denver, Colorado (the
'Office Tower') containing approximately 635,000 rentable square feet plus 55
underground parking spaces and a 663 space parking garage located one and
one-half blocks northeast of the Office Tower at 2099 Welton Street (the
'Parking Garage', and together with the Office Tower, the 'Property'). See 'The
Property.'
The Partnership is a Delaware limited partnership. The address of its
principal office is c/o Winthrop Financial Associates, A Limited Partnership,
Five Cambridge Center, 9th Floor, Cambridge, Massachusetts 02142-1493, and the
Partnership's telephone number is (617) 234-3000.
THE REORGANIZATION
During the fall of 1995, leases relating to approximately 138,000 square
feet at the Office Tower expired and were not renewed by the vacating tenants.
As a result of such nonrenewals, the occupancy rate at the Office Tower and the
Property's operating revenue significantly declined, thereby impairing the
Operating Partnership's ability to meet its obligations, including, amounts
payable to the holder (the 'Lender') of the mortgage (the 'Mortgage')
encumbering the Property. In response to the Lender's efforts to appoint a
receiver to manage the Property, the Operating Partnership commenced a voluntary
petition for relief under Chapter 11 of the United States Bankruptcy Code.
In November, 1996, the Lender and the Operating Partnership entered into an
agreement pursuant to which the Lender agreed to vote in favor of a Plan of
Reorganization (the 'Plan') submitted by the Operating Partnership, which plan
was confirmed by the Bankruptcy Court on November 13, 1996. The Plan provided
for the modification of the Loan in several respects, including the following:
(i) the maturity date of the Loan was extended by one year to September 1999,
(ii) the amortization schedule for the Loan was revised to reflect a 25 year
schedule (instead of a 30 year schedule), with a balloon payment being due at
maturity, (iii) additional principal payments of $4,000,000 were required to be,
and have been, paid and (iv) monthly interest only payments for the period
commencing on November 26, 1996 and ending February 28, 1997, were required to
be, and have been, paid.
In addition, certain covenants, including the following, have been
incorporated in the Loan as part of the Plan: (a) no distributions by the
Operating Partnership are permitted while the Loan is outstanding, (b) certain
minimum tangible net worth standards are required to be maintained by the
Partnership and the Managing General Partner of the Operating Partnership, (c)
such net worth requirements are to be used, if necessary, to fund tenant
improvements for new space leases (including related leasing commissions),
capital improvements to the Property and any debt service shortfalls. If the
Partnership obtains the Consent and the Offering is consummated, the Partnership
cannot make current payments of the Annual Return of the Preferred Units unless
it receives distributions from the Operating Partnership. Accordingly, the
Partnership will not be able to pay the Annual Return until the Loan is
refinanced or the Lender provides a waiver with respect to the prohibition on
distributions by the Operating Partnership. See 'Investment Considerations--Risk
of Non-Payment of Preferred Return' and '--Need for Additional Capital' and 'The
Offering--Purpose of the Offering.'
INVESTMENT CONSIDERATIONS
Effect of Not Exercising Rights. Upon completion of the Offering
contemplated hereby, Unitholders who do not exercise their Rights will own a
smaller proportional interest in the Partnership. Holders of the Preferred Units
will be entitled to receive distributions from the proceeds of any sale of the
Property or upon a liquidation of the Partnership on account of the Preferred
Units in an aggregate amount not less than $21,390,000 million
7
<PAGE>
prior to any distribution to the Unitholders on account of the Units. In
addition, holders of the Preferred Units will be entitled to a preference in
distributions from cash flow by the Partnership. See 'Description of
Securities--Distributions from Capital Proceeds' and 'Description of
Securities--Liquidation Preferences.' Accordingly, the only way a Unitholder can
protect against substantial dilution of his investment in his Units is to
exercise his Rights.
In view of the priority return on the Preferred Units, other than the
distribution of $10,000 per Unit to be made upon completion of the Offering,
Unitholders who do not exercise their Rights may not receive any further return
of or on their investment in the Units unless there is a material appreciation
in the value of the Property. See 'The Property.'
Dilution of Voting Rights. If the Consent is obtained and the Offering is
consummated, each Preferred Unitholder, voting together with the Unitholders as
a single class, will be entitled to two votes per Preferred Unit with respect to
any decisions to approve or disapprove the sale of all or substantially all of
the assets of the Partnership or the Operating Partnership in a single or
related series of transactions. Accordingly, Unitholders who do not subscribe
for their pro rata portion of the Preferred Units will experience substantial
dilution with respect to their voting rights in the event of the sale of all or
substantially all of the assets of the Partnership or the Operating Partnership
in a single or related series of transactions.
Risks Associated with Purchase of Preferred Units. During the year ended
December 31, 1996, the Partnership generated net operating income of
approximately $1.1 million and made debt service payments of approximately $2.9
million. The Partnership would not have been able to pay to the Preferred
Unitholders any part of the 12% cumulative, non-compounded preferred annual
return of approximately $1,280,000 (the 'Annual Return') to which they would
have been entitled during fiscal 1996 if the Preferred Units had been
outstanding during fiscal 1996. See 'Ratio of Earnings to Fixed Charges and
Preferred Unit Distributions.' Furthermore, the General Partner believes that
the Partnership will not generate sufficient net operating income in fiscal 1997
to pay any part of the Annual Return. The Partnership's ability to pay the
Annual Return in fiscal 1998 and thereafter, as well as its ability to pay an
amount equal to the greater of (i) $46,500 (200% of an investor's preferred
invested capital, on a per Preferred Unit basis) or (ii) an amount equal to the
Subscription Price paid by an investor, together with a cumulative, compounded
return thereon of 15%, in each case exclusive of any payments received with
respect to the Annual Return, from the net cash proceeds, if any, received by
the Partnership from capital transactions or upon liquidation of the Partnership
(the 'Preferred Capital Return') will be dependent, in large part, on increasing
the Partnership's net operating income, refinancing the Loan, reducing the
Partnership's debt service obligations and increasing the value of the Property.
The General Partner believes that the Tenant Improvements intended to be
made with the proceeds of the Offering (see 'Use of Proceeds') will, in the
aggregate, result in an appreciation in the value of the Property in excess of
the amount actually expended for such improvements. However, there can be no
assurance that the value of the Property will so appreciate or as to the amount
of any such appreciation in value. Accordingly, there can be no assurance that
an investor in the Preferred Units will receive the full Annual Return or the
full Preferred Capital Return on his investment in the Preferred Units. In
addition, the Preferred Units offered hereby have no preemptive rights or
anti-dilution protection.
Operating Deficits. The Operating Partnership has generated net operating
income of approximately $1.15 million, $3.0 million and $4.4 million in the
fiscal years ended December 31, 1996, 1995 and 1994, respectively. Other than in
fiscal 1996, these amounts have been sufficient to permit the Operating
Partnership to make required debt service payments of approximately $2.9
million, $3.1 million and $3.1 million in the fiscal years ended December 31,
1996, 1995 and 1994, respectively. In the fiscal year ended December 31, 1996,
the Partnership was required to utilize its working capital reserves to enable
the Operating Partnership to meet its debt service requirements under the Plan.
The Partnership has experienced a negative net cash flow in recent years
primarily due to lower occupancy rates at the Office Tower. This negative net
cash flow has necessitated greater use of the Partnership's working capital
reserves to fund the Operating Partnership's debt service obligations under the
Loan, including during the six month period ended June 30, 1997. See 'The
Offering--Purpose of the Offering.' There can be no assurance that the cost of
operating the Property and making debt service payments will not exceed the
revenues available from operations in future periods. See 'Use of Proceeds' and
'The Offering--Purpose of the Offering.'
8
<PAGE>
Risk of Non-Payment of Preferred Return. Holders of Preferred Units will
be entitled to a 12% cumulative, non-compounded annual return (the 'Annual
Return') of $2,790 per Preferred Unit. The Loan, as modified by the Plan,
however, prohibits distributions by the Operating Partnership to its partners.
If the Partnership obtains the Consent and the Offering is consummated, the
General Partner does not believe that the Partnership can make current payments
of the Annual Return of the Preferred Units unless it receives distributions
from the Operating Partnership. Absent any distributions from the Operating
Partnership, the Partnership believes that it will not have sufficient funds to
pay the Annual Return. Accordingly, the Partnership will not be able to pay the
Annual Return unless the Loan is refinanced or the Lender waives its restriction
on the prohibition on distributions by the Operating Partnership. Even if a
waiver is obtained or the Loan is refinanced, there can be no assurance that
current debt service or reduced debt service will result in a net cash flow that
is sufficient to pay the Annual Return.
Distribution to Unitholders. If the Offering is consummated, the
Partnership intends to distribute $10,000 per Unit or approximately $4.6 million
to Unitholders on a pro rata basis. Such distribution will reduce a Unitholder's
adjusted basis in his Units, but generally should not result in a Unitholder's
recognition of taxable income or gain. It is possible that such distribution may
be recharacterized by the Internal Revenue Service for tax purposes as proceeds
received by a Unitholder in consideration for a portion of his Partnership
interest, in which event the Unitholder would be required to allocate his tax
basis in his Units and Preferred Units (if any) between the portion of his
Partnership interest deemed to have been sold and the portion retained. In such
event, a Unitholder would recognize a taxable gain or loss to the extent (if
any) that the amount deemed to have been realized by the Unitholder for the
portion sold exceeds the Unitholder's tax basis allocable to the portion sold.
Need for Additional Capital. The principal Loan balance of approximately
$26 million is due on September 30, 1999 and principal payments of an aggregate
of $291,000 are required to be amortized during 1998. Although the General
Partner believes that the entering into of the New Leases will enable the
Operating Partnership to meet its debt service obligations prior to maturity of
the Loan, the Operating Partnership may not be able to refinance the Loan
without the payment of substantial refinancing fees, a substantial increase in
the Partnership's equity and a substantial reduction in its aggregate
outstanding indebtedness. There can be no assurance that the Operating
Partnership will be able to secure any such refinancing or whether any such
refinancing will be on terms as favorable to the Operating Partnership as its
current arrangements.
In order to complete the Tenant Improvements and meet its obligations under
the Loan, the Operating Partnership requires the proceeds of the Offering. If,
however, the Consent is not obtained and the Offering is not consummated, the
current working capital of the Operating Partnership will be insufficient to
complete the Tenant Improvements and to enable the Operating Partnership to meet
its obligations under the Loan. As a result, the Operating Partnership will be
forced to default on either the New Leases or the Loan, or both, and will have
insufficient funds to retain existing tenants and attract new tenants; all of
which will have a significant adverse effect on the Operating Partnership's
ability to refinance the existing Loan on favorable terms, if at all. See 'Use
of Proceeds'.
In addition, the Operating Partnership's ability to sell or refinance the
Property and the terms of such a sale or refinancing will depend upon the value
of the Property at that time, which is subject to general economic conditions
and special factors affecting real estate investments. See 'The Property.' If
the Operating Partnership is not able to refinance the Property prior to
maturity of the Loan and is unable to meet its obligations thereunder at
maturity, the Lender may foreclose its mortgage on the Property, with resultant
potential adverse tax consequences to Unitholders. See 'Certain Income Tax
Considerations--Sale or Foreclosure of the Property.'
Removal of General Partner and Redemption of Preferred Units. If at any
time the General Partner is removed as general partner of the Partnership
without its consent, all of the Preferred Units will be redeemed by the
Partnership concurrently with such removal of the General Partner for a price
equal to the liquidation preference of the Preferred Units (such right is not
triggered if the General Partner withdraws voluntarily). Accordingly, the
Offering will impose substantial limitations on the ability of the limited
partners of the Partnership to remove the General Partner without its consent.
Risks of Real Estate Ownership. The Partnership's investment in the
Operating Partnership is subject to the risks inherent in the ownership of
office property and rental property. These include the uncertainty that rental
income will be sufficient to cover operating costs and debt service due to
inability to attract or retain tenants as a
9
<PAGE>
result of adverse changes in general or local economic conditions or
characteristics, inadequacies of the management agent, the possibility of
unanticipated Property expenses, and other factors. Other risks inherent in an
investment in the Partnership include the possibility of changes in the
investment climate for real estate, unavailability of mortgage funds for
refinancing, changes in real estate tax rates and other operating expenses, and
other factors which are beyond the control of the General Partner.
Competition. A number of commercial office properties in Denver compete
with the Property. The commercial office market in Denver is highly competitive
and the Property competes with many other established properties as well as
other developments which may be constructed. There can be no assurance that the
Property will be able to attract and retain tenants at occupancy and rental
rates sufficient for successful operations. See '--Operating Deficits.'
Uninsured Losses. The Property is the subject of insurance coverage
customary for properties of this type. There can be no assurance, however, that
claims for any loss due to fire, natural disaster or other cause will be fully
covered under the comprehensive insurance policies for the Property. Moreover,
there are certain types of losses (generally of an unusual or catastrophic
nature, such as those that result from wars, earthquakes, floods or tornados)
which are either uninsurable or not economically insurable. Should such a
casualty occur, the Partnership would suffer a loss of the capital invested in
the Property as well as anticipated benefits from the Property.
Restrictions on Transfer. The transferability of the Preferred Units will
be restricted by the Partnership Agreement. In addition, in order to prevent
treatment of the Partnership as a publicly traded partnership for federal income
tax purposes, the Partnership Agreement will authorize the General Partner to
refuse to recognize or give effect to any transfer of a Unit or Preferred Unit
that, in the General Partner's determination, could result in the Partnership's
being treated as a 'publicly traded partnership' (as defined in section 7704(b)
of the Code) unless the General Partner determines that imposing such
restrictions on transfers would not be in the best interests of the Partnership
and the partners taken as a whole. See also 'Certain Income Tax Considerations--
Partnership Classification.' A Preferred Unitholder may thus be required to
retain his investment for an indefinite period.
Absence of Market. In addition to the restrictions on transfer in the
preceding paragraph, it is not expected that there will be a market for the
resale of Preferred Units in the Partnership; therefore, a Preferred Unitholder
may be unable to sell or otherwise dispose of all or any portion of his
investment. Moreover, in the event a Preferred Unitholder were able to sell some
or all of his Preferred Units, he might receive less than the amount of his
original investment.
Conflicts of Interest. The Partnership is subject to potential conflicts
of interest arising from the other real estate activities of affiliates of the
General Partner. The officers and directors of the General Partner and its
affiliates may be actively engaged in supervising the development, construction,
rehabilitation and operation of other projects which may be in competition with
the Property. These additional activities and investments may affect its ability
to perform its obligations to the Partnership.
An affiliate of the General Partner manages the Property and receives
property management fees in respect thereof. If the Property were sold, it would
not receive such fees. In addition, an affiliate of the General Partner is
currently the exclusive leasing agent for the Property's existing tenants and
receives leasing commissions in respect of the Property. If the Property as a
whole were to be sold, it would no longer receive such fee. In addition, if the
Guarantor were to purchase a substantial number of the Preferred Units, a
conflict of interest could arise if the sale of the Property or a portion
thereof would be advantageous to the holders of the Preferred Units but not the
Unitholders. The General Partner is, however, aware of its fiduciary obligations
to the Partnership and intends to fulfill such obligations.
Tax Liability May Exceed Cash Distributions. As a partner in the
Partnership, a Preferred Unitholder will be taxed on his annual allocable share
of Partnership taxable income whether or not any cash distributions are made to
him and irrespective of the amount of such distributions, if any. Consequently,
a Preferred Unitholder's tax liability with respect to Partnership taxable
income allocated to him may exceed the cash distributed to him in one or more
years. Partnership taxable income from operations will be allocated first to
Preferred Unitholders up to the amount of their cumulative annual preferred
return, even if the Preferred Unitholders do not receive current
10
<PAGE>
distributions of that amount. See 'Investment Considerations--Risk of
Non-Payment of Preferred Return,' 'Description of Partnership
Agreement--Allocations of Net Income, Net Loss and Gain or Loss From a Capital
Transaction' and 'Certain Income Tax Considerations--Taxation of the Partnership
and the Preferred Unitholders.'
Limitations on Losses. The deductibility of any Partnership losses, as
determined for tax purposes, will be limited by the passive activity loss
limitations. There is also a risk that the IRS might seek to reallocate
Partnership items among the Preferred Unitholders and the other Limited Partners
in the event that the allocations provided for in the Partnership Agreement are
not respected. See 'Certain Income Tax Considerations.'
Liability of Limited Partners. Under Delaware law, a limited partner may
be liable for the debts of a partnership up to the amount of any distribution
made to such limited partner if, at the time of such distribution, all
liabilities of the partnership, other than liabilities to partners on account of
their interests in the partnership, exceed the fair value of the partnership's
assets. Additionally, a limited partner who receives the return, in whole or in
part, of his capital contribution without violation of the partnership agreement
or applicable statute may be liable to the partnership for a period of one year
for any sum, not in excess of such returned capital contribution, necessary to
discharge the partnership's liabilities to all creditors who extended credit or
whose claims arose before such return. If a limited partner receives the return
of any part of his capital contribution in violation of the partnership
agreement or applicable statute, he is liable to the partnership for a period of
six years for the entire amount of the contribution wrongfully returned.
Lack of Management Control. The Preferred Unitholders will have no right
or power to take part in the management or control of the business of the
Partnership, except the right to approve certain extraordinary actions. The
business of the Partnership is managed solely by the General Partner. If a
Preferred Unitholder participates in the control of the business of the
Partnership, he may be deemed under applicable laws to be a general partner of
the Partnership, with the resulting loss of his limited liability. If a
Preferred Unitholder were deemed to be liable as a general partner of the
Partnership, he would be generally liable for the Partnership's obligations,
which liability could be satisfied out of his personal assets if the
Partnership's assets were insufficient. Since the Partnership Agreement will
provide certain voting rights to the Preferred Unitholders, a creditor of the
Partnership might claim that such rights amount to participation in the
Partnership's business, which claim, if judicially sustained, could result in a
Preferred Unitholder's personal liability.
DESCRIPTION OF THE PROPOSAL
For the reasons identified in this Proxy Statement and Prospectus, the
General Partner believes that it is in the best long-term interests of the
Partnership and the Unitholders that the Partnership's Amended and Restated
Partnership Agreement be amended to reflect the creation and issuance of the
Preferred Units. If the Unitholders consent to the creation and issuance of the
Preferred Units, the Partnership Agreement will be amended and the Second
Amended and Restated Partnership Agreement, filed as an exhibit to the Proxy and
Registration Statement of which this Proxy Statement and Prospectus is a part,
will be substituted for the existing Partnership Agreement.
The Partnership Agreement provides that the Partnership may not issue
equity interests in the Partnership, other than Units, without the consent of
Unitholders owning in excess of 50% of the aggregate number of Units owned by
all Unitholders. The Partnership Agreement further provides that consent shall
be deemed to be granted if the General Partner makes a written request for the
consent of the Unitholders to a particular action, unless the General Partner
receives written refusal to consent within 30 days of the request from
Unitholders owning in the aggregate 50% or more of the Units owned by all
Unitholders. Accordingly, if the General Partner does not receive written
refusals to consent to the issuance of the Preferred Units within 30 days of the
date of mailing of this Proxy Statement and Prospectus from Unitholders owning
in the aggregate 50% or more of the Units owned by all Unitholders, the
Unitholders shall be deemed to have consented to the creation and issuance of
the Preferred Units.
THE GENERAL PARTNER RECOMMENDS THAT EACH UNITHOLDER USE THE ATTACHED
CONSENT FORM TO VOTE IN FAVOR OF THE AMENDMENTS TO THE PARTNERSHIP AGREEMENT TO
CREATE THE PREFERRED UNITS.
11
<PAGE>
THE OFFERING
PURPOSE OF THE OFFERING
The Operating Partnership has been engaged in a comprehensive leasing
program at the Property. To that end, the Operating Partnership recently entered
into leases (the 'New Leases') for approximately 166,000 square feet of office
space (the 'Newly Leased Space') at the Office Tower, thereby increasing the
Office Tower's occupancy rate from 63% at the time the Plan was confirmed to
approximately 90%. Capital improvement obligations both with respect to the New
Leases and 57,000 square feet of existing leased space expected to be renewed in
the next 12 months, together with attendant leasing commissions (such capital
improvements and leasing commissions are collectively referred to herein as the
'Tenant Improvements'), are anticipated to require the Operating Partnership to
expend approximately $7.5 million in 1997 and 1998. Neither the Operating
Partnership nor the Partnership has sufficient reserves, nor does the Property
generate sufficient cash flow, to fully fund these Tenant Improvements.
The General Partner believes that, in order to maximize the value of the
Property, it is necessary to complete the Tenant Improvements contemplated to be
made with the proceeds of the Offering. See 'Use of Proceeds.' The General
Partner believes that such Tenant Improvements will result in an appreciation in
the value of the Property in excess of the amount actually expended for such
improvements. However, there can be no assurance that the value of the Property
will so appreciate or as to the amount of any such appreciation in value.
At present, the Operating Partnership does not have sufficient funds or
revenues to complete the expected $7.5 million of Tenant Improvements and to
satisfy its debt service payments under the Loan. During 1996, the Operating
Partnership had a negative debt service coverage ratio of approximately .4:1. As
a result, the Operating Partnership was required to utilize a part of its
capital reserve to make current debt service payments. Winthrop Financial
Associates, A Limited Partnership, the general partner of the Partnership (the
'General Partner'), believes that the failure to consummate the Offering will,
in all likelihood, cause the Operating Partnership to default under the New
Leases and/or the Loan, as well as hinder its ability to renew existing leases.
If the Operating Partnership were to default under the Loan either prior to or
at its maturity, the Operating Partnership would risk losing the Property
through foreclosure. Further, if the Tenant Improvements are not completed
and/or the occupancy level at the Property remains low, the value of the
Property will be impaired which will make it difficult to refinance the Loan or
to obtain sufficient proceeds upon a sale of the Property to repay the Loan.
However, if the Offering is consummated, the General Partner believes that the
Operating Partnership will have sufficient funds to complete the Tenant
Improvements. Increased revenues from the New Leases will enable the Operating
Partnership to meet its debt service obligations and increase the likelihood
that the Loan can be refinanced at or prior to its maturity. Upon consummation
of the Offering or as soon as practical thereafter, the Operating Partnership
will seek to reduce its interest expense by refinancing the Loan with a new loan
having a reduced principal balance and a lower interest rate. There can be no
assurance, however, that the Operating Partnership will be able to refinance the
Loan on favorable terms.
Accordingly, the General Partner has determined, subject to receipt of the
Consent (as herein defined), to raise additional capital and increase the
Partnership's equity by means of the offering (the 'Offering') being made by
this Proxy Statement and Prospectus. The Partnership will utilize the proceeds
of the Offering to complete the Tenant Improvements and to reduce the
outstanding principal indebtedness of the Operating Partnership at the time of
the refinancing of the Loan. In addition, if the Offering is completed, the
Partnership will distribute approximately $4.6 million to Unitholders on a pro
rata basis. If, however, the Consent is not obtained and the Offering is not
completed, the Partnership believes that it will be required to expend
substantially all of its working capital on debt service payments in order to
avoid default on the Loan prior to its maturity and will not possess sufficient
reserves to complete the Tenant Improvements. See 'Use of Proceeds.' In such
event, unless the Partnership is able to locate alternative sources of equity
financing, the Operating Partnership will not be able to refinance the Loan at
or prior to its maturity and the Operating Partnership will be in default of its
obligations under the New Leases.
12
<PAGE>
TERMS OF THE OFFER
The Partnership is issuing to the holders (the 'Unitholders') of its
limited partnership interests (the 'Units') of record as of the close of
business on October 27, 1997 (the 'Record Date') one subscription right (each, a
'Right') for each Unit held. Each Right entitles the Unitholder to purchase,
conditioned upon the receipt of the consent (the 'Consent') of the Unitholders
to permit the creation and issuance of a class of 12% cumulative, non-compounded
preferred units (each, a 'Preferred Unit') representing limited partnership
interests in the Partnership, at any time prior to 5:00 p.m., New York City
time, on December , 1997 (as such date may be extended by the General Partner
as herein provided, the 'Expiration Date'), one Preferred Unit at a subscription
price of $23,250 (the 'Subscription Price') per Preferred Unit. The Rights are
evidenced by subscription certificates (the 'Subscription Certificates') which
are being mailed to Unitholders herewith. The Rights are not transferable.
Completed Subscription Certificates may be delivered to the Partnership at
any time commencing on November , 1997 and terminating at 5:00 p.m. New York
time on the Expiration Date (the 'Subscription Period'). If the Partnership does
not obtain the Consent, any completed Subscription Certificates, together with
any payments received by the Partnership in connection with such completed
Subscription Certificate will be returned to the relevant Unitholder.
Rights may be exercised by completing a Subscription Certificate and
delivering it, together with payment by means of a check, to the Partnership.
See '--Exercise of Rights' and '--Subscription Price.' Subject to the receipt of
Consent, all Rights may be exercised immediately upon receipt and until 5:00
p.m., New York City time, on the Expiration Date.
The terms of this Offering and the Preferred Units have been determined by
the General Partner. No determination has been or will be made as to, nor has
the Partnership requested any third party to determine and/or deliver an opinion
in respect of, the fairness of the terms of the Preferred Units.
SUBSCRIPTION PRICE
The Subscription Price for each Preferred Unit is $23,250.00.
NO MODIFICATION OR REVOCATION
ONCE A HOLDER OF RIGHTS HAS PROPERLY EXERCISED HIS RIGHTS AND THE OVER-
SUBSCRIPTION PRIVILEGE, SUCH EXERCISE MAY NOT BE MODIFIED OR REVOKED UNLESS THE
PARTNERSHIP DOES NOT OBTAIN THE CONSENT, IN WHICH CASE THE SECURITIES OFFERED
HEREBY WILL BE DEREGISTERED, ALL COMPLETED SUBSCRIPTIONS FOR PREFERRED UNITS
WILL BE DEEMED NULL AND VOID, AND ALL PAYMENTS RECEIVED IN RESPECT THEREFOR WILL
BE RETURNED TO THE EXERCISING UNITHOLDERS.
EXPIRATION OF THE OFFERING
This Offering will expire at 5:00 p.m. New York City time, on the
Expiration Date. The Rights expire on the Expiration Date and thereafter may not
be exercised.
OVER-SUBSCRIPTION PRIVILEGE
Any Unitholder who has exercised his Right will be entitled to exercise an
over-subscription privilege (the 'Over-Subscription Privilege'), if they wish to
acquire additional Preferred Units. The Over-Subscription Privilege may be
exercised by any Unitholder who has exercised his Right. Any Over-Subscription
Privilege may only be exercised with respect to whole (and not fractional)
Preferred Units. Unitholders should indicate, on the Subscription Certificate
which they submit with respect to the exercise of their Rights, how many
additional Preferred Units they are willing to acquire pursuant to the
Over-Subscription Privilege.
Within five business days after the Expiration Date (to allow for clearance
of the checks remitted in payment of the Subscription Price of the Preferred
Units subscribed for by the Unitholders), the Partnership will allocate the
available Preferred Units pro rata among those Unitholders who exercise the
Over-Subscription Privilege
13
<PAGE>
(including the Guarantor) according to the aggregate number of Rights exercised.
The percentage of remaining Preferred Units each Unitholder may acquire may be
rounded up or down to result in delivery of whole Preferred Units. In the event
a Unitholder who exercises the Over-Subscription Privilege is allocated less
than the number of Preferred Units that such Unitholder subscribed for, excess
subscription payments will be promptly refunded. See '--Payment for Securities.'
SUBSCRIPTION GUARANTY
In order to ensure full subscription of the Offering, the Guarantor, an
affiliate of the General Partner and a Unitholder, has agreed (i) to exercise
its Right as a Unitholder and (ii) to subscribe for all other Preferred Units
offered hereunder through the Over-Subscription Privilege and to purchase all
unsubscribed Preferred Units (the 'Subscription Guaranty'). If no Rights are
exercised by Unitholders other than the Guarantor, the Guarantor would purchase
and own all 460 Preferred Units. No fee is being paid to the Guarantor on
account of the Subscription Guaranty. As a result of the Subscription Guaranty,
subject to receipt of the Consent, the Partnership is assured of receiving gross
proceeds from the Offering in an amount equal to approximately $10.695 million.
Apollo Real Estate Investment Fund III, L.P. ('Apollo'), an affiliate of
the General Partner, has agreed to provide the Guarantor with such financing as
shall be necessary to enable the Guarantor to fulfill the Subscription Guaranty.
As a result of the Subscription Guaranty, the Partnership is assured of
receiving gross proceeds of the offering in an amount equal to approximately
$10.695 million. See 'Investment Considerations--Removal of General Partner and
Redemption of Preferred Units' and 'Description of Securities--Redemption.'
EXERCISE OF RIGHTS
Rights may be exercised by filling in and signing the reverse side of the
Subscription Certificate which accompanies this Proxy Statement and Prospectus
and mailing it in the envelope provided, or otherwise delivering the completed
and signed Subscription Certificate to the Partnership, together with payment of
the Subscription Price for the Preferred Units as described in '--Payment for
Securities'. Rights may also be exercised through a Unitholder's broker or
dealer, who may charge such Unitholder a servicing fee.
EXERCISE OF OVER-SUBSCRIPTION PRIVILEGE
Any Unitholder exercising his Rights may participate in the
Over-Subscription Privilege by indicating on his Subscription Certificate the
number of Preferred Units he is willing to acquire pursuant thereto. Any Over-
Subscription Privilege may only be exercised with respect to whole (and not
fractional) Preferred Units. There is no limit on the number of Preferred Units
that exercising Unitholders may seek to subscribe for pursuant to the
Over-Subscription Privilege. The number of Preferred Units issued to each
Unitholder participating in the Over-Subscription Privilege will be allocated as
described above in '--Over-Subscription Privilege.'
PAYMENT FOR SECURITIES
Payment for Preferred Units that are subscribed for by exercising Rights
and the Over-Subscription Privilege must be made by means of a check, in United
States dollars, made payable to the Partnership, along with a completed and
properly executed Subscription Certificate on or prior to the Expiration Date.
All checks received by the Partnership will be deposited in a segregated
interest-bearing account of the Partnership (the interest from which will belong
to the Partnership) pending receipt of the Consent and distribution of the
Preferred Units. Any excess funds paid by a Unitholder will be promptly returned
to such Unitholder.
If any Unitholder does not make timely and full payment for the Preferred
Units subscribed for by exercise of his Rights and/or the Over-Subscription
Privilege, the Partnership reserves the right to allow the Guarantor to purchase
the Preferred Units subscribed for by such non-paying Unitholder.
THE METHOD OF DELIVERY OF SUBSCRIPTION CERTIFICATES AND PAYMENT OF THE
SUBSCRIPTION PRICE TO THE PARTNERSHIP WILL BE AT THE ELECTION AND RISK OF THE
HOLDERS OF THE RIGHTS. IF SENT BY MAIL, IT IS RECOMMENDED THAT SUCH CERTIFICATES
AND PAYMENTS BE SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT
REQUESTED, AND THAT A SUFFICIENT NUMBER OF DAYS BE ALLOWED TO ENSURE DELIVERY
14
<PAGE>
TO THE PARTNERSHIP AND CLEARANCE OF PAYMENT PRIOR TO 5:00 P.M., NEW YORK CITY
TIME, ON THE EXPIRATION DATE. BECAUSE UNCERTIFIED PERSONAL CHECKS MAY TAKE AT
LEAST FIVE BUSINESS DAYS TO CLEAR, YOU ARE STRONGLY URGED TO PAY, OR ARRANGE FOR
PAYMENT, BY MEANS OF CERTIFIED OR CASHIER'S CHECK OR MONEY ORDER.
All questions concerning the timeliness, validity, form and eligibility of
any exercise of Rights will be determined by the Partnership, whose
determinations will be final and binding. The Partnership in its sole discretion
may waive any defect or irregularity or permit a defect or irregularity to be
corrected within such time as it may determine or reject the purported exercise
of any Right. Subscriptions will not be deemed to have been received or accepted
until all irregularities have been waived or cured within such time as the
Partnership shall determine in its sole discretion. The Partnership shall not
have any duty to give notification of any defect or irregularity in connection
with the submission of Subscription Certificates or incur any liability for
failure to give such notification.
THE PROPERTY
The Property is comprised of a 42-story Class A limestone and reflective
glass office tower located at 1999 Broadway, Denver, Colorado (the 'Office
Tower') and a 663 space parking garage located one and one-half blocks northeast
of the Office Tower at 2099 Welton Street (the 'Parking Garage'). The
Partnership acquired the Property in 1988 for an aggregate purchase price of
approximately $83 million.
In 1996, in connection with the Partnership's litigation with respect to
its reorganization under the bankruptcy laws, the Partnership obtained an
appraisal of the Property for approximately $39 million. Although the General
Partner has not obtained a more recent appraisal, it does not have any reason to
believe that the current value of the Property has changed in any substantial
amount from the value determined in 1996. In addition, in 1996 during the
Partnership's reorganization, the Partnership received two unsolicited offers to
purchase the Office Tower, each conditioned upon the completion of due
diligence: one offer was for $38 million and the other for $41 million. These
offers were received shortly after the commencement of the bankruptcy proceeding
at a time when the Property was experiencing a relatively high vacancy rate. The
General Partner determined that the pursuit of a sale in the face of these
distressed conditions would not yield optimum value for the Partnership.
Consequently, neither offer was pursued, nor was the financial ability of the
bidders to consummate any such transaction investigated.
USE OF PROCEEDS
The estimated proceeds of the Offering (net of expenses of approximately
$200,000) will be applied approximately as follows:
<TABLE>
<S> <C>
Tenant Improvements.................................................. $ 7,500,000
Reduction of outstanding principal indebtedness of the Partnership at
the time of refinancing of the Loan................................ 2,000,000
Closing and other expenses relating to the refinancing of the Loan... 500,000
Working Capital of the Partnership................................... 495,000
-------------
$ 10,495,000
-------------
-------------
</TABLE>
Pending application of the net proceeds of the Offering as indicated above,
such proceeds will be invested in interest-bearing investment grade securities.
In addition, such proceeds will be held in trust by the Partnership for the
benefit of the Unitholders, to be used only for the purposes set forth herein.
Any net proceeds not required to be applied to capital improvements or to
refinance the Loan will be added to the Partnership's working capital. In
addition, if the Offering is completed, the Partnership intends to distribute
$10,000 per Unit, or an aggregate of approximately $4.6 million, to Unitholders
on a pro rata basis. See 'The Offering--Purpose of the Offering.'
15
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES AND
PREFERRED UNIT DISTRIBUTIONS
The following table sets forth the computation of the ratio of earnings to
fixed charges for the six month periods ended June 30, 1997 and 1996 and for
each of the years in the five-year period ended December 31, 1996. The financial
information for purposes of computing the ratio of earnings to fixed charges has
been derived from the unaudited and audited financial statements of the
Partnership incorporated by reference herein.
The following table also sets forth the pro forma computation of the ratio
of earnings to fixed charges and Preferred Unit distributions for the six month
period ended June 30, 1997 and the year ended December 31, 1996. The pro forma
ratio of earnings to fixed charges and Preferred Unit distributions has been
prepared by adjusting the historical financial statements of the Partnership to
give effect to the exercise of the Rights as of the beginning of the period
presented and does not purport to be indicative of the ratio of earnings to
fixed charges and Preferred Unit distributions which might have occurred had the
Rights been exercised at the beginning of such periods or which might be
expected to occur in the future.
<TABLE>
<CAPTION>
PERIOD ENDING JUNE
30, FOR THE YEAR ENDED DECEMBER 31,
------------------ ---------------------------------------------------
1997 1996 1996 1995 1994 1993(1) 1992
------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS EXCEPT RATIO INFORMATION)
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS:
Net earnings (loss).......................... ($1,315) ($1,346) ($3,858) ($ 942) $ 826 ($5,890) $ 151
Add back fixed charges charged to earnings... 1,305 1,464 2,909 2,936 2,957 2,980 2,999
------- ------- ------- ------- ------- ------- -------
Net (loss) Earnings before fixed charges..... (10) 118 (949) 1,994 3,783 (2,910) 3,150
Depreciation and amortization of acquisition
costs...................................... 870 913 1,873 1,770 1,628 1,540 1,424
Reduction in carrying value of income
producing properties....................... 0 0 0 0 0 6,256 0
------- ------- ------- ------- ------- ------- -------
Net earnings before fixed charges,
depreciation, amortization of acquisition
costs and reduction in carrying value...... $ 860 $ 1,031 $ 924 $ 3,764 $ 5,411 $ 4,886 $ 4,574
------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- -------
FIXED CHARGES:
Interest expense as reported(4).............. $ 1,272 $ 1,431 $ 2,844 $ 2,871 $ 2,892 $ 2,915 $ 2,934
Amortization of debt placement costs......... 33 33 65 65 65 65 65
------- ------- ------- ------- ------- ------- -------
Total fixed charges.......................... $ 1,305 $ 1,464 $ 2,909 $ 2,936 $ 2,957 $ 2,980 $ 2,999
------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- -------
RATIO:
Net earnings before fixed charges/Fixed
charges(1,2)............................... (0.0) 0.1 (0.3) 0.7 1.3 (1.0) 1.1
------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- -------
Net earnings before fixed charges,
depreciation, amortization of acquisition
costs and reduction in carrying value/Fixed
charges(5) 0.7 0.7 0.3 1.3 1.8 1.6 1.5
------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- -------
Pro forma Ratio of Net Earnings to Fixed
Charges and Preferred Unit Distributions:
Fixed charges per above...................... $ 1,305 $ 1,464 $ 2,909
Adjustment to give effect to the net decrease
in interest expense resulting from a
refinancing................................ (95) (90) (181)
Preferred Unit distributions(3).............. 642 642 1,283
------- ------- -------
Total fixed charges.......................... $ 1,852 $ 2,016 $ 4,011
------- ------- -------
------- ------- -------
PRO FORMA RATIO:
Net earnings (loss) before fixed
charges/Fixed Charges (0.0) 0.1 (0.2)
------- ------- -------
------- ------- -------
Net earnings before fixed charges,
depreciation, amortization of acquisition
costs and reduction of carrying value/Fixed
charges.................................... 0.5 0.5 0.2
------- ------- -------
------- ------- -------
</TABLE>
(Footnotes are on following page)
16
<PAGE>
(Footnotes from previous page)
(1) Net earnings were not adequate to cover fixed charges for year ended
December 31, 1993 by $5,890,000 due to a reduction in carrying value of
approximately $6,256,000.
(2) Net earnings were not adequate to cover fixed charges for years ended 1995
and 1996 by $942,000 and $3,858,000 respectively.
(3) Assuming that $10,695,000 worth of Preferred Units are purchased at 12%
annual return.
(4) At December 31, 1995 and 1996 amortization of debt placement costs were
included in interest expense for financial reporting purposes.
(5) The ratio of net earnings before fixed charges, depreciation and
amortization of acquisition costs is presented to demonstrate that earnings,
before non cash charges, were adequate to cover fixed charges for the years
ending December 1992, 1993, 1994, and 1995.
17
<PAGE>
DESCRIPTION OF SECURITIES
GENERAL
Each Right entitles the Unitholder to purchase one Preferred Unit. The
Preferred Units represent limited partnership interests in the Partnership and
have such rights and designations as are described below. The Preferred Units
will be evidenced by certificates issued by the Partnership.
The Partnership's Amended and Restated Partnership Agreement (the
'Partnership Agreement') provides that the Partnership may not issue equity
interests in the Partnership, other than Units, without the consent of
Unitholders owning in excess of 50% of the aggregate number of Units owned by
all Unitholders. The Partnership Agreement further provides that consent shall
be deemed to be granted if the General Partner makes a written request for the
consent of the Unitholders to a particular action, unless the General Partner
receives written refusal to consent within 30 days of the request from
Unitholders owning in the aggregate 50% or more of the Units owned by all
Unitholders. Accordingly, if the General Partner does not receive written
refusals to consent to the issuance of the Preferred Units within 30 days of the
date of this Proxy Statement and Prospectus from Unitholders owning in the
aggregate 50% or more of the Units owned by all Unitholders, the Unitholders
shall be deemed to have consented to the issuance of the Preferred Units.
There is no existing market for the Preferred Units. The Partnership does
not intend to list the Preferred Units on any securities exchange and it is not
anticipated that a market for the Preferred Units will develop. In addition, the
transferability of the Preferred Units will be restricted by the Partnership
Agreement. See 'Investment Considerations.'
CUMULATIVE, NON-COMPOUNDED PREFERRED ANNUAL RETURN
Each Preferred Unit will entitle the holder thereof to receive from the
Cash Flow of the Partnership an amount in cash equal to a cumulative,
non-compounded preferred annual return of 12% on his preferred invested capital
of $23,250. The amount of preferred invested capital on which such return will
be calculated will be reduced from time to time by distributions, if any, of
Capital Proceeds (as defined in the Partnership Agreement). See '--Distributions
from Capital Proceeds.' Cash Flow, as used herein, means Net Income (as defined
in the Partnership Agreement) or Net Loss (as defined in the Partnership
Agreement) of the Partnership plus depreciation and amortization deductions and
the amount of reserve funds no longer required, less the sum of (a) debt
amortization, (b) payments to reasonable reserve accounts established by the
General Partner, (c) capital expenditures to the extent not paid out of
reserves, insurance proceeds or condemnation proceedings, and (d) the annual
partnership administration and investor service fee. Cash Flow does not include
gains or losses resulting from a capital transaction of the Partnership. The
General Partner has the right at any time to establish reasonable reserves for
the Partnership (or the Operating Partnership) as a deduction from Cash Flow.
Cash Flow, if available, is required to be distributed at least once each year
to the Partners, or more frequently at the option of the General Partner.
Distributions of Cash Flow may be made from time to time by the Partnership
to the Preferred Unitholders until such time as the Preferred Unitholders have
received a 12% per annum cumulative, non-compounded return on their preferred
invested capital. Thereafter, Cash Flow will be distributed 99% to the
Unitholders and 1% to the General Partner until such time as the Unitholders
have received a 6% per annum cumulative, non-compounded return on their invested
capital. Thereafter, Cash Flow will be distributed 97% to the Unitholders and 3%
to the General Partner until the Unitholders have received an amount equal to
their Net Invested Capital (as defined in the Partnership Agreement). Any
remaining Cash Flow will be distributed 70% to the Unitholders and 30% to the
General Partner. See 'The Reorganization' for a description of the need for
distributions from the Operating Partnership to the Partnership.
The availability of Cash Flow for distribution is dependent upon the
Operating Partnership's earning more than sufficient rental and investment
income to pay all expenses of the Operating Partnership and meet the debt
service requirements of the Loan and of any other borrowings of the Partnership.
No assurance can be given that income from the Operating Partnership in any year
will be sufficient to generate Cash Flow for the Preferred Unitholders or that
there will not be cash deficits. Investors should recognize that because
operating expenses and real estate taxes are subject to increases, and increases
in rent levels may be subject to market limitations, cash
18
<PAGE>
distributions to the Partnership from the Operating Partnership in any year may
not be sufficient to generate Cash Flow for distribution to the Preferred
Unitholders.
DISTRIBUTIONS FROM CAPITAL PROCEEDS
In addition to a 12% cumulative, non-compounded preferred return (the
'Annual Return'), each Preferred Unit entitles the holder thereof to receive an
aggregate cash distribution (prior to any distribution to Unitholders and to the
General Partner on account of the Units and the general partnership interests
held by them) equal to the greater of (i) $46,500 (200% of an investor's
original preferred invested capital) or (ii) an amount equal to the Subscription
Price paid by an investor together with a cumulative, compounded return thereon
of 15%, in each case exclusive of any payments received with respect to the
Annual Return, from the net cash proceeds, if any, received by the Partnership
from Non-Terminating Capital Transactions (as defined in the Partnership
Agreement) or upon liquidation of the Partnership. Accordingly, prior to
dissolution of the Partnership, the net cash proceeds, if any, of a
Non-Terminating Capital Transaction that the General Partner determines is
available for distribution shall be distributed and applied generally as
follows:
(a) to discharge, to the extent required by any lender or creditor,
debts and obligations of the Partnership (including loans made by the
General Partner);
(b) (i) to fund reserves for contingent liabilities to the extent
deemed reasonable by the General Partner and the accountants of the
Partnership or (ii) as determined by the General Partner to fund repairs,
capital improvements or the development of portions of the Property;
(c) to each Preferred Unitholder, to the extent not theretofore paid
out of prior distributions of Cash Flow and capital proceeds, an amount
equal to a cumulative, non-compounded annual 12% return on his preferred
invested capital, as such capital may be reduced from time to time by any
prior distributions pursuant to (d) below;
(d) to each Preferred Unitholder, an amount equal to the greater of
(i) $46,500 or (ii) an amount equal to the Subscription Price paid by an
investor together with a cumulative, compounded return thereon of 15%, in
each case exclusive of any payments received with respect to clause (c)
above, per Preferred Unit, reduced by all prior distributions to such
Preferred Unitholder pursuant to this clause (d);
(e) to each Unitholder, an amount equal to a annual 6% cumulative,
non-compounded return on his invested capital reduced by all prior
distributions to him out of Cash Flow and by all prior distributions to him
hereunder;
(f) to each Unitholder, an amount equal to his invested capital,
reduced by all prior distributions to him hereunder;
(g) to the General Partner, the aggregate amount of its capital
contribution to the Partnership, reduced by any prior distribution to it
hereunder; and
(h) the balance, 70% to the Unitholders and 30% to the General
Partner.
LIQUIDATION PREFERENCES
Upon the termination and winding up of the Partnership, the proceeds of any
Terminating Capital Transaction (as defined in the Partnership Agreement) and/or
the remaining assets of the Partnership available for distribution, after
payment of all liabilities of the Partnership (including loans made by the
General Partner), shall be distributed and applied generally as follows:
(a) to each Preferred Unitholder, an amount equal to a annual 12%
cumulative, non-compounded return on his preferred invested capital, after
taking into account all prior distributions to him out of Cash Flow and
capital proceeds;
(b) to each Preferred Unitholder, an amount equal to the greater of
(i) $46,500 or (ii) an amount equal to the Subscription Price paid by an
investor together with a cumulative, compounded return thereon of 15%, in
each case exclusive of any payments received with respect to clause (a)
above, per Preferred Unit, reduced by any prior distributions to him in
reduction thereof; and
19
<PAGE>
(c) thereafter, to the Unitholders and the General Partner in
accordance with their respective capital account balances.
No assurance can be given as to the availability or feasibility of a
Non-Terminating or a Terminating Capital Transaction or the amount of net cash
proceeds, if any, therefrom.
Upon receipt by a Preferred Unitholder of an amount equal to the
liquidation preference of a Preferred Unit, he shall have no further rights to
vote or to receive distributions from the Partnership.
VOTING RIGHTS
A Preferred Unit will not entitle the holder thereof to any voting rights,
provided, however, that each Preferred Unit will entitle the holder thereof,
voting together with the Unitholders as a single class, to two votes with
respect to any decisions to approve or disapprove the sale of all or
substantially all of the assets of the Partnership or the Operating Partnership
in a single or related series of transactions. See 'Description of Partnership
Agreement--Voting Rights.'
REDEMPTION
If at any time the General Partner is removed without its consent, the
Partnership will be required to redeem all of the Preferred Units at a price
equal to the liquidation preference of the Preferred Units (such right is not
triggered if the General Partner withdraws voluntarily).
Upon payment in full of the liquidation preference of the Preferred Units,
they will be redeemed in full and the holders thereof shall have no further
rights, powers or obligations.
TRANSFER OF PREFERRED UNITS
The Partnership Agreement will provide that no sale or exchange of an
interest in the Partnership may be made if the sale or exchange of the interest,
when added to the total of all other interests sold or exchanged within the
period of 12 consecutive months ending with the proposed date of the sale or
exchange, would result in the termination of the Partnership under Section 708
of the Internal Revenue Code of 1986, as amended (the 'Code'). However, the sale
or exchange could be made if there has been compliance with the requirements of
the securities laws and the Partnership Agreement and if, prior to the sale or
exchange, there has been published in the Internal Revenue Bulletin, or the
Partnership has been granted upon application and at the expense of the
Preferred Unitholder desiring to transfer his Preferred Units, a favorable
ruling to the effect that a transfer of the type proposed will not result in
such a termination.
In addition, in order to prevent treatment of the Partnership as a publicly
traded partnership for federal income tax purposes, the Partnership Agreement
will authorize the General Partner to refuse to recognize or give effect to any
transfer of a Unit or Preferred Unit that, in the General Partner's
determination, could result in the Partnership's being treated as a 'publicly
traded partnership' (as defined in section 7704(b) of the Code) unless the
General Partner determines that imposing such restrictions on transfers would
not be in the best interests of the Partnership and the partners taken as a
whole.
The Partnership Agreement also will provide, with certain exceptions, that
no Preferred Unitholder may transfer his interest in the Partnership to a minor
or an incompetent or transfer any interest representing less than one-half of a
Preferred Unit (unless such interest represents the Preferred Unitholder's
entire interest).
No pledge, sale, transfer, exchange, assignment or other disposition of a
Preferred Unitholders's interest in the Partnership may be made except (a) with
the consent of the General Partner (except as otherwise provided in the
Partnership Agreement) and (b) in compliance with applicable regulations of any
governmental agency having jurisdiction over such disposition.
An assignee of a Preferred Unit may be admitted as a substitute Limited
Partner only upon: (a) delivery to the General Partner of a duly endorsed
Certificate and transfer application, (b) the General Partner's consenting to
the transfer, the granting of which consent is in the General Partner's sole
discretion, and (c) the assignee's written acceptance and adoption of all terms
and provisions of the Partnership Agreement. By executing and delivering a
transfer application, the transferee of Preferred Units (i) is an assignee until
admitted to the
20
<PAGE>
Partnership as a substituted limited partner, (ii) automatically requests
admission to the Partnership as a substituted limited partner, (iii) represents
that such transferee has the capacity and authority to enter into the
Partnership Agreement and (iv) grants powers of attorney to the General Partner.
On a quarterly basis, the Partnership will, on behalf of transferees who have
submitted transfer applications, request the General Partner to admit such
transferees as substituted limited partners in the Partnership. If the General
Partner consents to such substitution, a transferee will be admitted to the
Partnership as a substituted limited partner upon the recordation of such
transferee's name in the books and records of the Partnership. Upon such
admission, which is in the sole discretion of the General Partner, he will be
entitled to all of the rights of a limited partner under the Delaware Act and
pursuant to the Partnership Agreement. Except in the case of an assignment upon
death or incapacity, an assignee of a Preferred Unitholder who does not become a
substitute Limited Partner will not have any right to share in the Net Income,
Net Loss, Cash Flow or other distributions of the Partnership.
REPLACEMENT OF LOST PREFERRED UNIT CERTIFICATES
A Preferred Unitholder or transferee who loses or has his or her
certificate for Preferred Units stolen or destroyed may obtain a replacement
certificate by furnishing an indemnity bond and by satisfying certain other
procedural requirements under the Partnership Agreement.
DESCRIPTION OF PARTNERSHIP AGREEMENT
The following is a summary of certain provisions of the Partnership
Agreement and is qualified in its entirety by reference to the text of the
amended Partnership Agreement, a form of which has been filed as an exhibit to
the Registration Statement of which this Proxy Statement and Prospectus is a
part.
RIGHTS AND DUTIES OF THE GENERAL PARTNER
The Partnership Agreement provides that the General Partner has the sole
right to manage the business of the Partnership and that, aside from certain
rights to consent to extraordinary actions, the Unitholders and the Preferred
Unitholders (collectively, the 'Limited Partners') shall not, as such,
participate in or have any control over the business of the Partnership (except
as required by law) or have any right or authority to act for or bind the
Partnership. The General Partner is responsible for the proper maintenance and
operation of the Operating Partnership and the Property. The General Partner may
not, however, except as otherwise provided in the Partnership Agreement, take
any action required to be approved or ratified by limited partners under the
Revised Uniform Limited Partnership Act of the State of Delaware (the 'Delaware
Act') without the written consent of the Limited Partners.
To ensure the orderly and efficient operation of the Partnership, the
General Partner has the exclusive right to admit any person as an additional or
substitute General Partner of the Partnership upon the consent of Limited
Partners holding more than 50% of the voting rights, voting as a single class,
of the limited partnership interests in the Partnership (the 'Consent of the
Limited Partners'). In addition, the General Partner has the authority, without
the Consent of the Limited Partners, to increase, decrease or refinance the Loan
or any other loan entered into by the Partnership, and to sell, exchange or
develop portions of the Property (but not to sell all or substantially all of
the Property in a single or related series of transactions).
WITHDRAWAL OF THE GENERAL PARTNER
The General Partner may voluntarily retire as the general partner of the
Partnership only if a substitute General Partner remains in the Partnership
after such voluntary withdrawal. A General Partner shall retire automatically
upon any involuntary withdrawal or an event of bankruptcy.
TERMINATION OF THE PARTNERSHIP
The Partnership will continue until December 31, 2038 unless earlier
terminated upon the occurrence of any of the following events:
(i) the retirement of the General Partner, if there is no remaining
General Partner who elects to continue the Partnership and the Limited
Partners do not elect to continue the Partnership;
21
<PAGE>
(ii) the sale or other disposition of all or substantially all of the
assets of the Partnership, provided, however, that under certain
circumstances the Partnership may continue in existence solely for the
purpose of collecting any deferred installment payments of the purchase
price or any other consideration to be received for such assets; or
(iii) the election by the General Partner with the Consent of the
Limited Partners to dissolve the Partnership.
If, following the retirement of the General Partner, there is no remaining
General Partner of the Partnership or the remaining General Partner does not
elect to continue the Partnership, the Limited Partners may, within 90 days
after such retirement, elect to reconstitute the Partnership and continue the
business of the Partnership by selecting a substitute General Partner by the
unanimous consent of the Limited Partners. If the Limited Partners elect to
reconstitute the Partnership and admit a substitute General Partner, the
relationship of the partners and of any person who has acquired an interest of a
partner in the Partnership shall be governed by the Partnership Agreement.
Upon dissolution of the Partnership, the Partnership's assets will be
liquidated and the proceeds of liquidation will be applied and distributed as
described in 'Description of Securities--Liquidation Preferences.'
ALLOCATIONS OF NET INCOME, NET LOSS AND GAIN OR LOSS FROM A CAPITAL TRANSACTION
While the Preferred Units are outstanding, Net Income from the operations
of the Partnership (including the Partnership's allocable share of net income
from the operations of the Operating Partnership) will be allocated (a) first,
to the Preferred Unitholders, in an amount equal to the excess of the Annual
Return accrued on their invested capital for periods through the close of the
year then ended (see 'Description of Securities--Cumulative Preferred Annual
Return') over the cumulative amounts of Net Income and Gain from a Capital
Transaction (as defined in the Partnership Agreement) previously allocated to
them on account of such accrued Annual Return, (b) second, to the Preferred
Unitholders, to restore Net Loss previously allocated to them on account of
their Preferred Units, (c) third, to Unitholders and to the General Partner, to
restore Net Loss previously allocated to them during the period that the
Preferred Units are outstanding on account of the Units and the general
partnership interests held by them, and (d) the balance, if any, to the
Unitholders and to the General Partner on account of the Units and the general
partnership interests held by them.
While the Preferred Units are outstanding, Net Loss from the operations of
the Partnership (including the Partnership's allocable share of net loss from
the operations of the Operating Partnership) will be allocated (a) first, 1% to
the General Partner and 99% to the limited partners (including the Preferred
Unitholders), in proportion to and the extent of the positive balances in their
capital accounts, and (b) the balance, if any, to the Unitholders and to the
General Partner, on account of the Units and the general partnership interests
held by them.
While the Preferred Units are outstanding, Gain or Loss from a Capital
Transaction (as defined in the Partnership Agreement) generally will be
allocated (a) if any amounts are distributed or to be distributed on account of
such Capital Transaction, first, in such manner as to cause the Partners'
respective positive capital account balances to at least equal, or in the case
of a Terminating Capital Transaction, to most nearly equal, the amounts to be
distributed to them pursuant to and in the priority described above in
'Distributions from Capital Proceeds' on account of such Capital Transaction (as
defined in the Partnership Agreement), (b) if no amounts are distributed or to
be distributed on account of such Capital Transaction, in the case of Gain only,
to the Preferred Unitholders, first, to restore Net Loss previously allocated to
them on account of their Preferred Units as described in the preceding
paragraph, and then, in an amount equal to the excess of the cumulative
distributions previously made to them (other than distributions made to them on
account of their Annual Return) in excess of $23,250 per Preferred Unit over the
cumulative amount of Net Income and Gain from a Capital Transaction previously
allocated to them on account of such excess distributions, and (c) the balance,
if any, to the Unitholders and to the General Partner, on account of the Units
and the general partnership interests held by them. In the event of a
Terminating Capital Transaction, the Gain therefrom will be allocated first to
all Partners having negative balances in their capital accounts, in proportion
to and to the extent of such negative balances, before making the allocations
described in the preceding sentence.
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ACCOUNTING BOOKS AND RECORDS
Net Income and Net Loss are determined in accordance with the accounting
methods followed by the Partnership for Federal income tax purposes. The
Partnership's fiscal year is the calendar year. The books and records of the
Partnership are maintained at its principal place of business and will be
available for inspection by the Limited Partners and their respective authorized
representatives during business hours.
TAX ELECTIONS
The Operating Partnership and the Partnership each currently have in effect
an election, pursuant to Section 754 of the Code, to adjust the basis of its
property. See 'Federal Income Tax Considerations-- Partnership Tax Elections.'
All other elections required or permitted to be made by the Partnership under
the Code shall be made by the General Partner in such manner as will be most
advantageous to the Limited Partners.
REPORTS TO INVESTORS
The General Partner is required to furnish the Limited Partners with the
following information:
<TABLE>
<CAPTION>
INFORMATION DATE TO BE FURNISHED
- --------------------------------------------------- ---------------------------------------------------
<S> <C>
Audited financial statements and report of Within 120 days after each calendar year end
Accountants
All necessary tax information required for each Within 90 days after each calendar year end
Limited Partner to prepare his individual
tax return
</TABLE>
The financial statements, which will be prepared on an accrual basis, will (a)
contain annual balance sheets, statements of operations, changes in partners'
equity (deficit) and cash flows, (b) be reported on by independent certified
public accountants (the 'Accountants') chosen by the General Partner and (c)
contain an opinion by the Accountants as to the accounting methods used in the
preparation of such statements. An annual audit of the financial statements of
the Partnership is conducted by the Accountants. At the present time, the
Accountants are Imowitz Koenig & Co., LLP.
LIABILITY OF PARTNERS TO THIRD PARTIES
The General Partner is liable for all debts, liabilities and obligations of
the Partnership, except for nonrecourse indebtedness (if any) on the Property,
to the extent not paid by the Partnership. The Delaware Act provides that, so
long as a limited partner does not take part in the management or control of the
Partnership's business, his liability for the debts, liabilities and obligations
of the Partnership will be limited to the amount of his capital contribution and
his share of undistributed net income. A Limited Partner is also liable to the
Partnership for a period of one year for the full amount of any distribution to
him (plus interest) which distribution represents a return of capital and is not
made in violation of the Partnership Agreement or the Delaware Act, to the
extent necessary to discharge the Partnership's liabilities to all creditors who
extended credit to the Partnership or whose claims arose before such
distribution. Such liability will continue for six years from the date of the
distribution if the distribution is made in violation of the Delaware Act or the
Partnership Agreement.
AMENDMENTS AND POWER OF ATTORNEY
The General Partner may utilize the power of attorney granted to it by each
Limited Partner to execute certain types of amendments to the Partnership
Agreement, including amendments to admit additional Limited Partners, to cure
ambiguities or to satisfy 'Blue Sky' regulations. The General Partner may also,
without the Consent of the Limited Partners, amend the Agreement to provide for
a special allocation of depreciation and gain in connection with the admission
of tax-exempt entities as investors in the Partnership.
The Partnership Agreement may not otherwise be modified or amended except
with the consent of the Limited Partners, provided, that the written consent of
all Limited Partners will be required for any modification or amendment which
would (i) increase the amount of the capital contributions payable by the
Limited Partners,
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(ii) extend the termination date of the Partnership, (iii) increase the
liability of the Limited Partners, (iv) except in connection with the offering
of additional partnership interests in the Partnership, adversely affect the
rights of the Limited Partners with regard to profits and losses and
distributions or (v) alter the amendment section of the Partnership Agreement.
VOTING RIGHTS
The Partnership Agreement provides that the consent of the Limited Partners
owning in the aggregate not more than 50% of the Units will be required (i) to
remove the General Partner, (ii) to amend the Partnership Agreement (except as
described in the foregoing paragraph) or to approve or disapprove any material
amendments thereto proposed by the General Partner, (iii) to dissolve the
Partnership and (iv) to approve or disapprove the sale of all or substantially
all of the assets of the Partnership in a single or related series of
transactions, provided, however, that the holders of Preferred Units will be
entitled, voting together with the Unitholders as a single class, to two votes
per Preferred Unit with respect to actions described in subclause (iv) of this
sentence. Except as provided in the proviso of the preceding sentence, holders
of Preferred Units will not be entitled to any voting rights. The voting rights
described in this paragraph may be exercised only if the exercise thereof will
not impair the limited liability of the Limited Partners and will not adversely
affect the classification of the Partnership as a partnership for Federal income
tax purposes. If the Limited Partners remove the General Partner, the General
Partner will nevertheless retain the right to receive fees otherwise payable
under the Partnership Agreement, the right to allocations of Net Income, Net
Loss and Cash Flow, and the right to receive proceeds from the sale, refinancing
or other disposition of the Property. Any General Partner of the Partnership
removed by the Limited Partners shall become a limited partner. See also
'Investment Considerations--Removal of General Partner and Redemption of
Preferred Units' and 'Description of Securities--Redemption.'
The Partnership Agreement provides that consent shall be deemed to be
granted if the General Partner makes a written request for the consent of the
Unitholders and/or the Preferred Unitholders to a particular action, unless the
General Partner receives written refusal to consent within 30 days of the
request from Unitholders and/or Preferred Unitholders representing in the
aggregate 50% or more of the vote entitled to be cast on any matter.
MANAGEMENT
Generally, the General Partner has full, exclusive and complete
responsibility and discretion in the management or control of the Partnership,
and the Limited Partners have no authority to transact business for, or
participate in the management activities and decisions of, the Partnership. The
General Partner is expressly authorized, without the consent of the Limited
Partners, to increase, decrease, or refinance the Loan or any other loan entered
into by the Partnership, and to sell, exchange or develop portions of the
Property (but not to sell all or substantially all of the assets in a single or
related series of transactions). The authority of the General Partner is subject
to certain other express restrictions set forth in the Partnership Agreement.
The General Partner is required to devote such time and effort to the
Partnership's business as may be necessary to promote adequately the interests
of the Partnership and the mutual interests of the Partners. The General Partner
is not required to devote full time to Partnership business and is specifically
permitted to engage in other business, including engaging in activities which
compete with the business of the Partnership.
INDEMNIFICATION OF THE GENERAL PARTNER
The Partnership Agreement provides that the Partnership shall indemnify and
hold harmless the General Partner and each person performing services on behalf
of the Partnership who (a) directly or indirectly controls, is controlled by, or
is under common control with, the General Partner, (b) who owns or controls 10%
or more of the outstanding voting interest in the General Partner, and (c) any
officer, director or partner of the General Partner against any loss, damage,
liability, cost or expense (including reasonable attorneys' fees) incurred by
them in connection with the Partnership, provided that such loss, damage,
liability, cost or expense was not the result of the negligence or misconduct of
any such person. Any such indemnity will be paid from, and only to the extent
of, available Partnership assets and no partners shall have any personal
liability on account thereof. Notwithstanding this provision, however, neither
the General Partner nor any other entity or individual entitled to
24
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indemnification pursuant to the Partnership Agreement shall be indemnified for
any loss, damage or cost resulting from the violation of any Federal or state
securities laws unless (i) there has been a successful adjudication on the
merits of each count involving such securities law violations, (ii) such claims
have been dismissed with prejudice on the merits by a court of competent
jurisdiction or (iii) a court of competent jurisdiction approves a settlement of
such claims. In any claim for indemnification for Federal or state securities
law violations, the party seeking indemnification shall place before the court
the position of the Securities and Exchange Commission and the Massachusetts
Securities Division with respect to the issue of indemnification for securities
law violations. The Partnership shall not incur the cost of the portion of any
insurance which insures any party against any liabilities as to which such party
is prohibited from being indemnified under the Partnership Agreement.
ADDITIONAL PARTNERSHIP INTERESTS
The Partnership Agreement will provide that the Partnership may not issue
equity interests in the Partnership, other than Units or Preferred Units,
without the consent of Unitholders owning in excess of 50% of the aggregate
number of Units owned by all Unitholders. The Partnership Agreement provides
that consent shall be deemed to be granted if the General Partner makes a
written request for the consent of the Unitholders to a particular action,
unless the General Partner receives written refusal to consent within 30 days of
the request from Unitholders owning in the aggregate 50% or more of the Units
owned by all Unitholders. In the event of such issuance, any Unitholder who
elects not to purchase his pro rata share of such interests will suffer dilution
of his interest in the Partnership, which may have adverse tax consequences to
such Unitholder. See 'Certain Income Tax Consequences.' No fees will be payable
to the General Partner or any of its affiliates from the proceeds of the sale of
such interests, except for customary brokerage commissions on interests sold to
parties who are not partners of the Partnership. The General Partner and its
affiliates may, however, be reimbursed for any reasonable out-of-pocket expenses
incurred in connection with the sale of such additional interests.
MEETINGS
The General Partner may at any time solicit the vote of the Limited
Partners without a meeting. The General Partner is required to call a meeting of
the Partners following receipt of a written request therefor signed by
Unitholders holding an aggregate of 10% or more of the Units in the Partnership
held by all Unitholders. Preferred Unitholders may not require the General
Partner to call a meeting of the Partners. The Partnership does not intend to
hold annual meetings of Limited Partners.
CERTAIN INCOME TAX CONSIDERATIONS
The following is a summary of certain federal income tax considerations
that may be relevant to Unitholders who exercise their Rights, and is based upon
the Internal Revenue Code of 1986, as amended (the 'Code'), judicial decisions,
final, temporary and proposed Treasury regulations ('Regulations') and
administrative rulings and pronouncements of the Internal Revenue Service
('IRS'). Although the material federal income tax considerations relevant to a
Unitholder who acquires Preferred Units are discussed below, no attempt has been
made to comment on all federal income tax matters affecting the Partnership or
Preferred Unitholders. Prospective investors should consult their own tax
advisors about the federal, state and local income tax consequences to them of
acquiring Preferred Units.
This summary is based on current legal authority. There is no assurance
that legislative or administrative changes or court decisions may not occur
which would significantly modify the statements and opinions expressed herein,
and any such changes may be retroactive with respect to transactions completed
or investments made prior to the date of such changes. Various aspects of
recently enacted tax legislation are subject to further interpretation and
clarification and, therefore, are not free from doubt. In addition, the General
Partner must make various federal income tax determinations that will impact
Preferred Unitholders, and there is no assurance that the IRS will agree with
the General Partner's determinations. It is therefore possible that the
allocation or treatment of tax items by the General Partner may be modified upon
audit.
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LEGAL OPINION
Rosenman & Colin LLP, counsel to the Partnership ('Counsel'), has expressed
its opinion as to the following matters: (i) assuming the Partnership is
classified as a partnership and is not a publicly traded partnership (within the
meaning of Section 7704(b) of the Code) as of the date of this Proxy Statement
and Prospectus, the Partnership will continue to be treated as a partnership for
federal income tax purposes following the issuance of the Preferred Units; and
(ii) to the extent the summary of income tax considerations set forth below
involves matters of federal income tax law, such statements of law are accurate
in all material respects as of the date of such opinion. Counsel has based its
opinion on applicable legal authority, the facts set forth in this Proxy
Statement and Prospectus and certain factual representations made by the General
Partner, and its opinion is conditioned on the accuracy of such facts and
representations. Counsel's opinion represents only its best legal judgment, and
does not bind the IRS or the courts. No ruling has been or will be requested
from the IRS as to any tax matters. Thus, no assurance can be provided that the
opinions and statements set forth herein will not be challenged by the IRS or
sustained by a court if litigated. Due to the factual nature of the issue, or
uncertainty of the law, Counsel is not able to opine with respect to certain
issues that involve: (i) the deductibility of Partnership fees and expenses
representing amounts paid or payable to WFA or its affiliates; (ii) the amount
or timing of any tax losses or taxable income that may be generated by the
Partnership; (iii) the ability of any particular Preferred Unitholder to
currently deduct any tax losses that may be generated by the Partnership; and
(iv) whether the allocations of income and loss of the Partnership, including
amounts reported as income and loss to holders of Preferred Units, will be
respected for federal income tax purposes.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS RELATING TO THE
RIGHTS AND THE PREFERRED UNITS
EFFECT OF RIGHTS DISTRIBUTION
Neither the Partnership nor the Unitholders should recognize gain or loss
upon the distribution of the Rights.
UNITHOLDER'S BASIS IN RIGHTS
Although not completely certain, the tax basis of Rights received by a
Unitholder from the Partnership likely will be zero and the distribution of
Rights will not change the tax basis of the existing Units. If Rights received
by a Unitholder are not exercised but are allowed to expire, no loss will be
allowed to the Unitholder.
EFFECT OF EXERCISE OF RIGHTS
No gain or loss should result to a Unitholder or the Partnership on the
purchase of Preferred Units through the exercise of Rights.
SALE OF PREFERRED UNITS
Gain or loss will be recognized by a Preferred Unitholder upon the sale of
Preferred Units in an amount equal to the difference between the amount realized
on the sale and the tax basis of the Preferred Unitholder in the Preferred Units
sold (discussed below). Except to the extent attributable to depreciation
recapture and any other unrealized receivables (as determined under Section 751
of the Code), such gain or loss will be a capital gain or loss if the Preferred
Units are capital assets in the hands of the holder thereof. If the holder is a
non-corporate taxpayer and has a holding period in the Preferred Units of more
than one year, it appears that the holder's capital gain (if any) on a sale of
Preferred Units generally will be taxable under current law at marginal federal
income tax rates of 28% if the holding period in the Preferred Units sold is
between 12 and 18 months, or, if the holding period in such Units exceeds 18
months, 25% to the extent attributable to straight-line depreciation deductions
previously allocated to such holder with respect to real property, and 20% as to
the balance. The holding period of Preferred Units acquired through the exercise
of Rights will begin on the date of exercise.
It is the position of the IRS that a partner has a single aggregate basis
in all of the partner's partnership interests and that, to determine gain or
loss upon a sale or other taxable disposition of a part of such partnership
interests, the portion of the partner's basis allocated to the interests being
sold equals the partner's share of
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partnership liabilities transferred in the sale plus the partner's aggregate tax
basis (excluding basis attributable to partnership liabilities) multiplied by
the ratio of the fair market value of the interests sold to the fair market
value of all of the partner's partnership interests. Therefore, Unitholders who
exercise their Rights will be required to determine their tax basis in, and the
tax consequences to them of a sale of, Preferred Units or Units, as the case may
be, based upon their aggregate tax basis in their Partnership Units. See
'--Preferred Unitholder's Basis in His Preferred Units' and '--Treatment of Cash
Distributions to Preferred Unitholders.'
In the case of a corporate Preferred Unitholder, under Section 291(a)(1) of
the Code, a sale or other disposition of its Preferred Units generally will
result in recapture (to the extent of gain) as ordinary income of a portion of
its allocable share of the depreciation deductions claimed by the Partnership.
The amount realized on the sale or disposition of a Preferred Unit will
include, among other things, an allocable share of the outstanding amount of the
Operating Partnership's nonrecourse indebtedness (including unpaid interest
accrued thereon) to the extent such amount was includable in the basis of such
Preferred Unit. Therefore, it is possible that the gain realized on the sale or
disposition of a Preferred Unit may exceed the cash proceeds of such sale or
disposition and, in some cases, the income taxes payable with respect to such
disposition may exceed such cash proceeds.
TAXABILITY OF CASH DISTRIBUTIONS
A holder of Preferred Units generally will not be taxed on cash
distributions received with respect to such Preferred Units except to the extent
the amount of cash paid exceeds the holder's aggregate tax basis in all of his
Units (i.e., his Units and his Preferred Units). See '--Treatment of Cash
Distributions to Preferred Unitholders.' However, the holder will be allocated
Partnership taxable income on account of such distributions. See 'Description of
Securities--Allocations of Net Income, Net Loss and Gain or Loss From a Capital
Transaction.'
PASSIVE ACTIVITY LOSS LIMITATION
A Unitholder who is a natural person, trust, estate, a personal service
company or a closely held 'C' corporation generally is subject to limitations on
deducting passive activity losses. Any tax losses allocated to a Preferred
Unitholder or realized upon a sale of Preferred Units generally will be subject
to these limitations. See '--Limitations on Deductibility of Passive Activity
Losses.'
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS RELATING
TO THE PARTNERSHIP AND PREFERRED UNITHOLDERS
TAXATION OF THE PARTNERSHIP AND THE PREFERRED UNITHOLDERS
The Partnership itself is not subject to any federal income tax. The
Partnership files an annual information tax return on which it reports its
income, gain, loss, deduction and items of tax preference, if any. Each
Preferred Unitholder will be required to report on his personal income tax
return his allocable share of Partnership income, gain, loss, deduction and
items of tax preference and will be subject to tax on his allocable share of the
Partnership's taxable income, regardless of whether any portion of that income
is, in fact, distributed to such Preferred Unitholder. Consequently, a Preferred
Unitholder's tax liability with respect to his share of Partnership taxable
income may exceed the cash actually distributed to him in a given taxable year.
Under the amended Partnership Agreement, Preferred Unitholders will be allocated
Partnership taxable income on account of the Annual Return even if such amount
is not currently distributed to them. See 'Investment Considerations--Risk of
Non-Payment of Preferred Return' and 'Description of Partnership Agreement--
Allocations of Net Income, Net Loss and Gain or Loss From a Capital
Transaction.'
PARTNERSHIP CLASSIFICATION
The availability of most of the tax benefits of the Partnership depends
upon the classification of the Partnership as a partnership for tax purposes. If
the Partnership were treated as an association taxable as a corporation in any
taxable year, the Partnership itself would be subject to corporate income tax,
and its taxable income, gains, losses, deductions and credits (if any) would not
be passed through to its partners. In addition,
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distributions made to Preferred Unitholders generally would be treated as
taxable dividend income (to the extent of the Partnership's current and
accumulated earnings and profits) and the balance as a non-taxable return of
capital to the extent of the partner's basis in his Preferred Units. Also, the
reclassification of the Partnership as an association taxable as a corporation
would be treated as a deemed incorporation of such entity upon which gain could
be recognized, and which could result in additional tax. Accordingly, treatment
of the Partnership as an association taxable as a corporation would
substantially reduce the Partnership's economic income and cash resources and
would also result in a material reduction of the after-tax return to Preferred
Unitholders.
The General Partner and the Partnership believe that the Partnership has
been properly classified as a partnership for federal income tax purposes since
inception. Counsel has advised the Partnership of its opinion that, assuming the
Partnership is classified as a partnership as of the date of this Proxy
Statement and Prospectus and that Partnership interests are not publicly traded
(see the discussion below), the Partnership will continue to be treated as a
partnership for federal income tax purposes following the issuance of Preferred
Units. See '--Legal Opinion' above. In rendering such opinion, Counsel has
relied on the General Partner's representation that the Partnership has operated
in accordance with the Partnership Agreement and will operate in accordance with
the amended Partnership Agreement and applicable state law.
Section 7704 of the Code treats certain publicly traded partnerships as
corporations. The General Partner has represented that the Partnership has
satisfied and will continue to satisfy applicable safe harbors for avoiding
treatment as a publicly traded partnership. See 'Investment
Considerations--Restrictions on Transfer.' Satisfying such safe harbors may
require the Partnership to limit the amount of Partnership interests transferred
during a taxable year (other than pursuant to certain 'exempt' transfers) to
less than 5% of the aggregate amount of outstanding interests in Partnership
capital and profits. Counsel's opinion as to partnership classification relies
on such representation. Failure of the Partnership to satisfy applicable safe
harbors for avoiding treatment as a publicly traded partnership may cause the
Partnership to be treated as a publicly traded partnership taxable as a
corporation, with the resultant adverse tax consequences discussed above.
The discussion of federal income tax consequences herein assumes that the
Partnership is treated as a partnership for federal income tax purposes.
TAX TREATMENT OF PREFERRED UNITS
The Partnership intends to treat Preferred Units as equity of the
Partnership for federal income tax purposes. The Preferred Units have certain
characteristics in common with debt, such as a fixed return and a right to
payment senior to distributions to holders of Units. The IRS therefore may seek
to recharacterize Preferred Units as debt of the Partnership, rather than
equity. Such recharacterization could affect, among other things, the
allocations of taxable income and loss to Preferred Unitholders, the amount of
gain or loss recognized by a Preferred Unitholder on the sale of his Preferred
Units, and the tax treatment and/or timing of inclusion of income attributable
to Preferred Units, and would be adverse for Preferred Unitholders. However, the
Preferred Units have many of the significant characteristics of equity and are
intended by the Partnership to be equity of the Partnership. These equity
characteristics include: (i) the Preferred Units are limited partnership
interests under Delaware law; (ii) payment of the liquidation preference is not
secured or guaranteed and is subject to entrepreneurial risk and the
requirements and limitations of Delaware partnership law; (iii) Preferred Units
will be allocated Partnership losses, if any; (iv) there is no maturity date for
the Preferred Units; and (v) the Partnership intends to treat Preferred Units as
equity for both financial accounting and tax reporting purposes. Counsel
believes that the Preferred Units should be treated as partnership interests for
tax purposes and not as debt obligations of the Partnership.
The discussion below assumes that the Preferred Units will be treated as
partnership interests for federal income tax purposes.
ALLOCATION OF INCOME AND LOSS
Preferred Unitholders will receive allocations of Partnership income, gain
and loss as described in 'Description of Partnership Agreement--Allocations of
Net Income, Net Loss and Gain or Loss From A Capital Transaction.'
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The Partnership Agreement's allocation provisions will be respected for
federal income tax purposes if they are considered to have 'substantial economic
effect' and are not retroactive allocations. If any allocation of an item fails
to satisfy the 'substantial economic effect' requirement, the item will be
allocated among the Partners based on their respective 'interests in the
Partnership,' determined on the basis of all of the relevant facts and
circumstances. Such a determination could result in a reallocation of the
income, gains, losses or deductions allocated under the Partnership Agreement.
Such a reallocation, however, would not alter the distribution of cash under the
Partnership Agreement.
The allocation provisions of the Partnership Agreement generally should be
respected under the standards of Section 704(b) of the Code to the extent that
the Partnership's allocations are deemed consistent with the economic
arrangements between the holders of Preferred Units and the Unitholders,
respectively. Counsel is unable to opine that the Partnership's allocations
comply with Section 704(b) of the Code because the Partnership Agreement does
not comply with the 'safe harbor' provisions of the Regulations, and the issue
of whether the allocations are consistent with the Partners' actual respective
economic interests in the Partnership is primarily a factual issue.
PREFERRED UNITHOLDER'S BASIS IN HIS PREFERRED UNITS
A Preferred Unitholder's adjusted basis in his Preferred Units is relevant
in determining the gain or loss on the sale or other disposition of his
Preferred Units and the tax consequences of a distribution from the Partnership.
See '--Treatment of Gain or Loss on Sale or Disposition of Preferred Units' and
'--Treatment of Cash Distributions to Preferred Unitholders.' In addition, a
limited partner is entitled to deduct on his personal income tax return, subject
to the limitations discussed below, his distributive share of a partnership's
net loss, if any, to the extent of such partner's adjusted basis in his
partnership interest.
A Preferred Unitholder's adjusted basis in his Preferred Units will include
an allocable share of non-recourse indebtedness of the Partnership, and will be
increased by his share of items of Partnership income and gain, and reduced, but
not below zero, by his share of items of Partnership loss and deduction, and by
any cash distributions received by him from the Partnership. A Preferred
Unitholder will be considered to have a single adjusted basis in all his Units,
common and Preferred. See '--Sale of Preferred Units' above.
TREATMENT OF CASH DISTRIBUTIONS TO PREFERRED UNITHOLDERS
Cash distributions made to Preferred Unitholders will be treated as a
return of capital to the extent such distributions do not exceed the Preferred
Unitholder's basis in his Units. A return of capital generally will not result
in any recognition of gain or loss for federal income tax purposes but will
reduce a Preferred Unitholder's adjusted basis in his Units (common and
Preferred). Distributions of cash are deemed for tax purposes to include
reductions in a partner's share of nonrecourse Partnership liabilities,
including as a result of repaying such liabilities. Thus, for example, the
anticipated $2 million reduction in the outstanding principal indebtedness of
the Partnership at the time of the refinancing of the Loan will be treated for
tax purposes as a constructive cash distribution of $2 million by the Operating
Partnership, reducing each Partner's basis in his Partnership interest, but this
should not result in a Partner's recognition of taxable gain to the extent not
in excess of his adjusted basis in his Partnership interest. Cash distributions
(including constructive distributions resulting from a reduction in the
Unitholder's share of Partnership nonrecourse debt) in excess of a Preferred
Unitholder's adjusted basis in his Units will result in his recognition of gain
to the extent of such excess, as if the Preferred Unitholder sold part of his
Preferred Units. See '--Preferred Unitholder's Basis in his Preferred Units' and
'--Sale of Preferred Units.' Dilution of a Preferred Unitholder's Partnership
interest in connection with a future sale of additional limited partnership
interests could, under certain circumstances, create a constructive distribution
to Preferred Unitholders that results in their recognition of gain.
LIMITATIONS ON DEDUCTIBILITY OF PASSIVE ACTIVITY LOSSES
Preferred Unitholders who are individuals, trusts, estates, personal
service companies and certain closely held C corporations are subject to the
passive activity loss limitation, under which Partnership losses (if any)
allocated to a Preferred Unitholder may offset only other passive activity
income of such Preferred Unitholder, including, generally, subsequent
Partnership income (other than income classified as portfolio income, such as
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income from investments of reserves). Disallowed losses from passive activities
may be carried forward and treated as a deduction in the next taxable year,
subject to these limitations. Any disallowed losses from the Partnership are
allowed in full (subject to any other applicable limitations) when the taxpayer
disposes of his entire interest in the Partnership in a taxable transaction or
upon liquidation and dissolution of the Partnership. The deductibility of
interest on debt incurred in passive activities and interest on debt incurred to
purchase an interest in a passive activity is generally subject to these
limitations.
Assuming that the Preferred Units are treated as equity for federal income
tax purposes (see '--Tax Treatment of Preferred Units'), the taxable income or
loss from the Partnership allocable to a Preferred Unitholder, other than income
from investing reserves and other available cash, should be treated as income or
loss from a passive activity. Notwithstanding the foregoing, each Preferred
Unitholder should note that, under Section 469(k) of the Code, Congress granted
the Treasury broad discretion to promulgate regulations which could, among other
things, require in the future that net income or gain allocated on account of a
preferred return may not be treated as passive activity income under certain
circumstances.
AT RISK LIMITATIONS
A Preferred Unitholder who is subject to the passive activity loss
limitation also will be subject to the 'at risk' rules of Section 465 of the
Code. Under these rules, a Preferred Unitholder generally may not currently
deduct from taxable income his share of the Partnership's losses to the extent
that such losses exceed the amount the Unitholder is considered to have 'at
risk' in the Partnership under Section 465 of the Code at the end of that year.
In addition, prior tax losses must be recaptured (as ordinary income) if the
taxpayer's amount at risk is reduced below zero. The General Partner currently
does not anticipate that the Partnership's operations will result in allocations
to Preferred Unitholders of deductions or losses in excess of their amount 'at
risk' in the Partnership.
DEDUCTIBILITY OF PARTNERSHIP EXPENSES
The Partnership incurs various expenses in connection with its ongoing
administration and with the operation of the Property. Payments for services
generally are deductible if the payments are ordinary and necessary expenses,
are reasonable in amount and are for services performed during the taxable year
in which paid or accrued. Payments for services related to the acquisition of an
asset having a useful life in excess of one year generally must be capitalized
into the cost basis of the acquired property. Deductions for interest paid on
mortgage loans providing for payments to the lender that are contingent on the
value or results of operation of the underlying property may be disallowed in
whole or in part, and/or the Partnership's ongoing allocations of income and
loss could be affected, if the lender is considered for tax purposes (by reason
of the contingent payment feature of the mortgage loan) to hold an equity
interest in the property. The IRS may not agree with the Partnership's
determinations as to the deductibility of fees and expenses and might disallow
such deductions or require that certain expenses be capitalized and amortized or
depreciated over a period of years. These issues are essentially questions of
fact with respect to which Counsel cannot opine. If all or a portion of
Partnership deductions were to be disallowed, the Partnership's taxable income
would be increased or its tax losses would be reduced.
Expenses of offering and issuing Preferred Units in the Partnership
('syndication expenses') are not allowable deductions to the Partnership or any
Preferred Unitholder. Syndication expenses are defined as expenditures connected
with the issuing and marketing of interests in partnerships. Registration fees,
printing costs, selling and promotional material costs and legal fees for
securities and tax advice pertaining to registration of the Preferred Units with
the Securities and Exchange Commission are syndication expenses and, therefore,
do not qualify for amortization or deduction.
DEPRECIATION AND COST RECOVERY DEDUCTIONS
The portion of the Property consisting of real property generally is being
depreciated over a period of 31.5 years using the straight-line method.
Improvements made to the Property generally will be subject to a 39-year
recovery period, and will be recovered using the straight-line method. If the
Partnership terminates for tax purposes, the Partnership will be required to
depreciate all of its real property under the current depreciation
30
<PAGE>
rules, which are less favorable than the rules in effect when the Property was
acquired. Any personal property acquired by the Partnership generally will be
depreciated over a seven-year recovery period using the double declining balance
method (switching to straight-line at a time to maximize the depreciation
deductions). To the extent that any tax-exempt or foreign persons hold Units, a
portion of the Partnership's depreciation deductions, corresponding to such
persons' percentage interest in the Partnership, must be depreciated over
somewhat longer recovery periods than those otherwise applicable.
DEPRECIATION RECAPTURE
There is generally no depreciation recapture for real property that is
depreciated pursuant to the straight-line method. (However, the portion of any
capital gain attributable to straight-line depreciation deductions is subject to
taxation at a maximum marginal federal income tax rate for non-corporate
taxpayers of 25%, rather than 20%, if the property has been held for more than
18 months. See--'Treatment of Gain or Loss on Sale or Disposition of Preferred
Units.') If real property or capital improvements are sold or otherwise disposed
of within 12 months after they were acquired or made, all depreciation claimed
with respect to such property or improvements, as applicable, will be recaptured
as ordinary income on such disposition. All depreciation deductions attributable
to personal property are subject, to the extent of any gain recognized, to being
fully recaptured as ordinary income on a sale or other disposition of the
personal property. Amounts subject to depreciation recapture must be recognized
as ordinary income in the year of the sale even if the sale calls for payments
to be made on a deferred basis.
Under Section 291(a)(1) of the Code, which applies only to corporate
Preferred Unitholders, 20% of a corporate Preferred Unitholder's depreciation
deductions will be subject to recapture as ordinary income on such disposition
to the extent of the Preferred Unitholder's share of any gain recognized, even
though the Partnership and the Preferred Unitholder might not otherwise be
subject to general depreciation recapture on such depreciation.
SALE OR FORECLOSURE OF THE PROPERTY
The Property (including improvements made thereto that are held for more
than 12 months) constitutes Section 1231 property. Gains and losses from the
sale or exchange of Section 1231 property are offset against each other on an
annual basis, and net gain is treated as capital gain, while net loss is treated
as ordinary loss. A non-corporate Unitholder's allocable share of such net gain,
if any, generally should qualify for a maximum marginal federal income tax rate
of 25% to the extent of the Unitholder's previously claimed straight-line
depreciation deductions with respect to the Property, and 20% as to the
remaining net gain, if any. Net Section 1231 gains, must, however, be treated as
ordinary income to the extent of net Section 1231 losses taken over the five
most recent years, to the extent these losses have not been thus 'recaptured'.
In general, an involuntary transfer of the Property, such as a mortgage
foreclosure, will have the same tax consequences as those of a sale.
If all or a portion of the Property is sold, the net cash proceeds
distributed from the sale may not be sufficient to pay a Unitholder's resulting
tax liability. Such circumstances might include (i) the sale of the Property
encumbered by any nonrecourse debt, since in determining taxable gain from such
a sale the outstanding principal amount of the loan is included along with any
cash proceeds from the sale in determining the amount realized, while the basis
of the Property (the amount subtracted from the sales price in determining gain)
may have been substantially reduced through previous depreciation deductions;
(ii) the sale or transfer of the Property pursuant to foreclosure of a mortgage,
deed of trust, or other financing instrument; (iii) the sale of the Property at
a time when all or part of the net proceeds may have to be used by the Operating
Partnership or the Partnership to meet other obligations; or (iv) under certain
circumstances, the sale or transfer of the Property pursuant to an installment
sale.
A sale by the Partnership of its interest in the Operating Partnership
would be taxed in the manner described above for the sale of all or a portion of
the Property.
31
<PAGE>
TAX CONSIDERATIONS FOR TAX-EXEMPT ENTITIES
Preferred Unitholders which are exempt from federal income tax (including
IRAs and tax-exempt organizations such as trusts that hold assets of employee
benefit or retirement plans) may be subject to federal income tax on their
allocable share of Partnership income to the extent that such income is
'unrelated business taxable income.' A Preferred Unitholder that is otherwise
exempt from tax generally will have unrelated business taxable income with
respect to such Preferred Unitholder's allocable share of Partnership taxable
income in the proportion that the Operating Partnership's 'acquisition
indebtedness,' i.e., the mortgage debt on the Property, bears to the Operating
Partnership's adjusted basis for its Property. Acquisition indebtedness also
could arise from indebtedness incurred directly by a Preferred Unitholder in
connection with its acquisition of Preferred Units or from other indebtedness
incurred by (or allocable to) the Partnership.
The receipt of unrelated business taxable income by a tax-exempt entity
generally has no effect on its status or on the exemption from tax of its other
income. However, for certain types of tax-exempt entities, the receipt of any
unrelated business taxable income may have extremely adverse consequences. For
example, the receipt of any taxable income from an unrelated business by a
charitable remainder trust (defined under Section 664 of the Code) during a
taxable year will result in the taxation of all of the trust's income from all
sources during such year.
An entity that is subject to tax on unrelated business taxable income would
be subject to tax only to the extent that the sum of its unrelated business
taxable income, if any, from the Partnership and all other sources exceeds
$1,000 in any particular year, and would be required to file federal income tax
returns for any taxable year in which it has gross income, included in computing
unrelated business taxable income, in excess of $1,000 (whether or not any tax
is due).
PARTNERSHIP TAX RETURNS AND TAX INFORMATION, AUDITS, INTEREST AND PENALTIES
The Partnership provides annual tax information to the Partners within 90
days after the close of each year.
Any Preferred Unitholder who sells or exchanges a Preferred Unit will be
required to notify the Partnership of such transaction in writing within 30 days
of the transaction (or, if earlier, by January 25 of the calendar year after the
year in which the transaction occurs). The notification is required to include
(i) the names and addresses of the transferor and the transferee; (ii) the
taxpayer identification number of the transferor and, if known, the transferee;
and (iii) the date of the sale or exchange. Any transferor who fails to notify
the Partnership of a sale or exchange may be subject to a penalty for each such
failure. The Partnership will treat any transferor Preferred Unitholder who
provides all of the information requested of the transferor on the certificate
representing the Preferred Units and in the transfer application as having
satisfied this notification requirement.
The tax treatment of the Partnership's income, gain, loss, deductions or
credit will be determined at the partnership level in a unified partnership
proceeding, rather than in separate proceedings with Preferred Unitholders. With
respect to proposed tax deficiency adjustments at the administrative level, in
general, each partner (other than a partner owning less than a 1% profits
interest in a partnership having more than 100 partners) whose name and address
is furnished to the IRS (a 'notice partner') will receive notice of the
commencement of a partnership level audit as well as notice of the final
partnership administrative adjustment. All partners have the right to
participate at their own expense in the partnership level audit as well as
receive notice of the final partnership administrative adjustment. In general,
each partner is free to negotiate his own settlement of partnership items with
the IRS. If the IRS enters into a settlement agreement with any partner, it must
offer the same settlement terms to the other parties who request settlement.
A 'tax matters partner' must be designated by the partnership who may enter
into a settlement on behalf of, and binding on, partners owning less than a 1%
profits interest in partnerships having more than 100 partners. The Partnership
Agreement designates the General Partner as the tax matters partner. Under the
Code, the tax matters partner may not settle on behalf of partners with less
than a 1% profits interest if (i) an aggregate of 5% or more of such partners
designate with the IRS a notice partner to receive notice from the IRS on behalf
of the group or (ii) such partners notify the IRS that the tax matters partner
may not settle on their behalf. Once a determination becomes final, it is
binding on all partners who are represented by the tax matters partner. The tax
matters partner may extend the statute of limitations for assessment of a
deficiency with respect to all partners.
32
<PAGE>
All expenses of the General Partner in performing its duties as tax matters
partner will be paid for by the Partnership.
Because such a proceeding will control the way in which Unitholders treat
Partnership items and the allocation thereof, the chances of an audit occurring
are greater than they were before this proceeding was allowed. Any adverse
determination following an audit of the Partnership's return by a taxing
authority would result in an adjustment of the returns of Unitholders and, as
indicated, they may be precluded from separately litigating a proposed
adjustment to Partnership items. Such an adjustment could also result in an
audit of Preferred Unitholders' own tax returns and adjustments of
non-Partnership, as well as Partnership, income and loss. Audits of other
limited partnerships of which the General Partner or its affiliates are general
partners could result in an audit of the Partnership's (or a Unitholder's)
return. Interest paid on tax deficiencies by non-corporate and certain corporate
Unitholders would not be deductible by them.
Section 6111 of the Code requires a tax shelter organizer to register a
'tax shelter' with the IRS by the first day on which interests in the tax
shelter are offered for sale. The provision's definition of a 'tax shelter'
applies to nearly all real estate partnerships owning leveraged property.
Accordingly, the Partnership is registered as a 'tax shelter' even though it did
not expect to generate substantial tax losses that could be used to shelter the
income of Limited Partners that is not derived from the Partnership.
The Partnership will furnish its tax shelter registration number to
Preferred Unitholders, and any Preferred Unitholder claiming any deduction,
credit or other tax benefit from the Partnership must include such number in his
tax return on Form 8271. ISSUANCE OF A REGISTRATION NUMBER DOES NOT INDICATE
THAT THIS INVESTMENT OR THE CLAIMED TAX BENEFITS HAVE BEEN REVIEWED, EXAMINED OR
APPROVED BY THE IRS. Failure by a Preferred Unitholder to furnish such number on
his individual tax return when required to do so could subject him to a penalty.
Section 6662 of the Code imposes a penalty for the substantial
understatement of income tax for any taxable year. The penalty is equal to 20%
of the amount of underpayment of tax attributable to the understatement. An
understatement is defined as the difference between the tax required to be shown
on the return and the amount actually shown. The penalty is only applicable if
the understatement for a taxable year exceeds the greater of (a) 10% of the tax
required to be shown on the return for the taxable year and (b) $5,000 ($10,000
in the case of a corporation other than an S corporation or personal holding
company). Except in the case of items attributable to a 'tax shelter,' the
amount of understatement is reduced to the extent that the taxpayer had
substantial authority for the position taken in his tax return or there was a
reasonable basis for such position and the taxpayer disclosed the facts relevant
to the position in his tax return or in a statement attached to the return. In
the case of items attributable to 'tax shelters,' however, the taxpayer can
reduce the understatement only by showing that there was substantial authority
for the tax treatment and a reasonable belief that the tax treatment of the item
was more likely than not the proper treatment. It is unclear whether the
Partnership would be considered a 'tax shelter' for these purposes.
TAX ELECTIONS
Pursuant to Sections 734, 743 and 754 of the Code, a partnership may elect
to have the cost basis of its assets adjusted in the event of certain
distributions of partnership property to a partner or sale by a partner of his
interest in the partnership or the death of a partner. The Partnership and the
Operating Partnership have made such an election. The general effect of making
such elections is that transferees of Units are treated, for purposes of
depreciation and taxable gain, as though they had acquired a direct interest in
the assets of the Operating Partnership. The Partnership and the Operating
Partnership would be treated for such purposes, upon certain distributions to
their respective partners, as though they had newly acquired an interest in
their respective assets and therefore acquired a new cost basis for such assets.
STATE AND LOCAL TAXES
In addition to the federal income tax consequences described above,
prospective investors should consider potential state and local tax consequences
of an investment in Preferred Units both in their state of residence and in
Colorado, where the Property is located, and are urged to consult their
individual tax advisors in this regard.
33
<PAGE>
The rules of various states and localities for computing and/or reporting
taxable income differ from (and are less favorable than) the federal income tax
rules.
* * *
The summary of tax consequences set forth above is for general information
only and does not address the circumstance of any particular Preferred
Unitholder. Preferred Unitholders should consult their own tax advisors as to
the specific tax consequences to them of the ownership and disposition of
Preferred Units, including the application of state, local and estate tax laws.
REQUIREMENTS FOR ADOPTION OF THE PROPOSAL
THE PROPOSAL
The Partnership hereby solicits from the Unitholders their written consents
to the Proposal. A vote in favor of the Proposal will constitute a vote in favor
of the creation and issuance of Preferred Units on terms more fully described in
this Proxy Statement and Prospectus.
VOTING
Unitholders at the close of business on October 27, 1997 will be entitled
to one vote for each Unit then held. On October 27, 1997, there were 460 Units
outstanding held by 549 Unitholders, and no person was known by the General
Partner to be the beneficial owner of more than 5% of the Units, nor did any
officer, director or partner of the General Partner own any Units.
The Proposal will be adopted so long as Unitholders holding a majority of
the outstanding Units do not reject the Proposal prior to , 1997. A
Unitholder must vote all of the Units held by him in the same way with respect
to the Proposal. He cannot vote separate Units held by him in the Partnership in
differing ways. A signed Consent which is returned without a vote will be deemed
a 'yes' vote.
Each Unitholder is requested to complete and execute the enclosed Consent
in accordance with the instructions contained therein and to return the Consent
in the enclosed, self-addressed, postage pre-paid envelope within one week after
receipt, but in no event later than , 1997. Such date may be
extended from time to time in the sole discretion of the General Partner until
, 1997. Pending the completion of the solicitation period, except as
required by operation of law, the General Partner will not effect the transfer
of any Units by Limited Partners.
A Consent may only be revoked by delivery to the Partnership of a
later-dated Consent in the form enclosed or a dated and executed revocation that
specifically refers to the Consent to be revoked. To be effective, such
revocation must be received by the Partnership prior to the earlier of (i) the
time that signed, unrevoked Consents voting in favor of the Proposal and
representing a majority of the Units outstanding have been delivered to the
Partnership or (ii) , 1997.
If Unitholders representing a majority of the Units do not reject the
Proposal, the Proposal will be deemed approved and such approval will bind all
Unitholders, including those who vote against such Proposal or abstain from
voting. As the Partnership Agreement precludes Limited Partners from withdrawing
their capital and does not grant appraisal or similar dissenters' rights to
Unitholders, a Unitholder who votes 'no' with respect to the Proposal does not
have either a statutory right or contractual right to elect to be paid the fair
value of his Units.
MISCELLANEOUS
The cost of preparing, assembling and mailing the enclosed form of Consent,
this Proxy Statement and Prospectus and other materials which may be sent to
Unitholders in connection with this solicitation shall be borne by the
Partnership. It is estimated that total expenditures relating to the
solicitation made hereby and the Offering, including legal fees, filing fees
with the Securities and Exchange Commission and printing and mailing fees, will
be approximately $200,000. Certain directors, officers and partners of the
General Partner may solicit the execution and return of Consents by mail,
telephone, telegraph and personal interview. Such directors,
34
<PAGE>
officers and partners will not be additionally compensated, but may be
reimbursed for out-of-pocket expenses in connection with such solicitation.
LEGAL MATTERS
Certain legal matters in respect of the securities offered hereby will be
passed upon for the Partnership by Rosenman & Colin LLP, 575 Madison Avenue, New
York, New York 10022.
EXPERTS
The consolidated financial statements of the Partnership as of December 31,
1996 and for the year period ended December 31, 1996 incorporated by reference
in this Proxy Statement and Prospectus have been audited by Imowitz Koenig &
Co., LLP, and the consolidated financial statements of the Partnership as of
December 31, 1995 and for the year ended December 31, 1995, incorporated by
reference in this Proxy Statement and Prospectus, have been audited by Arthur
Andersen LLP, in each case independent certified public accountants, as
indicated in their reports with respect thereto, and are incorporated by
reference herein in reliance upon the authority of said firms as experts in
accounting and auditing.
35
<PAGE>
APPENDIX A
[FORM OF SUBSCRIPTION CERTIFICATE]
SUBSCRIPTION CERTIFICATE NUMBER:
NUMBER OF RIGHTS:
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
SUBSCRIPTION RIGHT FOR PREFERRED UNITS
This Subscription Certificate represents the number of Rights set forth
above. Each Right held entitles the registered holder thereof (the 'Holder') to
acquire one 12% cumulative, non-compounded preferred unit (the 'Preferred Unit')
representing a limited partnership interest in 1999 Broadway Associates Limited
Partnership (the 'Partnership').
To subscribe for Preferred Units, the Holder must present to the
Partnership, prior to 5:00 p.m., New York City time, on , 1997 (the
'Expiration Date') a properly completed and executed Subscription Certificate
and a check drawn on a bank located in the United States and payable to the
Partnership in the amount of the Subscription Price as calculated in Item C of
this Subscription Certificate. Any Holder exercising his Right may also
subscribe for additional Preferred Units, if any, through exercise of the
Over-Subscription Privilege described in the accompanying Proxy Statement and
Prospectus.
No later than 45 business days following the Expiration Date, the
Partnership will send to each Holder exercising his Rights a certificate
representing the Preferred Units purchased pursuant to the exercise of such
Holder's Rights and the exercise of the Over-Subscription Privilege, if any. A
Holder exercising his Rights will have no right to modify or rescind a purchase
after the Partnership has received payment of the Subscription Price by means of
a check; provided, however, that if Consent, as defined in the accompanying
Proxy Statement and Prospectus, is not received, all subscriptions will be
deemed null and void and all payments received in respect therefor will be
returned to the exercising Holders.
If a Holder does not make payment of the Subscription Price on or prior to
the Expiration Date, the Partnership reserves the right to treat the Holder as
not having exercised his Rights or exercised the Over-Subscription Privilege and
the Guarantor, thereafter, shall have the right to purchase any and all such
Preferred Units as to which the Holder shall not have made payment of the
Subscription Price.
1999 BROADWAY ASSOCIATES
LIMITED PARTNERSHIP
By: WINTHROP FINANCIAL ASSOCIATES,
A LIMITED PARTNERSHIP, General
Partner
By: __________________________________
Any questions regarding this Subscription Certificate and the Offer made hereby
and in the accompanying Proxy Statement and Prospectus may be directed to the
Partnership at (617) 234-3000.
Expiration Date: ,
1997
A-1
<PAGE>
PLEASE COMPLETE ALL APPLICABLE INFORMATION
BY MAIL: BY OVERNIGHT COURIER: BY HAND:
TO SUBSCRIBE: I hereby irrevocably subscribe for the dollar amount of Preferred
Units indicated in A and B below upon the terms and conditions specified in the
Proxy Statement and Prospectus related hereto, receipt of which is acknowledged.
I enclose a check for the Subscription Price for the number of Preferred Units
indicated in A together with the Subscription Price for the number of Preferred
Units indicated in B.
Please check (X) below:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
/ / A. Basic __________________ = ________________ .000 x $23,250 = $
Subscription (Rights Exercised) (Preferred Units
Rights Requested)
/ / B. Over- ________________ .000 x $23,250 = $
Subscription
Privilege(1)
/ / C. Amount of Check Enclosed (Total of A and B). = $
</TABLE>
MAKE CHECK PAYABLE TO '1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP'
<TABLE>
<S> <C> <C>
Signature of Subscriber(s) Please provide your Day ( )
telephone number Evening ( )
</TABLE>
IMPORTANT: PREFERRED UNITS WILL ONLY BE ISSUED TO HOLDERS WHO COMPLETE THIS
SUBSCRIPTION CERTIFICATE IN THE NAME OF SUCH HOLDER. SUBSCRIPTION
CERTIFICATES COMPLETED BY ASSIGNEES OF A HOLDER WILL NOT BE ACCEPTED.
- ------------------
(1) Any Over-Subscription Privilege may only be exercised with respect to whole
(and not fractional) Preferred Units.
A-2
<PAGE>
APPENDIX B
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
FORM OF CONSENT
The undersigned, a holder of limited partnership interests (the
'Interests') in 1999 Broadway Associates Limited Partnership, a Delaware limited
partnership (the 'Partnership'), does hereby vote as follows, with respect to
all Interests in the Partnership owned by the undersigned for the proposal more
fully described in the accompanying Proxy Statement and Prospectus (the
'Prospectus'), dated , 1997, receipt of which is hereby
acknowledged.
APPROVAL of the creation and issuance of a class of 12% cumulative preferred
limited partnership interests and the resultant amendment to the
Partnership's Amended and Restated Partnership Agreement in the form filed
as an exhibit to the Proxy and Registration Statement of which the
Prospectus is a part.
/ / FOR / / AGAINST / / ABSTAIN
THIS CONSENT IS SOLICITED BY 1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP.
WHEN THIS PROXY IS PROPERLY EXECUTED, THE INTERESTS REPRESENTED HEREBY WILL BE
VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE ON THIS CARD, THIS CONSENT WILL
BE VOTED FOR THE PROPOSAL.
Dated:__________________________, 1997
______________________________________
______________________________________
Signature
______________________________________
Signature (if held jointly)
______________________________________
______________________________________
Please sign exactly as name appears
hereon. When Interests are held by
joint tenants, both should sign. When
signing as an attorney, as executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in name by
President or other authorized
officer. If a partnership, please
sign in partnership name by
authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS CONSENT PROMPTLY USING THE ENCLOSED
PRE-PAID ENVELOPE TO: The Partnership at Five Cambridge Center, 9th Floor,
Cambridge, Massachusetts 02142-1493. If you have any questions, please call the
Partnership's Investor Relations Department at (617) 234-3000.
B-1
<PAGE>
- ------------------------------------------------------
------------------------------------------------------
- ------------------------------------------------------
------------------------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT
AND PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE PARTNERSHIP. THIS PROXY
STATEMENT AND PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO
ANY PERSON WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS PROXY STATEMENT AND PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE PARTNERSHIP SINCE THE DATE HEREOF OR THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE. HOWEVER, IN THE EVENT OF ANY MATERIAL CHANGE DURING THE PERIOD WHEN THIS
PROXY STATEMENT AND PROSPECTUS IS REQUIRED TO BE DELIVERED, THE PROXY STATEMENT
AND PROSPECTUS WILL BE AMENDED OR SUPPLEMENTED ACCORDINGLY.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.......................... 2
Incorporation of Certain Documents by
Reference.................................... 2
Summary........................................ 3
The Partnership................................ 7
The Reorganization............................. 7
Investment Considerations...................... 7
Description of the Proposal.................... 11
The Offering................................... 12
The Property................................... 15
Use of Proceeds................................ 15
Ratio of Earnings To Fixed Charges and
Preferred Unit Distributions................. 16
Description of Securities...................... 18
Description of Partnership Agreement........... 21
Certain Income Tax Considerations.............. 25
Requirements for Adoption of the Proposal...... 34
Legal Matters.................................. 35
Experts........................................ 35
</TABLE>
1999 BROADWAY ASSOCIATES
LIMITED PARTNERSHIP
460 PREFERRED UNITS
-------------------------
PROXY STATEMENT
AND PROSPECTUS
-------------------------
OCTOBER _______, 1997
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses of issuance and distribution of the securities are to be paid
by the Partnership. The following itemized list is an estimate of the expenses:
<TABLE>
<S> <C>
SEC Registration Fee.......................................... $ 3,688
Legal fees and expenses....................................... 120,000
Accounting fees and expenses.................................. 15,000
Printing fees and expenses.................................... 25,000
Blue Sky fees and expenses.................................... 30,000
Miscellaneous................................................. 6,312
--------
Total....................................................... $200,000
--------
--------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Partnership has agreed to indemnify and hold harmless the General
Partner and each person performing services on behalf of the Partnership who (a)
directly or indirectly controls, is controlled by, or is under common control
with, the General Partner, (b) who owns or controls 10% or more of the
outstanding voting interest in the General Partner, and (c) any officer,
director or partner or wholly-owned subsidiary of any entity described in (a) or
(b), against any loss, damage, liability, cost or expense (including reasonable
attorneys' fees) incurred by them in connection with the Partnership, provided
that such loss, damage, liability, cost or expense was not the result of the
negligence or misconduct of any such person. Any such indemnity will be paid
from, and only to the extent of, available Partnership assets and no partners
shall have any personal liability on account thereof. Notwithstanding this
provision, however, neither the General Partner nor any other entity or
individual entitled to indemnification pursuant to the Partnership Agreement
shall be indemnified for any loss, damage or cost resulting from the violation
of any Federal or state securities laws unless (i) there has been a successful
adjudication on the merits of each count involving such securities law
violations, (ii) such claims have been dismissed with prejudice on the merits by
a court of competent jurisdiction or (iii) a court of competent jurisdiction
approves a settlement of such claims. In any claim for indemnification for
Federal or state securities law violations, the party seeking indemnification
shall place before the court the position of the Securities and Exchange
Commission and the Massachusetts Securities Division with respect to the issue
of indemnification for securities law violations.
ITEM 16. EXHIBITS
The following documents are filed as a part of this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- --------- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
4.1* -- Second Amended and Restated Partnership Agreement of the Registrant
5* -- Opinion of Rosenman & Colin LLP
8* -- Opinion of Rosenman & Colin LLP as to certain federal income tax matters
23.1((1)) -- Consent of Accountants
23.2* -- Consent of Rosenman & Colin LLP (included in Exhibits 5 and 8)
24((1)) -- Power of Attorney
</TABLE>
- ------------------
* Filed herewith
((1)) Previously filed
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<PAGE>
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by
reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act, and will be governed by the final
adjudication of such issue.
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<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3, HAS DULY CAUSED THIS PROXY STATEMENT AND
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE COUNTY OF NEW YORK AND STATE OF NEW YORK ON OCTOBER 28,
1997.
1999 BROADWAY ASSOCIATES LIMITED
PARTNERSHIP
By: WINTHROP FINANCIAL ASSOCIATES,
A LIMITED PARTNERSHIP,
General Partner
By /s/
--------------------------------
Michael L. Ashner
Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS PROXY
STATEMENT AND REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN
THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ---------------------------------------------- --------------------
<S> <C> <C>
/s/ Chief Executive Officer and Director of the October 28, 1997
- ------------------------------------------ general partner of the Registrant
Michael L. Ashner
/s/ President & Chief Operating Officer of the October 28, 1997
- ------------------------------------------ general partner of the Registrant
Richard J. McCready
/s/ Chief Financial Officer of the general partner October 28, 1997
- ------------------------------------------ of the Registrant
Edward V. Williams
/s/ Senior Vice President of the general partner October 28, 1997
- ------------------------------------------ of the Registrant
Peter Braverman
</TABLE>
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<PAGE>
EXHIBIT 4.1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECOND AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF 1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
SECOND AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
---------------------------------
THE LIMITED PARTNER UNITS IN THIS PARTNERSHIP ARE BEING SOLD WITHOUT
REGISTRATION UNDER THE SECURITIES LAWS OF CERTAIN STATES, IN RELIANCE UPON
EXEMPTIONS THEREFROM. CONSEQUENTLY, LIMITED PARTNER UNITS IN THE PARTNERSHIP MAY
NOT BE SOLD OR TRANSFERRED WITHOUT REGISTRATION OF SUCH UNITS UNDER SUCH
SECURITIES LAWS UNLESS SUCH UNITS ARE SOLD IN A TRANSACTION WHICH IS EXEMPT FROM
REGISTRATION THEREUNDER. ADDITIONAL LIMITATIONS ON TRANSFER OF THE LIMITED
PARTNER UNITS ARE CONTAINED HEREIN.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I
Defined Terms........................................................................................... 1
ARTICLE II
CONTINUATION, PURPOSE, AND TERM
Section 2.1 Continuation....................................................................................... 5
Section 2.2 Name, Principal Office, Registered Office and Registered Agent..................................... 5
Section 2.3 Purpose............................................................................................ 5
Section 2.4 Authorized Acts.................................................................................... 5
Section 2.5 Term and Dissolution............................................................................... 6
ARTICLE III
PARTNERS; CAPITAL
Section 3.1 General Partner.................................................................................... 7
Section 3.2 Limited Partners................................................................................... 7
Section 3.3 Partnership Capital................................................................................ 7
Section 3.4 Withdrawal of Capital.............................................................................. 7
Section 3.5 Liability of Limited Partners...................................................................... 7
Section 3.6 Limited Partners................................................................................... 7
ARTICLE IV
CAPITAL CONTRIBUTIONS OF LIMITED PARTNERS
Section 4.1 Payments........................................................................................... 8
Section 4.2 Additional Capital Contributions by Limited Partners and Admission of Additional Limited
Partners........................................................................................... 8
Section 4.3 Fees and Expense Reimbursements Paid to Certain Entities........................................... 8
ARTICLE V
RIGHTS, POWERS AND DUTIES OF THE GENERAL PARTNER
Section 5.1 Business Management and Control..................................................................... 9
Section 5.2 Duties and Obligations.............................................................................. 9
Section 5.3 Indemnification..................................................................................... 9
Section 5.4 Liability of the General Partner to Limited Partners................................................ 10
Section 5.5 Limited Partners' Right to Restrict General Partner's Authority..................................... 10
Section 5.6 Other Activities.................................................................................... 11
ARTICLE VI
RETIREMENT OF A GENERAL PARTNER
Section 6.1 Retirement; Dissolution; Continuation............................................................... 11
ARTICLE VII
TRANSFERABILITY OF LIMITED PARTNERSHIP INTERESTS
Section 7.1 Limitations and Restrictions....................................................................... 12
Section 7.2 Assignment Effective at Death; Death or Incapacity................................................. 12
Section 7.3 Conveyance of Partnership Interests................................................................ 13
Section 7.4 Lost Investor Certificates......................................................................... 14
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE VIII
LOANS
Section 8.1 In General......................................................................................... 14
ARTICLE IX
PROFITS AND LOSSES; DISTRIBUTIONS
Section 9.1 Profits and Losses................................................................................. 14
Section 9.2 Distributions Prior to Dissolution................................................................. 19
Section 9.3 Distributions On Dissolution....................................................................... 21
Section 9.4 Changes in Percentage Interests.................................................................... 21
ARTICLE X
BOOKS AND RECORDS, ACCOUNTING, TAX ELECTIONS, ETC.
Section 10.1 Books and Records.................................................................................. 21
Section 10.2 Bank Accounts...................................................................................... 22
Section 10.3 Accountants........................................................................................ 22
Section 10.4 Reports to Limited Partners........................................................................ 22
Section 10.5 Tax Elections...................................................................................... 22
Section 10.6 Special Basis Adjustments.......................................................................... 22
Section 10.7 Fiscal Year and Accounting Method.................................................................. 22
Section 10.8 Tax Matters Partner................................................................................ 23
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 Restrictions on Transfer........................................................................... 23
Section 11.2 Appointment of General Partner as Attorney in-Fact................................................. 23
Section 11.3 Notices............................................................................................ 24
Section 11.4 Word Meanings...................................................................................... 24
Section 11.5 Binding Provisions................................................................................. 24
Section 11.6 Applicable Law..................................................................................... 24
Section 11.7 Counterparts....................................................................................... 24
Section 11.8 Survival of Representations and Warranties......................................................... 25
Section 11.9 Separability of Provisions......................................................................... 25
Section 11.10 Investment Representation.......................................................................... 25
Section 11.11 Paragraph Titles................................................................................... 25
Section 11.12 Meeting of Partners................................................................................ 25
Section 11.13 Amendment Procedure................................................................................ 25
Section 11.14 Partition.......................................................................................... 26
</TABLE>
<PAGE>
1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
SECOND AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
Second Amended and Restated Agreement of Limited Partnership (the
'Agreement') of 1999 Broadway Associates Limited Partnership, a Delaware limited
partnership (the 'Partnership'), dated as of November , 1997, by and among
Winthrop Financial Associates, A Limited Partnership, a Maryland limited
partnership, as General Partner, those persons named on the Schedule as
Unitholders and those persons named on the Schedule as Preferred Unitholders.
WHEREAS, the Partnership, pursuant to the Registration Statement has
offered subscription rights to purchase an aggregate of 460 Preferred Units on
terms more fully described in the Registration Statement and herein; and
WHEREAS, the General Partner wishes to amend and restate the First Amended
and Restated Limited Partnership Agreement, dated as of January 5, 1989, as
amended thereafter (the 'Prior Agreement'), to effect the issuance of the
Preferred Units and the admission of the Preferred Unitholders to the
Partnership.
NOW, THEREFORE, the Prior Agreement is hereby amended to admit the persons
listed on the Schedule as Preferred Unitholders and to amend and restate all of
the provisions thereof so that the Prior Agreement, as amended and restated
hereby, reads in its entirety as follows:
ARTICLE I
DEFINED TERMS
The capitalized terms used in this Agreement shall have the meanings
specified below.
'Accountants' means the firm of certified public accountants engaged by the
General Partner on behalf of the Partnership.
'Admission Date' means, as to each Limited Partner, the date on which his
admission to the Partnership in accordance with Section 3.6 is duly recorded on
the records of the Partnership.
'Affiliate' or 'Affiliated Person' means any (i) General Partner, (ii)
member of the Immediate Family of any General Partner; (iii) legal
representative, successor, or assignee of any Person referred to in the
preceding clauses (i) and (ii); (iv) trustee of a trust for the benefit of any
Person referred to in the preceding clauses (i) through (iii); (v) Entity which
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, any Person referred to in the
preceding clauses (i) through (iv); or (vi) Person who is an officer, director,
trustee, employee, stockholder (10% or more), or partner of any Person referred
to in the preceding clauses (i) through (v). For purposes of this definition,
the term 'control' means the ownership of 10% or more of the beneficial interest
or the voting power of the appropriate Entity.
'Agreement' means this Second Amended and Restated Limited Partnership
Agreement, as it may be further amended from time to time.
'Annual Return' has the meaning set forth in Section 9.2.D.
'Capital Account' means, as to any Partner or class of Partners, the
Capital Contribution actually paid to the Partnership by the Partner or class
(reduced by selling commissions, if any) plus Net Income (or item thereof) and
Gain from a Capital Transaction allocated to the Partner or class, minus the sum
of (i) all Net Loss and deduction (or item thereof) and Loss from a Capital
Transaction allocated to the Partner or class, (ii) the cash and the fair market
value of property distributed to the Partner or class (net of any liabilities
assumed by such Partner or class or to which such distributed property is
subject), and (iii) the Partners' or class' distributive share of expenditures
of the Partnership described in Code Section 705(a)(2)(B) (relating to
expenditures which are neither deductible nor properly chargeable to capital,
such as unamortized organization expenses or losses disallowed under the
related-party loss disallowance rules of the Code). In addition, the capital
accounts of all Partners shall be determined and maintained throughout the term
of the partnership in accordance with the capital accounting rules of Income Tax
Regulation Section1.704-1(b)(2)(iv). In the event that any Interest is
transferred in
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<PAGE>
accordance with the terms of this Agreement, the Capital Account of the
transferee shall be equal to the Capital Account of the transferor at the time
of the transfer of the Interest.
'Capital Contribution' means with respect to (i) each Unitholder, $100,000
per Unit for Cash Method Unitholders and $101,789 per Unit for Installment
Method Unitholders, (ii) Preferred Unitholders, $23,250 per Preferred Unit, and
(iii) the General Partner, the aggregate of the amount of cash heretofore
contributed by the General Partner.
'Capital Proceeds' means the net cash proceeds received by the Partnership
from a Capital Transaction after payment of all related expenses but prior to
payment of debts and obligations of the Partnership, or funding of reserves.
'Capital Transaction' means any transaction the proceeds of which do not
constitute Cash Flow, including (i) a Capital Transaction as described in the
Operating Partnership Agreement and (ii) the financing, sale, exchange, or other
disposition of interest of the Partnership in the Operating Partnership.
'Cash Flow' shall have the meaning provided in Section 9.2.A.
'Cash Method Unitholders' means those Unitholders who elected to pay their
Capital Contributions in a single payment of $100,000 per Unit.
'Certificate' means the Certificate of Limited Partnership establishing the
Partnership, as filed in the office of the Secretary of State of Delaware on
January 10, 1989, as amended and as it may be amended from time to time in the
future in accordance with the terms of this Agreement and the Uniform Act.
'Code' means the Internal Revenue Code of 1986, as amended.
'Consent of the Limited Partners' means the written consent or approval of
Limited Partners owning in the aggregate Units and Preferred Units representing
more than 50% of the votes entitled to be cast on any action, which Consent
shall be obtained prior to the taking of any action for which it is required by
this Agreement. Each Unit shall entitle the holder thereof to one vote.
Preferred Units will not entitle the holders thereof to any voting rights;
provided, however, that Preferred Units will entitle the holders thereof, voting
together with the Unitholders as a single class, to two votes per Preferred Unit
with respect to any decision to approve or disapprove the sale of all or
substantially all of the assets of the Partnership or the Operating Partnership
in a single or related series of transactions. Consent shall be deemed to be
granted if the General Partner makes a written request for the consent of the
Limited Partners to a particular action, unless the General Partner receives
written refusals to consent within 30 days of the request from Limited Partners
owning in the aggregate Units and Preferred Units representing more than 50% of
the votes entitled to be cast with respect to such action.
'Entity' means any general partnership, limited partnership, corporation,
joint venture, trust, business trust, cooperative, or association.
'Event of Bankruptcy' means as to a General Partner:
(a) its filing a petition commencing a case as a debtor under the
Bankruptcy Code (as now or in the future amended), or the commencement of
an involuntary case against it under the Bankruptcy Code and the earlier of
the entry of an order for relief or the appointment of an interim trustee
to take possession of its estate and/or to operate any of its business;
(b) its making a general assignment for the benefit of its creditors;
(c) its consenting to the appointment of a receiver for all or a
substantial part of its property;
(d) the entry of a court order appointing a receiver or trustee for
all or a substantial part of its property without its consent; or
(e) the assumption of custody or sequestration by a court of competent
jurisdiction of all or substantially all of its property.
'Gain or Loss from a Capital Transaction' means the gain or loss recognized
by the Partnership as a result of a Capital Transaction as determined for
Federal income tax purposes by the Accountants, but without regard to any
adjustments to basis pursuant to Sections 734 and 743 of the Code.
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<PAGE>
'General Partner' or 'General Partners' means any Person designated as a
General Partner in the Schedule or any Person who becomes a General Partner as
provided in this Agreement, including a substitute General Partner, in that
Person's capacity as a General Partner.
'Immediate Family' means, with respect to any Person, his spouse, parents,
parents-in-law, descendants, nephews, nieces, brothers, sisters,
brothers-in-law, sisters-in-law, children-in-law, and grandchildren-in-law.
'Installment Method Unitholders' means those Unitholders who elected to pay
their Capital Contributions in installments pursuant to Section 4.1.A of the
Prior Agreement.
'Interest' or 'Partnership Interest' means the ownership interest of a
Partner in the Partnership at any particular time, including the right of such
Partner to any and all benefits to which such Partner may be entitled as
provided in this Agreement, together with the obligations of such Partner to
comply with all the terms and provisions of this Agreement.
'Invested Capital' means, for each Limited Partner at any point in time,
the amount by which his Capital Contribution exceeds the aggregate amount
previously distributed to such Limited Partner pursuant to Article IX hereof.
'Investor Certificate' means the certificate, in the form of Exhibits A
and/or B to this Agreement, issued to each Unitholder and Preferred Unitholder,
as applicable; it being understood that such Investor Certificate and the
Interest it represents shall for all purposes be considered a 'Certificated
Security' for purposes of Article VIII of the Uniform Commercial Code of the
State of Delaware.
'Limited Partner' or 'Limited Partners' means the Unitholders and the
Preferred Unitholders.
'Management Agreement' means the Amended and Restated Commercial Management
Agreement, dated as of January 1, 1990, and the First Amendment thereto, dated
as of October 22, 1991, between Winthrop Management and the Operating
Partnership.
'Minimum Gain' means the excess of the outstanding principal balance of the
non-recourse debt secured by the Property (excluding any portion of the
principal balance which would not be treated as an amount realized under Section
1001 of the Code and Income Tax Regulation 1.1001-2(a) if the debt were
foreclosed upon) over the adjusted basis of the Property for Federal income tax
purposes.
'Mortgage Documents' means the mortgage, security agreement and financing
statements and assignments of leases, rents, issues and profits, and any other
agreements entered into by the Mortgage Lender and the Partnership in connection
with the Mortgage Loan, and shall include, where the context admits, any
mortgage or deed of trust to the extent secured by the Property, security
agreement, modification agreement, allonge, or financing statement and the
promissory note or other credit instrument evidencing the debt thereunder and
any other instrument in connection with the Mortgage Loan which is binding on
the Partnership. If the Mortgage Loan is replaced by any subsequent mortgage or
mortgages, the term Mortgage Documents shall refer to any subsequent mortgage or
mortgages.
'Mortgage Lender' means First Interstate Structures, Inc., a subsidiary of
First Interstate Bank, or other mortgage lender as described in the Registration
Statement.
'Mortgage Loan' means the loan made by the Mortgage Lender to the
Partnership in the amount of $56,000,000 on the terms described in the Mortgage
Documents.
'Net Income or Net Loss' for any fiscal year means the net income or net
loss of the Partnership for the Year as determined for Federal income tax
purposes by the Accountants (a) excluding Gain or Loss from a Capital
Transaction; (b) determined without regard to any adjustments to basis pursuant
to Section 743 of the Code; (c) if, and to the extent that, assets of the
Partnership have been reflected in the Capital Accounts of the Partners and on
the books of the Partnership at their respective fair market values rather than
their adjusted bases for tax purposes, by computing items of gain, loss, and
deduction based upon such assets' values as reflected on the Partnership's
books; (d) by including as an item of gross income any tax-exempt income
received by the Partnership; and (e) by treating as a deductible expense any
expenditure of the Partnership described in Section 705(a)(2)(B) of the Code
(amounts paid or incurred to organize the Partnership (unless an election is
made pursuant to Code Section 709(b)) or to promote the sale of interests in the
Partnership and deductions for
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<PAGE>
any losses incurred in connection with the sale or exchange of Partnership
property disallowed pursuant to Section 267(a)(1) or Section 707(b) of the Code
shall be treated as expenditures described in Section 705(a)(2)(B) of the Code).
'Non-Terminating Capital Transaction' means a Capital Transaction which
does not result in liquidation, dissolution, or termination of the Partnership.
'Operating Partnership' means 1999 Broadway Partnership, a Delaware general
partnership.
'Operating Partnership Agreement' means the partnership agreement of the
Operating Partnership, as amended from time to time.
'Other Equity Interests' means equity interests in the Partnership, other
than Units or Preferred Units, which may be issued by the Partnership from time
to time, having such rights to distributions of Cash Flow, Net Profits and Net
Losses, Sale Proceeds, Refinancing Proceeds and net liquidation proceeds as the
General Partner may determine, which shall be issued only with the Consent of
the Limited Partners. Other Equity Interests may take the form of convertible
debt instruments issued in connection with loans made to the Partnership by the
Partners, including the General Partner, as contemplated in Section 8.1.
'Partner' means any General Partner or Limited Partner.
'Partnership' means the limited partnership governed by this Agreement as
constituted and amended from time to time.
'Partnership Administration and Investor Service Fee' means the fee
described in Section 4.3.A.
'Percentage Interest' means, as to a Partner, the applicable percentage
specified in the Schedule. A Preferred Unitholder, as such, shall not be
assigned any Percentage Interest.
'Person' means any individual or Entity, and his heirs, executors,
administrators, legal representatives, successors, and assigns where the context
requires. Unless the context otherwise requires, the singular shall include the
plural, and the masculine gender shall include the feminine and the neuter and
vice versa.
'Preferred Invested Capital' means, as to each Preferred Unitholder,
$23,250 per Preferred Unit, reduced (but not below zero) by the amount of any
prior distribution to such Preferred Unitholder under Section 9.2.D(i)(B).
'Preferred Unitholder' means any Person designated as such in the Schedule
or any Person who becomes a Preferred Unitholder as provided in this Agreement,
including a substitute Preferred Unitholder, in that Person's capacity as a
Preferred Unitholder.
'Preferred Unit' means an interest in the Partnership held by a Preferred
Unitholder, as set forth on the Schedule.
'Property' means the office building located at 1999 Broadway, Denver,
Colorado, the parking structure located at 2099 Welton, Denver, Colorado, and
the parcels of land upon which such properties are situated.
'Property Expenses' means all the costs and expenses of any type incurred
incident to the ownership and operation of the Property, including, without
limitation, taxes, payments of principal and interest on the Mortgage Loan or
any other Partnership loans, maintenance, repairs and capital improvements to
the Property, the Management Fee, and the Partnership Administrative and
Investor Services Fee, and the funding of any reserves, deposits, escrow
accounts, or fees required to be maintained or paid by the Mortgage Documents.
Property Expenses shall be determined on an accrual basis of accounting
regardless of the basis upon which the books of the Partnership are kept for
other purposes.
'Registration Statement' means the Partnership's proxy and registration
statement on Form S-3 (SEC Registration No. 333-36471) declared effective in
October, 1997.
'Retirement' (including Retire, Retired, and Retiring) means, as to a
General Partner, and shall be deemed to have occurred automatically upon the
occurrence of, an Event of Bankruptcy, dissolution, or voluntary or involuntary
withdrawal of a General Partner for any reason.
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<PAGE>
'Schedule' means the Schedule of Partners, as amended from time to time,
maintained by the Partnership.
'State' means the State of Delaware,
'Substitute Limited Partner' means any Person who is admitted to the
Partnership as a Limited Partner under the provisions of Article VII.
'Terminating Capital Transaction' means a Capital Transaction which results
in the termination of the Partnership. The term shall also include the receipt
and collection of notes, if any, and payments thereon or any other consideration
received or to be received by the Partnership upon such a Transaction during the
winding up of Partnership affairs.
'Uniform Act' means the Delaware Revised Uniform Limited Partnership Act, 6
Del. C. 17-101 et seq., as amended or modified from time to time.
'Unit' means an interest in the Partnership held by a Unitholder as set
forth on the Schedule.
'Unitholder' means any Person designated as such in the Schedule or any
Person who becomes a Unitholder as provided in this Agreement, including a
substitute Unitholder, in that Person's capacity as a Unitholder.
'WFA' means Winthrop Financial Associates, A Limited Partnership, a
Maryland limited partnership, and is the General Partner of the Partnership.
ARTICLE II
CONTINUATION, PURPOSE, AND TERM
Section 2.1 Continuation.
The parties hereto hereby agree to continue the limited partnership known
as 1999 Broadway Associates Limited Partnership as a limited partnership under
the provisions of the Uniform Act.
Section 2.2 Name, Principal Office, Registered Office and Registered
Agent.
The Partnership shall continue to be conducted under the name of 1999
Broadway Associates Limited Partnership. The principal office of the Partnership
is Five Cambridge Center, Cambridge, MA 02142-1493. The General Partner may at
any time change the location of the principal office and shall give due notice
of any such change to the Limited Partners. The address of the Registered Office
of the Partnership in the State of Delaware is c/o The Prentice-Hall
Corporation, 32 Loockerman Square, Suite L-100, Dover, Delaware 19901. The
Registered Agent for service of process in the State of Delaware is The
Prentice-Hall Corporation, 32 Loockerman Square, Suite L-100, Dover, Delaware
19901.
Section 2.3 Purpose.
The purpose of the Partnership is to acquire an interest as a general
partner in the Operating Partnership; to hold, own, maintain, sell, transfer,
convey, exchange, otherwise dispose of or deal in this partnership interest; to
exercise all of the powers of a general partner in the Operating Partnership;
and further to invest the assets of the Partnership in interim short-term
investments as provided elsewhere herein. The Partnership shall not engage in
any other business or activity, except that it may engage in any business or
activity that is (i) within the scope of the purposes of the Operating
Partnership or (ii) necessary, advisable or convenient to the business of the
Partnership.
Section 2.4 Authorized Acts.
In furtherance of its purposes, but subject to all other provisions of this
Agreement, the Partnership by its General Partner is hereby authorized:
(i) to acquire by purchase, lease, or otherwise, any real or personal
property necessary, convenient, or incidental to the accomplishment of the
purpose of the Partnership;
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<PAGE>
(ii) to invest in interest-bearing accounts and short-term
investments, including obligations of Federal, state and local governments
and their agencies, mutual funds, commercial paper, and certificates of
deposit of commercial banks, savings banks or savings and loan
associations;
(iii) to borrow money or establish a line of credit on the general
credit of the Partnership or secure any such debt by mortgage, pledge or
other lien on any of the assets of the Partnership, and issue evidences of
indebtedness in furtherance of any of the purposes of the Partnership,
including without limitation, the Mortgage Loan, and to take any action and
enter into any agreement necessary or advisable in connection with any such
borrowing;
(iv) to bring and defend actions at law or suits in equity;
(v) to purchase, cancel or otherwise retire or dispose of the Units or
Preferred Units of any Partner according to the express provisions of this
Agreement;
(vi) to execute and deliver all documents for the sale of Units or
Preferred Units, including the Registration Statement and filings under the
Securities Act of 1933 and any other Federal and state laws relating to the
sale of securities;
(vii) to execute any Agreement and to enter into any transaction
described in the Registration Statement;
(viii) to take any action necessary to allow the amendment of the
Operating Partnership Agreement and to give its consent as a general
partner of the Operating Partnership;
(ix) to act in all ways as a general partner of the Operating
Partnership and to take any action contemplated, authorized or necessary to
be taken by general partners under the Uniform Act and the Operating
Partnership Agreement, including the execution of a mortgage loan and
acquisition documents on behalf of the Operating Partnership;
(x) to enter into any kind of activity and to carry out contracts of
any kind necessary to, or in connection with, or incidental to, the
purposes of the Partnership, so long as the activities and contracts may be
lawfully entered into or carried on by a partnership under the laws of the
State;
(xi) to establish any reserves for contingencies of the Partnership
and for working capital and other requirements of the Partnership, and to
release funds from these reserves to the extent that the General Partner no
longer regards such reserves as reasonably necessary in the efficient
conduct of the affairs of the Partnership;
(xii) to cause the Operating Partnership to employ and supervise the
Management Agent (as defined in the Operating Partnership Agreement),
including any Affiliate of a Partner, to manage the Property;
(xiii) to employ such other management or service personnel as may
from time to time be required to carry on the business of the Partnership;
and
(xiv) to cause the Operating Partnership to obtain and keep in force
during the terms of the Partnership and the Operating Partnership such fire
and extended coverage, workmen's compensation, liability and other
insurance in favor of the Partnership and the Operating Partnership as the
General Partner deems appropriate.
Section 2.5 Term and Dissolution.
The Partnership shall continue in effect until December 31, 2038, except
that the Partnership shall be dissolved prior to that date if any of the
following events occurs:
(i) the sale or other disposition of all or substantially all the
assets of the Partnership unless the General Partner, with the Consent of
the Limited Partners, elects to continue the Partnership business solely
for the purpose of receiving and collecting a note or notes or any other
consideration to be received in exchange for the assets of the Partnership;
(ii) the Retirement of the General Partner, if the Partnership is not
continued as provided in Section 6.1; or
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(iii) the election to dissolve the Partnership made in writing by the
General Partner with the Consent of the Limited Partners.
Upon completion of winding up of the affairs of the Partnership, the
General Partner (or its trustees, receivers, successors, or legal
representatives) shall, unless the Partnership is continued pursuant to Sections
5.1.C or 6.1, liquidate the Partnership assets and distribute the proceeds in
accordance with Section 9.3. Notwithstanding the foregoing, if the General
Partner determines that an immediate sale of part or all of the Partnership's
assets would cause undue loss to the Partners, the General Partner may either
(i) defer liquidation of, and withhold from distribution for a reasonable time,
any assets of the Partnership except those necessary to satisfy the
Partnership's debts and obligations; or (ii) distribute the assets to the
Partners in kind.
ARTICLE III
PARTNERS; CAPITAL
Section 3.1 General Partner.
A. The General Partner is WFA and its Capital Contribution is set forth in
the Schedule.
B. The General Partner shall have the right to admit any Person as an
additional or substitute General Partner with the Consent of the Limited
Partners. Upon an assignment of the General Partner's Interest in the
Partnership, the assignee shall become an additional or substitute General
Partner and shall have the right to exercise any rights or powers of a General
Partner. The Limited Partners recognize that this procedure is necessary for the
orderly and efficient operation of the business of the Partnership.
Section 3.2 Limited Partners.
The Limited Partners are the Limited Partners designated as Limited
Partners on the Schedule. The names, addresses, Capital Contributions, Units,
Percentage Interests and Preferred Units of the Limited Partners are set forth
in the Schedule.
Section 3.3 Partnership Capital.
The capital of the Partnership shall be the aggregate amount of cash and
property contributed by the General Partner and the Limited Partners as set
forth in the Schedule. No interest shall be paid by the Partnership on any
Capital Contribution.
Section 3.4 Withdrawal of Capital.
No Partner shall have the right to withdraw any part of his Capital
Contribution from the Partnership until December 31, 2038. No Partner shall have
the right to demand and receive property of the Partnership, instead of cash, in
return of his Capital Contribution except as specifically provided in this
Agreement. All rights to withdraw a Partner's Capital Contribution shall be
subject to the provisions of the Uniform Act. No General Partner shall be liable
for the return of any Partner's capital.
Section 3.5 Liability of Limited Partners.
No Limited Partner shall be liable for any debts, liabilities, contracts or
obligations of the Partnership.
Section 3.6 Limited Partners.
A. Each Limited Partner shall be admitted to the Partnership as of the date
on which an amendment is made to the Schedule listing his name, address, Capital
Contribution, Units, Percentage Interest or Preferred Units.
B. Each Limited Partner agrees, by the execution of this Agreement or as a
result of being admitted to the Partnership as a Substitute Limited Partner
pursuant to Article VII, and as a condition of receiving any interest in the
Partnership property, to be bound by the terms and provisions of this Agreement
and any other documents required in connection therewith. Each Limited Partner
also agrees to accept any other terms and conditions set forth in writing at the
time of admission which are determined to be reasonably necessary by the General
Partner.
C. Upon the admission of each Limited Partner, the Schedule shall be
amended to reflect his name, address and Capital Contribution. Each Limited
Partner may become signatory hereto by his attorney-in-fact signing a
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conformed copy of this Agreement pursuant to the power of attorney contained in
his subscription documents. Each Limited Partner shall thereupon be deemed to
have adopted and to have agreed to be bound by all the provisions of this
Agreement; provided, however, that no such signed copy shall be binding until it
has been signed by the General Partner. The Partnership shall thereupon issue to
each Limited Partner an Investor Certificate as evidence of his Interest in the
Partnership. Unless otherwise determined by the General Partner, all Investor
Certificates shall be held by the Partnership on behalf of the Limited Partners.
D. To the extent that the Partnership makes any payment or payments which
are treated as syndication expenses under Section 709 of the Code and are not
amortized, such payment or payments shall be charged, at that time, against the
Limited Partners' Capital Accounts. If at any time thereafter, the Partnership
takes a deduction for Federal income tax purposes which is attributable to such
payment or payments (or a portion thereof), such deduction shall be allocated
solely to the Limited Partners, but no adjustment of the Limited Partners'
Capital Accounts shall be made at such time. All amounts allocated under this
Section 3.6.D to the Limited Partners as a group shall be allocated among them
pro rata based upon the Percentage Interest of each Limited Partner as set forth
on the Schedule. Selling commissions shall be allocated under this Section 3.6.D
and shall be charged to the Capital Account of such Partner based upon the
selling commissions paid with respect to each Partner's Units.
ARTICLE IV
CAPITAL CONTRIBUTIONS OF LIMITED PARTNERS
Section 4.1 Payments. The Unitholders and the Preferred Unitholders have
made the Capital Contributions identified on the Schedule.
Section 4.2 Additional Capital Contributions by Limited Partners and
Admission of Additional Limited Partners.
A. In the event that the General Partner determines that it is in the best
interests of the Partnership to raise additional capital for the Partnership,
the General Partner may, (i) without the Consent of the Limited Partners, sell
additional Units or Preferred Units in the Partnership and (ii) with the Consent
of the Limited Partners cause the Partnership to issue Other Equity Interests.
Additional limited partnership interests and, with the Consent of the Limited
Partners, Other Equity Interests may be sold on such terms and conditions, and
additional Limited Partners shall have such rights and obligations, as the
General Partner shall determine.
B. In the event that the General Partner determines to issue and sell
additional limited partnership interests as provided in Section 4.2.A, the
General Partner may, but is not required to, prior to the offer or sale of such
interests to Persons other than the Limited Partners, offer such interests to
the Limited Partners pro rata in accordance with their Percentage Interests. No
fees will be payable to the General Partner or any Affiliate from the proceeds
of the sale of such interests except for customary brokerage commissions on
interests sold to Persons who are not Partners of the Partnership and except for
reimbursement of any reasonable 'out-of-pocket' expenses incurred in connection
with the sale of such interests.
Section 4.3 Fees and Expense Reimbursements Paid to Certain Entities.
A. For Partnership administration and other services, the Partnership will
pay to the General Partner or its Affiliate an annual Partnership Administration
and Investor Service Fee of $100,000 beginning in 1989, increasing annually at
the rate of 6%.
B. The Partnership may pay the General Partner or an Affiliated Person fees
for various goods and services including without limitation insurance, insurance
brokerage, mortgage brokerage in connection with financings and refinancings of
the Property, management, rehabilitation, construction supervision, leasing and
property brokerage at then prevailing market rates in the vicinity of the
Property.
C. In the event of a sale of all or a portion of the Property which is
financed by the Operating Partnership, or a sale of the Partnership's interest
in the Operating Partnership which is financed by the Partnership, the General
Partner or its Affiliate will receive the fee described in Section 5.1.C(ii).
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D. The Partnership shall pay to the General Partner a Disposition Fee equal
to 1.5% of the gross sales price of the Property or the Partnership's interest
in the Operating Partnership. This fee is in addition to any other real estate
brokerage fees that may be paid by the Operating Partnership in connection with
such sale.
E. Any fees or reimbursements by the Partnership to the General Partner or
to any Affiliate thereof which are not specifically provided for in this
Agreement or the Registration Statement shall be fully disclosed to the Limited
Partners and shall be payable only if they constitute reasonable reimbursements
or compensation for services or goods actually rendered or sold to the
Partnership in the ordinary course of business.
ARTICLE V
RIGHTS, POWERS AND DUTIES OF THE GENERAL PARTNER
Section 5.1 Business Management and Control.
A. The General Partner shall have the exclusive right to manage and control
the business of the Partnership, to bind the Partnership by its sole signature
and to take any action it deems necessary or advisable in connection with the
business of the Partnership. The Partnership hereby ratifies all action
heretofore taken by the General Partner in connection with the Partnership's
acquisition of the interest in the Operating Partnership.
B. Subject to Sections 5.1.E and 5.5(iv), the General Partner, on behalf of
the Partnership, in its capacity as a general partner of the Operating
Partnership, may take any action it deems necessary or advisable in connection
with the business of the Operating Partnership without the Consent of the
Limited Partners.
C. If the Partnership or Operating Partnership enters into a Capital
Transaction and elects to continue in existence for the purpose of receiving and
collecting a promissory note or notes received in the transaction, then:
(i) any payments of interest on the note(s) shall be considered as
income of the Partnership or Operating Partnership, as the case may be, for
purposes of determining Cash Flow, and any payments of principal shall be
considered proceeds of a Capital Transaction; and
(ii) WFA or its Affiliate shall be entitled to receive an annual
Installment Sale Service Fee each year in the amount of 1% of the interest
payments and other fees collected for that year by the Partnership or
Operating Partnership, as the case may be; provided, however, that any
Installment Sale Service Fee relating to a Capital Transaction of the
Operating Partnership shall be paid to the General Partner solely from the
Partnership's share of payments of interest and other fees collected by the
Operating Partnership.
D. No Limited Partner (except one who may also be a General Partner, and
then only in his capacity as General Partner) shall (i) have any authority or
right to act for or bind the Partnership, or (ii) participate in or have any
control over the Partnership business, except as required by law. The Limited
Partners hereby approve of the exercise by the General Partner of the powers
conferred on it by this Agreement.
E. The Limited Partners, for themselves and their successors and assigns,
hereby authorize the General Partner to propose, approve or disapprove all
amendments to the Operating Partnership Agreement that relate to the operation
of the Operating Partnership and to approve, on behalf of the Partnership, the
following transactions: (1) a proposed Capital Transaction, so long as its
approval would not result in the inability of the Operating Partnership to carry
on its normal operations; and (2) an amendment of the Operating Partnership
Agreement pursuant to Section 9.8 of that Agreement.
Section 5.2 Duties and Obligations.
The General Partner shall diligently and faithfully devote as much of its
time, but shall not be required to devote its full time, to the business of the
Partnership as necessary to conduct the business of the Partnership and shall at
all times act in a fiduciary manner toward the Partnership and the Limited
Partners. The General Partner shall at all times have a fiduciary responsibility
for the safekeeping and use of all Partnership funds and assets.
Section 5.3 Indemnification.
A. Subject to the provisions of Section 5.3.B, the Partnership (but not any
Partner) shall indemnify and hold harmless each General Partner and each Person
performing services on behalf of the Partnership who (a) directly
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or indirectly controls, is controlled by, or is under common control with the
General Partner, (b) owns or controls 10% or more of the outstanding voting
interest in the General Partner, and (c) any officer, director or partner of the
General Partner, to the full extent permitted by law, for any loss, damage,
liability, cost or expense (including reasonable attorneys' fees) sustained by
it or them in connection with the Partnership, provided that such loss, damage,
liability, cost or expense was not the result of negligence or misconduct by the
General Partner or such Persons. Any indemnity under this Section 5.3 shall be
paid from, and only to the extent of, Partnership assets and no Partner shall
have any personal liability on account thereof.
B. Notwithstanding any other provision of this Agreement, neither the
General Partner nor any Entity or Person entitled to indemnification pursuant to
Section 5.3.A above, shall be indemnified for any loss, damage or cost resulting
from the violation of any Federal or state securities laws in connection with
the sale of Units or Preferred Units unless (i) there has been a successful
adjudication on the merits of each count involving such securities law
violations, (ii) such claims have been dismissed with prejudice on the merits by
a court of competent jurisdiction or (iii) a court of competent jurisdiction
approves a settlement of such claims. In any claim for indemnification for
federal or state securities law violations, the party seeking indemnification
shall place before the court the position of the Securities and Exchange
Commission and the Massachusetts Securities Division and any other applicable
regulatory authority with respect to the issue of indemnification for securities
law violations.
C. Except as otherwise required by applicable law, and subject to the
provisions of Section 5.2 of this Agreement, the General Partner shall be
required to take only such actions on behalf of the Partnership as are expressly
required by this Agreement, and it shall not be required to take any such action
requiring the expenditure of funds if Partnership funds are not available. The
General Partner shall not be required to advance, contribute or provide funds to
the Partnership for any purpose in excess of its Capital Contributions.
D. No Partnership funds shall be used to purchase any insurance that
insures any party against any liability for which indemnification is not
available pursuant to this Section 5.3.
Section 5.4 Liability of the General Partner to Limited Partners.
Neither the General Partner nor any Person directly or indirectly owning
any interest in the General Partner or any of its directors, executive officers
and Affiliates shall be liable, responsible or accountable for damages or
otherwise to any Limited Partner or the Partnership arising out of any act
performed or any failure to act by any of them if they determined, in good
faith, that such act or failure to act was in the best interests of the
Partnership, and such course of conduct did not constitute negligence or
misconduct on the part of such Persons.
Section 5.5 Limited Partners' Right to Restrict General Partner's
Authority.
A. Notwithstanding any provisions to the contrary in this Agreement,
Limited Partners owning in the aggregate more than 50% of the Units shall have
the right:
(i) to remove any General Partner;
(ii) to amend this Agreement (subject to the requirement of Section
11.13 for unanimous consent to certain amendments), or to approve or
disapprove any amendment proposed by the General Partner, the effect of
which would be to alter the basic substance of the Agreement;
(iii) to dissolve the Partnership; and
(iv) voting together with Limited Partners owning Preferred Untis, to
approve or disapprove the sale of all or substantially all of the assets of
the Partnership or the Operating Partnership in a single or related series
of transactions; provided, however, that no amendment of the Agreement
shall affect the timing or amount of the fees to be paid by the Partnership
under this Agreement; provided, further, that no removal of a General
Partner or amendment shall affect the rights of any General Partner
(including the right to receive any fees payable to any General Partner,
including fees payable pursuant to Section 4.3) or any share of the
profits, losses, and distributions allocable or distributable to a Partner
pursuant to Article IX (collectively referred to in this Section as
'Retained Rights') without its prior written consent; and, provided
further, that in addition to the provisions of Section 11.13, no such
amendment, without the prior written consent of the affected Limited
Partner, shall increase the liability of a Limited Partner or alter the
amounts allocable or
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distributable to him with respect to his Retained Rights in any manner that
is disproportionate to the alteration of the amounts allocable or
distributable to any other Limited Partner.
B. Any General Partner removed pursuant to this Section shall, upon
removal, become a Limited Partner and as such shall not have any right to
participate in the management of the affairs of the Partnership but shall
continue to own its Partnership Interest and the Retained Rights which it owned
as a General Partner. The Limited Partners, or any successor General Partner
proposed by them, shall have the option but not the obligation to acquire, upon
payment of any agreed-upon value or its fair market value, all or any part of
the Interest in the Partnership of any General Partner so removed. Any dispute
as to fair market value shall be settled by averaging appraisals of the fair
market value of the Interest submitted by three appraisers, one chosen by the
removed General Partner, one chosen by the successor General Partner or the
Limited Partners, as the case may be, and the third chosen by the two appraisers
so chosen. Any General Partner removed pursuant to this Section shall not be
liable as General Partner for any liability or obligation of the Partnership
incurred on account of the activities of the Partnership from and after the time
its removal is effective.
Section 5.6 Other Activities.
A General Partner or any Affiliate may engage in or possess an interest in
other business ventures of every nature and description, independently or with
others, including, without limitation, real estate business ventures, whether or
not such other enterprises shall be in competition with any activities of the
Partnership.
ARTICLE VI
RETIREMENT OF A GENERAL PARTNER
Section 6.1 Retirement; Dissolution; Continuation.
A. Subject to the provisions of this Article VI, a General Partner shall be
automatically Retired from the Partnership upon the occurrence of any of the
events specified in Article I under the definition of 'Retirement.'
B. A General Partner may withdraw voluntarily from the Partnership only if
another General Partner, including a substitute or additional General Partner
admitted pursuant to Section 3.1, remains.
C. Upon the Retirement of a General Partner, any remaining General Partner
or if none, the Retired General Partner or its heirs, successors, or assigns,
shall immediately send notice of its Retirement (the 'Retirement Notice') to
each Limited Partner. In such event the Partnership (i) shall be dissolved
(unless it is continued by all of the Unitholders as provided in paragraph D) if
there is no remaining General Partner, or (ii) shall be continued by any
remaining General Partner if the remaining General Partner, in its sole
discretion, so elects.
D. If following the Retirement of a General Partner there is no remaining
General Partner or substitute General Partner who elects to continue the
Partnership, the Unitholders may, within ninety (90) days after the Retirement,
elect to continue the Partnership's business for the balance of the term
specified in Section 2.5 by selecting a substitute General Partner by unanimous
written consent. If the Unitholders elect to continue the Partnership by
admitting a substitute General Partner, the relationship of the Partners (and of
any person who has acquired an Interest of a Partner) shall be governed by this
Agreement.
E. Notwithstanding any other provisions of this Agreement, if the
Retirement of a General Partner is due to an Event of Bankruptcy, any fees
otherwise payable to the bankrupt General Partner and not paid at the time of
the Event of Bankruptcy shall be retained by the Partnership for such purposes
as any remaining General Partner determines.
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ARTICLE VII
TRANSFERABILITY OF LIMITED PARTNERSHIP INTERESTS
Section 7.1 Limitations and Restrictions.
A. No Limited Partner shall have the right to assign, sell, transfer,
exchange or otherwise dispose of or pledge or otherwise create a security
interest in any portion of his Partnership Interest except as set forth in this
Agreement.
B. No assignment, sale, transfer, exchange or other disposition or pledge
or creation of a security interest in any portion of a Partnership Interest (a
'Transfer') otherwise permitted by Section 7.3 or 7.4 may be made except in
compliance with Section 11.1.
C. No Transfer of any portion of a Partnership Interest otherwise permitted
by Section 7.3 or 7.4 may be made without the prior written consent of the
General Partner which consent may be granted or withheld in the sole discretion
of the General Partner.
D. No assignment, sale, transfer, exchange or other disposition of any
portion of a Partnership Interest, including a disposition which constitutes a
present assignment for security or which results from any action taken by a
holder of a security interest in such Interest to realize upon such Interest as
collateral (a 'Conveyance'), may be made if such portion, when added to all
other Partnership Interests transferred as Conveyances within the preceding 12
months ending with the date of the proposed Conveyance, would result in the
termination of the Partnership under Section 708 of the Code.
E. No Transfer of any portion of a Partnership Interest may be made to a
minor (other than pursuant to Section 7.2 to a minor who is a member of the
Immediate Family of the transferor thereof) or to an incompetent.
F. No Transfer of any portion of a Partnership Interest may be made if such
portion shall represent less than one-half of a Unit or a Preferred Unit unless
such portion constitutes the entire Interest of the transferor thereof or unless
the transferor thereof shall have received the prior written consent of the
General Partner. No Transfer of any portion of a Partnership Interest shall
consist of less than the transferor's entire interest in such portion unless
such Transfer shall be a pledge or other grant of a security interest in the
transferor's entire interest in such portion.
G. No pledge or creation of a security interest in any portion of a
Partnership Interest may be made except to an 'accredited investor.' No pledge
or creation of a security interest may be made with respect to any portion of a
Partnership Interest unless such portion is free and clear of all prior pledges
or grants of security interests.
H. The General Partner may require, as a condition of any Transfer of a
Partnership Interest, that the transferor thereof pay or agree to pay all costs
incurred by the Partnership or the General Partner in connection with such
Transfer, and furnish the Partnership with a legal opinion satisfactory to it to
the effect that such Transfer was made in compliance with the requirements of
federal and state securities laws.
I. No Transfer of any Interest in the Partnership by a Limited Partner may
be made if such Transfer would constitute the Transfer of an Interest in the
Partnership that, in the General Partner's determination, could result in the
Partnership's classification as a 'publicly traded partnership' (as defined in
section 7704(b) of the Code) unless the General Partner determines that imposing
such restrictions on Transfers would not be in the best interests of the
Partnership and the Partners taken as a whole.
J. Any Transfer made in violation of this Section 7.1 shall be void and of
no force or effect.
Section 7.2 Assignment Effective at Death; Death or Incapacity.
A. By a written instrument otherwise in compliance with applicable law, a
Limited Partner may designate one or more Persons to become the transferee of
all or any portion of his Partnership Interest, such designation to take effect
as a Transfer, however, only upon the death of such Limited Partner. Any such
Person, if then living, shall become the transferee of the portion of the
Partnership Interest so transferred to him immediately upon the transferor's
death, without any act by the legal representative of the transferor, and such
legal representative and the estate of the transferor shall have no interest
whatsoever in the Partnership. Any such designation shall be void and of no
force or effect unless it shall have been delivered to the Partnership during
such transferor's
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lifetime and unless it shall comply with Section 7.1.E. Any such designation
from time to time in effect may be revoked by a written instrument delivered to
the Partnership during such transferor's lifetime, whether or not any new
designation is delivered to the Partnership. As a transferee of any portion of
the Partnership Interest of such transferor, such Person shall be entitled to
become the registered holder thereof upon compliance with the provisions of
Section 7.3. The Partnership shall not be liable for any failure to recognize
any such designation unless duly notified in writing of the death of such
transferor.
B. A Person designated by a Limited Partner as a transferee of any portion
of a Partnership Interest in accordance with Section 7.2.A shall become a
Substitute Limited Partner only if (i) the Partnership shall have received the
Investor Certificate of the deceased Limited Partner duly endorsed by the legal
representative thereof to such Person, unless such certificate is already held
by the Partnership; (ii) the Partnership shall have been duly notified in
writing of the death of such Limited Partner; (iii) the Partnership shall have
received a legal opinion, satisfactory to the General Partner, to the effect
that the designation is valid under the applicable laws of testate or intestate
succession; and (iv) such Person shall have complied with Section 7.3.
C. If a Limited Partner who has not delivered a designation to the
Partnership as described in Section 7.2.A shall die or become disabled, his
legal representative shall be entitled to become a Substitute Limited Partner to
the same extent and with the same effect as though such legal representative
were a transferee of such Partnership Interest, provided such legal
representative shall comply with Section 7.2.B.
D. No act of a legal representative of a deceased or incapacitated Limited
Partner shall be recognized by the Partnership under this Section 7.2 unless the
Partnership shall have received evidence, satisfactory to the General Partner,
of the legal authority of such representative.
E. The death or incapacity of a Limited Partner shall not dissolve or
terminate the Partnership.
Section 7.3 Conveyance of Partnership Interests.
A. A Conveyance of a Partnership Interest shall be accomplished, in the
case of a transferor having possession of an Investor Certificate, by the
delivery of such Investor Certificate to the Partnership, duly endorsed to the
intended transferee or in blank, together with a request by an appropriate
person to transfer the same, accompanied by a guarantee of signature as
described in Section 8-402 of the Uniform Commercial Code of Delaware and such
other documentation as shall be necessary to enable the transferee to cause the
registration of the Conveyance upon the records of the Partnership. Upon
delivery to the Partnership of such Investor Certificate, such guarantee of
signature and such other documentation, together with instructions from the
transferor or transferee as to the registration of such Conveyance, the General
Partner shall examine the same and shall examine the books and records of the
Partnership. If satisfied as to its duty to register the purported Conveyance
pursuant to Section 8-401 of the Uniform Commercial Code of Delaware, the
General Partner shall cause the Conveyance to be registered in the register
maintained by the Partnership and shall issue an Investor Certificate
representing the transfer of such Partnership Interest in accordance with the
instructions provided to the Partnership. Upon the registration of such
Conveyance, the transferee of such Partnership Interest shall be admitted to the
Partnership as a Substitute Limited Partner, and shall be entitled to receive
and profits and losses and distributions of Partnership property allocable to
the Interest transferred to him.
B. Each purported transferee of a Partnership Interest, by his submission
to the Partnership of an Investor Certificate and other documents and
instruments as described in Section 7.3.A or by his submission to the
Partnership of the instructions and other documents and instruments as described
in Section 7.3.A, shall be deemed to have agreed to all of the terms and
conditions of this Agreement, shall be deemed to have appointed the Partnership
and the General Partner as his agent and attorney-in-fact for all purposes
described in this Agreement, and shall be deemed to have authorized and directed
the General Partner, on behalf of such purported transferee, to execute and
deliver a counterpart of this Agreement.
C. If a Limited Partner shall make a Transfer of his entire Partnership
Interest, such Limited Partner shall no longer be entitled to exercise the
rights of a Limited Partner or to receive any benefits as a Limited Partner, but
shall remain liable for all his obligations as a Limited Partner.
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Section 7.4 Lost Investor Certificates.
If any Investor Certificate is lost, mutilated, or destroyed while in the
possession of a Limited Partner, the General Partner may issue a replacement
Certificate and may require as a precondition that the Limited Partner, his
legal representatives, or any holder of the lost, mutilated, or destroyed
Certificate execute and deliver any indemnity agreements, affidavits, bonds, or
other security reasonably required by the General Partner.
ARTICLE VIII
LOANS
Section 8.1 In General.
A. The Partnership may borrow from any source, including Partners. If any
Partner lends money to the Partnership, the amount of any such loan shall not be
an increase of his Capital Account or, except as contemplated by Section 4.3.A
or applicable Treasury Regulations, affect in any way his share of the profits,
losses or distributions of the Partnership.
B. Except as otherwise provided in the Management Agreement, loans made by
a Partner or Affiliate to the Partnership shall be evidenced by promissory notes
which shall:
(i) bear interest at a commercially reasonable rate not in excess of
the lesser of (x) the maximum rate permitted by law and (y) three percent
(3%) above the rate of interest announced from time to time by Citibank,
N.A. as its 'base rate' (the 'Base Rate'), said Base Rate being computed at
the end of each calendar month (based upon the Base Rate on the last day of
each such month) following the making of said loan; and
(ii) provide that the obligation of the Partnership to make interest
and principal payments thereunder shall be subordinate to the obligation of
the Partnership to pay unrelated creditors of the Partnership but shall
have priority over the distribution to Partners of Cash Flow and Capital
Proceeds pursuant to Sections 9.2 and 9.3 of this Agreement.
C. The Partnership will not be permitted to make loans to WFA or any of its
Affiliates.
ARTICLE IX
PROFITS AND LOSSES; DISTRIBUTIONS
Section 9.1 Profits and Losses.
A. Allocation of Net Income or Net Loss. Except as otherwise provided in
this Section 9.1, (i) Net Loss for each fiscal year shall be allocated 99% to
the Unitholders and 1% to WFA and (ii) Net Income for each fiscal year shall be
allocated to the Partners in proportion to the Cash Flow distributable to the
Partners with respect to such year, and, if there is no such Cash Flow, 97% to
the Unitholders and 3% to WFA.
B. Allocation of Gain from a Non-Terminating Capital Transaction. The
Gain, if any, arising from a Non-Terminating Capital Transaction shall be
allocated in the following order:
First, to each Partner who has received or will receive a distribution
out of the proceeds of the Capital Transaction under Section 9.2.C Third,
Fourth, Fifth, and Sixth, in proportion to and in an amount equal to the
excess of the distribution over the positive balance in his Capital Account
determined without taking into account such distribution.
Second, to all Partners having negative balances in their Capital
Accounts (determined after the allocation provided in Section 9.1.B First
above), in proportion to their negative balances, the portion of such Gain
that is necessary to increase all their negative balances to zero; and
Third, the balance of the Gain, if any, shall be allocated so as to
increase each Partner's Capital Account (determined after the allocations
provided in Section 9.1.B First and Second above) to an amount
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equal to the proceeds of a hypothetical Capital Transaction that would be
distributable to him pursuant to Section 9.2.C if the proceeds were equal
to the sum of:
(1) the amount of Gain being allocated pursuant to this Section
9.1.B Third, plus
(2) the sum of the positive balances, if any, in the Capital
Accounts of all Partners (determined after the allocations provided in
Section 9.1.B First and Second) as of the end of the fiscal year in
which the Capital Transaction resulting in the Gain being allocated
pursuant to this Section 9.1.B Third occurs.
C. Allocation of Gain from a Terminating Capital Transaction. The Gain,
if any, arising from a Terminating Capital Transaction shall be allocated in the
following order:
First, to all Partners having negative balances in their Capital
Accounts, in proportion to their negative balances, the portion of such
Gain that is necessary to increase their negative balances to zero;
Second, to each Partner who has received or will receive a
distribution out of the proceeds of the Terminating Capital Transaction
under Section 9.3, the excess of (i) the sum of the amounts which would
have been distributable to him under Section 9.2.C Third, Fourth, Fifth and
Sixth if this transaction were not a Terminating Capital Transaction, over
(ii) the positive balance in his Capital Account, determined without taking
into account such distribution and after any allocation under Section 9.1.C
First; and
Third, the balance of the Gain, if any, 70% to the Unitholders and 30%
to WFA.
D. Loss from a Capital Transaction. A Loss arising from a Capital
Transaction, including a Terminating Capital Transaction, shall be allocated in
the following order:
First, to the Unitholders with positive balances in their Capital
Accounts, an amount of loss so that, to the extent possible, the positive
Capital Accounts per Unit of all Unitholders will be the same;
Second, to the Partners with positive balances in their Capital
Accounts in proportion to their positive balances, the amount of such Loss
necessary to reduce their positive balances to zero; and
Third, the remainder 99% to the Unitholders and 1% to WFA.
E. Allocations While Preferred Units Are Outstanding. Notwithstanding the
provisions of Sections 9.1.A, 9.1.B, 9.1.C and 9.1.D, for each fiscal year (or
portion thereof) that Preferred Units are outstanding, commencing on the date
hereof, (i) Net Loss shall be allocated (A) first, 1% to the General Partner and
99% to the Limited Partners, in proportion to and to the extent of the positive
balances in the Limited Partners' Capital Accounts, until the Limited Partners'
Capital Account balances are reduced to zero, and (B) the balance, if any, to
the Partners on account of their Units and general partnership interests as
provided in Section 9.1.A, (ii) Net Income shall be allocated (A) first, to the
Preferred Unitholders, in an amount equal to the excess of the Annual Return (as
defined in Section 9.2.D) accrued on their Preferred Invested Capital for all
periods through the close of the fiscal year just ended over the cumulative
amounts of Net Income and Gain from a Capital Transaction previously allocated
to them on account of such accrued Annual Return pursuant to this Section 9.1.E,
(B) second, to the Preferred Unitholders, to restore Net Loss previously
allocated to them on account of their Preferred Units pursuant to this Section
9.1.E, (C) third, to the Partners, to restore Net Loss previously allocated to
them on account of their Units and general partnership interests pursuant to
this Section 9.1.E, and (D) the balance, if any, to the Partners on account of
their Units and general partnership interests as provided in Section 9.1.A, and
(iii) Gain or Loss from a Capital Transaction shall be allocated (A) if any
amounts are distributed or to be distributed on account of such Capital
Transaction, first, in such manner as shall cause the Partners' respective
positive Capital Account balances to at least equal, or, in the case of a
Terminating Capital Transaction, to most nearly equal, the amounts distributed
or to be distributed to them pursuant to and in the priority set forth in
Section 9.2.D on account of such Capital Transaction, (B) if no amounts are to
be distributed on account of such Capital Transaction, in the case of Gain only,
to the Preferred Unitholders, first, to restore Net Loss previously allocated to
them on account of their Preferred Units pursuant to this Section 9.1.E, and
then, in an amount equal to the excess of the cumulative distributions
previously made to them pursuant to Section 9.2.D(B) in excess of $23,250 per
Preferred Unit for all periods through the close of the fiscal year just ended,
over the cumulative amount of Net Income and Gain from a Capital Transaction
previously
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allocated to them on account of such excess distributions under this Section
9.1.E, and (C) the balance, if any, to the Partners on account of their Units
and general partnership interests as provided in Sections 9.1.B, C and D;
provided, however, that if the Capital Transaction is a Terminating Capital
Transaction, then any Gain therefrom shall first be allocated to all Partners
having negative balances in their Capital Accounts in proportion to and to the
extent of such negative balances and, to the extent insufficient to eliminate
such negative balances, such Partners shall be allocated Net Income and, if
necessary, gross income in an amount and manner sufficient to eliminate such
negative balances.
F. Allocation Among Partners or Classes of Partners. Except as otherwise
provided in this Agreement, all Net Income, Net Loss and Gain or Loss from a
Capital Transaction allocated to Partners or a class of Partners shall be shared
by the Partners or the members of the class in the ratios of their respective
Percentage Interests or, in the case of the Preferred Unitholders, in proportion
to their respective Preferred Units.
G. Section 754 Election. All allocations of Net Income, Net Loss and Gain
or Loss from a Capital Transaction pursuant to this Section 9.1 shall be made
without regard to any adjustments under Section 743 of the Code. After the
allocations are made, however, appropriate adjustments shall be made in the Net
Income, Net Loss, and Gain or Loss from a Capital Transaction allocated to each
Partner to give effect to any such election.
H. Allocation Causing Negative Capital Accounts; Minimum Gain Rule and
Qualified Income Offset.
(1) Notwithstanding the other provisions of this Section 9.1, if an
allocation of Net Loss (or item thereof) or Loss from a Capital Transaction
to a Limited Partner would cause or increase a deficit balance in its
Capital Account in excess of its obligation to restore any such negative
balance to the Partnership in the event of the liquidation of the
Partnership or of its Interest (a 'Restoration Obligation'), then the
allocation shall not be made to such Limited Partner, but shall be made
instead to the other Partners in proportion to their Percentage Interests.
For purposes of making the determination set forth in the preceding
sentence:
(a) Each Partner's Restoration Obligation shall be deemed to
include (i) its proportionate share of the Partnership's Minimum Gain,
and (ii) any amount which it is unconditionally required under this
Agreement or by law to contribute to the Partnership by the later of (x)
the end of the taxable year in which the liquidation of the Partnership
(or of its Interest) occurs, or (y) 90 days after the date of
liquidation of the Partnership (or of its Interest) (including such
Partner's or its Affiliates' personal liability, if any, with respect to
Partnership indebtedness, such personal liability at any time being
equal to the maximum amount that such Partner or its Affiliates
ultimately could be compelled to pay to creditors of the Partnership
(assuming the successful exercise by all persons of all rights of
contribution, subrogation or indemnification if the assets of the
Partnership were disposed of at a price equal to the amount at which
they are carried on the books of the Partnership maintained pursuant to
this Agreement and the proceeds of such disposition were paid over to
the Partnership's creditors), determined at the end of the taxable year
for which any allocation of Net Loss or Loss from a Capital Transaction
is to be made.
(b) Each Partner's Capital Account balance shall be reduced by
reasonably expected allocations or adjustments of loss (or item thereof)
including Loss from a Capital Transaction under Income Tax Regulations
Section 1.704-1(b)(2)(ii)(d)(4) and (5), and by reasonably expected
distributions to the extent not offset by reasonably expected Capital
Account increases ('Account Reduction Items'). For purposes of
calculating reasonably expected Capital Account increases, the value of
the Partnership's assets shall be presumed to be equal to the amount at
which they are carried on the books of the Partnership maintained
pursuant to this Agreement.
(2) No Partner shall be obligated to contribute additional capital to
the Partnership in order to restore a deficit balance in his Capital
Account except (i) as provided in Section 9.3.C and (ii) as described in
Section 9.1.H(1)(a) above. A Partner's proportionate share of the Minimum
Gain equals the Partner's aggregate share of nonrecourse deductions, plus
the amount of any financing proceeds distributed to such Partner if and to
the extent that such Minimum Gain exceeds such nonrecourse deductions.
(3) Notwithstanding the other provisions of this Section 9.1, (i) if
an Account Reduction Item unexpectedly causes or increases a deficit
balance in a Partner's Capital Account in excess of its Restoration
Obligation (as calculated above), then any such Partner, or (ii) if there
is a net decrease in Partnership
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Minimum Gain during a taxable year, then all Partners with a share of such
Partnership Minimum Gain, shall be specially allocated items of income
(including Net Income and Gain from a Capital Transaction and, if
necessary, gross income) in an amount and manner (A) if clause (i) is
applicable, sufficient to eliminate the excess deficit balance as quickly
as possible, or (B) if clause (ii) is applicable, sufficient to allocate to
each Partner an amount equal to his share of the reduction in Partnership
Minimum Gain.
(4) Any special allocations of Net Income, Gain from a Capital
Transaction or gross income under this Section 9.1.H shall be taken into
account in computing subsequent allocations of Net Income and Net Loss or
Gain or Loss from a Capital Transaction, so that to the extent possible the
aggregate amounts of Net Income and Net Loss or Gain or Loss from a Capital
Transaction allocated to each Partner will be equal to the aggregate
amounts that would have been allocated to them in the absence of the
unexpected Account Reduction Items or reduction in Partnership Minimum
Gain.
I. Allocation of Gain Attributable to Depreciation Recapture. To the
extent that any portion of a Gain from a Capital Transaction is treated as
ordinary income pursuant to Sections 751(b), 1245, or, 1250 of the Code, this
ordinary income shall be allocated among the Partners in proportion to the
balances in their 'Depreciation Recapture Accounts' as of the last day of the
fiscal year in which such Capital Transaction occurs; provided, however, that
the amount of such ordinary income allocated to any Partner shall not be less
than the lesser of (i) his 'Priority Recapture Amount' as defined in this
Section 9.1.I or (ii) the amount of such ordinary income multiplied by a
fraction, the numerator of which is the Partner's Priority Recapture Amount, and
the denominator of which is the total of all Partners' Priority Recapture
Amounts. Each Partner's Depreciation Recapture Account shall be determined as
follows:
(1) there shall be added to his Account at the end of each fiscal year
(a) the amount of depreciation allowable to the Partnership for
that year with respect to 'Section 1245 property' multiplied by his
percentage of the Partnership's Net Income or Net Loss for that year;
and
(b) the amount of 'additional depreciation' allowable to the
Partnership for that year with respect to 'Section 1250 property',
multiplied by his percentage of the Partnership's Net income or Net Loss
for that year; for Section 1250 property held for one year or less as of
the end of the fiscal year, all depreciation deductions shall be treated
as 'additional depreciation';
(2) there shall be deducted from his Account at the end of each fiscal
year the excess, if any, of
(a) the amount of depreciation which would have been allowable to
the Partnership for that year with respect to Section 1250 property, if
such depreciation had been claimed on a straight-line basis from the
date of acquisition or completion of construction of the Property,
multiplied by his percentage of the Partnership's Net Income or Net Loss
for that year;
over
(b) the amount of depreciation allowable to the Partnership with
respect to 'Section 1250 property' for that year, multiplied by his
percentage of the Partnership's Net Income or Net Loss for that year.
(3) there shall be deducted from his Account at the beginning of each
fiscal year the amount of any ordinary income allocated to him pursuant to
this Section 9.1.I for the prior fiscal year;
(4) for any Section 1245 property and Section 1250 property sold or
otherwise disposed of by the Partnership during the fiscal year, there
shall be deducted from his Account, at the beginning of the next fiscal
year, his proportionate share, in accordance with the balances of the
Partners Depreciation Recapture Accounts at the end of the fiscal year of
the sale or other disposition, of the excess, if any, of
(a) the amount of ordinary income which would have been realized by
the Partnership if the asset had been sold or otherwise disposed of for
its original basis (determined under Section 1012 of the Code prior to
any adjustments pursuant to Section 1016 of the Code),
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(b) the amount of ordinary income actually realized by the
Partnership upon the sale or other disposition of the asset; and
(5) for Section 1250 property held for one year or less as of the end
of the previous fiscal year, there shall be deducted from such Account as
of the date that such property has been held more than one year the amount
of depreciation deductions which would have been allowable under the
straight line method for such previous fiscal year. The terms 'Section 1245
property', 'Section 1250 property', and 'additional depreciation' shall
have the meanings specified in Sections 1245 and 1250, respectively, of the
Code.
To the extent that the amount of ordinary income allocable to any Partner
pursuant to this Section 9.1.I exceeds the amount of Gain allocable to him under
Section 9.1.B, 9.1.C or 9.1.E, the amount of Gain allocable to him under Section
9.1.B, 9.1.C or 9.1.E, as applicable, shall be increased by the amount of the
excess, and the amount of Gain allocated to all other Partners under those
Sections (excluding Partners whose share of Gain is increased pursuant to this
sentence) shall be decreased by the amount of the excess in proportion to the
respective amounts of Gain otherwise allocable to them pursuant to those
Sections; provided, however, that the provisions of this sentence shall not
apply to the extent that their application would create or increase a positive
balance in the Capital Account of any Partner while the balance in the Capital
Account of any other Partner (after applying Sections 9.1.B, 9.1.C or 9.1.E) is
negative.
Each Partner's Priority Recapture Amount is equal to the total of his
Priority Recapture increments, reduced by the amount of ordinary income
previously recognized by him pursuant to this Section 9.1.I. A Partner will
incur a Priority Recapture increment as of the date that his Partnership
interest is diluted through the admission of new Partners to the Partnership
(the 'Dilution Date'). On each Dilution Date, each Partner will incur a Priority
Recapture increment equal to the product of (a) the sum of (i) the aggregate
amount of depreciation allowable to the Partnership with respect to 'Section
1245 property' prior to the Dilution Date and (ii) the aggregate amount of
'additional depreciation' allowable to the Partnership with respect to 'Section
1250 property' of the Partnership prior to the Dilution Date, multiplied by (b)
the decimal equivalent of the difference between his Percentage Interest
immediately after the dilution and his Percentage Interest immediately before
the dilution. For Section 1250 property held for one year or less on a Dilution
Date, all depreciation deductions shall be treated as 'additional depreciation.'
J. Determination of Capital Account Balances. For purposes of Sections
9.1.B, C, D and E, Capital Accounts shall, except as otherwise specifically
provided therein, be determined as of the last day of the fiscal year, after
giving effect to distributions during the 60 days after the end of the fiscal
year and, in the case of allocations of Gain or Loss from a Capital Transaction,
after giving effect to allocations of Net Income or Net Loss, but before giving
effect to the applicable allocation of Gain or Loss from the Capital
Transaction, including a Terminating Capital Transaction. In applying Sections
9.1.C First and 9.1.E(iii), Capital Accounts shall be determined prior to the
distribution of the Capital Proceeds resulting in the Gain or Loss to be
allocated under those Sections. If more than one Capital Transaction occurs in
any fiscal year, the Gain or Loss shall be allocated in the order in which the
Capital Transactions occur. For purposes of allocating Gain from a Terminating
Capital Transaction, the Capital Account of the General Partner shall be
determined after adding any amounts required to be contributed by the General
Partner to discharge Partnership obligations.
K. Allocations with Respect to Reserved Proceeds of Capital
Transactions. To the extent that Capital Proceeds received by the Partnership
are reserved pursuant to Sections 9.2.C and 9.3.A, the reserved proceeds shall,
for purposes of Section 9.1.B First and 9.1.C Second, be deemed to have been
distributed pursuant to Sections 9.2.C or 9.3, and any deduction allowed to the
Partnership by reason of the subsequent payment of any contingent or unforeseen
liability shall be allocated among the Partners in the same proportions that the
amount paid on such a liability would otherwise have been distributed pursuant
to Sections 9.2.C and 9.3.
L. Tax Allocations; Section 704(c). Notwithstanding the provisions of
Section 9.1, in accordance with Section 704(c) of the Internal Revenue Code (the
'Code') and the Income Tax Regulations thereunder, income, gain, loss, and
deduction (including depreciation) with respect to any property contributed to
the capital of the Partnership shall, solely for tax purposes, be allocated
among the Partners so as to take account of any variation between the adjusted
basis of such property to the Partnership for federal income tax purposes and
its fair market value on the date of contribution. Furthermore, in the event the
value at which Partnership assets are carried on its balance sheet maintained
under the terms of this Agreement are adjusted pursuant to Income Tax
Regulations
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1.704-1(b)(2)(iv)(f), subsequent allocations of income, gain, loss and deduction
with respect to such assets shall take account of any variation between the
adjusted basis of such asset for federal income tax purposes and the value
carried on such balance sheet in the same manner as under Section 704(c) of the
Code and the Income Tax Regulations thereunder. Any elections or other decisions
relating to such allocations shall be made by the General Partner in any manner
that reasonably reflects the purpose and intention of this Agreement.
Allocations pursuant to this Section 9.1.L are solely for purposes of federal,
state and local taxes and shall not affect, or in any way be taken into account
in computing, any Partner's Capital Account or share of profits and losses
allocated pursuant to Section 9.1, or distributions pursuant to any provision of
this Agreement.
Section 9.2 Distributions Prior to Dissolution.
A. Definitions of Cash Flow. For all purposes of this Agreement, the term
'Cash Flow' shall mean the Net Income or Net Loss of the Partnership, subject to
the following:
(a) Depreciation of building, improvements and personal property,
amortization of any fee and other non-cash charges taken into account in
determining taxable income of the Partnership or the Operating Partnership
shall not be considered as deductions in determining Cash Flow.
(b) Payments of principal on the Mortgage Loan, repayment of the debts
of the Partnership or the Operating Partnership, including loans from
Partners and any other cash expenditures not deductible in determining
taxable income of the Partnership or the Operating Partnership shall be
considered as deductions in determining Cash Flow.
(c) If the General Partner so determines, reasonable additional
reserves shall be established to provide for any contingencies of the
Partnership or the Operating Partnership, and in determining Cash Flow any
amounts allocated to any such reserves from time to time shall be
considered as deductions and, conversely, any amounts previously set aside
as reserves from Cash Flow shall be considered as additions when and to the
extent the General Partner no longer regards them as reasonably necessary
for the efficient conduct of the affairs of the Partnership, including
release of any such reserves upon disposition of the Property or
termination of the Partnership or the Operating Partnership.
(d) Any amounts paid by the Partnership or the Operating Partnership
for capital expenditures shall be considered as a deduction in determining
Cash Flow, unless paid by cash withdrawal from insurance or condemnation
proceeds or from the Operating Reserve, Capital Improvement Fund or any
additional reserve for capital expenditures.
(e) Gain or loss from the sale, exchange, condemnation (or similar
eminent domain taking), casualty or other disposition of all, or any
substantial portion of, the Property (other than the proceeds of any
business or rental interruption insurance), or from the liquidation of the
Property following a dissolution of the Partnership or the Operating
Partnership, shall not be included in determining Cash Flow.
Cash Flow shall be determined separately for each calendar year (or part of
a year) and shall not be cumulative.
B. Cash Flow for each calendar year (or part of a year) shall be
distributed to the Partners as follows:
First, 99% to the Limited Partners and 1% to the General Partner until
the Limited Partners have received an amount equal to an annual 6% per
annum noncumulative, noncompounded return on their Invested Capital;
Second, 97% to the Limited Partners, and 3% to the General Partner
until the Limited Partners have received an amount equal to their Invested
Capital; and
Third, the balance, if any, 70% to the Limited Partners and 30% to the
General Partner.
Distributions of Cash Flow to the Partners shall be made at reasonable
intervals during the fiscal year as determined by the General Partner, and in
any event shall be made within 60 days after the close of each fiscal year.
Notwithstanding anything to the contrary that may be contained in this
Agreement, (a) Cash Flow for each month in 1989 shall be determined by dividing
the total Cash Flow of the Partnership for 1989 by (ii) 12, and the
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amount of such Cash Flow for each month, as determined by this sentence, shall
thereafter be distributed to and among the Partners as described above in this
Section 9.2.B.
C. Distribution of Capital Proceeds of a Non-Terminating Capital
Transaction. Prior to the termination and dissolution of the Partnership, if
there are Capital Proceeds from a Non-Terminating Capital Transaction or cash
other than Cash Flow available for distribution, such Capital Proceeds or cash
shall be distributed as follows:
First, to discharge, to the extent required by any lender or creditor,
the debts and obligations of the Partnership, including, without
limitation, all amounts required to be paid in connection with any resale
or refinancing of any portion of the Property;
Second, to fund additional reserves of the Partnership to the extent
deemed reasonable by the General Partner and the Accountants.
Third, to each Limited Partner, an amount equal to a cumulative annual
6% noncompounded return on his Invested Capital, reduced by any prior
distributions to him of Cash Flow and by any prior distributions to him
under this Section 9.2.C Third;
Fourth, to each Limited Partner, an amount equal to his Invested
Capital, reduced by any prior distributions to him under this Section 9.2.C
Fourth;
Fifth, to the General Partner, the aggregate amounts of their Capital
Contributions to the Partnership as set forth on the Schedule, reduced by
any prior distributions to the General Partner under this Section 9.2.C
Fifth; and
Sixth, the balance, 70% to the Limited Partners and 30% to the General
Partner.
Notwithstanding the foregoing, in no event shall the General Partner
receive as an aggregate distribution under this Section 9.2.C less than 1% of
the aggregate of the amounts distributed to the Partners under this Section. If
the aggregate amount distributable to the General Partner under Section 9.2.C
does not equal 1% of the aggregate amount distributable to the Partners without
regard to this provision, then the amounts otherwise distributable to the
Limited Partners under Section 9.2.C shall be reduced to assure that the General
Partner receives its 1% share.
D. Distributions While Preferred Units Are Outstanding. Notwithstanding
the provisions of Sections 9.2.B and 9.2.C, prior to any other distributions to
any Partners pursuant to said Sections, (i) for each fiscal year (or portion
thereof) that the Preferred Units are outstanding, commencing on the date
hereof, Cash Flow and Capital Proceeds determined to be available for
distribution to the Partners shall be distributed (A) first, to the Preferred
Unitholders in an amount equal to a cumulative annual 12% non-compounded return
(the 'Annual Return') on their Preferred Invested Capital, (B) in the case of
Capital Proceeds only, to the Preferred Unitholders in a cumulative amount equal
to the greater of (1) $46,500 and (2) an amount equal to the Preferred Invested
Capital per Preferred Unit together with a cumulative annual 15% compounded
return thereon, exclusive of any amounts distributed pursuant to Section
9.2.D(i)(A), and (C) the balance, if any, as provided in Sections 9.2.B and
9.2.C (and the amounts so paid shall be deemed to have been distributed to said
Sections), and (ii) immediately upon the removal of the General Partner pursuant
to Section 5.5, there shall be paid to the Preferred Unitholders, the sum of the
amounts described in Sections 9.2.D(i)(A) and (B) (and the amounts so paid shall
be deemed to have been distributed pursuant to said Sections). Notwithstanding
anything to the contrary contained herein, immediately after the receipt of all
distributions required to be paid to the holders thereof under this Agreement,
the Preferred Units shall be deemed cancelled and Preferred Unitholders shall
not be deemed Limited Partners for the purpose of determining amounts to be
received by the Limited Partners as provided in Sections 9.2.B and 9.2.C.
E. Except as otherwise provided in this Agreement, all distributions to the
Partners (or a class of Partners) shall be shared by the Partners (or the
members of the class) in the ratio of their respective Percentage Interests or,
in the case of the Preferred Unitholders, in proportion to their respective
Preferred Units.
F. For purposes of this Article IX, the Limited Partners shall constitute a
single class.
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Section 9.3 Distributions On Dissolution.
A. On termination and winding up of the Partnership, the remaining assets
of the Partnership (or the proceeds of any Terminating Capital Transaction, as
determined by the remaining or surviving General Partner) remaining after
payment of all liabilities of the Partnership (including the Mortgage Loan and
any accrued interest thereon), and funding all reserves, to the extent deemed
reasonable by the General Partner and the Accountants, shall be distributed to
the Partners in accordance with their respective Capital Account balances
determined after all allocations pursuant to Section 9.1 and all prior
distributions pursuant to Section 9.2, but before any distributions pursuant to
this Section 9.3.
B. If any assets of the Partnership are to be distributed in kind, they
shall be distributed on the basis of their fair market value, and any Partner
entitled to any interest in the assets distributed shall receive his interest as
a tenant-in-common with all other Partners so entitled. If assets are to be
distributed in kind, the Partners' Capital Accounts shall be appropriately
adjusted before any such distribution to reflect the increases or decreases to
the Capital Accounts which would have occurred if the property distributed in
kind had been sold for its fair market value by the Partnership prior to the
distribution.
C. If on the termination of the Partnership, the General Partner's Capital
Account is less than zero (after allocation of profits and losses recognized
upon the disposition of Partnership assets in connection with the liquidation of
the Partnership), the General Partner shall pay to the Partnership an amount
equal to the lesser of (i) the deficiency in its Capital Account, or (ii) 1.01%
of the Limited Partners' Capital Contribution.
D. If, on the termination of the Partnership, the Preferred Units are
outstanding, then notwithstanding anything to the contrary in this Section 9.3,
there shall be paid to the Preferred Unitholders the amount described in clause
(ii) of Section 9.2.D before any other distributions are made to the Partners
pursuant to this Section 9.3 (and said payment shall be deemed to have been
distributed pursuant to Sections 9.2.D(i)(A) and/or (B), as applicable).
Section 9.4 Changes in Percentage Interests.
A. In the event of the transfer of all or any part of a Unit or the
transfer of all or any part of a Preferred Unit at any time other than the end
of a Partnership accounting year, the distributive share of the Net Income and
Net Loss of the Partnership allocable to the Interest transferred shall be
allocated between the transferor Limited Partner and the Transferee in the same
ratio as the number of days in the Partnership accounting year before and after
the Transfer. The provisions of the preceding sentence shall not be applicable
to a Gain or Loss arising from a Capital Transaction or any 'allocable cash
basis item' required to be allocated otherwise under Section 706(d) of the Code.
Gain or Loss from a Capital Transaction or any allocable cash basis item shall
be allocated on the basis of Unit or Preferred Units, as applicable, on the date
the Gain is realized or the Loss incurred, as the case may be, and the allocable
cash basis items shall be allocated as required under Section 706(d) of the Code
and the Treasury regulations thereunder.
ARTICLE X
BOOKS AND RECORDS, ACCOUNTING, TAX ELECTIONS, ETC.
Section 10.1 Books and Records.
The General Partner shall keep or cause to be kept complete and accurate
books and records of the Partnership and supporting documentation of
transactions with respect to the conduct of the Partnership's business. The
Partnership's books and records shall be maintained in accordance with sound
accounting practices and shall be available at the principal office of the
Partnership for examination by any Partner, or his duly authorized
representatives, at any reasonable time during normal business hours. The
General Partner shall maintain at the principal offices of the Partnership a
register listing the names of all Limited Partners, the number of Units or
Preferred Units owned by each Limited Partner and all transfers and other
information required to be contained therein by Article 8 of the Uniform
Commercial Code as enacted in the State of Delaware. All distributions of cash
and allocations of profits and losses by the Partnership shall be made only to
the Limited Partners listed on the register. Upon admission of a Substitute
Limited Partner, the General Partner shall reflect the Transfer on the register.
Copies of the register will be available for inspection by the Limited Partners.
The
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Partnership will maintain such books and records and will provide such financial
or other statements as the General Partner deems advisable or as may be required
by such Article 8.
Section 10.2 Bank Accounts.
The bank accounts of the Partnership shall be maintained in banking
institutions selected by the General Partner, and withdrawals shall be made only
in the regular course of business on signatures determined by the General
Partner. All funds not needed in the operation of the business may be invested
as provided in Section 2.4. The funds of the Partnership shall not be commingled
with any other funds.
Section 10.3 Accountants.
The Accountants for the Partnership shall be a firm of certified public
accountants engaged by the General Partner. The Accountants shall audit and
certify all annual financial reports to the Partnership in accordance with
generally accepted accounting principles.
Section 10.4 Reports to Limited Partners.
A. At the request of any Limited Partner, the General Partner shall, within
30 days after receipt of such request, distribute to the requesting Limited
Partner a copy of the Certificate, this Agreement and all reports or other
materials received pursuant to the Management Agreement.
B. Within 120 days after the end of each fiscal year, the General Partner
shall cause to be prepared and sent to all Limited Partners: (i) a balance sheet
and the related statements of income and Partners' capital and changes in
financial position, prepared in accordance with generally accepted accounting
principles and accompanied by a report of the Accountants; (ii) a notice by the
General Partner (a) if any mortgage payments and taxes or insurance premiums
with respect to the Property are not current as of the date of the year-end
report, or (b) if any notice has been received by the partnership or the
Operating Partnership of any defaults under any mortgage, or this Agreement, and
a description thereof; and (iii) a descriptive statement of all transactions
during the fiscal year between the Partnership and any Affiliated Person,
including the nature of the transaction and the payments involved. All necessary
tax information, including Schedule K-1 (Form 1065) or any successor or
additional form required by the Limited Partners to prepare their tax returns,
shall be furnished to all Limited Partners within 90 days after the end of each
fiscal year. Each Partner shall be entitled to receive, upon request, copies of
all federal, state and local income tax returns and informational returns that
the Partnership is required to file. All costs for preparing such statements,
reports, returns and information shall be Partnership expenses.
Section 10.5 Tax Elections.
The Partnership shall elect to use such methods of depreciation with
respect to all depreciable assets as are, in the opinion of the Accountants,
most advantageous to the Limited Partners. Except as provided in Section 10.6,
all other elections required or permitted to be made by the Partnership under
the Code shall be made by the General Partner in such manner as will, in the
opinion of the Accountants, be most advantageous to the Limited Partners.
Section 10.6 Special Basis Adjustments.
If any part of the Interest of any Partner is transferred, including a
Transfer of an Interest pursuant to Article VII, the Partnership may elect, in
the General Partner's sole discretion, pursuant to Section 754 of the Code (or
corresponding provisions of succeeding law), to adjust the basis for the
Partnership's property. Notwithstanding anything contained in Article IX, any
adjustments made pursuant to Sections 734 and 743 of the Code shall affect only
the successor-in-interest to the transferring Partner. Each Partner will furnish
the Partnership all information necessary to give effect to any such election.
Section 10.7 Fiscal Year and Accounting Method.
The fiscal year of the Partnership shall be the calendar year. The books of
the Partnership shall be kept on an accrual basis.
B-22
<PAGE>
Section 10.8 Tax Matters Partner.
The General Partner shall be the 'tax matters partner' of the Partnership
for Federal income tax purposes. Pursuant to Section 6223(c)(3) of the Code,
upon receipt of notice from the Internal Revenue Service of the beginning of an
administrative proceeding with respect to the Partnership, the General Partner,
as the tax matters partner, agrees to furnish the Internal Revenue Service with
the names, addresses, and interests in profits and losses of each of the Limited
Partners. The General Partner agrees not to enter into a settlement agreement
pursuant to Section 6224 of the Code without providing at least 30 days' advance
written notice of the terms of the settlement to each of the Limited Partners.
If the Partnership receives from the IRS a Final Partnership Administration
Adjustment pursuant to Code Section 6223, and if the General Partner determines
to seek judicial review of the IRS action pursuant to Code Section 6226, then
the General Partner shall select the forum for judicial review.
Subject to the provisions of Section 5.3.B, the Partnership hereby
indemnifies and holds harmless the General Partner against any claim, loss,
liability, action, or damage resulting from its action or its failure to take
any action as the 'tax matters partner,' provided that its action or failure to
act was not willful misconduct.
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 Restrictions on Transfer.
A. No assignment, sale, transfer, exchange, or other disposition of any
Interest may be made except in compliance with the then applicable rules and
regulations of any governmental authority with jurisdiction over such
disposition, and the General Partner may require as a condition thereof that the
transferor furnish a legal opinion that the proposed disposition complies with
applicable Federal and state securities laws.
B. Any sale, exchange, or other transfer in contravention of any of the
provisions of this Section 11.1 shall be void and ineffectual and shall not bind
or be recognized by the Partnership.
Section 11.2 Appointment of General Partner as Attorney-in-Fact.
A. Each Limited Partner (including a Substitute or additional Limited
Partner) hereby irrevocably appoints and empowers the Partnership and the
General Partner, acting through its authorized officers and agents and the
general partner and principals of its general partner, acting singly or
collectively, in each case with full power of substitution, as his true and
lawful attorney-in-fact, in his name, place and stead, to execute, acknowledge,
swear and deliver to all instruments and file all documents required to carry
out the purposes of this Agreement, including, without limitation, the
following:
(i) the Certificate and any amendment or restatement that may be
required by this Agreement or the laws of the State of Delaware;
(ii) any certificate of cancellation of the Certificate that may be
necessary upon the termination of the Partnership;
(iii) any amendments to this Agreement and to the Schedule, any
assignments necessary to reflect any change or transfer of a Partner's
Partnership Interest, including, without limitation, any other amendments
to this Agreement adopted in accordance with Section 11.13
(iv) any business certificate, Certificate of Limited Partnership,
amendment thereto or restatement thereof, or other instrument or document
of any kind necessary to accomplish the business purposes and objectives of
the Partnership;
(v) any instrument or documents required to continue the business of
the Partnership pursuant to Article VI;
(vi) any endorsements, transfer instructions, instruments, stock
powers, UCC financing statements, continuation statements, and other
documents necessary or required to grant and perfect the security interest,
B-23
<PAGE>
if any, of the Partnership, the Mortgage Lender and/or the General Partner
in the Partnership Interest of a Limited Partner;
(vii) all other instruments that may be required or permitted by law
to be filed on behalf of the Partnership and that are not inconsistent with
this Agreement;
(viii) any amendments to this Agreement that may be required to cure
any ambiguity or to correct or supplement any provision which is
inconsistent in any respect with any other provision hereof or with the
Registration Statement, or to add or delete any provision of this Agreement
in response to the concerns of any federal agency or by a state 'Blue Sky'
commissioner or similar official, which addition or deletion is deemed by
such agency or official, or counsel for the Partnership, to be for the
benefit or protection of the Limited Partners; and
(ix) any amendments required to clarify the terms of the Partnership's
ownership of the Operating Partnership and the allocation of taxable income
and loss and the distribution of cash flow and the proceeds of a sale or
disposition of all or a portion of the Operating Partnership or the
Property;
(x) any amendments described in Section 11.13.B, or any amendments
described in Section 11.13.A that have received the consent of the
requisite number of Limited Partners.
The Partnership and the General Partner shall take no action as an
attorney-in-fact for any Limited Partner which would in any way increase the
liability of any Limited Partner beyond the liability expressly set forth in
this Agreement or would diminish the substantive rights of any Limited Partner
except as expressly permitted, or to accomplish a result expressly contemplated,
by this Agreement.
B. The appointment by each Limited Partner of the Partnership and the
General Partner acting through its officers and agents and the general partner
and principals of its general partner, acting singly or collectively, in each
case as attorneys-in-fact, shall be deemed to be a power coupled with an
interest in recognition of the fact that the Limited and General Partners under
this Agreement will be relying upon the power of the Partnership or the General
Partner and its officers, agents and the general partner and principals of its
general partner on behalf of the Partnership, to act as contemplated by this
Agreement in any filing or other action by them. This power of attorney shall
survive and not be affected by the subsequent death, disability, or incapacity
of the Limited Partner or by the Transfer by any Limited Partner of any Interest
in the Partnership.
Section 11.3 Notices.
A. Any notices (as distinguished from periodic reports) called for under
this Agreement shall be deemed adequately given only if in writing and sent
registered or certified mail, postage prepaid, to the party or parties for whom
such notices are intended.
B. All such notices or periodic reports, in order to be effective, shall be
addressed to the last address of record on the Partnership books when given by
the General Partner and intended for the other Partners, and to the address of
the Partnership when given by the Limited Partners and intended for the General
Partner or the Partnership.
Section 11.4 Word Meanings.
The singular shall include the plural and the masculine gender shall
include the feminine, and vice versa, unless the context otherwise requires.
Section 11.5 Binding Provisions.
A. The covenants and agreements contained in this Agreement shall be
binding upon, and inure to the benefit of, the heirs, legal representatives,
successors, and assigns of the respective parties.
B. None of the provisions of this Agreement shall be for the benefit of or
enforceable by any creditor of the Partnership.
Section 11.6 Applicable Law.
This Agreement shall be construed and enforced in accordance with the laws
of the State of Delaware.
B-24
<PAGE>
Section 11.7 Counterparts.
This Agreement may be executed in several counterparts, and all
counterparts so executed shall constitute one agreement binding on all parties,
notwithstanding the fact that all the parties have not signed the original or
the same counterpart, except that no counterpart shall be binding unless signed
by the General Partner. Any counterpart signed by the party against whom
enforcement of this Agreement is sought shall be admissible into evidence as an
original of this Agreement to prove its contents.
Section 11.8 Survival of Representations and Warranties.
All representations and warranties stated in this Agreement shall survive
the dissolution and final liquidation of the Partnership, except to the extent
that a representation or warranty expressly provides otherwise.
Section 11.9 Separability of Provisions.
Each provision of this Agreement shall be considered separable, and (a) if
for any reason any provision is determined to be invalid and contrary to any
existing or future law, the invalidity shall not impair the operation of or
affect those portions of this Agreement which are valid, or (b) if for any
reason any provision would cause the Limited Partners to be bound by the
obligations of the Partnership under the laws of the State of Delaware as they
may now or hereafter exist, that provision or provisions shall be deemed void
and of no effect.
Section 11.10 Investment Representation.
Each Limited Partner represents that he is acquiring his Interest as a
Limited Partner for his own account for investment and not with a view to or
present intention of distributing or reselling it. Each Limited Partner agrees
that he will not sell or offer to sell any portion of his Interest as a Limited
Partner, or solicit offers to buy any portion of his Interest or otherwise
approach or negotiate with, any Person so as to bring this transaction and the
offering of Limited Partner Interests in the Partnership within the provisions
of Section 5 of the Securities Act of 1933, as amended, or the registration
requirements of any state 'Blue Sky' statute or regulations.
Section 11.11 Paragraph Titles.
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 of its provisions.
Section 11.12 Meeting of Partners.
Unitholders whose Capital Contributions represent at least 10% in interest
of the Unitholders may request in writing that the General Partner call a
meeting of the Partners. The General Partner shall be required to give written
notice of any such meeting and its purpose to all Limited Partners within ten
days of receipt of a request for such a meeting. Any such meeting shall be held
on a date not less than 15 nor more than 60 days after the date of receipt of
said request.
Section 11.13 Amendment Procedure.
A. This Agreement may be modified or amended pursuant to Sections 5.5,
11.2, and 11.13.B, or with the written consent of the General Partner and the
Consent of the Limited Partners, provided that any modification or amendment
that would (i) increase the amount of the Capital Contributions required to be
paid by the Limited Partners, (ii) extend the termination date specified in
Section 2.5, (iii) reduce the percentage allocations of the Limited Partners set
forth in Article IX other than as may be necessary to reflect the transactions
contemplated by Section 4.2 or (iv) amend this Section 11.13, shall require the
written consent of all of the Limited Partners.
B. The General Partner shall have the authority, upon advice of the
Accountants and counsel for the Partnership, to amend Article IX and restate the
Capital Accounts of the Partners in order to cause the provisions of such
Article to comply with the income tax regulations promulgated by the U.S.
Treasury Department under Section 704(b) of the Code relating to the allocations
of profits and losses among partners and the administrative and judicial
interpretations thereof. In addition, the General Partner shall have the
authority to amend the Agreement without the Consent of the Limited Partners in
order to provide for the special allocation of depreciation attributable to
tax-exempt use property resulting from the admission of tax-exempt entities as
Limited Partners and the application of Section 168(j)(9) of the Code so that
the depreciation allocated to the taxpaying Partners will not be reduced. The
General Partner shall also have the right to specially allocate gain on a sale
of the Property in order to equalize the Capital Accounts of the taxpaying and
tax-exempt Partners.
B-25
<PAGE>
C. In making any amendment described in Section 11.13.B, the General
Partner shall use its best efforts to effect as little change in the economic
and tax arrangements among the Partners as the General Partner shall determine
in its sole discretion to be necessary to provide for allocations of profits and
losses to the Limited Partners which the General Partner believes will be
respected for Federal income tax purposes. Any amendments made in accordance
with Section 11.13.B shall be deemed to have been made in accordance with the
General Partner's fiduciary obligations to the Partnership and the Limited
Partners, and no such amendment shall give rise to any claim or cause of action
by any Limited Partner.
Section 11.14 Partition.
The Partners hereby agree that no Partner or successor-in-interest shall
have the right, while this Agreement remains in effect, to have the property of
the Partnership partitioned or to file a complaint or institute any proceeding
at law or in equity to have the property of the Partnership partitioned. Each
Partner, on behalf of himself, his successors, representatives, heirs, and
assigns, hereby waives any right to partition. It is the intention of the
Partners that during the term of this Agreement the rights of the Partners and
their successors-in-interest, as among themselves, shall be governed by the
terms of this Agreement, and that the right of any Partner or
successors-in-interest to assign, transfer, sell, or otherwise dispose of his
Interest in the Partnership's properties shall be subject to the limitations and
restrictions of this Agreement.
B-26
<PAGE>
WITNESS the execution under seal as of the day of , 1997.
<TABLE>
<S> <C>
GENERAL PARTNER:
ATTEST: Winthrop Financial Associates, A Limited Partnership
By:
------------------------------------------------
Authorized Officer
UNITHOLDERS:
ATTEST: By: Winthrop Financial Associates, A Limited Partnership,
their Attorney-in-fact
By:
------------------------------------------------
Authorized Officer/Agent
ATTEST: PREFERRED UNITHOLDERS:
By: Winthrop Financial Associates, A Limited Partnership,
their Attorney-in-fact
By:
------------------------------------------------
Authorized Officer/Agent
</TABLE>
B-27
<PAGE>
SCHEDULE A
TO 1999 BROADWAY ASSOCIATES LIMITED PARTNERSHIP
SECOND AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
<TABLE>
<CAPTION>
CAPITAL UNITHOLDERS PREFERRED
NAME AND ADDRESS CONTRIBUTION PERCENTAGE INTEREST UNITS OWNED
- --------------------------------------------------------- ------------ ------------------- -----------
<S> <C> <C> <C>
GENERAL PARTNER:
Winthrop Financial Associates, A
Limited Partnership
Five Cambridge Center
Cambridge, Massachusetts 02142-1493
Unitholders..............................................
Preferred Unitholders....................................
</TABLE>
B-28
<PAGE>
EXHIBIT A
FORM OF UNIT CERTIFICATE
Registered Number
1999 BROADWAY ASSOCIATES
LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP FORMED UNDER THE
LAWS OF THE STATE OF DELAWARE)
CERTIFICATE FOR UNITS OF LIMITED
PARTNERSHIP INTEREST
THIS CERTIFIES THAT
is the registered holder of units of
limited partnership interest (the 'Units') in 1999 Broadway Associates Limited
Partnership (the 'Partnership'), a limited partnership organized under the laws
of the State of Delaware pursuant to a Certificate of Limited Partnership, filed
with the Secretary of State of the State of Delaware, as amended from time to
time (the 'Certificate'), and an Amended and Restated Limited Partnership
Agreement dated January 10, 1989, as amended from time to time (the 'Partnership
Agreement'). Copies of both the Certificate and the Partnership Agreement are on
file at the office of the Partnership. The Certificate and the Partnership
Agreement are incorporated by reference herein as fully as if set forth in their
entirety. EACH TRANSFEREE OF THIS CERTIFICATE, UPON DELIVERY TO THE PARTNERSHIP
OF THIS CERTIFICATE DULY ENDORSED FOR TRANSFER ACCOMPANIED BY APPROPRIATE
TRANSFER INSTRUCTIONS, SHALL BE DEEMED TO HAVE APPLIED TO BECOME A SUBSTITUTE
LIMITED PARTNER, SHALL BE DEEMED TO HAVE AGREED TO THE TERMS AND CONDITIONS OF
THE PARTNERSHIP AGREEMENT AND TO HAVE APPOINTED THE PARTNERSHIP AND THE GENERAL
PARTNER AS AGENTS AND ATTORNEYS-IN-FACT OF SUCH TRANSFEREE UPON THE TERMS AND
FOR ALL PURPOSES SET FORTH IN THE PARTNERSHIP AGREEMENT. A Unitholder may, under
certain circumstances, be required to return to the Partnership a portion of
cash distributions from the Partnership to the Unitholder, if the Partnership
does not have assets sufficient to discharge its liabilities.
WITNESS the facsimile seal of the General Partner of the Partnership and
the facsimile signature of its duly authorized officer.
<TABLE>
<S> <C>
Dated: WINTHROP FINANCIAL ASSOCIATES,
A LIMITED PARTNERSHIP
By:
Authorized Officer/Agent
</TABLE>
THE UNITS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE 'ACT'), OR UNDER THE SECURITIES LAWS
OF CERTAIN STATES, IN RELIANCE ON EXEMPTIONS THEREFROM. UNITS MAY NOT BE SOLD OR
TRANSFERRED WITHOUT REGISTRATION OF SUCH UNITS UNDER THE ACT AND SUCH SECURITIES
LAWS UNLESS SUCH UNITS ARE SOLD IN A TRANSACTION WHICH IS EXEMPT FROM
REGISTRATION THEREUNDER, AND THE GENERAL PARTNER MAY REQUIRE AS A CONDITION OF
TRANSFER THE DELIVERY OF AN OPINION TO THE EFFECT THAT SUCH TRANSFER COMPLIES
WITH ALL APPLICABLE FEDERAL AND STATE SECURITIES LAWS.
B-29
<PAGE>
EXHIBIT B
FORM OF PREFERRED UNIT CERTIFICATE
Registered Number
1999 BROADWAY ASSOCIATES
LIMITED PARTNERSHIP
(A LIMITED PARTNERSHIP FORMED UNDER THE
LAWS OF THE STATE OF DELAWARE)
CERTIFICATE FOR PREFERRED UNITS OF LIMITED
PARTNERSHIP INTEREST
THIS CERTIFIES THAT
is the registered holder of preferred
units of limited partnership interest (the 'Preferred Units') in 1999 Broadway
Associates Limited Partnership (the 'Partnership'), a limited partnership
organized under the laws of the State of Delaware pursuant to a Certificate of
Limited Partnership, filed with the Secretary of State of the State of Delaware,
as amended from time to time (the 'Certificate'), and an Amended and Restated
Limited Partnership Agreement dated January 10, 1989, as amended from time to
time (the 'Partnership Agreement'). Copies of both the Certificate and the
Partnership Agreement are on file at the office of the Partnership. The
Certificate and the Partnership Agreement are incorporated by reference herein
as fully as if set forth in their entirety. EACH TRANSFEREE OF THIS CERTIFICATE,
UPON DELIVERY TO THE PARTNERSHIP OF THIS CERTIFICATE DULY ENDORSED FOR TRANSFER
ACCOMPANIED BY APPROPRIATE TRANSFER INSTRUCTIONS, SHALL BE DEEMED TO HAVE
APPLIED TO BECOME A SUBSTITUTE LIMITED PARTNER, SHALL BE DEEMED TO HAVE AGREED
TO THE TERMS AND CONDITIONS OF THE PARTNERSHIP AGREEMENT AND TO HAVE APPOINTED
THE PARTNERSHIP AND THE GENERAL PARTNER AS AGENTS AND ATTORNEYS-IN-FACT OF SUCH
TRANSFEREE UPON THE TERMS AND FOR ALL PURPOSES SET FORTH IN THE PARTNERSHIP
AGREEMENT. A Preferred Unitholder may, under certain circumstances, be required
to return to the Partnership a portion of cash distributions from the
Partnership to the Preferred Unitholder, if the Partnership does not have assets
sufficient to discharge its liabilities.
WITNESS the facsimile seal of the General Partner of the Partnership and
the facsimile signature of its duly authorized officer.
<TABLE>
<S> <C>
Dated: WINTHROP FINANCIAL ASSOCIATES,
A LIMITED PARTNERSHIP
By:
Authorized Officer/Agent
</TABLE>
THE PREFERRED UNITS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES LAWS OF CERTAIN STATES, IN RELIANCE ON
EXEMPTIONS THEREFROM. PREFERRED UNITS MAY NOT BE SOLD OR TRANSFERRED WITHOUT
REGISTRATION OF SUCH PREFERRED UNITS UNDER SUCH SECURITIES LAWS UNLESS SUCH
PREFERRED UNITS ARE SOLD IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION
THEREUNDER, AND THE GENERAL PARTNER MAY REQUIRE AS A CONDITION OF TRANSFER THE
DELIVERY OF AN OPINION TO THE EFFECT THAT SUCH TRANSFER COMPLIES WITH ALL
APPLICABLE FEDERAL AND STATE SECURITIES LAWS.
B-30
<PAGE>
EXHIBIT 5
[ROSENMAN & COLIN LLP LETTERHEAD]
October 28, 1997
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen:
We have been requested by 1999 Broadway Associates Limited Partnership (the
'Partnership'), a Delaware limited partnership, to furnish our opinion in
connection with the proxy and registration statement (the 'Registration
Statement') on Form S-3 (Registration No. 333-36471) with respect to the
registration of 460 preferred limited partnership interests (the 'Interests') of
the Partnership.
We have made such examination as we have deemed necessary for the purpose
of this opinion. Based upon such examination, it is our opinion that when the
Registration Statement has become effective under the Securities Act of 1933,
and when the Interests have been issued and paid for in the manner described in
the Registration Statement, the Interests will be validly issued, fully paid and
non-assessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference to our name under the caption 'Legal
Matters' in the prospectus included in the Registration Statement.
Very truly yours,
ROSENMAN & COLIN LLP
By JOSEPH L. GETRAER
A Partner
<PAGE>
EXHIBIT 8
[ROSENMAN & COLIN LLP LETTERHEAD]
October 28, 1997
1999 Broadway Associates
Limited Partnership
c/o Winthrop Financial Associates,
A Limited Partnership
Five Cambridge Center, 9th Floor
Cambridge, Massachusetts 02142-1493
Re: Rights Offering
Gentlemen:
You have requested our opinion with respect to certain federal income tax
matters in connection with the offering (the 'Offering') by 1999 Broadway
Associates Limited Partnership, a Delaware limited partnership organized in 1989
(the 'Partnership'), to holders of record ('Unitholders') of units of limited
partnership interests in the Partnership, of subscription rights to purchase 12%
cumulative preferred units of limited partnership interests ('Preferred Units')
in the Partnership, as more fully described in the proxy statement and
prospectus (the 'Prospectus') included in the Registration Statement on Form S-3
filed by the Partnership with the Securities and Exchange Commission on
September 26, 1997, as amended (the 'Registration Statement'). All capitalized
terms used herein have their respective meanings set forth in the Registration
Statement unless otherwise stated.
We have acted as counsel to the Partnership in connection with the
Offering. In connection with your request, we have reviewed the following
documents: (a) the Registration Statement; (b) the form of amended and restated
agreement of limited partnership of the Partnership filed as an exhibit to the
Registration Statement (the 'Partnership Agreement'); (c) the Partnership's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996; and (d)
such other documents as we have deemed necessary or appropriate to review in
rendering this opinion.
In rendering this opinion, we have assumed, with your permission, that: the
Offering will be consummated in accordance with its terms; the statements and
descriptions contained in the Registration Statement are accurate; and the
representations of the General Partner set forth herein are accurate. Although
we have no reason to believe that such assumptions are not correct, we have not
independently investigated or verified any of the underlying facts upon which
such assumptions are based.
In rendering this opinion, we also have relied upon the General Partner's
representations that: (1) the Partnership will be operated and administered in
accordance with the Partnership Agreement, the Prospectus and the Delaware
Revised Uniform Limited Partnership Act; (2) for each taxable year since its
formation, the Partnership has been classified for federal income tax purposes
as a partnership and not as an association taxable as a corporation, and has
come within applicable safe harbors for avoiding treatment as a 'publicly traded
partnership' within the meaning of Section 7704(b) of the Internal Revenue Code
of 1986, as amended (the 'Code'); (3) each person who becomes the record owner
of a Preferred Unit will be validly admitted to the Partnership as a limited
partner on the date such person becomes the record owner of such Preferred Unit
in accordance with the provisions of the Partnership Agreement; (4) the General
Partner shall not recognize or consent to any assignments or transfers of
limited partnership interests that would cause the Partnership to be unable to
satisfy applicable safe harbors for avoiding treatment as a publicly traded
partnership; (5) the
<PAGE>
Partnership will treat the Preferred Units as equity for both financial
reporting and tax purposes; and (6) payment of the Preferred Units' cumulative
annual return and liquidation preference will not be secured or guaranteed.
In addition to the aforementioned documents, assumptions and
representations, our opinion is based upon federal income tax law as currently
in effect, including the Code, applicable Treasury Regulations, existing
judicial decisions and Internal Revenue Service ('IRS') rulings, practices and
procedures, all as in effect on the date hereof. There can be no assurance,
however, that the legal authorities on which this opinion is based will not
change, perhaps retroactively, that the representations of the General Partner
and the factual assumptions underlying this opinion will continue to be
accurate, or that the future circumstances of the General Partner or the
Partnership will not change, any of which events could adversely affect the
conclusions set forth in this opinion. Furthermore, the law as to many tax
matters material to an investment in the Partnership is uncertain. Accordingly,
there can be no assurance that the IRS will not challenge the conclusion or
propriety of any of our conclusions. Although we believe that our opinion will
be sustained if challenged, there can be no assurance that this will be the
case.
Based on and subject to the foregoing, we are of the opinion that, for
federal income tax purposes:
A. Following the issuance of the Preferred Units, the Partnership will
continue to be treated as a partnership and not as an association taxable
as a corporation.
B. The statements made in the Prospectus under the caption 'Certain
Income Tax Considerations', to the extent they involve matters of federal
income tax law, are accurate in all material respects as of the date
hereof.
Except as expressly set forth above, we express no opinion on any issue
relating to the Partnership, the Offering, the Preferred Units or the
Unitholders.
We hereby consent to the references to our Firm under the caption 'Certain
Income Tax Considerations' in the Prospectus, and to the filing of this opinion
as an exhibit to the Registration Statement.
Very truly yours,
ROSENMAN & COLIN LLP
BY: JILL E. DARROW
A Partner
