<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(e) OF THE SECURITIES EXCHANGE ACT OF 1934)
BERKSHIRE REALTY COMPANY, INC.
(Name of Issuer)
--------------------
BRI ACQUISITION LLC
BERKSHIRE REALTY HOLDINGS, L.P.
BERKSHIRE REALTY COMPANY, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, $.01 PAR VALUE
(Title of Class of Securities)
084710 10 2
--------------------
(CUSIP Number of Class of Securities)
SCOTT D. SPELFOGEL, ESQ. DOUGLAS S. KRUPP
BERKSHIRE REALTY COMPANY, INC. BERKSHIRE REALTY HOLDINGS, L.P.
ONE BEACON STREET, SUITE 1550 ONE BEACON STREET, SUITE 1500
BOSTON, MASSACHUSETTS 02108 BOSTON, MASSACHUSETTS 02108
(617) 574-8385 (617) 523-7722
(Name, Address and Telephone Number of Persons Authorized to
Receive Notices and Communications on Behalf of Person(s) Filing Statement)
Copies to:
DAVID E. REDLICK, ESQ. JAMES M. DUBIN, ESQ.
KENNETH A. HOXSIE, ESQ. MICHELE R. JENKINSON, ESQ.
HALE AND DORR LLP PAUL, WEISS, RIFKIND, WHARTON &
60 STATE STREET GARRISON
BOSTON, MASSACHUSETTS 02109 1285 AVENUE OF THE AMERICAS
(617) 526-6000 NEW YORK, NEW YORK 10019
(212) 373-3000
ROBERT A. WEIBLE, ESQ. GREGORY J. RESSA, ESQ.
SUZANNE K. HANSELMAN, ESQ. BRIAN M. STADLER, ESQ.
BAKER & HOSTETLER LLP SIMPSON THACHER & BARTLETT
NATIONAL CITY CENTER 425 LEXINGTON AVENUE
SUITE 3200 NEW YORK, NEW YORK 10017
1900 EAST 9TH STREET (212) 455-2000
CLEVELAND, OHIO 44114
(216) 621-0200
ANTHONY J. COLLETTA, ESQ.
GERALD D. SHEPHERD, ESQ.
SULLIVAN & CROMWELL
125 BROAD STREET
NEW YORK, NEW YORK 10004
(212) 558-4000
<PAGE>
This statement is filed in connection with (check the appropriate box):
a. [X] The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the
Securities Exchange Act of 1934.
b. [ ] The filing of a registration statement under the Securities Act of
1933.
c. [ ] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting material or information statement
referred to in checking box (a) are preliminary copies: [ X]
Calculation of Filing Fee
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Amount of Filing
Transaction Valuation* Fee
<S> <C>
$528,934,462 ................................................ $105,787
- --------------------------------------------------------------------------------
</TABLE>
* This amount is based upon a merger involving the cancellation of 36,754,752
shares of Common Stock at $12.25 cash per share and 2,737,000 shares of
Preferred Stock at $28.75 per share. Pursuant to, and as provided by, Rule
0-11(b)(1), the amount required to be paid with the filing of this Schedule
13E-3 is $105,787.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount previously paid: $105,787 Filing Party: Berkshire Realty Company, Inc.
Form or registration No.: Preliminary Schedule 14A Date Filed: June 23, 1999
This Rule 13e-3 Transaction Statement on Schedule 13E-3 is being filed
jointly by Berkshire Realty Holdings, L.P., a Delaware limited partnership (the
"Parent"), BRI Acquisition, LLC, a Delaware limited liability company (the
"Acquiror"), and Berkshire Realty Company, Inc., a Delaware corporation (the
"Company"), in connection with the proposed merger of the Acquiror with and into
the Company or, alternatively, the merger of the Company with and into the
Parent (either such structure is hereinafter referred to as the "Merger"),
pursuant to an Agreement and Plan of Merger, dated as of April 13, 1999 (the
"Merger Agreement"), by and among the Company, the Parent and the Acquiror.
Upon the effectiveness of the Merger (the "Effective Time"), each share of
common stock, par value $.01 per share, of the Company issued and outstanding
immediately prior to the Effective Time will be converted into $12.25 in cash,
and each share of Series 1997-A Convertible Preferred Stock, $.01 par value per
share, issued and outstanding immediately prior to the Effective Time, will be
converted into $28.75, together with 115% of unpaid accrued dividends, in cash.
This Schedule 13E-3 is being filed with the Securities and Exchange
Commission concurrently with a proxy statement filed by the Company pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Proxy
Statement"). A copy of the Proxy Statement is attached hereto as Exhibit 99.1.
The following cross reference sheet is being supplied pursuant to General
Page 2 of 13 Pages
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Instruction F to Schedule 13E-3 and shows the location in the Proxy Statement of
the information required to be included in this Schedule 13E-3. The information
contained in the Proxy Statement, including all appendices thereto, is expressly
incorporated herein by reference and the responses to each item are qualified in
their entirety by reference to the information contained in the Proxy Statement
and the appendices thereto. Capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to such terms in the Proxy
Statement.
CROSS REFERENCE SHEET
ITEM NUMBER AND CAPTION IN LOCATION IN THE
SCHEDULE 13E-3 PROXY STATEMENT
- -------------- ---------------
1. Issuer and Class of Security
Subject to the Transaction
(a) "SUMMARY;" and "GENERAL -- The Company"
(b) COVER PAGE, "SUMMARY -- Voting Securities
and Votes Required;" and "INFORMATION
CONCERNING THE SPECIAL MEETING -- Record
Date; Quorum; Outstanding Common Stock and
Preferred Stock Entitled to Vote"
(c) "COMMON STOCK MARKET PRICE INFORMATION;
DIVIDEND INFORMATION"
(d) "COMMON STOCK MARKET PRICE INFORMATION;
DIVIDEND INFORMATION"
(e) "COMMON STOCK MARKET PRICE INFORMATION;
DIVIDEND INFORMATION"
(f) *
2. IDENTITY AND BACKGROUND "SUMMARY;" "GENERAL -- The Parent and the
Acquiror;" "MANAGEMENT OF THE COMPANY;"
"MANAGEMENT OF THE PARENT AND THE ACQUIROR;
GENERAL PARTNERS OF THE PARENT;" "APPENDIX
F;" "APPENDIX G;" AND "APPENDIX H"
3. PAST CONTACTS, TRANSACTIONS
OR NEGOTIATIONS
(a)(1) "SPECIAL FACTORS -- Background of the
Merger;" "SPECIAL FACTORS -- Interest of
Certain Persons in Matters to be Acted
Upon;" and "CERTAIN RELATIONSHIPS AND
TRANSACTIONS"
(a)(2) "SPECIAL FACTORS -- Background of the
Merger;" "SPECIAL FACTORS -- Purpose and
Structure of the Merger;" "SPECIAL FACTORS
-- Interests of Certain Persons in Matters
to be Acted Upon;" and "CERTAIN
RELATIONSHIPS AND TRANSACTIONS"
Page 3 of 13 Pages
<PAGE>
ITEM NUMBER AND CAPTION IN LOCATION IN THE
SCHEDULE 13E-3 PROXY STATEMENT
- -------------- ---------------
(b) "SPECIAL FACTORS -- Background of the
Merger;" "SPECIAL FACTORS -- Interests of
Certain Persons in Matters to be Acted
Upon;" and "CERTAIN RELATIONSHIPS AND
TRANSACTIONS"
4. TERMS OF THE TRANSACTION
(a) "SUMMARY;" "SPECIAL FACTORS;" and "THE
MERGER"
(b) "SUMMARY;" "SPECIAL FACTORS;" and "THE
MERGER"
5. PLANS OR PROPOSALS OF THE
ISSUER OR AFFILIATE
(a) - (g) "SUMMARY -- Partnership Merger;" "SPECIAL
FACTORS -- Purpose and Structure of the
Merger;" "SPECIAL FACTORS -- Interest of
Certain Persons in Matters to be Acted
Upon;" "SPECIAL FACTORS -- Certain
Consequences of the Merger;" "SPECIAL
FACTORS -- Plans for the Company After the
Merger;" "THE MERGER -- The Merger;" and
"THE MERGER -- Financing; Source of Funds"
6. SOURCE AND AMOUNT OF FUNDS
OR OTHER CONSIDERATION
(a) - (c) "SUMMARY -- Fairness Opinions;" "SUMMARY --
Financing; Source of Funds;" "THE MERGER --
Financing; Source of Funds;" and "THE MERGER
-- Fees and Expenses"
(d) *
7. PURPOSE(S), ALTERNATIVES,
REASONS AND EFFECTS
(a) - (c) "SUMMARY -- Purpose, Structure and Effects
of the Merger;" "SPECIAL FACTORS --
Background of the Merger;" "SPECIAL FACTORS
-- Purpose and Structure of the Merger;"
"SPECIAL FACTORS -- Recommendation of the
Special Committee and the Board of
Directors; Fairness of the Merger;" "SPECIAL
FACTORS -- Opinions of the Financial
Advisors;" and "SPECIAL FACTORS -- Position
of the Parent and the Acquiror"
Page 4 of 13 Pages
<PAGE>
ITEM NUMBER AND CAPTION IN LOCATION IN THE
SCHEDULE 13E-3 PROXY STATEMENT
- -------------- ---------------
(d) "SUMMARY -- Purpose, Structure and Effects
of the Merger;" "SUMMARY -- Potential
Conflicts of Interest of Officers and
Directors of the Company;" "SUMMARY --
Federal Income Tax Consequences;" "SPECIAL
FACTORS -- Purpose and Structure of the
Merger;" "SPECIAL FACTORS -- Recommendation
of the Special Committee and the Board of
Directors; Fairness of the Merger;" "SPECIAL
FACTORS -- Benefits and Detriments to
Nonaffiliated Stockholders;" "SPECIAL
FACTORS -- Interests of Certain Persons in
the Merger;" "SPECIAL FACTORS -- Certain
Consequences of the Merger;" "SPECIAL
FACTORS -- Plans for the Company After the
Merger;" "SPECIAL FACTORS -- Material
Federal Tax Consequences;" "SPECIAL FACTORS
-- Accounting Treatment;" and "THE MERGER"
8. FAIRNESS OF THE TRANSACTION
(a) - (f) "SUMMARY -- Recommendation of the Board of
Directors and the Special Committee;"
"INFORMATION CONCERNING THE SPECIAL MEETING
-- Vote Required;" "SPECIAL FACTORS --
Background of the Merger;" "SPECIAL FACTORS
-- Purpose and Structure of the Merger;"
"SPECIAL FACTORS -- Recommendation of the
Special Committee and the Board of
Directors; Fairness of the Merger;" "SPECIAL
FACTORS -- Position of the Parent and the
Acquiror;" "SPECIAL FACTORS -- Benefits and
Detriments to Nonaffiliated Stockholders;"
"SPECIAL FACTORS -- Opinions of Financial
Advisors;" "SPECIAL FACTORS -- Interests of
Certain Persons in the Merger; "APPENDIX B
-- OPINION OF LAZARD," "APPENDIX C --
OPINION OF LEHMAN;" and "APPENDIX D --
OPINION OF PRUDENTIAL SECURITIES"
9. REPORTS, OPINIONS, APPRAISALS
AND CERTAIN NEGOTIATIONS
(a) - (c) "SPECIAL FACTORS -- Background of the
Merger;" "SPECIAL FACTORS -- Recommendation
of the Special Committee and the Board of
Directors; Fairness of the Merger;" "SPECIAL
FACTORS -- Opinions of the Financial
Advisors;" "APPENDIX B -- OPINION OF
LAZARD;" "APPENDIX C -- OPINION OF LEHMAN;"
and "APPENDIX D -- OPINION OF PRUDENTIAL
SECURITIES"
Page 5 of 13 Pages
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ITEM NUMBER AND CAPTION IN LOCATION IN THE
SCHEDULE 13E-3 PROXY STATEMENT
- -------------- ---------------
10. INTEREST IN SECURITIES OF
THE ISSUER
(a) "SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT OF THE COMPANY"
(b) "COMMON STOCK MARKET PRICE INFORMATION;
DIVIDEND INFORMATION"
11. CONTRACTS, ARRANGEMENTS OR "SUMMARY;" "SPECIAL FACTORS -- Interests
UNDERSTANDINGS WITH RESPECT of Certain Persons in Matters to be Acted
TO THE ISSUER'S SECURITIES Upon;" "THE MERGER;" and "CERTAIN
RELATIONSHIPS AND TRANSACTIONS"
12. PRESENT INTENTION AND
RECOMMENDATION OF CERTAIN
PERSONS WITH REGARD TO THE
TRANSACTION
(a) - (b) "SUMMARY;" "INFORMATION CONCERNING THE
SPECIAL MEETING -- Vote Required;" "SPECIAL
FACTORS -- Background of the Merger;"
"SPECIAL FACTORS -- Purpose and Structure of
the Merger;" "SPECIAL FACTORS --
Recommendation of the Special Committee and
the Board of Directors; Fairness of the
Merger;" and "SPECIAL FACTORS -- Position of
the Parent and the Acquiror"
13. OTHER PROVISIONS OF THE
TRANSACTION
(a) "SUMMARY -- Appraisal Rights;" and "THE
MERGER -- Appraisal Rights"
(b) *
(c) *
14. FINANCIAL INFORMATION
(a) "SELECTED FINANCIAL DATA OF THE COMPANY;"
and the Consolidated Financial Statements of
the Company included in the Proxy Statement
(b) *
15. PERSONS AND ASSETS EMPLOYED,
RETAINED OR UTILIZED
Page 6 of 13 Pages
<PAGE>
ITEM NUMBER AND CAPTION IN LOCATION IN THE
SCHEDULE 13E-3 PROXY STATEMENT
- -------------- ---------------
(a) "INFORMATION CONCERNING THE SPECIAL MEETING
-- Proxy Solicitation;" "SPECIAL FACTORS --
Background of the Merger;" "SPECIAL FACTORS
-- Plans for the Company After the Merger;"
and "THE MERGER -- Fees and Expenses"
(b) "INFORMATION CONCERNING THE SPECIAL MEETING
-- Proxy Solicitation;" "SPECIAL FACTORS --
Opinions of the Financial Advisors;" "THE
MERGER -- Fees and Expenses;" "APPENDIX B --
OPINION OF LAZARD;" "APPENDIX C -- OPINION
OF LEHMAN;" and "APPENDIX D -- OPINION OF
PRUDENTIAL SECURITIES"
16. ADDITIONAL INFORMATION The Proxy Statement, including the
Appendices thereto, and the Exhibits hereto
17. MATERIAL TO BE FILED AS EXHIBITS
(a) - (f) Separately filed with this Schedule 13E-3.
* The Item is inapplicable or the answer thereto is in the negative.
ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION.
(a) The information set forth in "SUMMARY;" and "GENERAL -- The Company"
in the Proxy Statement is hereby incorporated herein by reference.
(b) The information set forth on the Cover Page of the Proxy Statement and
in "SUMMARY -- Voting Securities and Vote Required;" and "INFORMATION CONCERNING
THE SPECIAL MEETING -- Record Date; Quorum; Outstanding Common Stock and
Preferred Stock Entitled to Vote" in the Proxy Statement is hereby incorporated
herein by reference.
(c) The information set forth in "COMMON STOCK MARKET PRICE INFORMATION;
DIVIDEND INFORMATION" in the Proxy Statement is hereby incorporated herein by
reference.
(d) The information set forth in "COMMON STOCK MARKET PRICE INFORMATION;
DIVIDEND INFORMATION" in the Proxy Statement is hereby incorporated herein by
reference.
(e) The information set forth in "COMMON STOCK MARKET PRICE INFORMATION;
DIVIDEND INFORMATION" in the Proxy Statement is hereby incorporated herein by
reference.
(f) Not applicable.
ITEM 2. IDENTITY AND BACKGROUND.
This Schedule 13E-3 is being filed by the Company, the Acquiror and the
Parent. The Company is the issuer of the Common Stock which is the subject of
the Rule 13e-3 transaction. The information set forth in "SUMMARY;" "GENERAL --
The Parent and the Acquiror;" "MANAGEMENT OF THE COMPANY;" "MANAGEMENT OF THE
PARENT AND THE ACQUIROR; GENERAL
Page 7 of 13 Pages
<PAGE>
PARTNERS OF THE PARENT;" "APPENDIX F;" "APPENDIX G;" and "APPENDIX H" in the
Proxy Statement is hereby incorporated herein by reference.
During the last five years, none of the Acquiror, the Parent, nor any
person controlling the Acquiror or the Parent, nor, to the best of their
knowledge, any of the persons set forth in "MANAGEMENT OF THE COMPANY" and
"MANAGEMENT OF THE PARENT AND THE ACQUIROR; GENERAL PARTNERS OF THE PARENT" in
the Proxy Statement has (i) been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree, or final
order enjoining further violations of, or prohibiting activities subject to,
federal or state securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS.
(a) (1) The information set forth in "SPECIAL FACTORS -- Background of the
Merger;" "SPECIAL FACTORS -- Interest of Certain Persons in Matters to be Acted
Upon;" and "CERTAIN RELATIONSHIPS AND TRANSACTIONS" in the Proxy Statement is
hereby incorporated herein by reference.
(a) (2) The information set forth in "SPECIAL FACTORS -- Background of the
Merger;" "SPECIAL FACTORS -- Purpose and Structure of the Merger;" "SPECIAL
FACTORS -- Interests of Certain Persons in Matters to be Acted Upon;" and
"CERTAIN RELATIONSHIPS AND TRANSACTIONS" in the Proxy Statement is hereby
incorporated herein by reference.
(b) The information set forth in "SPECIAL FACTORS -- Background of the
Merger;" "SPECIAL FACTORS -- Interests of Certain Persons in Matters to be Acted
Upon;" and "CERTAIN RELATIONSHIPS AND TRANSACTIONS" in the Proxy Statement is
hereby incorporated herein by reference.
ITEM 4. TERMS OF THE TRANSACTION.
(a) The information set forth in "SUMMARY;" "SPECIAL FACTORS ;" and "THE
MERGER" in the Proxy Statement is hereby incorporated herein by reference.
(b) The information set forth in "SUMMARY;" "SPECIAL FACTORS ;" and "THE
MERGER" in the Proxy Statement is hereby incorporated herein by reference.
ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE.
(a) - (g) The information set forth in "SUMMARY -- Partnership Merger;"
"SPECIAL FACTORS -- Purpose and Structure of the Merger;" "SPECIAL FACTORS --
Interests of Certain Persons in Matters to be Acted Upon;" "SPECIAL FACTORS --
Certain Consequences of the Merger;" "THE MERGER -- The Merger;" "SPECIAL
FACTORS -- Plans for the Company After the Merger;" and "THE MERGER -- Financing
and Source of Funds" in the Proxy Statement is hereby incorporated herein by
reference.
ITEM 6. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) - (c) The information set forth in "SUMMARY -- Fairness Opinions;"
"SUMMARY --Financing; Source of Funds;" "THE MERGER -- Financing; Source of
Funds;" and "THE MERGER --Fees and Expenses" in the Proxy Statement is hereby
incorporated herein by reference.
(d) Not Applicable.
ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS.
Page 8 of 13 Pages
<PAGE>
(a) - (c) The information set forth in "SUMMARY -- Purpose, Structure and
Effects of the Merger;" "SPECIAL FACTORS -- Background of the Merger;" "SPECIAL
FACTORS -- Purpose and Structure of the Merger;" "SPECIAL FACTORS --
Recommendation of the Special Committee and the Board of Directors; Fairness of
the Merger;" "SPECIAL FACTORS -- Opinions of the Financial Advisors;" and
"SPECIAL FACTORS -- Position of the Parent and the Acquiror" in the Proxy
Statement is hereby incorporated herein by reference.
(d) The information set forth in "SUMMARY -- Purpose, Structure and
Effects of the Merger;" "SUMMARY -- Potential Conflicts of Interest of Directors
and Officers of the Company;" "SUMMARY -- Federal Income Tax Consequences;"
"SPECIAL FACTORS -- Purpose and Structure of the Merger;" "SPECIAL FACTORS --
Recommendation of the Special Committee and the Board of Directors; Fairness of
the Merger;" "SPECIAL FACTORS -- Benefits and Detriments to Nonaffiliated
Stockholders;" "SPECIAL FACTORS -- Interests of Certain Persons in the Merger;"
"SPECIAL FACTORS -- Certain Consequences of the Merger;" "SPECIAL FACTORS --
Plans for the Company After the Merger;" "SPECIAL FACTORS -- Material Federal
Tax Consequences;" "SPECIAL FACTORS -- Accounting Treatment;" and "THE MERGER"
in the Proxy Statement is hereby incorporated herein by reference.
ITEM 8. FAIRNESS OF THE TRANSACTION.
(a) - (f) The information set forth in "SUMMARY - Recommendation of the
Board of Directors and the Special Committee;" "INFORMATION CONCERNING THE
SPECIAL MEETING -- Vote Required;" "SPECIAL FACTORS -- Background of the
Merger;" "SPECIAL FACTORS -- Purpose and Structure of the Merger;" "SPECIAL
FACTORS -- Recommendation of the Special Committee and the Board of Directors;
Fairness of the Merger;" "SPECIAL FACTORS -- Position of the Parent and the
Acquiror;" "SPECIAL FACTORS -- Benefits and Detriments to Nonaffiliated
Stockholders;" "SPECIAL FACTORS -- Opinions of the Financial Advisors;" "SPECIAL
FACTORS -- Interest of Certain Persons in the Merger;" "APPENDIX B -- OPINION OF
LAZARD;" APPENDIX C -- OPINION OF LEHMAN;" and "APPENDIX D -- OPINION OF
PRUDENTIAL SECURITIES" in the Proxy Statement is hereby incorporated herein by
reference.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS.
(a) - (c) The information set forth in "SPECIAL FACTORS -- Background of
the Merger;" "SPECIAL FACTORS -- Recommendation of the Special Committee and
Board of Directors; Fairness of the Merger;" "SPECIAL FACTORS -- Opinions of the
Financial Advisors;" "APPENDIX B --OPINION OF LAZARD;" "APPENDIX C -- OPINION OF
LEHMAN;" and "APPENDIX D -- OPINION OF PRUDENTIAL SECURITIES" in the Proxy
Statement is hereby incorporated herein by reference.
ITEM 10. INTEREST IN SECURITIES OF THE ISSUER.
(a) The information set forth in "SECURITIES OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT OF THE COMPANY" in the Proxy Statement is
hereby incorporated herein by reference.
(b) The information set forth in "COMMON STOCK MARKET PRICE INFORMATION;
DIVIDEND INFORMATION" in the Proxy Statement is hereby incorporated herein by
reference.
ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE
ISSUER'S SECURITIES.
The information set forth in "SUMMARY;" "SPECIAL FACTORS -- Interests of
Certain Persons in Matters to be Acted Upon;" "THE MERGER;" and "CERTAIN
RELATIONSHIPS AND TRANSACTIONS" in the Proxy Statement is hereby incorporated
herein by reference.
Page 9 of 13 Pages
<PAGE>
ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD TO
THE TRANSACTION.
(a) - (b) The information set forth in "SUMMARY;" "INFORMATION CONCERNING
THE SPECIAL MEETING -- Vote Required;" "SPECIAL FACTORS -- Background of the
Merger;" "SPECIAL FACTORS -- Purpose and Structure of the Merger;" "SPECIAL
FACTORS -- Recommendation of the Special Committee and the Board of Directors;
Fairness of the Merger;" and "SPECIAL FACTORS --Position of the Parent and the
Acquiror" in the Proxy Statement is hereby incorporated herein by reference.
ITEM 13. OTHER PROVISIONS OF THE TRANSACTION.
(a) The information set forth in "SUMMARY -- Appraisal Rights" and "THE
MERGER --Appraisal Rights" in the Proxy Statement is hereby
incorporated herein by reference.
(b) Not Applicable.
(c) Not Applicable.
ITEM 14. FINANCIAL INFORMATION.
(a) The information set forth in "SELECTED FINANCIAL DATA OF THE COMPANY"
in the Proxy Statement and the Consolidated Financial Statements of the Company
included in the Proxy Statement are hereby incorporated herein by reference.
(b) Not Applicable.
ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED.
(a) The information set forth in "INFORMATION CONCERNING THE SPECIAL
MEETING -- Proxy Solicitation;" "SPECIAL FACTORS -- Background of the Merger;"
"SPECIAL FACTORS -- Plans for the Company after the Merger;" and "THE MERGER --
Fees and Expenses" in the Proxy Statement is hereby incorporated by reference.
(b) The information set forth in "INFORMATION CONCERNING THE SPECIAL
MEETING -- Proxy Solicitation;" "SPECIAL FACTORS -- Opinions of the Financial
Advisors;" "THE MERGER -- Fees and Expenses;" "APPENDIX B - OPINION OF LAZARD;"
"APPENDIX C --OPINION OF LEHMAN;" and "APPENDIX D -- OPINION OF PRUDENTIAL
SECURITIES" in the Proxy Statement is hereby incorporated by reference.
ITEM 16. ADDITIONAL INFORMATION.
The information set forth in the Proxy Statement and the Appendices thereto
and the Exhibits hereto is incorporated herein by reference.
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS.
2.1 -- Agreement and Plan of Merger, dated April 13, 1999, among
the Company, the Parent and the Acquiror, which is
incorporated herein by reference from Appendix A to the Proxy
Statement.
99.1 -- Proxy Statement filed by the Company with the Commission on
even date hereof and hereby incorporated by reference.
Page 10 of 13 Pages
<PAGE>
99.2 -- Letter to Shareholders of the Company from David F.
Marshall, President and Chief Executive Officer of the
Company, filed by the Company with the Commission on even date
hereof and hereby incorporated by reference.
99.3 -- Notice of Special Meeting of the Shareholders of the
Company filed by the Company with the Commission on even date
hereof and hereby incorporated by reference.
99.4 -- Fairness opinion, dated April 13, 1999, of Lazard Freres &
Co. LLC, financial advisor to the Board of Directors, which is
incorporated herein by reference from Appendix B to the Proxy
Statement.
99.5 -- Fairness opinion, dated April 13, 1999 of Lehman Brothers
Inc., financial advisor to the Board of Directors, which is
incorporated by reference from Appendix C to the Proxy
Statement.
99.6 -- Fairness opinion, dated April 13, 1999, of Prudential
Securities Incorporated, financial advisor to the Special
Committee, which is incorporated by reference from Appendix D
to the Proxy Statement.
99.7 -- Section 262 of the Delaware General Corporation Law, which
is incorporated by reference from Appendix E to the Proxy
Statement.
99.8 -- Debt Commitment Letter, dated April 13, 1999, among the
Parent, Whitehall Street Real Estate Limited Partnership XI
and Blackstone Real Estate Acquisitions III.
99.9 -- Voting Agreement, dated April 13, 1999, between the Company
and Douglas Krupp.
99.10 -- Agreement of Limited Partnership of Berkshire Realty
Holdings, L.P., dated April 13, 1999, among Whitehall Street
Real Estate Limited Partnership XI, WXI/BRH Gen-Par, L.L.C.,
Stone Street Real Estate Fund 1998, L.P., Bridge Street Real
Estate Fund 1998, L.P., Stone Street WXI/BRH Corp.,
BRE/Berkshire LP L.L.C., BRE/Berkshire GP L.L.C., Aptco
Holdings, L.L.C. and Aptco Gen-Par, L.L.C.
99.11 -- Letter Agreement, dated April 13, 1999, among the partners
of Berkshire Realty Holdings, L.P.
` Page 11 of 13 Pages
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Dated: June 23, 1999
BRI ACQUISITION LLC
BY /s/DOUGLAS S. KRUPP
-----------------------------------------
DOUGLAS S. KRUPP
Authorized Signatory
BERKSHIRE REALTY HOLDINGS, L.P.
By /s/DOUGLAS S. KRUPP
-----------------------------------------
DOUGLAS S. KRUPP
Authorized Signatory
BERKSHIRE REALTY COMPANY, INC.
By /s/ DAVID F. MARSHALL
-----------------------------------------
DAVID F. MARSHALL
President and Chief Executive Officer
Page 12 of 13 Pages
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
2.1 -- Agreement and Plan of Merger, dated April 13, 1999, among the
Company, the Parent and the Acquiror, which is incorporated
herein by reference from Appendix A to the Proxy Statement.
99.1 -- Proxy Statement filed by the Company with the Commission on
even date hereof and hereby incorporated by reference.
99.2 -- Letter to Shareholders of the Company from David F. Marshall,
President and Chief Executive Officer of the Company, filed by
the Company with the Commission on even date hereof and hereby
incorporated by reference.
99.3 -- Notice of Special Meeting of the Shareholders of the Company
filed by the Company with the Commission on even date hereof and
hereby incorporated by reference.
99.4 -- Fairness opinion, dated April 13, 1999, of Lazard Freres & Co.
LLC, financial advisor to the Board of Directors, which is
incorporated herein by reference from Appendix B to the Proxy
Statement.
99.5 -- Fairness opinion, dated April 13, 1999 of Lehman Brothers
Inc., financial advisor to the Board of Directors, which is
incorporated by reference from Appendix C to the Proxy Statement.
99.6 -- Fairness opinion, dated April 13, 1999, of Prudential
Securities Incorporated, financial advisor to the Special
Committee, which is incorporated by reference from Appendix D to
the Proxy Statement.
99.7 -- Section 262 of the Delaware General Corporation Law, which is
incorporated by reference from Appendix E to the Proxy Statement.
99.8 -- Debt Commitment Letter, dated April 13, 1999, among the
Parent, Whitehall Street Real Estate Limited Partnership XI and
Blackstone Real Estate Acquisitions III.
99.9 -- Voting Agreement, dated April 13, 1999, between the Company
and Douglas Krupp.
99.10 -- Agreement of Limited Partnership of Berkshire Realty Holdings,
L.P., dated April 13, 1999, among Whitehall Street Real Estate
Limited Partnership XI, WXI/BRH Gen-Par, L.L.C., Stone Street
Real Estate Fund 1998, L.P., Bridge Street Real Estate Fund 1998,
L.P., Stone Street WXI/BRH Corp., BRE/Berkshire LP L.L.C.,
BRE/Berkshire GP L.L.C., Aptco Holdings, L.L.C. and Aptco
Gen-Par, L.L.C.
99.11 -- Letter Agreement, dated April 13, 1999, among the partners of
Berkshire Realty Holdings, L.P.
Page 13 of 13 Pages
<PAGE>
EXHIBIT 99.8
April 13, 1999
CONFIDENTIAL
Berkshire Realty Holdings, L.P.
c/o The Berkshire Group
One Beacon Street
Boston, Massachusetts 02108
Attn: Douglas S. Krupp, CEO
Re: COMMITMENT LETTER
Ladies and Gentlemen:
Affiliates of Douglas S. Krupp ("Krupp"), Blackstone Real Estate Acquisitions
III L.L.C. ("Blackstone") and Whitehall Street Real Estate Limited Partnership
XI ("Whitehall" and, collectively with Krupp and Blackstone and/or their
affiliates, the "Investors") have formed and intend to capitalize Berkshire
Realty Holdings, L.P., a Delaware limited partnership ("Holdings"), which will
propose a transaction to the Board of Directors of a publicly held Delaware
corporation ("Bruin"), pursuant to which (i) Bruin would merge with Holdings and
all the outstanding Bruin capital stock (and rights to acquire Bruin capital
stock) being converted in the merger into the right to receive cash equal to a
price per share (and total purchase price) not to exceed $ 12.25 per share (the
"Bruin Merger") and (ii) immediately prior to such merger, a subsidiary of
Holdings would be merged into BRI OP Limited Partnership, a Delaware limited
partnership ("OP"), in a transaction pursuant to which OP and OP's current
general partner ("OP GP") would become wholly owned by Holdings (the "OP Merger"
and together with the Bruin Merger, the "Transaction"). Currently, 79.16% of the
partnership interests of OP are directly or indirectly owned by Bruin. This
letter is referred to herein as the Commitment Letter.
Financing of $755 million, but in no event in excess of 75.5% of the Transaction
Value (as defined below) is being sought by you in connection with the
Transaction (the "Facility"). A portion of the proceeds of the Facility would be
made available to Holdings to finance a portion of the consideration to be paid
to Bruin stockholders and option/warrantholders in the Bruin Merger and the cash
option in the OP Merger. Additional information regarding the Transaction is set
forth in the partnership agreement of Holdings among the Investors and the draft
agreements for the Bruin Merger and the OP Merger which you have furnished to us
(the "Partnership Agreement").
Based on our understanding of the Transaction as set forth above and in other
documents referred to above, and the other information which you have provided
to us, each of Whitehall and Blackstone commits to provide, on a several and not
joint basis, 50% of the Facility on the terms and subject to the conditions set
forth herein (provided that Whitehall shall not be obligated to fund its portion
of the Facility unless Blackstone funds its portion of the Facility, and
Blackstone shall not be obligated to fund its portion of the Facility unless
Whitehall funds its portion of the Facility).
<PAGE>
LENDERS: Whitehall and Blackstone, together with their respective
permitted participants and co-lenders (each, a "Lender" and,
collectively the "Lenders").
TRANSFERABILITY: Prior to closing, Borrower and Lenders will agree upon the
terms pursuant to which Lenders may transfer their interest
in the loan (it being understood and agreed that Lenders may
sell participation interests in the loan, provided that
Whitehall retains the agent role).
BORROWER: OP and/or, at Lenders' election, certain other
property-owning OP subsidiaries.
GUARANTORS: Holdings and those OP subsidiaries owning the 58 properties
identified on Schedule I hereto which are not borrowers. In
addition, Guarantors shall include all other subsidiaries of
OP for which no third party consent for such guarantee is
required or as to which all required third party consents
have been obtained (as to special purpose entities, OP shall
arrange for charter amendments, as necessary to permit
granting of guarantees). Borrower and Guarantors to use all
commercially reasonable efforts to obtain such consents. The
Investors (or special purpose entities holding the
Investors' interest in Holdings) shall be non-recourse
guarantors of the Loan, to be secured by an assignment or
pledge of their interests in Holdings (see "Security"
below).
AMOUNT: $755 million in the aggregate, but in no event in excess of
75.5% of the Transaction Value, defined as the aggregate of
(i) the cash required to consummate the Transaction, (ii)
assumed debt of at least $233,000,000, (iii) equity
contributed or deemed contributed by Investors and (iv) all
fees and expenses of Holdings and its subsidiaries relating
thereto. The amount borrowed under the Facility is referred
to as the Loan. Borrower may borrow less than the entire
Loan at closing. In such event, the collateral to secure the
Loan will be reduced in accordance with loan allocation
amounts among the properties (such allocated loan amounts
shall be agreed upon by the Lenders and Borrower before the
merger agreement is signed).
2
<PAGE>
TERM: Twelve (12) months from initial funding.
USE OF PROCEEDS: Proceeds will be used to finance a portion of the aggregate
consideration to be paid by Holdings in the Bruin Merger, as
needed to fund the cash option in the OP Merger, to
refinance specified existing indebtedness of OP and its
subsidiaries, to repay intercompany indebtedness owed to
Bruin to enable Bruin to finance the redemption of its
outstanding Series A Preferred Stock, and to fund certain
fees and expenses associated with the Transaction.
INTEREST:
RATE: Absent a default, the Loan will bear interest at the rate of
3.75% above the reserve adjusted London Interbank Offered
Rate ("LIBOR Rate") for one month interest periods;
PROVIDED, HOWEVER, that notwithstanding the foregoing, the
minimum interest rate shall at all times be 8.65%.
PAYMENT DATES: Interest will be payable monthly.
OTHER TERMS: All interest will be calculated based on a 360-day year and
actual days elapsed. The financing documentation will
contain (a) customary LIBOR breakage provisions and LIBOR
borrowing mechanics, (b) LIBOR Rate definitions and (c)
customary provisions for determination of interest in the
event that LIBOR is not available for any period.
DEFAULT RATE: From and after the occurrence of a default, the interest
rates applicable to the Loan will be increased by 2% per
annum over the interest rate otherwise applicable and such
interest and fees will be payable on demand.
COMMITMENT FEE: 1.0% of the maximum amount of the Facility, payable at
the drawing of the Facility upon the closing of the
Transaction.
STRUCTURING FEE: 0.25% of the maximum amount of the Facility, payable at
the same time as the commitment fee.
TAKEDOWN FEE: 0.50% of the amount borrowed, payable upon borrowing.
3
<PAGE>
REPAYMENT FEE: A repayment fee of 0.50% of the then outstanding amount
of the Facility, if any, shall be due on June 15, 2000.
PREPAYMENTS: Borrowers may voluntarily prepay all or any portion of the
Loan in minimum amounts of $1 million at any time, upon at
least 5 days' prior written notice. All voluntary
prepayments will be accompanied by LIBOR breakage costs, if
any.
SECURITY: First mortgage liens (recorded) and title insurance on 58
properties identified on Schedule I hereto. Pledge by
Holdings of entire equity of OP GP. In addition, the
Investors (or special purpose entities holding the
Investors' interest in Holdings) will guarantee the Loan (on
a non- recourse basis) and assign or pledge their interest
in Holdings as security for such guaranty. At Lenders'
election, a first priority perfected lien on and security
interest in all assets of Holdings, OP and the subsidiaries
of OP not covered by the preceding sentences to the extent
available without the requirement to obtain any third party
consent or as to which all required third party consents are
obtained. Borrower and Guarantors to use all commercially
reasonable efforts to obtain such consents. Lenders will
have dominion over all cash if requested by Whitehall and
Blackstone, which arrangement shall permit the release of
cash to Borrower and Guarantors absent a default; provided,
however, that to the extent that the holders of debt in
respect of the 24 properties identified on Schedule II
hereto shall have the right to and shall prohibit such an
arrangement, Lenders shall not be entitled to same. The Loan
will be cross-collateralized and cross-defaulted in a manner
satisfactory to Lenders. The Parties will use reasonable
good faith efforts to minimize or avoid mortgage recording
taxes and title insurance premiums on the 58 properties on
Schedule I; it being understood that there will be no
mortgages or title insurance obtained with respect to the 24
properties on Schedule II.
4
<PAGE>
PARTIAL RELEASES Permitted in connection with third party sales and certain
FROM MORTGAGE OR partial refinancings provided that Lenders receive at least
NEGATIVE COVENANT: minimum release prices based on allocated loan amounts to be
agreed upon by the parties. Minimum release price is to be
equal to greater of the property's allocated loan amount or
100% of sale or refinancing proceeds capped at 110% of the
property's allocated loan amount. Borrower and Lenders to
agree on allocated loan amounts prior to the execution of
the merger agreement.
DOCUMENTATION: The documentation for the Financing will contain
representations and warranties, conditions precedent
described below, closing document deliveries and similar
customary conditions precedent, affirmative and negative
covenants (but no financial ratios, maintenance or other
similar financial condition tests), indemnities, events of
default and remedies, in each case customarily found in
documentation for similar transactions. The OP and/or
Holdings will provide customary environmental indemnity to
the Lenders. This Commitment Letter does not contain all the
terms that will be included in the documentation for the
Financing.
CONDITIONS: The commitment of Lenders for the Facility is conditioned
upon satisfaction of all the following (all to Lenders'
satisfaction):
- Relevant documents, such as all transaction documents
for the Bruin Merger and the OP Merger and other
material agreements to which Borrower is a party,
must be acceptable to Lenders in all material
respects.
- The Bruin Merger and the OP Merger each shall have
been consummated in compliance with all applicable
law and regulations.
- The material terms of the Bruin Merger and the OP
Merger, including, without limitation, the
consideration offered and the conditions precedent,
shall not have been modified, amended or
5
<PAGE>
supplemented in any respect and no provision
contained therein shall have been waived, without
Lenders' prior written consent.
- All necessary governmental and material third party
waivers and consents shall have been received.
- Receipt of opinions of counsel from Borrower's
counsel (including local counsel as requested)
reasonably acceptable to Lenders.
- Receipt of customary mortgage title insurance
policies, existing land surveys, evidence of
insurance and addition of Lenders as loss payees, and
the like.
- Absence of a default under the Financing.
- Holdings shall have received the equity from
Blackstone and Whitehall contemplated by the Summary
of Terms (I.E., a minimum of $125 million from each),
and not less than 5,416,000 shares of Bruin stock
and/or OP Units currently owned by Krupp and his
affiliates.
- The Transaction shall have closed, and the Loan shall
have been drawn, no later than December 31, 1999 (the
"Commitment Termination Date").
- Definitive agreements for the Bruin Merger and the OP
Merger shall have been executed by April 14, 1999,
PROVIDED, HOWEVER, that if definitive agreements are
not executed by April 14, 1999 and Lenders do not
extend this Commitment Letter, this Commitment Letter
will terminate and neither Borrower nor Lenders will
be liable hereunder.
OTHER TERMS: The documentation for the Facility will require, among other
things, compliance with covenants pertaining to the
following (all in form and substance satisfactory to
Lenders):
6
<PAGE>
- Financial reporting on a monthly basis. All financial
statements shall be prepared on a consolidated and
consolidating basis.
- Compliance with all applicable law, decrees and
material agreements, or obtaining of applicable
consents and waivers.
- Limitations on commercial transactions, management
agreements, service agreements and borrowing
transactions with officers, directors, employees and
affiliates.
- Prohibition on new indebtedness, other than the
Facility, and other than refinancings of existing
indebtedness (i) in respect of the 24 properties
listed on Schedule II, provided the same are on terms
not materially more onerous to the Borrower than the
existing indebtedness being refinanced and (ii) in
respect of the 58 properties identified on Schedule
I, provided that payment of the appropriate release
price is made.
- Prohibitions on liens, mortgages and security
interests except those in existence and identified,
those incurred in connection with permitted
refinancings, and liens on indebtedness permitted to
be incurred for the financing of permitted purchases
of properties which liens are limited to the
properties purchased, and which obligations are
solely those of the property owning subsidiary.
- Limitations on, or prohibitions of, cash dividends,
other distributions to equity holders, payments in
respect of subordinated debt and redemption of common
or preferred stock. Such limitations and/or
prohibitions shall not preclude, in the absence of a
default under the Loan, distributions to certain OP
Unit Holders who convert their interests to Class A
(Preferred) Interests or tax distributions, as
contemplated by the Holdings partnership agreement.
7
<PAGE>
- Limitations on mergers, acquisitions, or sale of a
material portion of assets (other than sales
accompanied by payment of specified release prices).
- Prohibitions of a direct or indirect change in
control of Borrower or Holdings (other than changes
which increase the control of Whitehall and
Blackstone). The foregoing shall not prohibit any
change in ownership within Whitehall or Blackstone.
- Customary provisions regarding responsibility for
misappropriation of funds.
- Limitations on capital expenditures.
- Agent's and Lenders' rights of inspection and access
to facilities, management and auditors.
- Payment of Lenders' costs and expenses in
documenting, closing and servicing the Loan
(including reasonable attorneys' fees and costs,
title insurance premiums and mortgage recording
taxes).
- Escrow for real estate taxes.
- Governing law: New York.
The commitment of Lenders hereunder is subject to the execution and delivery of
final legal documentation acceptable to Lenders and their counsel incorporating,
without limitation, the terms set forth in this Commitment Letter and other
terms satisfactory to the Lenders.
By signing this Commitment Letter, you acknowledge that this Commitment Letter
supersedes any and all discussions and understandings, written or oral, between
or among Lenders and any other person as to the Facility, including any prior
commitment letters for debt financing for the Transaction. No amendments,
waivers or modifications of this Commitment Letter or any of its contents shall
be effective unless expressly set forth in writing and executed by you and
Lenders.
This letter and the agreements contained herein are solely for the benefit of
Holdings and do not confer upon any other person or entity (including, without
limitation, any partner in Holdings) any rights or remedies and may not be
enforced by any person or entity other than
8
<PAGE>
Holdings. As described above, the commitments of Whitehall and Blackstone
hereunder are several and not joint and are subject to all of the terms of this
Commitment Letter, including, without limitation, the conditions to the
obligations of the Lenders hereunder.
This Commitment Letter is being provided to you on the condition that, except as
required by law or SEC Regs (as defined below), neither it nor its contents will
be disclosed publicly or privately except to those individuals who are your
advisors who have a need to know of them as a result of their being specifically
involved in the Bruin Merger and the OP Merger and the Facility and then only on
the condition that such matters may not, except as required by law or
regulations of the Securities and Exchange Commission ("SEC Regs"), be further
disclosed and except that, following your acceptance hereof, you may disclose
this Commitment Letter to Bruin and its advisors. No person, other than the
parties signatory hereto, is entitled to rely upon this Commitment Letter or any
of its contents. No person shall, except as required by law or SEC Regs, use the
name of, or refer to Lenders or any of their respective affiliates, in any
correspondence, discussions, press release, advertisement or disclosure made in
connection with the Transaction without the prior written consent of Lenders.
You agree to indemnify and hold harmless each Lender, and its affiliates, and
the directors, officers, employees, agents, attorneys and representatives of any
of them (each, an "Indemnified Person"), from and against all suits, actions,
proceedings, claims, damages, losses, liabilities and expenses (including, but
not limited to, reasonable attorneys' fees and disbursements and other costs of
investigation or defense, including those incurred upon any appeal), which may
be instituted or asserted against or incurred by any such Indemnified Person in
connection with, or arising out of, this Commitment Letter, the Financing, the
documentation related thereto, any actions or failures to act in connection
therewith, and any and all environmental liabilities and legal costs and
expenses arising out of or incurred in connection with any disputes between or
among any parties to any of the foregoing, and any investigation, litigation, or
proceeding related to any such matters. Your obligation for such reimbursement
may be assumed by Borrower at closing. Notwithstanding the foregoing, no
indemnitor shall be liable for any indemnification to any Indemnified Person to
the extent that any such suit, action, proceeding, claim, damage, loss,
liability or expense results solely from that Indemnified Person's gross
negligence or willful misconduct, as finally determined by a court of competent
jurisdiction. Under no circumstances shall any Lender, or any of its affiliates
be liable to you or any other person for any punitive, exemplary, consequential
or indirect damages in connection with this Commitment Letter, the Facility or
the documentation related thereto, regardless of whether the commitment herein
is terminated or the Transaction or the Facility closes. For purposes of this
paragraph, the term "affiliate" shall not include any affiliated entity which is
an Investor.
You and Lenders expressly waive any right to trial by jury of any claim, demand,
action or cause of action arising in connection with this Commitment Letter, any
transaction relating hereto, or any other instrument, document or agreement
executed or delivered in connection herewith, whether sounding in contact, tort
or otherwise. You and Lenders consent and agree
9
<PAGE>
that the state or federal courts located in New York County, City of New York,
New York, shall have exclusive jurisdiction to hear and determine any claims or
disputes between or among any of the parties hereto pertaining to this
Commitment Letter or the Facility under consideration and any investigation,
litigation, or proceeding related to or arising out of any such matters,
PROVIDED, HOWEVER, that you and Lenders acknowledge that any appeals from those
courts may have to be heard by a court located outside of such jurisdiction. You
and Lenders expressly submit and consent in advance to such jurisdiction in any
action or suit commenced in any such court, and hereby waive any objection which
either of them may have based upon lack of personal jurisdiction, improper venue
or inconvenient forum. The definitive documentation for the Facility shall
contain Borrower's and Guarantors' agreement to the foregoing.
This Commitment Letter is governed by and shall be construed in accordance with
the law of the State of New York applicable to contracts made and performed in
that State.
Lenders shall have access to all relevant facilities, personnel and accountants,
and copies of all documents which Lenders may reasonably request, including
business plans, financial statements (historical and pro forma), books, records,
and other documents. Lenders agree to treat any confidential information so
received as they would their own confidential information.
This Commitment Letter shall be of no force and effect unless and until this
Commitment Letter is executed and delivered to Lenders on or before 5:00 p.m.
New York City time on April 14, 1999, at both (i) 85 Broad Street, New York, New
York 10004 and (ii) 345 Park Avenue, 31st Floor, New York, New York 10154. Once
effective, the commitment of Lenders to provide financing in accordance with the
terms of this Commitment Letter shall terminate if the Bruin Board of Directors
rejects Holdings's proposal relating to the Transaction or if definitive
agreements have not been executed by April 14, 1999 (in which case, none of the
Holdings, the Investors or their respective affiliates shall have any liability
hereunder whether on account of fees, reimbursement obligations or otherwise) or
if the Loan does not close by the Commitment Termination Date.
10
<PAGE>
We look forward to continuing to work with you toward completing this
transaction.
Sincerely,
WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP XI
By: WH ADVISORS, L.L.C., XI,
its General Partner
By: /s/ Steven M. Feldman
---------------------------------------
Name: Steven M. Feldman
Title: Vice President
BLACKSTONE REAL ESTATE ACQUISITIONS III
By: /s/ Kenneth C. Whitney
---------------------------------------
Name: Kenneth C. Whitney
Title: Vice President
AGREED AND ACCEPTED THIS
13th DAY OF APRIL, 1999.
BERKSHIRE REALTY HOLDINGS, L.P.
By: /s/ Douglas Krupp
- ---------------------------------------
11
<PAGE>
SCHEDULE I
<TABLE>
<S> <C>
1. Lynn Lake* 30. Berkshires of Addison (Summer Place)
2. Prescott Place II 31. Carlyle Place
3. Park Colony 32. Diamond Ridge
4. Woodland Meadows 33. Hilltop
5. Berkshire West (Polos West) 34. Hunters Glen
6. Golfside (Conventry) 35. Huntington Brook
7. Westchester West 36. Huntington Lake
8. 6200 Gassner 37. Huntington Ridge
9. Berkshire Crossing (Lodge) 38. Liriope
10. Berkshire Springs 39. Providence (Newport Commons)
11. Avalon at Abernathy 40. Ridgeview Chase
12. East Lake Village 41. Stoneledge Plantation
13. Huntington Downs 42. Sunchase
14. Lakes at Jacaranda 43. Sweetwater Ranch
15. Southpoint Massapequa 44. Yorktown
16. Altamonte Bay Club 45. Berkshires at Crooked Creek
17. Huntington Chase at Indian Trail 46. Arbors at Breckinbridge
18. Newport 47. British Woods
19. Timbers 48. Highland Ridge (Chestnut Hill)
20. Brookwood Valley 49. Prescott Place
21. Brookfield Trace/The Berkshires 50. Roper Mountain Woods
22. Cumberland Cove 51. Windover
23. Indigo on Forest 52. Bluffs of Berkshire
24. The Oaks 53. The Channel (Heritage Hills)
25. Pleasant Woods (Hidden Oaks) 54. The Cove (Washington Square)
26. River Oaks 55. Granite Run
27. Arbor Keys (Seven Winds) 56. Harper's Mill
28. Benchmark 57. The Lighthouse (Lamplighter)
29. Berkshire Hills (Pinto Ridge) 58. Oaks of Marymount
</TABLE>
- --------
* Subject to refinancing restriction. If Holdings is unable to
refinance and grant Lenders a first priority mortgage in
this property, Holdings will substitute a property having a
substantially similar value.
<PAGE>
SCHEDULE II
1. Berkshire Towers
2. Calvert's Walk
3. Courtleigh
4. Coventry
5. Rolling Wind
6. Stratton Meadows
7. Olde Forge
8. Plantation Colony
9. Kings Crossing
10. Kingwood Lake
11. River Parkway
12. Fairway Ridge
13. Pines at Dunwoody
14. Essex House
15. Highlands at Briarcliff
16. Hazelcrest
17. Kingswood Common II
18. Heraldry Square
19. Warren Park
20. Kingwood Common I
21. Jamestowne
22. Estates
23. Arborview
24. Wiliston
<PAGE>
EXHIBIT 99.9
VOTING AGREEMENT
This Agreement is made as of April 13, 1999 by and among Douglas S.
Krupp ("Krupp"), Berkshire Realty Company, Inc., a Delaware corporation (the
"Company") and BRI OP Limited Partnership, a Delaware limited partnership (the
"Partnership").
WHEREAS, the Company, Berkshire Realty Holdings, L.P. ("Parent") and
BRI Acquisition, LLC (the "Buyer") have entered into an Agreement and Plan of
Merger dated as of the date hereof (the "Merger Agreement") providing for the
merger of the Buyer with and into the Company as the surviving entity; and
WHEREAS, the Partnership, Parent and BRI Acquisition Sub, LP have
entered into an Agreement and Plan of Merger dated as of the date hereof (the
"Partnership Merger Agreement") providing for the merger of BRI Acquisition Sub,
LP with and into the Partnership, with the Partnership as the surviving entity;
and
WHEREAS, Krupp and persons or entities affiliated with Krupp
(collectively, the "Krupp Entities") own shares of common stock, $.01 par value
per share, of the Company ("Common Stock") and units of limited partnership
interest in the Partnership ("OP Units"); and
WHEREAS, in order to induce the Company and the Partnership to enter
into the Merger Agreement and the Partnership Merger Agreement, respectively,
Krupp is making the covenants set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Krupp agrees to cause each of the Krupp Entities (i) to vote the
Common Stock they own (including any Common Stock issued after the date hereof)
in favor of adoption of the Merger Agreement and approval of the transactions
contemplated thereby and (ii) to vote the OP Units they own (including any OP
Units issued after the date hereof) in favor of adoption of the Partnership
Merger Agreement and approval of the transactions contemplated thereby.
2. Krupp agrees, on behalf of the Krupp Entities that own Common Stock
or subsequently are issued Common Stock, that no such Krupp Entity shall demand
appraisal rights pursuant to Section 262 of the Delaware General Corporation Law
of the State of Delaware with respect to such shares of Common Stock in
connection with the transactions contemplated by the Merger Agreement.
3. Krupp shall be relieved from his obligations hereunder if the Board
of Directors of the Company withdraws its recommendation that stockholders of
the Company vote to adopt the Merger Agreement and approve the transactions
<PAGE>
contemplated thereby or if the Board of Directors of the Company fails to
confirm its recommendation with respect to the Merger Agreement within ten days
of being requested to do so by the Buyer.
4. This Agreement constitutes the entire agreement among the parties
hereto and supersedes any prior understandings, agreements or representations by
or between the parties, written or oral, that may have related in any way to the
subject matter hereof.
5. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Delaware (without regard to any
conflicts-of-law principles that would result in the application of the law of
any other jurisdiction).
6. No amendment of any provision of this Agreement shall be valid
unless the same shall be in writing and signed by Krupp and the Company.
7. Krupp acknowledges and agrees that the Company would be damaged
irreparably in the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise are breached.
Accordingly, Krupp agrees that the Company shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any state thereof having
jurisdiction over the parties and the matter, in addition to any other remedy to
which the Company may be entitled, at law or in equity.
8. This Agreement shall terminate upon the termination of the Merger
Agreement, provided that Krupp shall remain liable for any breaches of this
Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
/s/ Douglas S. Krupp
-----------------------------------------
Douglas S. Krupp
BERKSHIRE REALTY COMPANY, INC.
By: /s/ David F. Marshall
---------------------------------------
Name: David F. Marshall
Title: Chief Executive Officer
BRI OP Limited Partnership
By: Berkshire Apartments, Inc., its general
partner
By: /s/ David F. Marshall
---------------------------------------
Name: David F. Marshall
Title: President and Chief Executive
Officer
<PAGE>
EXHIBIT 99.10
AGREEMENT OF LIMITED PARTNERSHIP
OF
BERKSHIRE REALTY HOLDINGS, L.P.
THE INTERESTS OF THE GENERAL PARTNERS AND THE LIMITED PARTNERS ISSUED UNDER THIS
AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE
SECURITIES ACT OF ANY STATE OR THE DISTRICT OF COLUMBIA. NO RESALE OF AN
INTEREST BY A LIMITED PARTNER IS PERMITTED EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF THIS AGREEMENT AND ANY APPLICABLE FEDERAL OR STATE SECURITIES
LAWS, AND ANY VIOLATION OF SUCH PROVISIONS COULD EXPOSE THE SELLING LIMITED
PARTNER AND THE PARTNERSHIP TO LIABILITY.
DATED AS OF APRIL 13, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE 1.
DEFINITIONS
1.1 DEFINITIONS.....................................................................................2
1.2 TERMS GENERALLY...............................................................................14+
ARTICLE 2.
THE PARTNERSHIP AND ITS BUSINESS
2.1 PARTNERSHIP NAME...............................................................................14
2.2 TERM...........................................................................................15
2.3 FILING OF CERTIFICATE AND AMENDMENTS...........................................................15
2.4 BUSINESS; SCOPE OF PARTNERS' AUTHORITY.........................................................15
2.5 PRINCIPAL OFFICE; REGISTERED AGENT.............................................................15
2.6 NAMES AND ADDRESSES OF THE PARTNERS............................................................16
2.7 REPRESENTATIONS BY THE PARTNERS................................................................17
2.8 CONTROL OF THE BERKSHIRE GROUP.................................................................18
2.9 PRE-CLOSING COSTS AND EXPENSES.................................................................18
2.10 COMPLIANCE WITH CERTAIN AGREEMENTS.............................................................19
2.11 MISCELLANEOUS..................................................................................19
ARTICLE 3.
MANAGEMENT OF PARTNERSHIP BUSINESS;
POWERS AND DUTIES OF THE ADMINISTERING GENERAL PARTNER
3.1 MANAGEMENT AND CONTROL.........................................................................19
3.2 ROLE OF THE ADMINISTERING GENERAL PARTNER AND LIMITATIONS ON ITS AUTHORITY.....................20
3.3 MAJORITY DECISIONS.............................................................................24
3.4 UNANIMOUS DECISIONS............................................................................27
3.5 CONSENTS OF GENERAL PARTNERS...................................................................29
3.6 MEETINGS OF GENERAL PARTNERS; ETC. ...........................................................30
3.7 NO PARTICIPATION BY OR AUTHORITY OF LIMITED PARTNERS; LIMITED RIGHTS...........................30
3.8 ACTS OF THE PARTNERSHIP AND THE PARTNERS; REPRESENTATIVES......................................31
3.9 WAIVER OF RIGHTS BY THE LIMITED PARTNERS.......................................................31
3.10 SALES OF CERTAIN PROPERTIES BY WHGP AND BLACKSTONE GP..........................................32
ARTICLE 4.
RIGHTS AND DUTIES OF PARTNERS
4.1 DUTIES AND OBLIGATIONS OF THE ADMINISTERING GENERAL PARTNER....................................32
4.2 OTHER ACTIVITIES OF THE PARTNERS...............................................................33
4.3 INDEMNIFICATION................................................................................34
4.4 COMPENSATION OF PARTNERS AND THEIR AFFILIATES; GOLDMAN, SACHS & CO. AS FINANCIAL
ADVISOR......................................................................................34
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4.5 DEALING WITH PARTNERS..........................................................................36
4.6 USE OF PARTNERSHIP PROPERTY....................................................................36
4.7 DESIGNATION OF TAX MATTERS PARTNER.............................................................36
4.8 GUARANTEES.....................................................................................37
ARTICLE 5.
BOOKS AND RECORDS; ANNUAL REPORTS
5.1 BOOKS OF ACCOUNT...............................................................................39
5.2 AVAILABILITY OF BOOKS OF ACCOUNT...............................................................39
5.3 ANNUAL REPORTS AND STATEMENTS; ANNUAL BUDGETS AND BUSINESS PLANS...............................39
5.4 ACCOUNTING AND OTHER EXPENSES..................................................................40
5.5 BANK ACCOUNT...................................................................................41
ARTICLE 6.
CAPITAL CONTRIBUTIONS, LOANS
AND LIABILITIES
6.1 INITIAL CAPITAL CONTRIBUTIONS OF THE PARTNERS..................................................41
6.2 ADDITIONAL CONTRIBUTIONS.......................................................................43
6.3 DILUTION FOR FAILURE TO FUND CAPITAL CALLS.....................................................44
6.4 CAPITAL OF THE PARTNERSHIP.....................................................................46
6.5 LIABILITY OF GENERAL PARTNERS..................................................................46
6.6 LIMITED LIABILITY OF LIMITED PARTNERS..........................................................46
ARTICLE 7.
CAPITAL ACCOUNTS, PROFITS
AND LOSSES AND ALLOCATIONS
7.1 CAPITAL ACCOUNTS...............................................................................46
7.2 PROFITS AND LOSSES.............................................................................47
ARTICLE 8.
APPLICATIONS AND DISTRIBUTIONS
OF AVAILABLE CASH
8.1 APPLICATIONS AND DISTRIBUTIONS.................................................................52
8.2 LIQUIDATION....................................................................................54
ARTICLE 9.
TRANSFER OF COMPANY INTERESTS
9.1 LIMITATIONS ON ASSIGNMENTS OF INTERESTS BY PARTNERS............................................54
9.2 SALE OF ALL OF THE PROPERTIES BEFORE THE FIFTH ANNIVERSARY OF THE CLOSING DATE AT THE
OPTION OF BERKSHIRE..........................................................................57
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9.3 SALE OF ALL OF THE PROPERTIES BEFORE THE FIFTH ANNIVERSARY OF THE CLOSING DATE AT THE
OPTION OF TWO GENERAL PARTNERS...............................................................62
9.4 SALE OF THE PROPERTIES AFTER THE FIFTH ANNIVERSARY.............................................63
9.5 ASSIGNMENT BINDING ON PARTNERSHIP..............................................................64
9.6 BANKRUPTCY OF A LIMITED PARTNER................................................................64
9.7 SUBSTITUTED PARTNERS...........................................................................64
9.8 ACCEPTANCE OF PRIOR ACTS.......................................................................65
9.9 ADDITIONAL LIMITATIONS.........................................................................65
9.10 PURCHASE OF THE BERKSHIRE GROUP'S INTEREST UPON THE TERMINATION OF DOUGLAS KRUPP'S
EMPLOYMENT UNDER THE DK EMPLOYMENT AGREEMENT.................................................65
9.11 TRANSFERS BY THE BLACKSTONE GROUP AND THE WHITEHALL GROUP......................................66
9.12 PURCHASE OF THE CLASS A PREFERRED UNITS AND CLASS B UNITS......................................67
9.13 SUBSEQUENT TRANSACTIONS........................................................................69
ARTICLE 10.
DISSOLUTION OF THE PARTNERSHIP;
WINDING UP AND DISTRIBUTION OF ASSETS
10.1 DISSOLUTION....................................................................................71
10.2 WINDING UP.....................................................................................72
10.3 DISTRIBUTION OF ASSETS.........................................................................73
10.4 SPECIAL ALLOCATION.............................................................................73
ARTICLE 11.
AMENDMENTS
11.1 AMENDMENTS.....................................................................................74
11.2 ADDITIONAL PARTNERS............................................................................74
ARTICLE 12.
MISCELLANEOUS
12.1 FURTHER ASSURANCES.............................................................................74
12.2 NOTICES........................................................................................74
12.3 HEADINGS AND CAPTIONS..........................................................................75
12.4 VARIANCE OF PRONOUNS...........................................................................75
12.5 COUNTERPARTS...................................................................................75
12.6 GOVERNING LAW..................................................................................75
12.7 CONSENT TO JURISDICTION........................................................................75
12.8 ARBITRATION....................................................................................76
12.9 PARTITION......................................................................................76
12.10 INVALIDITY.....................................................................................76
12.11 SUCCESSORS AND ASSIGNS.........................................................................76
12.12 ENTIRE AGREEMENT...............................................................................77
12.13 WAIVERS........................................................................................77
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12.14 NO BROKERS.....................................................................................77
12.15 MAINTENANCE AS A SEPARATE ENTITY...............................................................77
12.16 CONFIDENTIALITY................................................................................77
12.17 NO THIRD PARTY BENEFICIARIES...................................................................78
12.18 POWER OF ATTORNEY..............................................................................78
12.19 CONSTRUCTION OF DOCUMENTS......................................................................79
12.20 TIME OF ESSENCE................................................................................79
12.21 DEFAULT BY PARTNERSHIP.........................................................................79
</TABLE>
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SCHEDULES
<TABLE>
<S> <C>
Schedule 1.1(a) Properties; Preliminary Loan Amounts
Schedule 2.6(b) Names and Addresses of Partners
Schedule 2.7(c) Shares of Common Stock of BRI Owned by the Berkshire
Principals that will not be Contributed to the Partnership
Schedule 2.10 Contribution Agreements
Schedule 3.2(a)(19) List of Ten Assets to be Sold
Schedule 3.2(a)(20) Allocated Acquisition Cost of Each Asset
Schedule 3.8 Representatives of the General Partners
Schedule 4.2(b) Krupp Affiliated Entities
Schedule 4.4(c) Managed Properties
Schedule 5.3(b) Initial Annual Budget
Schedule 6.1 Initial Capital Contributions of the Partners, Partners;
Partnership Percentage Interests; Partnership Units held by
the Partners
Schedule 9.10 Performance Termination
Schedule 9.13(a)(1) 17 Properties
Schedule 9.13(a)(2) 22 Properties
Schedule 9.13(a)(3) 33 Properties
EXHIBITS
Exhibit 1 Form of DK Employment Agreement
Exhibit 2 Form of Guarantee of Partnership Indebtedness
</TABLE>
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<PAGE>
AGREEMENT OF LIMITED PARTNERSHIP
OF
BERKSHIRE REALTY HOLDINGS, L.P.
This AGREEMENT OF LIMITED PARTNERSHIP (the "AGREEMENT"), is made and
entered into as of April 13, 1999, by and among Whitehall Street Real Estate
Limited Partnership XI, a Delaware limited partnership ("WHITEHALL"), WXI/BRH
Gen-Par LLC , a Delaware limited liability company ("WHGP"), Stone Street Real
Estate Fund 1998 L.P., a Delaware limited partnership ("STONE STREET"), Bridge
Street Real Estate Fund 1998 L.P., a Delaware limited partnership ("BRIDGE
STREET") and Stone Street WXI/BRH Corp., a Delaware corporation ("STONE CORP"),
BRE/Berkshire LP L.L.C., a Delaware limited liability company ("BLACKSTONE LP"),
BRE/Berkshire GP L.L.C., a Delaware limited liability company (in its capacity
as a general partner hereunder, "BLACKSTONE GP"), Aptco Holdings, L.L.C., a
Delaware limited liability company ("BERKSHIRE") and Aptco Gen-Par, L.L.C., a
Delaware limited liability company ("BGP").
RECITALS
WHEREAS, the Partners desire to form a limited partnership pursuant to
the terms and provisions of this Agreement, and in accordance with the statutes
and laws of the State of Delaware relating to limited partnerships, including
without limitation, the Act;
WHEREAS, Berkshire Realty Holdings, L.P., (the "PARTNERSHIP") intends
to acquire by merger Berkshire Realty Company, Inc., a Delaware corporation
(Berkshire Realty Company, Inc., together with its subsidiaries, "BRI");
WHEREAS, BRI Acquisition Sub, LP, a Subsidiary of the Partnership,
intends to merge with and into BRI OP Limited Partnership, a Delaware limited
partnership ("BRI OP"); and
WHEREAS, the Partnership intends to supervise the operation of the
business conducted by BRI, including the ownership, acquisition, management,
renovation and development of multifamily properties (the multifamily properties
owned by BRI and any additional multifamily properties (or properties proposed
for development) acquired by the Partnership, BRI OP, or any of their respective
subsidiaries, being hereinafter referred to as the "PROPERTIES" and any of the
foregoing individually being hereinafter referred to as a "PROPERTY").
NOW, THEREFORE, in order to carry out their intent as expressed above
and in consideration of the mutual agreements hereinafter contained, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
<PAGE>
ARTICLE 1.
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement, the following terms shall
have the meanings set forth below, which meanings shall be applicable equally to
the singular and plural of the terms defined:
"ACT" shall mean the Delaware Revised Uniform Limited Partnership Act,
as amended from time to time.
"ADDITIONAL CAPITAL CALL" shall mean a capital call made on the
Partners pursuant to Section 6.2.
"ADDITIONAL CONTRIBUTION" shall mean any amounts contributed by a
Partner pursuant to Section 6.2.
"ADMINISTERING GENERAL PARTNER" shall mean (i) BGP, upon the execution
and delivery hereof or (ii) if for any reason BGP ceases to be Administering
General Partner pursuant to the terms hereof (including Section 3.2(c)), another
Person appointed by the General Partners of the Partnership (except that BGP
shall not have an approval right with respect to such appointment).
"ADMINISTRATIVE SERVICES AGREEMENT" shall have the meaning set forth in
Section 4.4(c).
"AFFILIATE" shall mean with respect to any Person (i) any other Person
that directly or indirectly through one or more intermediaries controls or is
controlled by or is under common control with such Person, (ii) any other Person
owning or controlling 10% or more of the outstanding voting securities of, or
other ownership interests in, such Person, (iii) any officer, director, member
or partner of such Person and (iv) if such Person is an officer, director,
member or partner, the company for which such Person acts in any such capacity.
For purposes of this definition, the term "control," when used with respect to
any Person, means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"AGREEMENT" shall mean this Agreement of Limited Partnership, as it may
hereafter be amended or modified from time to time.
"ANNUAL BUDGET" shall mean the applicable budget for the Partnership
prepared by the Administering General Partner for approval pursuant to Section
5.3(b).
"APPRAISER" shall have the meaning set forth in Section 9.10(d).
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"APPROVED BUDGET" shall mean (i) for calendar year 1999, the budget
previously approved by the General Partners and attached hereto as Schedule
5.3(b) and (ii) for any calendar year thereafter, the Annual Budget for the
Budget Year in question, as approved by at least two of the General Partners in
accordance with the provisions hereof and as any of the same may be amended from
time to time in accordance with the provisions hereof.
"APPROVED BUSINESS PLAN" shall mean for any Budget Year, the Business
Plan for the Budget Year in question, as approved by at least two of the General
Partners in accordance with the provisions hereof and as any of the same may be
amended from time to time in accordance with the provisions hereof.
"AVAILABLE CASH" shall mean, for any quarterly period or such other
period for which computation may be appropriate, the excess, if any, of (A) the
sum of (i) the amount of all cash receipts of the Partnership during such period
from whatever source and (ii) any cash reserves of the Partnership existing at
the start of such period, less (B) the sum of (i) all cash amounts paid or
payable (without duplication) in such period on account of expenses and capital
expenditures incurred in connection with the Partnership's business and approved
in accordance with the provisions hereof (including, without limitation, general
operating expenses, taxes, amortization or interest on any debt of the
Partnership and expenses incurred in connection with the satisfaction of any
refinancing of any of the Properties), and (ii) such cash reserves which may be
required for capital expenditures (not to exceed the greater of (x) $400 per
apartment unit then owned by the Partnership (directly or indirectly) and (y)
amounts included in an Approved Budget for capital expenditures less any amounts
actually expended), working capital and future needs of the Partnership in an
amount reasonably determined by at least two of the General Partners or, if not
yet determined for such period, in an amount equal to 105% of the amounts
required for the working capital and future needs of the Partnership as set
forth in the Partnership's Approved Budget.
"BANKRUPTCY" shall mean, with respect to the affected party, (i) the
entry of an order for relief under the Bankruptcy Code, (ii) the admission by
such party of its inability to pay its debts as they mature, (iii) the making by
it of an assignment for the benefit of creditors, (iv) the filing by it of a
petition in bankruptcy or a petition for relief under the Bankruptcy Code or any
other applicable federal or state bankruptcy or insolvency statute or any
similar law, (v) an application by such party for the appointment of a receiver
for the assets of such party, (vi) an involuntary petition against it seeking
liquidation, reorganization, arrangement or readjustment of its debts under any
other federal or state insolvency law, PROVIDED that the same shall not have
been vacated, set aside or stayed within the sixty-day period following the
filing of such petition or (vii) the imposition of a judicial or statutory lien
on all or a substantial part of its assets unless such lien is discharged or
vacated or the enforcement thereof stayed within sixty (60) days after its
effective date.
"BANKRUPTCY CODE" shall mean Title 11 of the United States Code, as
amended.
"BERKSHIRE" shall have the meaning set forth in the first paragraph of
this Agreement.
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"BERKSHIRE GROUP" shall mean, collectively, Berkshire and BGP together
with any assignees or transferees to the extent permitted hereunder, but only so
long as any such Person continues in its capacity as a partner in the
Partnership.
"BERKSHIRE PRINCIPALS" shall mean Douglas Krupp and George Krupp.
"BGP" shall have the meaning set forth in the first paragraph of this
Agreement.
"BLACKSTONE GP" shall have the meaning set forth in the first paragraph
of this Agreement.
"BLACKSTONE GROUP" shall mean, collectively, Blackstone GP and
Blackstone LP, together with any assignees or transferees to the extent
permitted hereunder, but only so long as any such Person continues in its
capacity as a partner in the Partnership.
"BLACKSTONE LP" shall have the meaning set forth in the first paragraph
of this Agreement.
"BOOK VALUE" shall mean, with respect to any Partnership Asset, its
adjusted basis for federal income tax purposes, except that the initial Book
Value of any asset contributed by a Partner to the Partnership shall be an
amount equal to the agreed gross fair market value of such asset, and such Book
Value shall thereafter be adjusted in a manner consistent with Treasury
Regulations Section 1.704-1(b)(2)(iv)(g) for revaluations pursuant to Section
7.1(b) and for the Depreciation taken into account with respect to such asset.
"BRI MERGER AGREEMENT" shall mean the Agreement and Plan of Merger,
dated as of April __, 1999 (as such agreement may be amended from time to time),
by and among the Partnership, BRI Acquisition LLC and Berkshire Realty Company,
Inc.
"BRI OP MERGER AGREEMENT" shall mean the Agreement and Plan of Merger,
dated as of April __, 1999 (as such agreement may be amended from time to time),
by and among the Partnership, BRI Acquisition Sub, L.P., Berkshire Apartments,
Inc. and BRI OP.
"BRIDGE LOAN" shall have the meaning set forth in Section 2.9(c).
"BRIDGE STREET" shall have the meaning set forth in the first paragraph
of this Agreement.
"BUDGET YEAR" shall mean the period beginning on the date hereof and
ending on December 31, 1999; and beginning January 1, 2000, "Budget Year" shall
mean a period beginning on January 1, 2000 and ending on December 31, 2000 and
each calendar year thereafter.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or any
other day on which banks in New York are required or permitted to be closed.
"BUSINESS PLAN" shall mean the applicable business plan for the
Partnership prepared by the Administering General Partner for approval pursuant
to Section 5.3(b).
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"CAPITAL ACCOUNT" shall mean, when used in respect of any Partner, the
Capital Account maintained for such Partner in accordance with Section 7.1, as
said Capital Account may be increased or decreased from time to time pursuant to
the terms of this Agreement.
"CAPITAL CONTRIBUTION" shall mean, (i) with respect to any Investor
Group Partner, the aggregate amount of capital actually contributed (and, in the
case of Berkshire and BGP only, deemed to be contributed) to the Partnership by
such Partner in accordance with Article 6 (regardless of the class of
Partnership Units received in respect of such contribution) and (ii) with
respect to Class A Preferred Limited Partners and the Class B Limited Partners,
the amounts deemed contributed by such Partners pursuant to Section 6.1 hereof
and reflected on SCHEDULE 6.1 hereto.
"CAUSE"shall mean, with respect to any Person, the conviction, guilty
plea, plea bargain or plea of nolo contendere of such Person with respect to a
felony, or the commission of fraud, in each case, other than with respect to the
Partnership or its Subsidiaries, Properties, business or personnel.
"CERTIFICATE" shall mean the Certificate of Limited Partnership of the
Partnership filed with the Secretary of State of Delaware on April ___, 1999, as
the same may hereafter be amended and/or restated from time to time.
"CLASS A PREFERRED LIMITED PARTNER" shall mean each Limited Partner who
is deemed to have made a Capital Contribution pursuant to Section 6.1(c) hereof
and who holds Class A Preferred Units, and any transferee of the foregoing to
the extent permitted hereunder, but only so long as any such Person continues in
its capacity as a partner in the Partnership.
"CLASS A PREFERRED PERCENTAGE INTEREST" shall mean, with respect to
each Class A Preferred Limited Partner, its percentage interest in such class,
determined by dividing the Class A Preferred Units owned by such Partner by the
total number of Class A Preferred Units then outstanding as specified in
SCHEDULE 6.1 attached hereto, as such schedule may be amended and restated from
time to time.
"CLASS A PREFERRED UNIT" means a Partnership Unit that is specifically
designated, when issued, as being a Class A Preferred Unit under the terms of
this Agreement.
"CLASS B LIMITED PARTNER" shall mean each Limited Partner who is deemed
to have made a Capital Contribution pursuant to Section 6.1(d) hereof and who
holds Class B Units, and any transferee of the foregoing to the extent permitted
hereunder, but only so long as any such Person continues in its capacity as a
partner in the Partnership.
"CLASS B PERCENTAGE INTEREST" shall mean, with respect to each Class B
Limited Partner, its percentage interest in such class, determined by dividing
the Class B Units owned by such Partner by the total number of Class B Units
then outstanding, as specified in SCHEDULE 6.1 attached hereto, as such schedule
may be amended and restated from time to time.
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"CLASS B UNIT" means a Partnership Unit that is specifically designated
by the General Partners, when issued, as being a Class B Unit under the terms of
this Agreement.
"CLASS C PARTNER" shall mean each Partner (including each GP) who has
made a Capital Contribution pursuant to Section 6.1(a) hereof and who holds
Class C Preferred Units, and any transferee of the foregoing to the extent
permitted hereunder, but only so long as any such Person continues in its
capacity as a partner in the Partnership. The initial Class C Partners shall be
WHGP, Whitehall, Blackstone GP, Blackstone LP, Stone Street, Bridge Street and
Stone Corp.
"CLASS C PREFERRED PERCENTAGE INTEREST" shall mean, with respect to
each Class C Partner, its percentage interest in such class, determined by
dividing the Class C Preferred Units owned by such Partner by the total number
of Class C Preferred Units then outstanding, as specified in SCHEDULE 6.1
attached hereto, as such schedule may be amended and restated from time to time.
"CLASS C PREFERRED UNIT" means a Partnership Unit that is specifically
designated by the General Partners, when issued, as being a Class C Preferred
Unit under the terms of this Agreement.
"CLASS D PARTNER" shall mean each Partner (including each GP) who has
made a Capital Contribution pursuant to Section 6.1(b) hereof and who holds
Class D Units, and any transferee of the foregoing to the extent permitted
hereunder, but only so long as any such Person continues in its capacity as a
partner in the Partnership. The initial Class D Partners shall be BGP and
Berkshire.
"CLASS D PERCENTAGE INTEREST" shall mean, with respect to each Class D
Limited Partner, its percentage interest in such class, determined by dividing
the Class D Units owned by such Partner by the total number of Class D Units
then outstanding, as specified in SCHEDULE 6.1 attached hereto, as such schedule
may be amended and restated from time to time.
"CLASS D UNIT" means a Partnership Unit that is specifically designated
by the General Partners, when issued, as being a Class D Unit under the terms of
this Agreement.
"CLASS E LIMITED PARTNER" shall mean those Partners holding Class E
Units who shall be admitted to the Partnership from time to time pursuant to the
IMP upon the recommendation of the Administering General Partner and the
concurrence of the other General Partners.
"CLASS E PERCENTAGE INTEREST" shall mean, with respect to each Class E
Limited Partner, its percentage interest in such class, determined by dividing
the Class E Units then owned by such Partner by the total number of Class E
Units then outstanding, as specified in SCHEDULE 6.1 attached hereto, as such
schedule may be amended and restated from time to time.
"CLASS E UNIT" means a Partnership Unit that is specifically designated
by the General Partners, when issued, as being a Class E Unit under the terms of
this Agreement.
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"CLOSING DATE" shall mean the date upon which the closing under the BRI
Merger Agreement occurs.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, or any
corresponding provision(s) of succeeding law.
"COMPANY CAUSE"shall mean, with respect to any Person, the conviction,
guilty plea, plea bargain or plea of nolo contendere of such Person with respect
to a felony, or the commission of fraud, wilful misconduct, gross negligence or
gross dereliction of duties, in each case, with respect to the Partnership or
its Subsidiaries, Properties, business or personnel, provided that, in the case
of gross negligence or gross dereliction of duties capable of cure, written
notice of such gross negligence or gross dereliction has been provided to such
Person and such conduct is not cured within a thirty (30) day period.
"CONFIDENTIAL INFORMATION" shall have the meaning set forth in Section
12.16.
"CONTRIBUTING PARTNER" shall have the meaning set forth in Section
6.3(a).
"COVERED PERSON" shall have the meaning set forth in Section 4.2.
"DEPRECIATION" shall mean, with respect to any Fiscal Year, all
deductions attributable to depreciation or cost recovery with respect to
Partnership Assets, including any improvements made thereto and any tangible
personal property located therein, or amortization of the cost of any intangible
property or other assets acquired by the Partnership, which have a useful life
exceeding one year; PROVIDED, HOWEVER, that with respect to any Partnership
Asset whose tax basis differs from its Book Value at the beginning of such
Fiscal Year or other period, Depreciation shall be an amount which bears the
same ratio to such beginning Book Value as the depreciation, amortization or
other cost recovery deduction for such period with respect to such asset for
federal income tax purposes bears to its adjusted tax basis as of the beginning
of such Fiscal Year; PROVIDED, HOWEVER, that if the federal income tax
depreciation, amortization or other cost recovery deduction for such Fiscal Year
is zero, Depreciation shall be determined using any method selected by the
General Partners.
"DK EMPLOYMENT AGREEMENT" shall have the meaning set forth in Section
4.4(d).
"DK IMP" shall mean the right of holders of the Class D Units to
receive distributions under Sections 8.1(b)(5)(ii), (6)(i) and (7)(i), and
related rights.
"FAILED CONTRIBUTION" shall have the meaning set forth in Section
6.3(a).
"FAIR MARKET VALUE" shall have the meaning set forth in Section
9.10(d).
"FINANCING CAPITAL CALL" shall have the meaning set forth in Section
6.2(b).
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"FISCAL YEAR" shall mean the fiscal year of the Partnership, which
shall be the calendar year; but upon termination of the Partnership, "Fiscal
Year" shall mean the period from the end of the last preceding Fiscal Year to
the date of such termination.
"FREDDIE MAC" shall mean The Federal Home Loan Mortgage Corporation.
"FREDDIE MAC PARAMETERS" shall mean a loan with the following terms:
(i) an original principal amount equal to the greater of (A) 75% of the
appraised value of the properties listed on SCHEDULE 1.1(A) hereto and (B) $650
million (such principal amount to be reduced by the preliminary loan amounts in
respect of any assets sold at or prior to the Closing Date (as set forth on
SCHEDULE 1.1(A) hereto) and by the preliminary loan amounts in respect of any
assets that are not included in the collateral pool for such financing) (as set
forth on SCHEDULE 1.1(A) hereto), (ii) such loan and all amounts payable with
respect thereto shall be non recourse in all respects to all Partners (with
express exculpation), unless they agree in writing otherwise, (iii) a term equal
to seven years, (iv) fixed interest rate of 8% per annum or less, (v) yield
maintenance penalty due upon prepayments only during the first five years of the
term, (vi) the properties subject to such loan will not be cross-collateralized
and individual loans securing such Properties will not be cross-defaulted and
(vii) the other terms are no less favorable to the Partnership than the terms of
the "CONDITIONAL COMMITMENT", dated November 16, 1998, provided by Freddie Mac
to the Investor Group Partners.
"FUNDED PORTION" shall have the meaning set forth in Section 6.3(a).
"GENERAL PARTNER" OR "GP" shall mean each of WHGP, Blackstone GP, BGP,
and any Person who subsequently becomes a general partner of the Partnership
pursuant to the terms of the Agreement, for so long as such Persons shall be
general partners of the Partnership; "GENERAL PARTNERS"or "GPS", shall mean such
Persons, collectively.
"GOLDMAN, SACHS & CO." shall mean Goldman, Sachs & Co., a New York
limited partnership, and any Person succeeding to its business substantially as
an entirety.
"GS GROUP" shall mean The Goldman Sachs Group, L.P. and any Person
succeeding to its business substantially as an entirety, together with any
assignees or transferees to the extent permitted hereunder.
"GSMC" shall have the meaning set forth in Section 2.9(c).
"HOLDER PURCHASE DATE" shall have the meaning set forth in Section
9.12(a).
"IMP" shall mean the incentive management participation plan approved
by the General Partners as a Unanimous Decision, which IMP shall provide the
Class E Limited Partners with the distributions under Sections 8.1(b)(5)(iii),
8.1(b)(6)(ii) and 8.1(b)(7)(ii) (it being understood and agreed that none of
BGP, Berkshire, Douglas Krupp or any of their respective Affiliates shall be
allocated any IMP allocated to the Class E Limited Partners).
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<PAGE>
"INITIAL APPRAISALS" shall have the meaning set forth in Section
9.10(d).
"INITIAL BUSINESS PLAN" shall mean the Business Plan for 1999 to be
approved in accordance with Section 5.3 within 30 days after the date hereof.
"INITIAL CAPITAL CONTRIBUTION" shall mean any Capital Contributions
made or deemed made pursuant to Sections 6.1(a)-(d) and 6.1(h).
"INSTITUTIONAL LENDER" shall mean an Affiliate of any Investor Group
Partner (other than Berkshire or BGP) and/or any one or more of the following
other entities, PROVIDED that for any such other entity to qualify as an
Institutional Lender hereunder, such other entity, together with its Affiliates,
must have total assets of at least $5,000,000,000 and stockholders' equity or
net worth of at least $250,000,000 (or, in either case, the equivalent thereof
in a foreign currency) as of the date the loan is made: a savings bank, a
savings and loan association, a commercial bank or trust company, an insurance
company subject to regulation by any governmental authority or body, a publicly
traded real estate investment trust, a union, governmental or secular employees'
welfare, benefit, pension or retirement fund, a pension fund property unit trust
(whether authorized or unauthorized), an investment company or trust, a merchant
or investment bank or any other entity generally viewed as an institutional
lender. In each of the foregoing cases, such Affiliate or other entity shall
constitute an Institutional Lender whether (i) acting for itself or (ii) as
trustee, in a fiduciary, management or advisory capacity or, in the case of a
bank, as agent bank, for any number of lenders, so long as in the case of clause
(ii) the day-to-day management decisions relating to the loan are either
exercised by or recommended by such Institutional Lender and, during the life of
the loan, such Institutional Lender shall only be removed from its clause (ii)
capacity if it is replaced by another Institutional Lender also so acting under
clause (ii).
"INTEREST" shall mean the entire interest of a Partner in the
Partnership at any particular time, including the right of such Partner to any
and all benefits to which a 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. An Interest may be expressed as a number
of Partnership Units.
"INVESTMENT" shall mean, relative to any Person (i) any loan or advance
made by such Person to any other Person (excluding advances made to officers and
employees in the ordinary course of business); (ii) the purchase by such Person
of any debt obligation of any other Person; and (iii) any ownership or similar
interest held by such Person in any other Person.
"INVESTOR GROUP PARTNERS" shall mean Berkshire, BGP, Whitehall, WHGP,
Stone Street, Bridge Street, Stone Corp., Blackstone LP and Blackstone GP,
together with any assignees or transferees thereof to the extent permitted
hereunder.
"IRS" shall mean the Internal Revenue Service and any successor agency
or entity thereto.
"KRUPP AFFILIATED ENTITIES" shall have the meaning set forth in Section
4.2(a).
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"LIMITED PARTNERS" shall mean all Class A Preferred Limited Partners,
all Class B Limited Partners, all Class C Partners that hold limited partnership
interests, in their capacities as such holders, all Class D Partners that hold
limited partnership interests, in their capacities as such holders, all Class E
Limited Partners, all other Limited Partners admitted to the Partnership
pursuant to the terms hereof, and any transferees of the foregoing permitted
hereunder, but only so long as any such Person continues in its capacity as a
Partner in the Partnership.
"LOSSES" shall have the meaning set forth in Section 7.2(a).
"MAJORITY DECISION" shall have the meaning set forth in Section 3.3.
"MAJORITY SALES NOTICE" shall have the meaning set forth in Section
9.3(a).
"MAJORITY THIRD PARTY OFFER" shall have the meaning set forth in
Section 9.3(b).
"MAJORITY TRIGGERING PARTIES" shall have the meaning set forth in
Section 9.3(b).
"MANAGED PROPERTIES" shall have the meaning set forth in Section
4.4(c).
"MANDATORY CAPITAL CALL" shall have the meaning set forth in Section
6.2(a).
"MANDATORY CAPITAL CALL LIMIT" shall have the meaning set forth in
Section 6.2(a).
"MAXIMUM SHARE" shall have the meaning set forth in Section 9.1(a).
"MINIMUM GAIN" shall mean an amount equal to the excess of the
principal amount of debt, for which no Partner is liable ("NON-RECOURSE DEBT"),
over the adjusted basis of the Partnership Assets which represents the minimum
taxable gain which would be recognized by the Partnership if the nonrecourse
debt were foreclosed upon and the Partnership Assets were transferred to the
creditor in satisfaction thereof, and which is referred to as "MINIMUM GAIN" in
Treasury Regulations Section 1.704-2(b)(2). A Partner's share of Minimum Gain
shall be determined pursuant to Treasury Regulations Section 1.704-2.
"NECESSARY EXPENDITURE" shall have the meaning set forth in Section
6.2(a).
"NON-CONTRIBUTING PARTNER" shall have the meaning set forth in Section
6.3(a).
"NON-RECOURSE DEDUCTIONS" for a taxable year means deductions
attributable to non-recourse debt (as determined under Treasury Regulation
Sections 1.704-2(c) and 1.704-2(i)(2)) for such year.
"NON-TRIGGERING PARTIES" shall have the meaning set forth in Section
9.2(a).
"NOTICE OF SALE" shall have the meaning set forth in Section 9.1(a).
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"OBJECTION NOTICE" shall have the meaning set forth in Section 5.3(b).
"OFFER TERMS" shall have the meaning set forth in Section 9.1(a).
"OFFERED INTEREST" shall have the meaning set forth in Section 9.1(a).
"ORGANIZATIONAL DOCUMENT" shall mean, with respect to any Person, (i)
in the case of a corporation, such Person's certificate of incorporation and
by-laws, and any shareholder agreement, voting trust or similar arrangement
applicable to any of such Person's authorized shares of capital stock, (ii) in
the case of a partnership, such Person's certificate of limited partnership,
partnership agreement, voting trusts or similar arrangements applicable to any
of its partnership interests, (iii) in the case of a limited liability company,
such Person's certificate of formation, limited liability company agreement or
other document affecting the rights of holders of limited liability company
interests, or (iv) in the case of any other legal entity, such Person's
organizational documents and all other documents affecting the rights of holders
of equity interests in such Person.
"PARTNER-FUNDED DEBT" shall mean any non-recourse debt of the
Partnership that is loaned or guaranteed by any Partner and/or is treated as
Partner non-recourse debt with respect to a Partner under Treasury Regulations
Section 1.704-2(b)(4).
"PARTNERS" shall mean all Class A Preferred Limited Partners, all Class
B Limited Partners, all Class C Partners, all Class D Partners, all Class E
Limited Partners and all other Partners admitted to the Partnership pursuant to
the terms hereof, and any transferees of the foregoing permitted hereunder, but
only so long as any of the foregoing Persons continues in its capacity as a
partner in the Partnership; "PARTNER" shall mean any of the foregoing
individually.
"PARTNERSHIP" shall mean Berkshire Realty Holdings, L.P., a Delaware
limited partnership, as said Partnership may from time to time be hereafter
constituted.
"PARTNERSHIP ASSETS" shall mean all right, title and interest of the
Partnership in and to all or any portion of the assets of the Partnership and
any property (real, personal, tangible or intangible) or estate acquired in
exchange therefor or in connection therewith.
"PARTNERSHIP PERCENTAGE INTEREST" shall mean, as to a Partner, the
percentage obtained by dividing the Partnership Units (other than Class A
Preferred Units, Class B Units or Class E Units) owned by such Partner by the
total number of Partnership Units (other than Class A Preferred Units, Class B
Units or Class E Units) then outstanding as specified in SCHEDULE 6.1 attached
hereto, as such exhibit may be amended and restated from time to time. For the
avoidance of doubt, the Partnership Percentage Interest of any Class A Preferred
Limited Partner, Class B Limited Partner or any Class E Limited Partner shall be
deemed zero percent (0%).
"PARTNERSHIP REDEMPTION DATE" shall have the meaning set forth in
Section 9.12(b).
"PARTNERSHIP UNIT" means a fractional, undivided share of the Interests
of all Partners issued pursuant to Section 6 hereof, and includes Class A
Preferred Units, Class B Units, Class
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C Preferred Units, Class D Units, Class E Units and any other classes or series
of Partnership Units established after the date hereof. The number of
Partnership Units outstanding and the Class A Percentage Interests, Class B
Percentage Interests, Class C Percentage Interests, Class D Percentage
Interests, Class E Percentage Interests and the Partnership Percentage Interests
in the Partnership represented by such Partnership Units are set forth in
SCHEDULE 6.1 hereto, as such Exhibit may be amended and restated from time to
time.
"PERFORMANCE TERMINATION" shall mean a termination of the DK Employment
Agreement after the third anniversary of the Closing Date as a result of a
determination by WHGP and Blackstone GP that the net operating income of the
Properties is not at least $124 million for the full year ending on the third
anniversary of the Closing Date (the "TEST YEAR") (it being understood that such
net operating income shall be calculated based upon the unaudited financial
statements of the Partnership, provided that any of the General Partners may
require that the Performance Termination be based on the net operating income
shown on audited financial statements). For purposes of calculating the
foregoing test, (x) net operating income so derived shall be reduced by (i) the
amount of any net operating income attributable to properties acquired by the
Partnership after the Closing Date and (ii) the amount of net operating income
attributable to properties sold by the Partnership prior to or after the Closing
Date to the extent included in the net operating income of the Test Year, and
(y) the $124 million threshold shall be reduced by the amount of net operating
income attributable to the Properties sold by the Partnership prior to or after
the Closing Date, as such attributable amounts are shown on SCHEDULE 9.10
attached hereto.
"PERMITTED PLEDGE" shall mean, with respect to any member of the
Berkshire Group, a pledge of, or security interest in, an equity interest in a
legal entity to secure a loan made to the pledgor, provided that, (i) such
pledged equity interest may not be transferred to the pledgee by foreclosure,
assignment in lieu thereof or other enforcement of such pledge and (ii) the
pledgor may pledge only its economic interest in such legal entity and no other
rights under such legal entity's Organizational Documents.
"PERSON" shall mean any individual, partnership, corporation, limited
liability company, trust or other legal entity.
"PLEDGEE" shall have the meaning set forth in Section 9.1(b).
"PLEDGOR" shall have the meaning set forth in Section 9.1(b).
"PROFITS" shall have the meaning set forth in Section 7.2(a).
"PROPERTIES" shall have the meaning set forth in the Recitals.
"PROPERTY" shall have the meaning set forth in the Recitals.
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"PROPERTY LOAN" shall mean any bridge, permanent or construction
financing assumed or obtained by the Partnership in accordance with the
provisions hereof, which may be secured by a mortgage, or similar security in
the nature of a mortgage on all or any of the Properties.
"PURCHASER" shall have the meaning set forth in 9.1(a).
"RATE OF RETURN" shall mean, with respect to any Partnership Units held
by any Partner, a return of all Capital Contributions made by such Partner with
respect to such Partnership Units plus a cumulative, annually compounded, return
on such Capital Contributions (and accrued but unpaid return at the specified
rate outstanding from time to time) at a rate per annum equal to the applicable
percentage specified herein. A Partner shall be deemed to have received a
specified Rate of Return with respect to such Partner's Partnership Units when
the total Capital Contributions made from time to time by such Partner in
respect of such Partnership Units are returned to such Partner together with an
annual return thereon equal to such specified percentage calculated commencing
on the date such Capital Contributions are made and compounded annually to the
extent not paid on a current basis, taking into account the timing and amounts
of all previous Capital Contributions by such Partner in respect of such
Partnership Units and all previous distributions by the Partnership to such
Partner. For purposes of computing such Rate of Return, the periods used to
measure capital inflows and outflows shall be monthly and any Capital
Contribution made, or deemed made, by such Partner, any forfeiture of any
Capital Contribution and any distribution of funds received by such Partner at
any time during a month shall be deemed to be made, forfeited or received on the
first day of such month. Any calculations shall be based on a 12-month year
based on thirty (30) day months.
"RESTRICTED PERIOD" shall have the meaning set forth in Section 4.2(a).
"SALES NOTICE" shall have the meaning set forth in Section 9.2(a).
"SALES RESPONSE NOTICE" shall have the meaning set forth in Section
9.2(c).
"SECOND TIER DIFFERENTIAL" shall mean an amount equal to the excess of
(i) the amount distributed by the Partnership necessary to give the holders of
Class C Preferred Units a 20% Rate of Return on the aggregate Capital
Contributions made in respect of such Class C Preferred Units over (ii) the
amount distributed by the Partnership necessary to give the holders of Class C
Preferred Units a 17.5% Rate of Return on the aggregate Capital Contributions
made in respect of such Class C Preferred Units.
"STONE CORP" shall have the meaning set forth in the first paragraph of
this Agreement.
"STONE STREET" shall have the meaning set forth in the first paragraph
of this Agreement.
"SUBSIDIARIES" shall mean all of the entities in which the Partnership
owns (whether as of the date hereof or at any time hereafter), directly or
indirectly 51% or more of the ownership interests and "SUBSIDIARY" shall mean
any one of them.
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"SUBSTITUTED PARTNER" shall mean any Person admitted to the Partnership
as a Partner pursuant to the provisions of Section 9.7.
"TARGETED CAPITAL ACCOUNT BALANCE" shall mean, with respect to any
Partner, the balance necessary to produce a Capital Account for each Partner
such that if an amount of cash equal to such positive Capital Account were
distributed in accordance with such positive Capital Account balances, such
distribution would be in the amounts, sequence and priority set forth in Section
10.3.
"TAX MATTERS PARTNER" shall mean the General Partner designated
pursuant to Section 4.7.
"THIRD APPRAISAL" shall have the meaning set forth in Section 9.10(d).
"THIRD PARTY OFFER" shall have the meaning set forth in Section 9.2(f).
"THIRD PARTY OFFER PRICE" shall have the meaning set forth in Section
9.2(f).
"THIRD PARTY RESPONSE NOTICE" shall have the meaning set forth in
Section 9.2(g).
"TRANSFER" shall have the meaning set forth in Section 9.1(a).
"TRANSFERRING PARTNER" shall have the meaning set forth in Section
9.1(a).
"TREASURY REGULATIONS" shall mean the regulations promulgated under the
Code, as such regulations are in effect on the date hereof.
"TRIGGERING PARTY" shall have the meaning set forth in Section 9.2(a).
"UNANIMOUS DECISION" shall have the meaning set forth in Section 3.4.
"WHGP" shall have the meaning set forth in the first paragraph of this
Agreement.
"WHITEHALL" shall have the meaning set forth in the first paragraph of
this Agreement.
"WHITEHALL GROUP" shall mean, collectively, Whitehall, WHGP, Stone
Street, Bridge Street and Stone Corp., together with any assignees or
transferees to the extent permitted hereunder, but only so long as any such
Person continues in its capacity as a partner in the Partnership.
1.2 TERMS GENERALLY. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the words "HEREIN," "HEREOF" and "HEREUNDER" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision; and
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(b) the words "INCLUDING" and "INCLUDE" and other words of similar
import shall be deemed to be followed by the phrase "WITHOUT LIMITATION."
ARTICLE 2.
THE PARTNERSHIP AND ITS BUSINESS
2.1 PARTNERSHIP NAME. The business of the Partnership shall be
conducted under the name of Berkshire Realty Holdings, L.P. in the State of
Delaware and under such name or such assumed names as the Administering General
Partner deems necessary or appropriate to comply with the requirements of any
other jurisdiction in which the Partnership may be required to qualify.
2.2 TERM. The term of the Partnership shall continue in full force and
effect until terminated following dissolution on December 31, 2049 or such
earlier date of dissolution as hereinafter provided.
2.3 FILING OF CERTIFICATE AND AMENDMENTS. The Certificate of Limited
Partnership of the Partnership was filed with the Secretary of State of the
State of Delaware on April 12, 1999. The Partners hereby agree to execute and
file any required amendments to the Certificate and shall do all other acts
requisite for the constitution of the Partnership as a limited partnership
pursuant to the laws of the State of Delaware or any other applicable law and
for enabling the Partnership to conduct business in the jurisdictions in which
the Partnership's properties are located.
2.4 BUSINESS; SCOPE OF PARTNERS' AUTHORITY.
(a) The Partnership is organized primarily for the purpose of BRI
merging with the Partnership (or a Subsidiary thereof) and, subsequent to such
merger, acquiring, owning, financing, refinancing, managing, maintaining,
operating, improving, developing, marketing and selling multifamily properties.
The Partnership is empowered to do any and all acts and things necessary,
appropriate, proper, advisable, incidental to or convenient for the furtherance
and accomplishment of the purposes and business described herein and for the
protection and benefit of the Partnership, including, without limitation, full
power and authority to enter into, perform and carry out contracts of any kind,
borrow money, guarantee and issue evidences of indebtedness whether or not
secured by any mortgage, deed of trust, pledge or other lien, acquire, own,
manage, improve and develop any real property (or any interest therein), and
sell, transfer and dispose of any such real property.
(b) Except as otherwise expressly and specifically provided in this
Agreement, no Partner shall have any authority to bind or act for, or assume any
obligations or responsibility on behalf of, any other Partner. Neither the
Partnership nor any Partner shall, by virtue of executing this Agreement, be
responsible or liable for any indebtedness or obligation of any other Partner
incurred or arising on, before or after the execution of this Agreement, except,
as to the Partnership, as to those joint responsibilities, liabilities,
indebtedness, or obligations expressly
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assumed by the Partnership as of the date of this Agreement or incurred
thereafter pursuant to and as limited by the terms of this Agreement.
2.5 PRINCIPAL OFFICE; REGISTERED AGENT. The principal office of the
Partnership shall be c/o The Berkshire Group, One Beacon Street, Suite 1500,
Boston, Massachusetts 02108. The Partnership may change its place of business to
such location or locations as may at any time or from time to time be determined
by the Administering General Partner and consented to by WHGP and Blackstone GP.
The mailing address of the Partnership shall be c/o The Berkshire Group, One
Beacon Street, Suite 1500, Boston, Massachusetts 02108, or such other address as
may be selected from time to time by the Administering General Partner. The
address of the registered office of the Partnership in the State of Delaware is
c/o Bridge Service Corp., 30 Old Rudnick Lane, Dover, Delaware 19901. The name
and address of the registered agent of the Partnership for service of process in
the State of Delaware is Bridge Service Corp, 30 Old Rudnick Lane, Dover,
Delaware 19901.
2.6 NAMES AND ADDRESSES OF THE PARTNERS. The names and addresses of the
Partners on the date of this Agreement are as follows:
Whitehall Street Real Estate Limited Partnership XI
85 Broad Street
New York, New York 10004
Attn: Steven M. Feldman
WXI/BRH Gen-Par LLC
85 Broad Street
New York, New York 10004
Attn: Steven M. Feldman
Bridge Street Real Estate Fund 1998 L.P.
Stone Street Real Estate Fund 1998 L.P.
Stone Street WXI/BRH Corp.
85 Broad Street
New York, N.Y. 10004
Attn: Kevin D. Naughton
BRE/Berkshire GP L.L.C.
345 Park Avenue, 32nd Floor
New York, N.Y. 10154
Attn: Mr. Thomas Saylak
BRE/Berkshire LP L.L.C.
345 Park Avenue, 32nd Floor
New York, N.Y. 10154
Attn: Mr. Thomas Saylak
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Aptco Holdings, L.L.C.
One Beacon Street, Suite 1500
Boston, Massachusetts 02108
Attn: Mr. Douglas Krupp
Aptco Gen-Par, L.L.C.
One Beacon Street, Suite 1500
Boston, Massachusetts 02108
Attn: Mr. Douglas Krupp
The names and addresses of the other Limited Partners and of such
Partners as may be admitted as Partners to the Partnership after the date hereof
shall be as set forth on SCHEDULE 2.6(B) hereof, as such Schedule may be amended
from time to time.
2.7 REPRESENTATIONS BY THE PARTNERS.
(a) Each Partner who is not an individual represents, warrants,
agrees and acknowledges that, as of the date hereof:
(1) it is a corporation, a limited liability company or
partnership, as applicable, duly organized or formed and validly
existing and in good standing under the laws of the state of its
organization or formation; it has all requisite corporate,
limited liability company or partnership power and authority to
enter into this Agreement, to acquire and hold its Interest and
to perform its obligations hereunder; and the execution, delivery
and performance of this Agreement has been duly authorized by all
necessary corporate, limited liability company or partnership
action; and
(2) its execution and delivery of this Agreement and the
performance of its obligations hereunder will not conflict with
or violate any of the provisions of its Organizational Documents.
(b) Each Partner, whether or not an individual, represents,
warrants, agrees and acknowledges that as of the date hereof:
(1) its execution and delivery of this Agreement and the
performance of its obligations hereunder will not conflict with,
result in a breach of or constitute a default (or any event that,
with notice or lapse of time, or both, would constitute a
default) or result in the acceleration of any obligation under
any of the terms, conditions or provisions of any other agreement
or instrument to which it is party or by which it is bound or to
which any of its property or assets are subject, violate any
statute or any order, rule or regulation of any court or
governmental or regulatory agency, body or official, that would
materially and adversely affect the performance of its duties
hereunder; such Partner has obtained any consent, approval,
authorization or order of any court or governmental agency or
body
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required for the execution, delivery and performance by such
Partner of its obligations hereunder;
(2) there is no action, suit or proceeding pending against
such Partner or, to its knowledge, threatened in any court or by
or before any other governmental agency or instrumentality which
would prohibit its entering into or performing its obligations
under this Agreement; and
(3) this Agreement is a binding agreement on the part of
such Partner enforceable in accordance with its terms against
such Partner.
Further, each Limited Partner represents that it is acquiring its Interest for
its own account for investment purposes only and not with a view to the
distribution or resale thereof, in whole or in part, in violation of applicable
securities laws and agrees that it will not Transfer all or any part of its
Interest, or solicit offers to buy from or otherwise approach or negotiate in
respect thereof with any Person or Persons whomsoever, all or any portion of its
Interest in any manner that would violate or cause the Partnership or any
General Partner to violate applicable federal or state securities laws.
(c) Berkshire and BGP represent, warrant and covenant that (i) they
will, on the Closing Date, contribute to the Partnership all shares of common
stock of BRI and all partnership interests in BRI OP owned by Berkshire, BGP,
the Berkshire Principals (other than the shares listed on SCHEDULE 2.7(C)) or
any Affiliate of any of the foregoing as of the date hereof and as of the
Closing Date (it being understood that they shall only be required to contribute
72.5% of the BRI OP interests held by Turtle Creek Associates (such percentage
representing their entire ownership percentage of Turtle Creek Associates)),
(ii) as of the date of this Agreement, Berkshire, BGP, the Berkshire Principals
and each Affiliate of any of the foregoing, collectively own 512,203 shares of
common stock of BRI (excluding the shares listed on SCHEDULE 2.7(C)) and
4,904,066 Units of partnership interests in BRI OP and (iii) none of Berkshire,
BGP, the Berkshire Principals, or any Affiliates of any of the foregoing, shall
Transfer any such shares or Units except to the Partnership as the initial
Capital Contributions of Berkshire and BGP. Each of BGP and Berkshire further
represents and warrants that, except as set forth above and on SCHEDULE 2.7(C),
BGP, Berkshire, the Berkshire Principals and their respective Affiliates have no
equity interest in BRI or BRI OP (other than the shares listed on SCHEDULE
2.7(C)).
2.8 CONTROL OF THE BERKSHIRE GROUP. Berkshire and BGP represent and
warrant that the Berkshire Principals control (which control is exercisable
without the consent or approval of any other Person) the business and affairs of
Berkshire and BGP.
2.9 PRE-CLOSING COSTS AND EXPENSES.
(a) Any reasonable out of pocket due diligence, legal and underwriting
costs or expenses incurred by an Investor Group Partner or its Affiliate (other
than GSMC) relating to the acquisition of BRI or the execution of this Agreement
will be reimbursed by the Partnership to such Partner on or promptly after the
Closing Date.
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(b) The Partnership shall not be required to reimburse any Partner for
fees payable to any broker or investment banker in connection with the proposed
acquisition of BRI, except for the fee payable to Greenhill & Co. in accordance
with its existing agreement with The Berkshire Group, which fee shall not be in
excess of $4,955,000. Notwithstanding the foregoing, the Partnership may pay
fees to brokers or investment bankers in connection with additional equity
and/or debt financing as provided in Section 3.4 or Section 4.4(a).
(c) The Partnership shall pay (i) all fees and expenses in an amount
not to exceed $750,000 related to the bridge financing committed by Goldman
Sachs Mortgage Company ("GSMC") in connection with the contemplated merger of
the Partnership (or a Subsidiary thereof) and BRI and (ii) all fees and expenses
related to the bridge financing committed or provided by Whitehall and
Blackstone in connection with the contemplated merger of the Partnership (or a
Subsidiary thereof) and BRI (the "BRIDGE LOAN") payable under the commitment
letter or definitive agreements relating to such Bridge Loan.
(d) In the event that, under the terms of the BRI Merger Agreement, a
termination or break-up fee and/or reimbursement of expenses becomes payable to
the Partnership, such fee shall be allocated among the Investor Group Partners
as follows: (i) first, to reimburse the Investor Group Partners for their actual
out of pocket transaction costs and expenses incurred to the date of the payment
of such fee and (ii) second, to the Investor Group Partners PRO RATA based upon
their respective anticipated initial Partnership Percentage Interests.
2.10 COMPLIANCE WITH CERTAIN AGREEMENTS. The Partnership acknowledges
that from and after the Closing Date, it will be bound by and will comply (and
will cause BRI OP to comply) with the terms of the agreements listed on SCHEDULE
2.10 hereto, as if the Partnership were a party to such agreements and that the
Class A Preferred Limited Partners and Class B Limited Partners shall be able to
enforce such agreements as third party beneficiaries of such agreements. Nothing
in this Agreement shall constitute an amendment to, or diminish or alter any
rights or obligations contained in, any of the agreements listed on Schedule
2.10.
2.11 MISCELLANEOUS. The Partnership anticipates that the equity and
debt financing expected to be raised in contemplation of the transactions
contemplated by the BRI Merger Agreement will be sufficient to pay the purchase
price required in connection with such merger and the transaction costs
associated therewith (assuming that the transaction costs of BRI and BRI OP
incurred in connection with the BRI Merger and the BRI OP Merger (other than
severance costs) do not exceed $11,000,000), but no assurance can be made with
respect to the foregoing.
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ARTICLE 3.
MANAGEMENT OF PARTNERSHIP BUSINESS;
POWERS AND DUTIES OF THE ADMINISTERING GENERAL PARTNER
3.1 MANAGEMENT AND CONTROL.
(a) Except as limited specifically herein, the powers of the General
Partners shall include all powers, statutory and otherwise, possessed by general
partners under the laws of the State of Delaware. No General Partner may be
removed by the Limited Partners with or without cause.
(b) Except as otherwise expressly and specifically provided in this
Agreement, no Limited Partner shall have any authority to bind, to act for, to
execute any document or instrument on behalf of or to assume any obligation or
responsibility on behalf of the Partnership or any other Partner.
(c) The provisions of this Agreement relating to the management and
control of the business and affairs of the Partnership shall also be construed
to be fully applicable to the management and control of each Subsidiary, and any
and all matters listed in Section 3.3 shall constitute Majority Decisions for
purposes hereof whether such matter relates to the Partnership or any Subsidiary
of the Partnership, any and all matters listed in Section 3.4 shall constitute
Unanimous Decisions for purposes hereof whether such matter relates to the
Partnership or any Subsidiary of the Partnership and the provisions of Section
3.2 shall apply with respect to the Partnership as well as to any Subsidiary of
the Partnership. Without limitation of the foregoing, given that the Partnership
will, after consummation of the transactions contemplated by the BRI Merger
Agreement and the BRI OP Merger Agreement, indirectly control the management of
and will own 100% of the sole general partner of BRI OP, each of the General
Partners shall have management rights over BRI OP, and the Partnership, in its
capacity as the general partner, will not take any actions in respect of
"MAJORITY DECISIONS" or "UNANIMOUS DECISIONS" without the approval of the
required General Partners (as if such decisions were made by the Partnership).
3.2 ROLE OF THE ADMINISTERING GENERAL PARTNER AND LIMITATIONS ON
ITS AUTHORITY.
(a) In addition to such powers and rights of the Administering General
Partner as are expressly set forth herein, and subject to the express
restrictions set forth in Sections 3.3 and 3.4, the Administering General
Partner shall have the right and the duty to manage the business of the
Partnership, to execute documents and to implement the decisions made on behalf
of the Partnership by the General Partners in accordance with the terms hereof
and applicable laws and regulations, and such other rights and powers as are
granted to the Administering General Partner hereunder and as the other General
Partners may from time to time expressly delegate to the Administering General
Partner (PROVIDED, that any such obligations or responsibilities that are
delegated to the Administering General Partner shall be subject to the
Administering General Partner's acceptance to the extent not set forth herein).
The Administering General Partner shall devote such time to the Partnership and
its business as shall be reasonably necessary to conduct
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the business of the Partnership in an efficient manner and to carry out the
Administering General Partner's responsibilities as set forth herein. Without
limiting the generality of the foregoing but subject to WHGP's and Blackstone
GP's rights with respect to Majority Decisions and Unanimous Decisions, the
Administering General Partner shall have the right and duty to do, accomplish
and complete, using Partnership funds at all times except where expressly
provided to the contrary in this Agreement, for and on behalf of the Partnership
with reasonable diligence and in a prompt and businesslike manner, exercising
such care and skill as a prudent owner with sophistication and experience in
owning, operating and managing property like the Properties would exercise in
dealing with its own property, all of the following:
(1) applying for and using diligent efforts to obtain any and
all necessary consents, approvals and permits required for the construction,
occupancy and operation of the Properties;
(2) paying, before delinquency and prior to the addition of
interest or penalties, all taxes, assessments and other impositions applicable
to the Properties, and retaining counsel to initiate any action or proceeding
seeking to reduce such taxes, assessments or other impositions;
(3) verifying that appropriate insurance (including any
required by the terms of any Property Loan) is maintained by each contractor
performing work on the Properties;
(4) assisting in obtaining any and all necessary financing
required to carry out the purposes of the Partnership;
(5) procuring and arranging all necessary insurance to the
extent available at commercially reasonable rates for the Partnership in
accordance with the insurance program adopted by the Partnership from time to
time pursuant to Section 3.3(12) below; causing the Investor Group Partners to
be named as additional insureds on all liability policies maintained by the
Partnership; delivering to the General Partners copies of all insurance policies
maintained by the Partnership from time to time, including renewals or
replacements of any expiring policies prior to the expiration thereof;
(6) demanding, receiving, acknowledging and instituting legal
action for recovery of any and all revenues, receipts and considerations due and
payable to the Partnership, in accordance with prudent business practices;
(7) executing and delivering leases and other legal documents
necessary to carry out the business of the Partnership (which leases and legal
documents shall have first been approved by either one or both of the other two
General Partners if their approval is required pursuant to this Agreement,
including without limitation, Sections 3.3 and 3.4 below, or shall otherwise be
in accordance with the relevant Approved Budget and Approved Business Plan);
(8) keeping all books of account and other records of the
Partnership and delivering all reports in the manner provided in Article 5
below;
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(9) maintaining all funds of the Partnership in a Partnership
bank account in the manner provided in Article 5 below, which funds shall not be
commingled with the funds of any other Person;
(10) protecting and preserving the title and interests of the
Partnership in the Properties, and including keeping the Properties free from
mechanics' and materialmen's liens;
(11) preparing for approval by the General Partners and
implementing once the same shall have been approved in accordance herewith, all
Approved Budgets and Approved Business Plans, including negotiating all
contracts and expending funds in accordance therewith;
(12) opening and maintaining bank accounts to the extent
required or permitted by Section 5.5;
(13) coordinating the defense of any claims, demands, suits or
legal proceedings made or instituted against the Partnership by other parties,
through legal counsel for the Partnership engaged in accordance with the terms
of this Agreement; giving WHGP and Blackstone GP prompt notice of the receipt of
any material claim or demand or the commencement of any suit or legal proceeding
and promptly providing WHGP and Blackstone GP all information relevant or
necessary thereto;
(14) monitoring and complying with (i) the terms and
provisions of any restrictive covenants or easement agreements affecting the
Properties or any portion thereof, and any and all contracts entered into or
assumed by the Partnership, including, without limitation, the exceptions noted
in any title policy, and (ii) the terms and provisions of any note, mortgage and
other loan documents assumed or executed by the Partnership, including any
Property Loan documents;
(15) delivering to the General Partners copies of any notices
received from lenders, or other persons with whom the Partnership has material
contractual obligations, alleging any material deficiencies or defaults by the
Partnership under the said contractual arrangements;
(16) paying (or causing to be paid), prior to delinquency, all
insurance premiums, debts and other obligations of the Partnership, including
amounts due under any loans of the Partnership and costs of construction,
operation and maintenance of the Properties;
(17) subject to the provisions of this Agreement, developing,
operating, maintaining and otherwise managing the Properties in an efficient
manner and in accordance with the relevant Approved Budget and Approved Business
Plan;
(18) promptly complying with all present and future laws,
ordinances, orders, rules, regulations and requirements of all federal, state
and municipal governments, courts, departments, commissions, boards and
officers, the requirements of any insurance policy (or any insurer thereunder)
covering the Properties (and any improvements thereon), any national or local
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Board of Fire Underwriters, or any other body exercising functions similar to
those of any of the foregoing, which may be applicable to any of the Properties
(and any improvements thereon) and the operation and management thereof, and
when and to the extent approved by the General Partners, the Administering
General Partner shall contest or assist the Partners in contesting the validity
or application of any such law, ordinance, order, rule, regulation or
requirement;
(19) provided that Douglas Krupp (or, if the last paragraph of
this Section 3.2 applies, George Krupp) is still acting as chairman and chief
executive officer of the Partnership, selling the ten (10) assets listed on
SCHEDULE 3.2(A)(19) hereto within the time period contemplated by the Approved
Business Plan to parties which are not Affiliated with the Berkshire Group and
in which the Berkshire Group and its Affiliates have no continuing interest, for
prices that yield the Partnership net proceeds (after all transaction costs,
transfer or similar taxes and debt prepayment fees and expenses) equal to, in
respect of each such Property, at least 95% of the amounts set forth on SCHEDULE
3.2(A)(19) hereto opposite such Property, provided that the aggregate amount of
all such net sale proceeds shall not be less than 97.5% of the aggregate of all
such amounts set forth on SCHEDULE 3.2(A)(19) hereto;
(20) provided that Douglas Krupp (or, if the last paragraph of
this Section 3.2 applies, George Krupp) is still acting as chairman and chief
executive officer of the Partnership, selling certain individual assets in any
calendar year not in excess of $100 million in gross proceeds, provided that (i)
the price for each sold asset yields the Partnership net proceeds (after all
transaction costs, transfer or similar taxes and debt prepayment fees and
expenses) equal to at least 103% of the allocated acquisition cost of such asset
as set forth on SCHEDULE 3.2(A)(20) hereto and (ii) if any such assets are held
by an entity that is a REIT (other than any REIT that holds a single Property),
independent tax counsel approved by a majority of the General Partners renders
an opinion that such sale will not be a "PROHIBITED TRANSACTION" within the
meaning of Section 857 of the Code;
(21) (i) in the event the Partnership draws down the Bridge
Loan, incurring indebtedness on or prior to May 1, 2000 to refinance all or part
of the Bridge Loan, provided that such indebtedness satisfies the Freddie Mac
Parameters or (ii) in the event the Partnership determines not to draw down the
Bridge Loan, incurring indebtedness satisfying the Freddie Mac Parameters
contemporaneously with the Closing Date (provided that a commitment letter
relating to indebtedness satisfying the Freddie Mac Parameters is obtained by
July 15, 1999, definitive agreements relating to such indebtedness are executed
by September 1, 1999, and at no time after July 15, 1999 do WHGP and Blackstone
GP reasonably conclude that there is a material risk the indebtedness satisfying
the Freddie Mac Parameters will not be agreed to, closed and funded on or prior
to the anticipated Closing Date);
(22) implementing, in the form approved pursuant to the terms
of this Agreement, Unanimous Decisions and Majority Decisions approved by the
General Partners pursuant to the terms of this Agreement (including, without
limitation, Approved Business Plans);
(23) performing all other services reasonably necessary or
required for the ownership, development, maintenance, marketing and operation by
the Partnership of the
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Properties or otherwise required to be performed by the Administering General
Partner pursuant to this Agreement and not otherwise prohibited hereunder; and
(24) retaining legal firms to represent the Partnership and
its Subsidiaries provided that such firms are selected with due care and are
recognized as having expertise in the area for which they have been retained.
(b) The Administering General Partner shall not (and shall not have any
right, power or authority to), without the prior approval of either WHGP or
Blackstone GP, or of both WHGP and Blackstone GP, as applicable, bind or take
any action on behalf of or in the name of the Partnership or any Subsidiary, or
enter into any commitment or obligation binding upon the Partnership or any
Subsidiary, except for actions authorized under this Agreement (including all
actions authorized by Section 3.2(a)) or actions authorized by WHGP, Blackstone
GP or the General Partners in the manner set forth herein. Neither WHGP nor
Blackstone GP shall have the authority to take any action on behalf of or in the
name of the Partnership or any Subsidiary except for actions authorized under
this Agreement.
(c) (1) Notwithstanding anything contained herein to the contrary, BGP
shall be removed as Administering General Partner and as a General Partner, and
be relieved of its obligations as same, and shall have no further rights with
respect to approvals of or consent to any Majority Decision or Unanimous
Decision in the event that (i) Berkshire, BGP or any of their respective
Affiliates Transfers any of its interests in the Partnership in violation of the
terms of this Agreement, (ii) the Partnership or any member of the Blackstone
Group or the Whitehall Group acquires the Interest of the Berkshire Group
pursuant to the terms of Section 9.10 of this Agreement or (iii) a default by
Berkshire, BGP or one of their respective Affiliates of a loan secured by
interests of Berkshire, BGP or an Affiliate in the Partnership and such loan
becomes due as a result of such default.
(2) Notwithstanding anything contained herein to the contrary,
BGP shall be removed as Administering General Partner and as a General Partner
in the event that Douglas Krupp is removed as chief executive officer of the
Partnership for Cause or Company Cause at any time or Douglas Krupp resigns as
chief executive officer of the Partnership prior to the fifth anniversary of the
Closing Date, and in connection with such removal or resignation, (i) the
general partnership Interest of BGP shall automatically (and without any notice
or other action) be converted into a new class of limited partnership interest
(and there shall be no other limited partnership interests of such
class), (ii) such limited partnership Interest shall be entitled (by means of a
class vote or similar mechanism) to exercise the rights that BGP had under this
Agreement as a General Partner (PROVIDED, that BGP shall not have the right to
vote with respect to the Unanimous Decisions described in clauses (5)(it being
understood and agreed that upon such removal or resignation and such conversion
of Interests, the Berkshire Group shall not be obligated to fund any Additional
Capital Call made pursuant to such clause (5) but shall be subject to dilution
as set forth in Section 6.3), (10), (14) and (16) of Section 3.4 and shall not
be entitled to vote in respect of any Majority Decision (other than the Majority
Decisions described in clauses (4), (7) and (16) of Section 3.3, as to which BGP
shall have the right to vote) and (iii) from and after the date of such removal,
the remaining General Partners shall then have the right to sell the
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Partnership or all or substantially all of the assets of the Partnership
(including by means of a merger, consolidation or other business combination)
provided that, as a result of such sale, the members of the Berkshire Group
receive, in the aggregate, an amount equal to the greater of (x) the Fair Market
Value of the Berkshire Group's Interest (excluding the DK IMP which shall be
forfeited upon the occurrence of any of such events) on the date of such
termination or resignation or (y) the amount equal to the aggregate amount of
Capital Contributions made by the Berkshire Group prior to the date of such
termination or resignation less any prior distributions made to the Berkshire
Group.
In the event that Douglas Krupp ceases to be chief executive
officer of the Partnership as a result of the death or disability of Douglas
Krupp (but not as the result of the termination by the Partnership of Douglas
Krupp's employment by the Partnership or as a result of the resignation by
Douglas Krupp of his employment by the Partnership), the Partnership will offer
George Krupp, Douglas Krupp's brother, the opportunity to serve as chief
executive officer of the Partnership on the same terms and conditions as Douglas
Krupp is employed as the chief executive officer of the Partnership pursuant to
this Agreement and the DK Employment Agreement.
3.3 MAJORITY DECISIONS. Notwithstanding anything to the contrary in
this Agreement, no act shall be taken, sum expended, decision made or obligation
incurred by the Partnership or any Subsidiary, the Administering General Partner
or any of the General Partners with respect to a matter within the scope of any
of the Majority Decisions except as expressly reserved as Unanimous Decisions or
Administering Partner Decisions pursuant to Section 3.2 or Section 3.4, unless
and until the prior written consent of at least two General Partners shall have
been obtained pursuant to and in accordance with this Section 3.3 and Section
3.5. Any two of the General Partners shall have the full and complete right,
power, authority and discretion to decide, and take all actions necessary to
implement, any Majority Decision:
The "MAJORITY DECISIONS" are:
(1) making a Mandatory Capital Call pursuant to the terms of
Section 6.2(a) or a Financing Capital Call pursuant to the terms of Section
6.2(b);
(2) approving any Annual Budget or Business Plan or modifying
or deviating from or making expenditures (whether operating or capital in
nature) or incurring any obligations in excess of any of the foregoing except to
the extent the Administering General Partner is so permitted by Section 3.2 or
by this Section 3.3; PROVIDED, HOWEVER, that, so long as Douglas Krupp (or if
the last paragraph of Section 3.2 applies, George Krupp) is still acting as
chairman and chief executive officer of the Partnership, the Administering
General Partner may, without the approval of any other General Partner, (i)
incur payroll expenses which do not exceed 105% of the annual amount for such
item on the Approved Budget and (ii) make additional expenditures or incur
additional obligations which, in the aggregate, do not exceed 105% of annual
expenses (other than payroll expenses) as set forth in the Approved Budget; and
provided further that without the consent of the Administering General Partner
no line item in an Approved Budget
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may provide for expenditures (other than capital items or reserves relating
thereto) of more than 105% of the corresponding line item in the previous
Approved Budget.
(3) without limiting the Administering General Partner's
ability to take action under 3.2(a)(19), (20) or (21), taking any action in
respect of the Properties relating to environmental matters; PROVIDED, HOWEVER,
that any General Partner is hereby authorized upon prior notice to the other
General Partners to take such action as may be reasonably required to mitigate
or eliminate any material environmental condition that poses imminent danger to
human health or safety; PROVIDED FURTHER, that such emergency expenses referred
to in the preceding clause shall not, without the approval of all of the General
Partners, exceed $100,000 in the aggregate in any Budget Year;
(4) subject to the provisions of Article 9 hereof, dissolving
and winding-up the Partnership or electing to continue the Partnership or
electing to continue the business of the Partnership;
(5) incurring, renewing, refinancing or paying or otherwise
discharging (or agreeing to do any of the foregoing) indebtedness of the
Partnership (other than paying or discharging indebtedness secured by an asset
with proceeds from sales of such asset, which the Administering General Partner
shall have authority to do without the need to obtain approval of another
General Partner) provided that the Administering General Partner (in addition to
WHGP and Blackstone GP acting jointly) may incur (i) indebtedness expressly
authorized by an Approved Business Plan or an Approved Budget or (ii)
indebtedness to Freddie Mac, or another institutional lender, satisfying the
Freddie Mac Parameters on or prior to the applicable time periods specified in
Section 3.2(a)(21). Notwithstanding the foregoing, in the event (i) the
Administering General Partner does not obtain financing satisfying the Freddie
Mac Parameters on or prior to May 1, 2000 (if the Bridge Loan is drawn upon) or
(ii) the Administering General Partner does not obtain a commitment letter
relating to indebtedness satisfying the Freddie Mac Parameters by July 15, 1999
or definitive agreements relating to such indebtedness have not been executed by
September 1, 1999 (or if at any time after July 15, 1999 WHGP and Blackstone GP
reasonably conclude that there is a material risk the indebtedness satisfying
the Freddie Mac Parameters will not be agreed to, closed and funded on or prior
to the anticipated Closing Date), two General Partners may take action necessary
to incur, refinance, pay and otherwise discharge up to $650,000,000 of
indebtedness on terms other than the Freddie Mac Parameters as if such
incurrence were a Majority Decision PROVIDED that, (A) the General Partners use
commercially reasonable efforts to obtain financing on terms as close as
possible to the Freddie Mac Parameters, (B) any such financing shall be fixed
rate or be subject to appropriate hedging arrangements and (C) the recourse of
any lender of such financing permitted to be incurred pursuant to this sentence
shall be limited to the Partnership Assets (and shall not be recourse to any
Partner without such Partner's approval);
(6) modifying (i) any loan documentation executed by the
Partnership or (ii) any other material agreement, except if such modification is
contained in an Approved Business Plan;
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(7) instituting proceedings to adjudicate the Partnership a
bankrupt, or consenting to the filing of a bankruptcy proceeding against the
Partnership, or filing a petition or answer or consent seeking reorganization of
the Partnership under the Bankruptcy Code or any other similar applicable
federal, state or foreign law, or consenting to the filing of any such petition
against the Partnership, or consenting to the appointment of a receiver or
liquidator or trustee or assignee in bankruptcy or insolvency of the Partnership
or of its property, or making an assignment for the benefit of creditors of the
Partnership, or admitting in writing the Partnership's inability to pay its
debts generally as they become due;
(8) taking any action that would constitute an event of
default under any loan agreement to which the Partnership is a party;
(9) organizing or forming any Subsidiary of the Partnership,
except as otherwise expressly provided herein;
(10) approving or filing any tax return or tax report on
behalf of the Partnership (it being understood and agreed that the Administering
General Partner shall prepare the first draft of such tax returns and deliver
such drafts to the other General Partners by no later than February 1 of each
year and that such tax returns shall be completed before February 15 of each
year);
(11) approving an insurance program for the Partnership or any
of the Properties or making a material change to such approved insurance
program;
(12) settling a property insurance claim or condemnation
action involving a claim in excess of one hundred thousand dollars ($100,000) or
that, when added to all other insurance or condemnation claims during a single
calendar year, exceeds two hundred fifty thousand dollars ($250,000);
(13) making or agreeing to any material changes to the zoning
of any of the Properties or approving the terms and provisions of any material
restrictive covenant or material easement agreement affecting any of the
Properties or any portion thereof (other than utility easements and the like
granted or released in the ordinary course);
(14) establishing any reserves for the Partnership (in
addition to capital expenditure reserves) in excess of $250,000 in the aggregate
but less than $2,000,000 in the aggregate unless set forth in the Approved
Budget;
(15) except as expressly set forth in an Approved Business
Plan, approving or disapproving of a creditors' plan, the filing of an
involuntary petition of bankruptcy or the dismissal or discharge of a claim of
bankruptcy in connection with bankruptcy proceedings involving any Person
contracting with the Partnership other than contractors against whom the
Partnership's claim is less than $100,000;
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(16) taking any action that involves or relates to, or
entering into any agreement with, any General Partner or any Affiliate thereof
(it being understood and agreed that such General Partner shall recuse itself
from the consideration of any such matter);
(17) executing, modifying, accepting the surrender of or
terminating any non-residential lease or other arrangement involving the rental,
use or occupancy of more than 5,000 square feet of the Properties (provided that
the subleasing a portion of BRI's current principal office at One Beacon Place
Boston, Massachusetts may be effected by the Administering General Partner as if
such decision were permitted under Section 3.2), except in accordance with the
applicable Approved Business Plan; PROVIDED, HOWEVER, that the Administering
General Partner may modify a lease of all or any portion of the Properties if
such lease would still satisfy the applicable Approved Business Plan as
modified; and PROVIDED FURTHER, HOWEVER, that the Administering General Partner
may terminate any lease (and bring eviction and legal proceedings against the
tenant thereunder) where the tenant has defaulted in its rent payments or is
otherwise in material default;
(18) unless required pursuant to the terms of any ground lease
or mortgage encumbering any of the Properties, deciding whether to repair or
rebuild in case of material damage to any of the improvements on any Property,
or any part thereof, arising out of a casualty or condemnation (except such
emergency repairs as may be necessary to protect such Property);
(19) except as otherwise expressly set forth in Sections
3.2(a), 3.10 and Article 9 of this Agreement, selling any of the Partnership
Assets or Properties;
(20) entering into hedging, interest rate protection or
similar arrangements with respect to up to 50% of the anticipated amount of debt
financing to be incurred by the Partnership or its Subsidiaries in connection
with the BRI Merger and the BRI OP Merger;
(21) exercising any rights by the Partnership under the DK
Employment Agreement or Section 9.10 hereof; and
(22) any action that is not a Unanimous Decision or that the
Administering General Partner has the authority to effect pursuant to Section
3.2(a) (it being understood that in the case of any inconsistency between
Sections 3.2(a)(19), 3.2(a)(20) and 3.2(a)(21) and this Section 3.3, the
foregoing Sections will prevail); provided that two General Partners may modify
Section 3.2(a) (other than clauses (19), (20) and (21) thereof) to provide that
any such actions set forth in Section 3.2(a) shall constitute Majority
Decisions.
3.4 UNANIMOUS DECISIONS. Notwithstanding anything to the contrary in
this Agreement, no act shall be taken, sum expended, decision made or obligation
incurred by the Partnership, the Administering General Partner or any of the
General Partners with respect to a matter within the scope of any of the
Unanimous Decisions, unless and until the prior written consent of ALL of the
General Partners shall have been obtained pursuant to and in accordance with
this Section 3.4 and Section 3.5. The General Partners, acting unanimously,
shall have the full
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and complete right, power, authority and discretion to decide, and take all
actions necessary to implement, any Unanimous Decision.
The "UNANIMOUS DECISIONS" are:
(1) taking any action in contravention of, amending, modifying
or waiving any of the provisions of this Agreement or the Certificate;
(2) except as permitted by Article 9, approving the admission
to the Partnership of a successor or a new Partner, removing any Partner,
designating or approving the classification of any new class of Partners (and
establishing the designations, preferences and relative rights and duties of
each class of Partners), or making any public or private offering for the sale
of equity interests or securities issued by the Partnership;
(3) except as provided in Article 9, merging or consolidating
the Partnership with or into another Person (or engaging in any other
transaction having substantially the same effect); it being agreed that the
terms of Section 17-211(g) of the Act shall be applicable such that the General
Partners acting pursuant to this Section 3.4 shall have the right to effect any
amendment to this Agreement or effect the adoption of a new partnership
agreement for a limited partnership if it is the surviving or resulting limited
partnership on the merger or consolidation (except as may be expressly
prohibited under Section 3.7(b) or Section 3.7(c));
(4) altering the nature of the business of the Partnership
from the businesses permitted by Section 2.4(a);
(5) making an Additional Capital Call other than pursuant to
Sections 6.2(a) and 6.2(b);
(6) disposing of all or any portion of the property known as
Berkshire Towers or the subsidiary that owns such property prior to the fifth
anniversary of the Closing Date, PROVIDED, HOWEVER, that such disposition shall
be a Majority Decision if it is made in a tax deferred transaction;
(7) acquiring any real property or interest therein or other
material assets;
(8) except as set forth in Article 9, selling the Partnership
or all or substantially all of the Partnership Assets prior to the date which is
forty-two months after the Closing Date;
(9) changing, amending or terminating the BRI Merger Agreement
or the BRI OP Merger Agreement; executing the foregoing documentation or any
documents related thereto or executed in connection therewith; or accepting any
closing deliveries, or making any election or granting any consents, approvals
or waivers of conditions to the Partnership's obligation to close the merger
with BRI pursuant to the foregoing documentation or any documents related
thereto or executed in connection therewith;
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(10) approving the IMP (and the persons to whom such IMP is
allocated) and admitting or removing any Class E Limited Partner;
(11) incurring, refinancing, paying and otherwise discharging
indebtedness in connection with the financing of the transactions contemplated
by the BRI Merger Agreement and the BRI OP Merger Agreement if the all-in,
blended interest rate for such financing exceeds a per annum rate equal to 10%;
(12) selecting or varying depreciation and accounting methods
and making or revoking any other decisions or elections with respect to federal,
state, local or foreign tax matters or other financial purposes;
(13) establishing reserves for the Partnership (in addition to
capital expenditure reserves) in an amount equal to or in excess of $2,000,000
in the aggregate unless set forth in the Approved Budget;
(14) changing the Partnership's accountants and independent
auditors from PriceWaterhouse Coopers (it being agreed and understood that the
General Partners intend that PriceWaterhouse Coopers shall act as the
Partnership's initial accountants); making any accounting decisions for the
Partnership (other than those specifically provided for in, or necessary to
carry out, other sections of this Agreement); or approving any financial
statements prepared by the Partnership's auditors;
(15) using Partnership funds to extend credit, make an
Investment, make a loan or become a guarantor or surety for debt of another
party;
(16) except as provided in Section 4.2(b), entering into any
property management, leasing, development or similar agreement;
(17) entering into hedging, interest rate protection or
similar arrangements with respect to an amount of the debt financing to be
incurred by the Partnership or its Subsidiaries in connection with the BRI
Merger and the BRI OP Merger in excess of 50% of such indebtedness; and
(18) except as expressly set forth in the Approved Business
Plan, taking any action that reasonably would be expected to have a material
adverse effect on the assets, liabilities, income or expenses of the Properties.
Notwithstanding anything else to the contrary herein, but subject to
Section 3.7(b), Article 9 and Section 11.1, any action or decision that is not a
Unanimous Decision or a decision permitted pursuant to Section 3.2 to be taken
by the Administering General Partner without the consent of any other General
Partner shall be deemed to be a Majority Decision and may be taken or made by
the General Partners acting together without the consent or approval of any
other Partner.
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3.5 CONSENTS OF GENERAL PARTNERS. If BGP consents to any Majority
Decision or Unanimous Decision in its capacity as the Administering General
Partner, BGP need not also give its consent to such Majority Decision or
Unanimous Decision in its capacity as a General Partner. In the event of any
need for consent of the General Partners to any Majority Decision or Unanimous
Decision, the Administrating General Partner, or the requesting General Partner
as the case may be, shall make such request of the General Partners and shall
provide the General Partners with any information reasonably necessary for the
General Partners to make an informed decision. If a General Partner does not
respond within ten (10) Business Days after receipt of such request for consent
to a Majority Decision or Unanimous Decision, such General Partner shall be
deemed to have rejected such request; provided that a request pursuant to
Section 3.3(a)(12), shall be deemed to be approved by a General Partner that
does not respond within such ten Business Day period. Each General Partner
(including the Administering General Partner) shall use its good faith
reasonable efforts to respond promptly to requests for consent and to keep the
other General Partners informed of the status of any matter regarding which such
General Partner intends to request the General Partners' consent under Section
3.3 or Section 3.4. No General Partner shall be permitted to enter into a
separate agreement with another General Partner regarding the voting of its
General Partner interests or the granting of its consent to any Majority
Decision or Unanimous Decision.
3.6 MEETINGS OF GENERAL PARTNERS; ETC. The Administering General
Partner shall from time to time, but no less frequently than every fiscal
quarter, meet with WHGP and Blackstone GP at WHGP's or Blackstone GP's request
to discuss the business and affairs of the Partnership or to discuss any
particular matter reasonably requested by WHGP or Blackstone GP. WHGP and
Blackstone GP shall promptly inform BGP of actions taken by WHGP and Blackstone
GP with respect to any Majority Decision. No General Partner shall be
responsible to the Partners for any adverse consequences, of actions taken in
accordance with the terms of this Agreement or without its consent. Notice of
meetings of the General Partners shall be given in the manner provided in
Section 12.2 hereof at least seventy-two (72) hours before the time of such
meeting (unless each General Partner waives such notice). No action may be taken
at any meeting of the General Partners unless a quorum of at least two (2)
General Partners shall be present thereat; and no action may be taken at any
such meeting at which less than all of the General Partners are present unless
such action was included in the notice for such meeting. The General Partners
may act by written consent in lieu of a meeting.
3.7 NO PARTICIPATION BY OR AUTHORITY OF LIMITED PARTNERS; LIMITED
RIGHTS.
(a) No Limited Partner shall have the right to participate in the
management or conduct of the Partnership. No Limited Partner shall transact
business for the Partnership, nor shall any Limited Partner have power to sign,
act for or bind the Partnership, all of such powers being vested solely and
exclusively in the General Partners. Except as required by law or as expressly
provided in this Section 3.7, no holder of Limited Partnership Interests shall
be entitled to vote at any meeting of the Partners or for any other purpose or
otherwise to participate in any action taken by the Partnership or the Partners,
or to receive notice of any meeting of the Partners. When entitled to vote on a
matter being submitted to holders of Partnership Interests of more than one
class or series, all classes of Interests in the Partnership shall vote together
as one class with
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each interest in the Partnership having a vote equal to the Partnership
Percentage Interest related to such Interest.
(b) Notwithstanding anything in this Agreement to the contrary, so long
as any Class A Preferred Units are outstanding, the Partnership shall not,
without the prior approval of the holders of at least a majority of the
outstanding Class A Preferred Units held by Persons other than the General
Partners and their respective Affiliates, (i) amend any provisions of this
Agreement in any manner that (x) adversely affects the holders of the Class A
Preferred Units disproportionately with respect to the rights of holders of
other classes of Partnership Units or (y) alters the preferences, rights,
privileges or powers of, or restrictions provided for the benefit of, the Class
A Preferred Units (it being understood and agreed that this Section 3.7(b) shall
not prevent the Partnership from authorizing or creating any class of
Partnership Units on a parity with the Class A Preferred Units or junior to the
Class A Preferred Units as to distributions or liquidations), (ii) authorize or
create any class of Partnership Units with a priority as to distributions or
liquidations over the Class A Preferred Units (it being understood and agreed
that this Section 3.7(b) shall not prevent the Partnership from issuing any debt
securities), (iii) issue any additional Class A Preferred Units or (iv) except
as expressly provided herein, redeem or repurchase any Interests (other than the
Interests of Class E Limited Partners which may be redeemed at any time).
(c) Notwithstanding anything in this Agreement to the contrary, so long
as any Class B Units are outstanding, the Partnership shall not, without the
prior approval of the holders of at least a majority of such outstanding Class B
Units held by Persons other than the General Partners and their respective
Affiliates, amend any provisions of this Agreement in any manner that (i)
adversely affects such holders of such Class B Units disproportionately with
respect to the rights of holders of other classes of Partnership Units or (ii)
alters the preferences, rights, privileges or powers of, or restrictions
provided for the benefit of, the Class B Units (it being understood and agreed
that this Section 3.7(c) shall not prevent the Partnership from authorizing or
creating any class of Partnership Units, whether on a parity, junior or senior
to the Class B Units as to distributions or liquidations).
3.8 ACTS OF THE PARTNERSHIP AND THE PARTNERS; REPRESENTATIVES.
(a) Whenever in this Agreement or elsewhere it is provided that consent
is required of, a demand shall be made by, or acts shall be performed by or at
the direction of the Administering General Partner, all such consents, demands
and acts are to be made, given or performed upon the consent of any of the
Persons listed on SCHEDULE 3.8 attached hereto (as the same may be amended from
time to time by the Administering General Partner) under the heading
"REPRESENTATIVES OF THE ADMINISTERING GENERAL PARTNER" who shall be vested with
the authority of the Administering General Partner, until such time, as any, as
the General Partners shall receive a notice from the Administering General
Partner designating one or more new representatives.
(b) Whenever in this Agreement or elsewhere it is provided that consent
is required of, a demand shall be made by, or acts shall be performed at the
direction of WHGP, all such consents, demands and acts are to be made, given or
performed upon the consent of any of the
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Persons listed on SCHEDULE 3.8 attached hereto (as the same may be amended from
time to time by WHGP) under the heading "REPRESENTATIVES OF WHGP" who shall be
vested with the authority of WHGP, until such time, as any, as the Administering
General Partner and Blackstone GP shall receive a notice from WHGP designating
one or more new representatives.
(c) Whenever in this Agreement or elsewhere it is provided that consent
is required of, a demand shall be made by, or acts shall be performed at the
direction of Blackstone GP, all such consents, demands and acts are to be made,
given or performed upon the consent of any of the Persons listed on SCHEDULE 3.8
attached hereto (as the same may be amended from time to time by Blackstone
GP) under the heading "REPRESENTATIVES OF BLACKSTONE GP" who shall be vested
with the authority of Blackstone GP, until such time, as any, as the
Administering General Partner and WHGP shall receive a notice from Blackstone GP
designating one or more new representatives.
3.9 WAIVER OF RIGHTS BY THE LIMITED PARTNERS. To the fullest extent
permitted by law, subject to Sections 3.7(b) and (c) and subject to compliance
with the agreements referenced in Section 2.10, each of the Limited Partners
hereby (a) waives any rights it may have to (i) consent to, (ii) request
statutory appraisal rights with respect to or (iii) otherwise approve, any
merger, combination, sale of Partnership Assets, cross-collateralized financing
or refinancing or other similar transaction with respect to the Partnership and
(b) releases each Partner of the Whitehall Group, the Berkshire Group and the
Blackstone Group from any claims that the Limited Partners might have had with
respect to such rights had they not been waived (it being understood and agreed
that such waivers shall not constitute a waiver of fiduciary duties owed to the
Limited Partners).
3.10 SALES OF CERTAIN PROPERTIES BY WHGP AND BLACKSTONE GP.
(a) In the event that the Administering General Partner does not sell
the ten (10) assets as set forth in Section 3.2(a)(19) within the time period
contemplated by the initial Business Plan the WHGP and Blackstone GP, acting
together as if such decision were a Majority Decision, may cause the Partnership
to sell (or to enter into an agreement to sell) such assets during the
immediately succeeding six (6) month period to parties that are not Affiliated
with either the Whitehall Group or the Blackstone Group and in which neither the
Whitehall Group nor the Blackstone Group have a continuing interest, PROVIDED
that such sales would satisfy the requirements of Section 3.2 (a)(19) had the
Administering General Partner effected such sales.
(b) In the event that the Administering General Partner does not sell
Properties in any calendar year for gross proceeds of at least $50,000,000
pursuant to Section 3.2(a)(20), during the six months following such calendar
year, WHGP and Blackstone GP, acting together as if such decision were a
Majority Decision, may cause the Partnership to sell Properties for an amount of
gross proceeds equal to the lesser of (i) $50,000,000 or (ii) the excess of
$100,000,000 over the gross proceeds received by the Partnership in respect of
Property sales during the preceding calendar year pursuant to Section
3.2(a)(20); PROVIDED that such Property sales pursuant to this clause (b) would
satisfy the requirements of Section 3.2(a)(20) had they been effected by the
Administering General Partner.
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ARTICLE 4.
RIGHTS AND DUTIES OF PARTNERS
4.1 DUTIES AND OBLIGATIONS OF THE ADMINISTERING GENERAL PARTNER. In
addition to such duties as are described elsewhere in this Agreement, the
Administering General Partner shall (i) prepare and deliver to WHGP and
Blackstone GP (or cause to be prepared and delivered to WHGP and Blackstone GP)
the Business Plan for each Budget Year, (ii) deliver to WHGP and Blackstone GP
promptly upon its receipt, copies of all (x) summonses and complaints served on
the Partnership, or the Administering General Partner (as a general partner of
the Partnership) and (y) notices of default on any loan or other indebtedness of
the Partnership or on any liens against any Partnership Asset, (iii) monitor
compliance by the Partnership with any loan agreements, mortgages, purchase
agreements and other material agreements to which the Partnership is bound (and
take appropriate steps to cure any non-compliance to the extent permitted under
this Agreement or otherwise promptly notify WHGP and Blackstone GP of any
noncompliance of which it has obtained knowledge) and (iv) manage the
Partnership and the Partnership Assets with the same care as it would use if it
owned the Partnership Assets individually.
4.2 OTHER ACTIVITIES OF THE PARTNERS.
(a) So long as Douglas Krupp or George Krupp shall be the chief
executive officer of the Partnership, or BGP or another Affiliate of Douglas
Krupp or George Krupp is the Administering General Partner (the "RESTRICTED
PERIOD"), Berkshire and BGP shall comply, and shall cause the Berkshire
Principals and their respective Affiliates (including, without limitation, (i)
any immediate family members of the Berkshire Principals or trusts established
for the benefit of such family members of the Berkshire Principals and (ii) any
public or private partnership or other entities (other than BRI) in which any
Berkshire Principals or any of their Affiliates owns, directly or indirectly, a
general partner interest or an economic interest (as limited partner, member or
stockholder) of 50% or more (the "KRUPP AFFILIATED ENTITIES")) (any of the
foregoing, a "COVERED PERSON") to comply with the provisions of this Section
4.2. Berkshire and BGP acknowledge that this covenant is a material inducement
to Whitehall, WHGP, Blackstone LP and Blackstone GP entering into this Agreement
and that a material breach of this covenant that is not cured after written
notice and a reasonable period to cure shall constitute a material breach of
this Agreement entitling such Partners to exercise all remedies available to
them at law or in equity. Berkshire and BGP represent that all of the Krupp
Affiliated Entities are identified on SCHEDULE 4.2(B).
(b) During the Restricted Period, no Covered Person may, directly or
indirectly, develop a new multifamily property (other than development that
completes previously commenced construction or a multifamily property that is a
part of a portfolio of multifamily property acquired by such Covered Person)
located within a one mile radius of any Property held by the Partnership.
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(c) During the Restricted Period each Covered Person shall offer the
Partnership the opportunity to act as property manager for each multifamily
property owned by such Covered Person that is not managed by a third party
property manager unaffiliated with the Partnership or any Covered Person for a
management fee equal to the amount (or percentage) that is market at such time.
(d) Subject to this Section 4.2, each Partner may engage or invest in
any other activity or venture or possess any interest therein independently or
with others. Subject to this Section 4.2, none of the Partners, the Partnership
or any other Person employed by, related to or in any way affiliated with any
Partner or the Partnership shall have any duty or obligation to disclose or
offer to the Partnership or the Partners, or obtain for the benefit of the
Partnership or the Partners, any other activity or venture or interest therein
including, without limitation, any multifamily property. Except in the event of
a breach of the limitations set forth in subparagraph (a) or (b) above, none of
the Partnership, the Partners, the creditors of the Partnership or any other
Person having any interest in the Partnership shall have (A) any claim, right or
cause of action against any Partner or any other Person employed by, related to
or in any way affiliated with, any Partner by reason of any direct or indirect
investment or other participation, whether active or passive, in any such
activity or venture or interest therein, or (B) any right to any such activity
or venture or interest therein or the income or profits derived therefrom.
(e) During the Restricted Period Berkshire and BGP agree to give
written notice to the Partnership and each of the General Partners of the
acquisition by any Covered Person of a multifamily property promptly following
the acquisition by such Covered Person of any such property or any direct or
indirect interest therein (but in no event more than sixty (60) days following
such acquisition).
4.3 INDEMNIFICATION.
(a) Notwithstanding anything in this Agreement to the contrary, no
Partner, or General Partner or tax matters partner shall be liable, responsible
or accountable in damages or otherwise to the Partnership, any third party or to
any other Partner for (i) any act performed within the scope of the authority
conferred on such Partner or General Partner by this Agreement except for the
gross negligence or willful misconduct of such Partner or General Partner in
carrying out its obligations hereunder or any act that is in breach of its
fiduciary duties, (ii) such Partner's or General Partner's failure or refusal to
perform any act, except those required by the terms of this Agreement, (iii)
such Partner's or General Partner's performance of, or failure to perform, any
act on the reasonable reliance on advice of legal counsel to the Partnership or
(iv) the negligence, dishonesty or bad faith of any agent, consultant or broker
of the Partnership selected, engaged or retained in good faith. In any
threatened, pending or completed action, suit or proceeding, each Partner,
General Partner and tax matters partner shall be fully protected and indemnified
and held harmless by the Partnership against all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, proceedings, costs,
expenses and disbursements of any kind or nature whatsoever (including, without
limitation, reasonable attorneys' fees, costs of investigation, fines, judgments
and amounts paid in settlement, actually incurred by such Partner or General
Partner in connection with such action, suit or proceeding) by virtue of its
status as Partner, General Partner or tax
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matters partner or with respect to any action or omission taken or suffered in
good faith, other than liabilities and losses resulting from the gross
negligence or willful misconduct of such Partner, General Partner or tax matters
partner. The indemnification provided by this Section 4.3 shall be recoverable
only out of the assets of the Partnership, and no Partner or General Partner
shall have any personal liability (or obligation to contribute capital to the
Partnership) on account thereof.
(b) Each General Partner shall defend and indemnify the Partnership and
the other Partners against, and shall hold it and them harmless from, any
damage, loss, liability, or expense, including reasonable attorneys' fees, as
and when incurred by the Partnership or the other Partners in connection with or
resulting from such indemnifying General Partner's gross negligence,
malfeasance, fraud, breach of fiduciary duty or willful misconduct.
4.4 COMPENSATION OF PARTNERS AND THEIR AFFILIATES; GOLDMAN,
SACHS & CO. AS FINANCIAL ADVISOR.
(a) No General Partner nor any other Partner, nor any of their
respective Affiliates, shall be entitled to compensation from the Partnership in
connection with any matter that may be undertaken in connection with the
fulfillment of its duties and responsibilities hereunder, except as provided in
this Section 4.4, or as set forth in an approved Business Plan.
(b) For so long as Whitehall is a Partner of the Partnership, to the
extent the Partnership seeks to retain an investment bank for (i) an initial
public offering of the Partnership or (ii) any other sale, merger or financing
transaction relating to the Partnership involving an amount in excess of $100
million, the Partnership shall offer to Goldman, Sachs & Co. or one or more of
its Affiliates the opportunity to act as (A) lead investment banker with respect
to an initial public offering or (B) co-lead investment banker with respect to a
transaction described in clause (ii) above; PROVIDED, HOWEVER, that in the event
of a sale, merger or financing other than an initial public offering, the
Partnership may, at the election of BGP or Blackstone GP engage a second
investment banker of its choice to act as co-lead financial advisor. In the
event that the Partnership engages Goldman, Sachs & Co. and/or one of its
Affiliates in connection with such an initial public offering or to arrange a
purchase, sale, financing, refinancing, securitization or similar transaction in
respect of the Partnership, or all or any portion of the Properties, Goldman,
Sachs & Co. and/or such Affiliate shall be entitled to receive from the
Partnership its customary fees, commissions and indemnification for such
services charged to independent third parties. In addition, in the event of any
sale, merger or other disposition relating to the Partnership and involving an
amount in excess of $100 million, the Partnership shall pay to an Affiliate of
Blackstone LP an advisory fee, equal to 33% of the total fees paid to Goldman,
Sachs & Co. in connection with such engagement. Notwithstanding the foregoing,
the aggregate amount of fees so paid to Goldman, Sachs & Co. or its Affiliates
and to such Affiliate of Blackstone LP shall not exceed in the aggregate
customary amounts that would be payable to one investment banker in a
transaction of that type.
(c) Each of BGP and Berkshire, on behalf of itself and each member of
the Berkshire Group and their respective Affiliates, hereby agrees that for so
long as any member of the
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Berkshire Group or any Affiliate thereof shall control the owner of the
properties listed on SCHEDULE 4.4(C) hereto (the "MANAGED PROPERTIES") and until
the latter to occur of (i) the end of the Restricted Period or (ii) the third
anniversary of the Closing Date, subject to its fiduciary duties as general
partner of such owners, Berkshire shall cause the owner of such Managed
Properties not to terminate or reduce the management fees payable under, or seek
to terminate or reduce the management fees payable under, any of the management
or similar contracts relating to such Managed Properties to which BRI, the
Partnership or any of their respective Affiliates is a party without the prior
written consent of Blackstone GP and WHGP; provided that the owner of such
Managed Properties may, after the third anniversary of the Closing Date, reduce
the management fee paid under such agreements to four percent (4%) of the gross
revenues of the properties subject to such management agreements. In addition,
each of BGP and Berkshire, on behalf of itself and each member of the Berkshire
Group and their respective Affiliates, hereby agrees that it will use its best
efforts, prior to the Closing Date (and following the Closing Date if the
amendments or waivers referred to in this Section 4.4(c) are not made or
obtained prior to the Closing Date) to cause The Berkshire Companies Limited
Partnership to amend the Administrative Services Agreement, dated as of February
28, 1997, as amended (as so amended, the "ADMINISTRATIVE SERVICES AGREEMENT"),
between a subsidiary of BRI and The Berkshire Companies Limited Partnership to
provide that (i) the transactions contemplated by this Agreement and the merger
agreement between BRI and the Partnership shall not constitute a "CHANGE IN
CONTROL" for purposes of the Administrative Services Agreement, (ii) no
termination or similar fee shall be payable by BRI, the Partnership or their
respective successors, assigns or Affiliates in connection with any termination
of such Administrative Services Agreement, (iii) The Berkshire Companies Limited
Partnership will not terminate or reduce the fees payable under, or seek to
terminate or reduce the fees payable under, the Administrative Services
Agreement without the prior written consent of Blackstone GP and WHGP.
By its execution below solely for the purpose of this paragraph, The
Berkshire Companies Limited Partnership hereby agrees, and Berkshire hereby
agrees, on behalf of its Affiliates, including The Berkshire Companies Limited
Partnership, that, upon and after consummation of the transactions contemplated
by the BRI Merger Agreement and the BRI OP Merger Agreement, no further BRI OP
Units or other consideration shall be issuable to The Berkshire Companies
Limited Partnership or any other person under the terms of the Advisory
Contribution Agreement, dated as of February 26, 1996, by and among BRI, BRI OP
and The Berkshire Companies Limited Partnership.
(d) The Partnership will enter into an employment agreement with
Douglas Krupp in substantially the form set forth on Exhibit 1 hereto (the "DK
EMPLOYMENT AGREEMENT") effective as of the Closing Date.
4.5 DEALING WITH PARTNERS.
(a) Subject to paragraph (b) below, the fact that a Partner, an
Affiliate of a Partner, or any officer, director, employee, partner, consultant
or agent of a Partner, is directly or indirectly interested in or connected with
any Person employed by the Partnership to render or perform a service, or from
or to whom the Partnership may buy or sell any property or have other business
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dealings, shall not prohibit a General Partner from employing such Person or
from dealing with such Person on customary terms and at competitive rates of
compensation, and neither the Partnership nor any of the other Partners shall
have any right in or to any income or profits derived therefrom by reason of
this Agreement. The foregoing is not intended to modify the restrictions on the
authority of the Administering General Partner under Sections 3.3 and 3.4.
(b) Except as provided in Section 4.4, the Partnership shall not employ
to render or perform a service, buy or sell any property from or to, or have any
other business dealings with, any Person who is a Partner in the Whitehall
Group, the Blackstone Group or the Berkshire Group or any Affiliate of any
Partner in the Whitehall Group, the Blackstone Group or the Berkshire Group
without the prior approval of both of the disinterested General Partners.
4.6 USE OF PARTNERSHIP PROPERTY. No Partner shall make use of the funds
or property of the Partnership, or assign its rights to specific Partnership
property, other than for the business or benefit of the Partnership.
4.7 DESIGNATION OF TAX MATTERS PARTNER. WHGP shall act as the "TAX
MATTERS PARTNER" of the Partnership, as provided in the regulations pursuant to
Section 6231 of the Code. Each Partner hereby approves of such designation and
agrees to execute, certify, acknowledge, deliver, swear to, file and record at
the appropriate public offices such documents as may be deemed necessary or
appropriate to evidence such approval. The Partnership and each General Partner
further agrees to indemnify WHGP for any claims made against it in its capacity
as tax matters partner in accordance with Section 4.3. To the extent and in the
manner provided by applicable Code sections and regulations thereunder, the Tax
Matters Partner (a) shall furnish the name, address, profits interest and
taxpayer identification number of each Partner to the IRS and (b) shall inform
each Partner of administrative or judicial proceedings for the adjustment of
Partnership items required to be taken into account by a Partner for income tax
purposes. The Tax Matters Partner shall not enter into an agreement with the IRS
or any other taxing authority to extend the limitation period for assessment of
any federal, state or local income, franchise or unincorporated business tax of
any Partner or owner thereof nor settle with the IRS or any other taxing
authority to disallow deductions or increase income from the Partnership with
respect to any Partner, unless all of the General Partners shall have agreed
thereto. Each Partner hereby reserves all rights under applicable law, including
the right to retain independent counsel of its choice at its expense (which
counsel shall receive the full cooperation of the Tax Matters Partner and shall
be entitled to prior review of submissions by the Partnership in respect of any
dispute with relevant taxing authorities).
4.8 GUARANTEES.
(a) The General Partners acknowledge that certain of the Partners
(individually, an "INDEMNITOR PARTNER," and collectively, the "INDEMNITOR
PARTNERS") would, absent a guarantee of Partnership indebtedness, be required to
recognize income or gain under the Code in respect of their interests in the
Partnership. For purposes of this Section 4.8, the amount of Partnership
liabilities that an Indemnitor Partner would need to guarantee, at any time, so
as to enable such Indemnitor Partner to defer the recognition of income or gain
that would otherwise result by virtue
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of the liability allocation rules under Code Section 752 and Section 465 and the
Treasury Regulations thereunder is referred to herein as the "MINIMUM DEBT
AMOUNT" and the aggregate of the Minimum Debt Amounts of all the Indemnitor
Partners on the date first written above is referred to herein as the "AGGREGATE
MINIMUM DEBT AMOUNT."
(b) On the Closing Date and otherwise upon written request from an
Indemnitor Partner, the General Partners on behalf of the Partnership shall
permit such Partner to guarantee (a "GUARANTEE") an amount of the "LEAST RISKY
PORTION" of Partnership indebtedness then available (it being understood and
agreed that, subject to the following sentence, this Section 4.8 shall not
impose any obligations on the Partnership with respect to the incurrence or
maintenance of any amount of indebtedness) equal to such Indemnitor Partner's
then Minimum Debt Amount, pursuant to a guarantee substantially in the form
attached hereto as EXHIBIT 2 to the extent not prohibited by the applicable
lenders. The General Partners agree that until the earliest of (i) the date that
is sixty-six months after the Closing Date, or (ii) the sale of all or
substantially all of the Partnership's assets (other than any transaction
described in Section 9.13(a)) or (iii) the sale of the Partnership's assets
pursuant to a plan of liquidation of the Partnership the Partnership shall
maintain at least $110,000,000 of Partnership indebtedness (including by reason
of any guarantees made by the Partnership of indebtedness of partnerships in
which the Partnership is a partner directly or indirectly, the form of such
guarantees to be provided to BRI OP prior to the closing of the BRI OP Merger
Agreement and subject to the reasonable approval of BRI OP). In the event that
the minimum debt provision of the previous sentence ceases to apply, the
Partnership shall use reasonable efforts to continue to maintain such minimum
debt; PROVIDED that such reasonable efforts are consistent with the
Partnership's Approved Business Plan and that no Indemnitor Partner shall have
any rights to assert that the Partnership has not used such reasonable efforts
to so maintain such indebtedness. In the event that the sum of the Minimum Debt
Amounts of the Indemnitor Partners other than Berkshire and BGP who request a
Guarantee of indebtedness exceeds the Aggregate Minimum Debt Amount of such
Partners or the amount of available debt, each such Indemnitor Partner shall be
entitled to a Guarantee of indebtedness PRO RATA based upon the respective
Minimum Debt Amounts of such Indemnitor Partners then requesting Guarantees as
of the date first written above. The General Partners on behalf of the
Partnership shall use commercially reasonable efforts to cause any lender of
Partnership indebtedness that is the subject of the Guarantee to acknowledge and
accept such Guarantee, and such Indemnitor Partner's obligation thereunder and
to cause the Partnership to acknowledge and accept the indemnification
obligation of such Indemnitor Partner contained in any such Guarantee.
(c) Nothing in this Section 4.8 shall prohibit or preclude the General
Partners, at any time and in their sole discretion (but subject to any other
provision of this Agreement), from refinancing, paying down or paying off any
Partnership indebtedness or permitting new Partners to guarantee excess amounts
of debt, or indemnify the General Partners for, any portion of the Partnership
indebtedness; PROVIDED, HOWEVER, with respect to any Partnership indebtedness
that is subject to a Guarantee and which is to be refinanced, paid down or paid
off, the Administering General Partner shall notify, in writing (the "NOTICE"),
each such Indemnitor Partner of such refinancing, paydown or payoff, and such
Indemnitor Partner shall have fifteen (15) days from the date of receipt of the
Notice to execute a substitute Guarantee (a "SUBSTITUTE GUARANTEE") for an
amount of the "least risky portion" of Partnership indebtedness then in
existence determined
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in the manner described in subsection (b) above pursuant to a guarantee having
substantially similar terms as the Guarantee that is being substituted. If,
within fifteen (15) days of the Indemnitor Partner's receipt of the Notice, the
Indemnitor Partner notifies the Administering General Partner, in writing, of
the Indemnitor Partner's desire to execute a Substitute Guarantee as described
in the Notice, then the Administering General Partner shall, subject to the
limitations set forth herein: (i) permit such Indemnitor Partner to execute such
Substitute Guarantee; (ii) use commercially reasonable efforts to cause the
lender of the Partnership indebtedness that is guaranteed by the Substitute
Guarantee to acknowledge and accept such Substitute Guarantee, and such
Indemnitor Partner's obligations thereunder, and (iii) cause the Partnership to
acknowledge and accept the indemnification obligation of such Indemnitor Partner
contained in such Guarantee.
(d) Notwithstanding anything herein to the contrary, provided that the
General Partners and the Partnership satisfy their obligations under this
Section 4.8, at no time and under no circumstances shall an Indemnitor Partner
have any recourse against the Partnership, the General Partners or any other
Person, and none of the Partnership, the General Partners nor any other Person
shall have any liability under this Section 4.8 or otherwise in the event that a
Guarantee or Substitute Guarantee (i) is not acknowledged or accepted by any
lender and/or (ii) does not result in the deferral of taxes.
ARTICLE 5.
BOOKS AND RECORDS; ANNUAL REPORTS
5.1 BOOKS OF ACCOUNT. At all times during the continuance of the
Partnership, the Administering General Partner shall keep or cause to be kept
true and complete books of account in which shall be entered fully and
accurately each transaction of the Partnership. Such annual books shall be kept
on the basis of the Fiscal Year in accordance with the accrual method of
accounting, and shall reflect all Partnership transactions in accordance with
generally accepted accounting principles. Any Investor Group Partner shall have
the right to inspect, copy and audit the books and records of the Partnership at
reasonable times and upon reasonable notice.
5.2 AVAILABILITY OF BOOKS OF ACCOUNT. All of the books of account
referred to in Section 5.1, together with an executed copy of this Agreement and
the Certificate, and any amendments thereto, shall at all times be maintained at
the principal office of the Partnership or such other location as the
Administering General Partner may propose and WHGP and Blackstone GP shall
approve (which other location, upon such approval, shall be communicated to all
of the Partners), and upon reasonable notice to the Administering General
Partner, shall be open to the inspection and examination of the General Partners
or their representatives during reasonable business hours.
5.3 ANNUAL REPORTS AND STATEMENTS; ANNUAL BUDGETS AND BUSINESS
PLANS.
(a) For each Fiscal Year, the Administering General Partner shall send
to each Person who was a Partner at any time during such Fiscal Year, by no
later than February 15 of the next Fiscal Year, an annual report of the
Partnership including an annual balance sheet, profit and loss
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statement and a statement of changes in financial position, and a statement
showing distributions to the Partners all as prepared in accordance with
generally accepted accounting principles consistently applied and audited by the
Partnership's independent public accountants, which initially shall be
PricewaterhouseCoopers, and a statement showing allocations to the Partners of
taxable income, gains, losses, deductions and credits, as prepared by such
accountants (it being acknowledged that the Administering General Partner's
obligations hereunder are not to guaranty timely delivery of audits, tax returns
or similar third-party work product, and the failure of the auditor or another
third party to make such delivery shall not itself constitute a default
hereunder on the part of the Administering General Partner). For each quarter,
the Administering General Partner shall send to each Person who was a Partner at
any time during such quarter, within forty-five (45) days after the end of such
quarter, quarterly financial statements of the Partnership including a quarterly
balance sheet, profit and loss statement and a statement of changes in financial
position, and a statement showing distributions to the Partners all as prepared
in accordance with generally accepted accounting principles consistently
applied. In addition, the Administering General Partner shall send (i) to each
General Partner within twenty-five (25) days after the end of each month of each
Fiscal Year a monthly report setting forth the financial and operating
information on an accrual basis and in form and substance approved by the
General Partners (acting reasonably) after the date hereof, (ii) to each Partner
by no later than February 15 of each year, completed IRS Schedules K-1 prepared
by the Partnership's accountants in accordance with Section 3.3(ii), and (iii)
to each Partner such other information concerning the Partnership and reasonably
requested by any Partner as is necessary for the preparation of each Partner's
federal, state and local income or other tax returns. Each General Partner
agrees that the Partnership will use and comply with the requirements and
deadlines of the Whitehall REPSYS management reporting system (to the extent
that compliance with such reporting system does not cause the Partnership to
incur additional material costs). The Administering General Partner shall
prepare and deliver to the lender under any loan documents to which the
Partnership is a party all reports and statements required by such lender.
(b) The Administering General Partner shall prepare or cause to be
prepared a proposed Annual Budget and related Business Plan for the Partnership
as a whole. The initial Annual Budget and Business Plan, which have been
approved by all of the General Partners, are attached hereto as SCHEDULE 5.3(B).
Not later than November 15 of the prior Budget Year with respect to each
subsequent Budget Year, the Administering General Partner shall prepare for the
Partnership for the Budget Year in question, a proposed Annual Budget and a
proposed Business Plan for the Partnership as a whole. Not later than thirty
(30) days after receipt by WHGP and Blackstone GP of a proposed Annual Budget or
Business Plan (or such longer period as WHGP or Blackstone GP may reasonably
request on notice to the Administering General Partner), WHGP or Blackstone GP
may deliver a notice (an "OBJECTION NOTICE") to the Administering General
Partner stating that WHGP or Blackstone GP objects to any information contained
in or omitted from such proposed Annual Budget or Business Plan and setting
forth the nature of such objections. With respect to all or any portion of such
proposed Annual Budget or Business Plan as to which no Objection Notice is
delivered prior to such thirtieth (30th) day (or such longer period as WHGP or
Blackstone GP may have reasonably requested), the proposed Annual Budget or
Business Plan or such portion thereof will be deemed to have been accepted and
consented to by WHGP and Blackstone GP. If the Objection Notice is timely
delivered, the Administering
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General Partner shall modify the proposed Annual Budget or Business Plan, taking
into account WHGP's and/or Blackstone GP's, as applicable, objections, shall
resubmit the same to WHGP and Blackstone GP for WHGP's and Blackstone GP's
approval within 15 days thereafter, and WHGP and Blackstone GP may deliver
further Objection Notices (if any) within 15 days thereafter (in which event,
the re-submission and review process described above in this sentence shall
continue until the Annual Budget or Business Plan in question is accepted and
consented to by WHGP and/or Blackstone GP or deemed to be so accepted and
consented to). As to any portion of a proposed Annual Budget or Business Plan
that is the subject of an Objection Notice, the Annual Budget or Business Plan
(as the case may be) for the immediately preceding year shall be deemed to
control pending resolution by WHGP and/or Blackstone GP of the disputed items
(as adjusted in accordance with Section 3.3(2) above). Notwithstanding the
foregoing, approval of the Annual Budget and the Business Plan shall at all
times be a Majority Decision and no General Partner shall have the right to
submit an Objection Notice after the approval of an Annual Budget or Business
Plan by the General Partners in accordance with Section 3.3.
5.4 ACCOUNTING AND OTHER EXPENSES. All out-of-pocket expenses payable
to Persons, including Affiliates of the Administering General Partner that are
retained in accordance with the terms of this Agreement, in connection with the
keeping of the books and records of the Partnership and the preparation of
audited or unaudited financial statements and federal and local tax and
information returns required to implement the provisions of this Agreement or
required by any governmental authority with jurisdiction over the Partnership or
otherwise required to be paid in connection with the management or operation of
the Partnership shall be borne by the Partnership as an ordinary expense of its
business. The Partnership shall reimburse the Administering General Partner's
consultants for the preparation of K-1's, and federal and local tax and
information returns.
5.5 BANK ACCOUNT. The Administering General Partner shall, as soon as
reasonably practicable, establish and maintain segregated bank accounts in the
Partnership's name and for the Partnership's business, which accounts shall, to
the extent reasonably practicable, be interest-bearing. Withdrawals or checks,
other than withdrawals or checks made or issued in respect of required mortgage
payments, in excess of $500,000 (or, upon notice to the Administering General
Partner, such lesser or greater amount as WHGP and Blackstone GP may from time
to time determine) shall require the signature of an authorized representative
of WHGP or Blackstone GP. Withdrawals or checks not in excess of $500,000 (or
upon notice to the Administering General Partner, such lesser or greater amount
as WHGP and Blackstone GP may from time to time determine) and withdrawals and
checks made or issued in respect of required mortgage payments may be made by an
authorized representative of the Administering General Partner to the extent
that the Administering General Partner is permitted hereunder to incur the
expense or other liability paid or discharged without the prior consent or
approval of the other General Partners.
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ARTICLE 6.
CAPITAL CONTRIBUTIONS, LOANS
AND LIABILITIES
6.1 INITIAL CAPITAL CONTRIBUTIONS OF THE PARTNERS.
(a) Each Class C Partner shall, on or prior to the Closing Date, make
initial cash Capital Contributions, to the Partnership in the aggregate amounts
set forth opposite such Class C Partner's name on SCHEDULE 6.1(A) hereto and the
Partnership shall, in consideration of such Capital Contribution, issue to each
such Class C Partner the number of Class C Preferred Units set forth opposite
such Class C Partner's name on SCHEDULE 6.1 hereto. Each Class C Partner shall
be deemed to have made a Capital Contribution to the Partnership in an amount
equal to the amount of cash so contributed to the Partnership.
(b) As contemplated by Section 2.7(c), each Class D Partner shall, on
or prior to the Closing Date, make an initial Capital Contribution to the
Partnership of 512,203 shares of common stock of BRI and 4,904,066 BRI OP Units
held by Berkshire, BGP and their respective Affiliates on such date free and
clear of any and all liens and encumbrances, such Capital Contributions having
an agreed value equal to the product of (i) the number of shares plus the number
of such BRI Units so contributed to the Partnership and (ii) $12.25. In
consideration for such Capital Contributions, the Partnership shall issue to
Berkshire and BGP a number of Class D Units equal to the sum of the number of
shares of common stock of BRI plus the number of BRI OP Units so contributed to
the Partnership.
(c) Each holder of BRI OP Units electing to receive Class A Preferred
Units in the merger of BRI OP and a subsidiary partnership of the Partnership
(the "PARTNERSHIP MERGER") shall be considered to have made, as a result of the
Partnership Merger, an initial Capital Contribution to the Partnership on the
Closing Date of all BRI OP Units held by such holder on such date (it being
understood and agreed that all such BRI OP Units shall, immediately prior to the
consummation of such Partnership Merger, be free and clear of any and all liens
and encumbrances). In consideration for such Capital Contributions, the
Partnership shall issue to such holder of BRI OP Units a number of Class A
Preferred Units equal to the number of BRI OP Units so contributed to the
Partnership. Each such holder shall be deemed to have made a Capital
Contribution to the Partnership in an amount equal to the product of (i) the
number of BRI OP Units so contributed to the Partnership by such holder of BRI
OP Units and (ii) $12.25.
(d) Each holder of BRI OP Units electing to receive Class B Units in
the Partnership Merger shall be considered to have made, as a result of the
Partnership Merger, an initial Capital Contribution to the Partnership on the
Closing Date of all BRI OP Units held by such holder on such date (it being
understood and agreed that all such BRI OP Units shall, immediately prior to the
consummation of such Partnership Merger, be free and clear of any and all liens
and encumbrances). In consideration for such Capital Contributions, the
Partnership shall issue to such holder of BRI OP Units a number of Class B Units
equal to the number of BRI OP Units so contributed to the Partnership. Each such
holder shall be deemed to have made a Capital
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Contribution to the Partnership in an amount equal to the product of (i) the
number of BRI OP Units so contributed to the Partnership by such holder of BRI
OP Units and (ii) $12.25.
(e) SCHEDULE 6.1 hereto, as such schedule may be amended from time to
time, sets forth the respective number and type of Units held by, and the Class
A Preferred Percentage Interest, Class B Percentage Interest, Class C Percentage
Interest, Class D Percentage Interest and Class E Percentage Interest of, each
of the Partners.
(f) Intentionally omitted.
(g) The General Partners may, acting by unanimous decision pursuant to
Section 3.4, cause the Partnership to admit officers, employees or consultants
of the Partnership as Class E Limited Partners and in connection therewith, in
their sole discretion, apportion Class E Percentage Interests to such Class E
Limited Partners. Each such officer, employee or consultant shall become a Class
E Limited Partner only when (i) such person executes a written acceptance of all
of the terms and conditions of this Agreement and (ii) the Administering General
Partner has entered such person as a Partner on the books and records of the
Partnership. The General Partners may, acting as if such decision were a
Unanimous Decision, remove any Class E Limited Partner for Cause or Company
Cause (as determined by the General Partners), and in the event of such removal
such Class E Limited Partner shall forfeit his Class E Limited Partnership
Interest. In addition, the Partnership may, upon the approval of all of the
General Partners as if such decision were a Unanimous Decision, enter into
agreements with one or more Class E Limited Partners providing for, among other
things, the repurchase or forfeiture of Class E Limited Partnership Interests in
accordance with the terms of such agreements.
(h) On the date hereof and prior to the Closing Date, the Class C
Partners may make Capital Contributions to fund the Partnership's obligations
(or make payments in respect of obligations) that arise prior to the Closing
Date, including, without limitation, the Partnership's obligations to provide an
escrowed amount under the terms of the BRI Merger Agreement or to purchase
interest rate hedge agreements). All such Capital Contributions or payments made
by such Class C Partners shall be deemed to be made pursuant to Section 6.1(a).
Any amounts paid by Berkshire or BGP to fund such obligations shall be treated
as an advance to the Partnership and shall be repaid by the Partnership
contemporaneously with the closing under the BRI Merger Agreement (together with
a 12% return thereon). This clause (h) shall not apply with respect to the
payment of fees and expenses that are to be reimbursed pursuant to Section
2.9(a).
6.2 ADDITIONAL CONTRIBUTIONS.
(a) If two of the General Partners, acting together as if such decision
were a Majority Decision, determine that funds are necessary with respect to
required debt service payments, the payment of taxes required to be paid in
respect of the Properties or the operations of the Partnership, operating
deficits, insurance premiums and similar matters, or by an emergency that
threatens injury to persons or damage to property, (a "NECESSARY EXPENDITURE"),
such General Partners shall have the right to make a capital call (a "MANDATORY
CAPITAL CALL") with respect to the Investor Group Partners in an amount as
reasonably determined by such General Partners
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making such Mandatory Capital Call in order to remedy such matter and shall as
promptly as reasonably possible deliver a notice to each of the other Investor
Group Partners (by telephone, telecopier or such other means as is necessary in
order to remedy such emergency potential injury or damage) describing the amount
and nature of such Necessary Expenditure and making a Mandatory Capital Call for
such amount. Notwithstanding anything contained herein to the contrary, in no
event may the General Partners make Mandatory Capital Calls in excess of an
aggregate amount equal to the amount obtained by dividing (a) $10,000,000 by (b)
the aggregate Partnership Percentage Interests of Berkshire and BGP on the date
hereof (the "MANDATORY CAPITAL CALL LIMIT") (it being understood and agreed that
any Additional Capital Call or portion thereof in respect of Necessary
Expenditures in an amount which when aggregated with the amounts of all previous
Mandatory Capital Calls exceeds the Mandatory Capital Call Limit shall be
subject to Section 6.2(c)). Each Investor Group Partner shall be required to
contribute to the capital of the Partnership an amount of cash equal to such
Investor Group Partner's PRO RATA portion (based on such Investor Group
Partner's Partnership Percentage Interest as compared to the Partnership
Percentage Interests of all of the other Investor Group Partners) which
contribution shall be made as promptly as reasonably determined by the General
Partners making such Mandatory Capital Call (but in no event sooner than twenty
(20) business days following the delivery of the notice of a Mandatory Capital
Call) in order to remedy such matter requirement, emergency, potential injury or
damage. The Partnership shall use reasonable efforts to minimize the costs and
expenditures to the Partnership in connection with such requirement, emergency,
potential injury or matter.
(b) Two of the General Partners, acting together as if such decision
were a Majority Decision, may, during the period ending on the date that is the
later of (i) the first anniversary following the Closing Date and (ii) three
months after the maturity of the Bridge Loan, require the funding of one or more
Additional Capital Calls in an aggregate amount not to exceed $30,000,000 (a
"FINANCING CAPITAL CALL"). In the event such General Partners determine to make
such a Financing Capital Call, such General Partners shall as promptly as
reasonably possible deliver a notice to each of the other Investor Group
Partners (in the manner provided in Section 12.2) describing the amount and
nature of such Financing Capital Call. Each of Berkshire, Whitehall and
Blackstone LP shall be required to contribute to the capital of the Partnership
an amount in cash equal to one-third (1/3) of the amount of such Financing
Capital Call, which contribution shall be made as promptly as possible, but in
no event later than twenty (20) business days following the delivery of notice
of such Financing Capital Call.
(c) Any Additional Capital Calls not described in clause (a) or clause
(b) of this Section 6.2 (including, without limitation, an Additional Capital
Call on account of a Necessary Expenditure in excess of the Mandatory Capital
Call Limit) shall be Unanimous Decisions subject to the approval requirements of
Section 3.4. In the event that such an Additional Capital Call is so approved,
each of the Investor Group Partners shall be required to contribute to the
capital of the Partnership an amount in cash equal to such Partner's PRO RATA
portion (based on such Investor Group Partner's Partnership Percentage Interest
as compared to the Partnership Percentage Interests of all of the other Investor
Group Partners) which contribution shall be made as promptly as possible, but in
no event later than thirty (30) days, after such approval.
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(d) Unless otherwise determined by the unanimous vote of the General
Partners, the Partnership shall issue Class C Preferred Units as consideration
for Additional Contributions and such Class C Preferred Units shall be issued by
the Partnership at a price of $12.25 per Class C Preferred Unit.
(e) The amount of any U.S. federal and state tax liability of the
direct or indirect owners of the Berkshire Group (after giving effect to any
losses allocated to the Berkshire Group under Section 7.2 hereof) arising from
gain recognized by the Partnership in connection with the merger of BRI with the
Partnership (or a Subsidiary thereof) (as a result of the shares of common stock
in Berkshire Realty Company, Inc. contributed to the Partnership by the
Berkshire Group) will be deemed to constitute an Additional Contribution made
PRO RATA by the Berkshire Group on the date such tax liability is paid, up to a
maximum of $1.5 million, and the Berkshire Group shall receive Class D Units in
exchange for such deemed Additional Contributions valued at $12.25 per class D
Unit.
6.3 DILUTION FOR FAILURE TO FUND CAPITAL CALLS.
(a) If any Partner shall fail to make a capital contribution required
pursuant to an Additional Capital Call in the amount and within the time periods
specified therein (such Partner is hereinafter referred to as a
"NON-CONTRIBUTING PARTNER"), the Administering General Partner (or, if the
Administering General Partner is the Non-Contributing Partner, WHGP or
Blackstone GP) shall give notice of such failure to all other Investor Group
Partners and the amount of the capital contribution not funded by the
Non-Contributing Partner (such amount is hereinafter referred to as the "FAILED
CONTRIBUTION") and, within twenty (20) business days after receiving notice of
such failure, any Investor Group Partner or Investor Group Partners that is or
are not in default with respect to the Failed Contribution or any contribution
required to be made in connection with such Additional Capital Call may fund all
or part of such Failed Contribution (each such funding Partner is hereinafter
referred to as a "CONTRIBUTING PARTNER"). If more than one Partner desires to be
a Contributing Partner, each such Partner shall have the right to fund a portion
of such Failed Contribution (the "FUNDED PORTION") PRO RATA in proportion to the
relative Partnership Percentage Interests of such Contributing Partners. At any
time after funding all or part of a Failed Contribution, the Partnership
Percentage Interest of each such Contributing Partner(s) shall be increased to
the percentage (rounded up to the nearest one hundredth of one percent) equal to
the sum of (i) such Contributing Partner's Partnership Percentage Interest
immediately prior to giving effect to the Capital Contributions pursuant to such
Additional Capital Call PLUS (ii) the percentage equal to the quotient of (x)
the sum of (A) the amount funded by such Contributing Partner pursuant to such
Additional Capital Call (other than the Funded Portion ) plus (B) the product of
2.0 (200%) times the Funded Portion funded by such Contributing Partner divided
by (y) the sum of all Partners' (other than the Class A Preferred Limited
Partners) Capital Contributions after giving effect to the Capital Contributions
funded pursuant to such Additional Capital Call (including the Funded Portions).
The Partnership Percentage Interest of the NonContributing Partner shall be
decreased by the aggregate amount of the increase in the Partnership Percentage
Interests of all Contributing Partners as a result of the failure of the
Non-Contributing Partner to fund the capital calls in question.
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Notwithstanding the foregoing, the words "1.0 (100%)" shall replace the
words "2.0 (200%)" for determining the applicable dilution for a
Non-Contributing Partner in respect of any Additional Capital Call made pursuant
to clause (a) of Section 6.2, to the extent, but only to the extent, that
Berkshire's share of such Additional Capital Contribution is in excess of
$10,000,000.
(b) In the event that the Partnership Percentage Interest of a
Non-Contributing Partner or of a Contributing Partner is adjusted pursuant to
the foregoing provisions of this Section 6.3, the Class C Percentage Interest or
other Percentage Interest relating to a class of Partnership Units of such
Contributing Partner or Non-Contributing Partner and the number of Partnership
Units of each class held by such Non-Contributing Partner shall likewise be
adjusted, using the same dilution factors as are used in determining the
adjustment to the Partnership Percentage Interests (it being understood and
agreed that such adjustments will result in an adjustment to the Partnership
Percentage Interest of the Non-Contributing and Contributing Partner and to the
Class C Percentage Interest (or such other applicable Percentage Interest) and
to the number of Partnership Units of each class held by the Contributing
Partner and the Non-Contributing Partner).
(c) In the event one or more of the Investor Group Partners fund an
Additional Capital Call, the Limited Partners other than the Investor Group
Partners shall not be required or entitled to fund any portion of such
Additional Capital Call and the Partnership Percentage Interest of such Limited
Partners (and of the Investor Group Partners) shall be adjusted as provided in
clause (a) of this Section 6.3; PROVIDED, HOWEVER, that the words "1.0 (100%)"
shall replace the words "2.0 (200%)" for purposes of all such calculations.
(d) Notwithstanding anything contained herein to the contrary, the
Class A Preferred Limited Partners, Class B Limited Partners and Class E Limited
Partners shall have no obligation to contribute any additional capital to the
Partnership and the Partnership Percentage Interest of the Class A Preferred
Limited Partners , Class B Limited Partners and Class E Limited Partners (which
shall at all times be zero (0%)), shall not be diluted by operation of this
Section 6.3.
6.4 CAPITAL OF THE PARTNERSHIP. Except as otherwise expressly provided
herein, no Partner shall be entitled to withdraw or receive any interest or
other return on, or return of, all or any part of its Capital Contribution, or
to receive any Partnership property (other than cash) in return for its Capital
Contribution. No Partner shall be entitled to make a Capital Contribution to the
Partnership except as expressly authorized by this Agreement or to make any
loans to the Partnership except with the unanimous consent of the General
Partners.
6.5 LIABILITY OF GENERAL PARTNERS. All debts and obligations of the
Partnership shall be paid or discharged first with the assets of the Partnership
before the General Partners shall be obligated to pay or discharge such debts or
obligations (and then such obligation shall be only to the extent required by
applicable law). The General Partners shall not be liable for the return of the
Capital Contribution of any Limited Partner.
6.6 LIMITED LIABILITY OF LIMITED PARTNERS. Except as provided in
Section 4.8, no Limited Partner shall be bound by, or be personally liable for,
the expenses, liabilities,
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indebtedness or obligations of the Partnership or of the General Partners. The
liability of each Limited Partner shall be limited solely to the amount of its
Capital Contribution; PROVIDED, HOWEVER, that after a Limited Partner has
received a distribution from the Partnership, such Limited Partner may be liable
to the Partnership for the amount of the distribution but only to the extent
required by the Act. Without affecting the rights and remedies provided under
Sections 6.2 through 6.5 hereof, the Limited Partners shall not be required to
contribute any amounts to the Partnership other than their Initial Capital
Contributions. Nothing contained in this Agreement shall be deemed to confer on
any Limited Partner the right to control the business of the Partnership for
purposes of the Act.
ARTICLE 7.
CAPITAL ACCOUNTS, PROFITS
AND LOSSES AND ALLOCATIONS
7.1 CAPITAL ACCOUNTS.
(a) The Partnership shall maintain a Capital Account for each Partner
in accordance with federal income tax accounting principles. Each Partner's
Capital Account as of the Effective Date will be equal to its original Capital
Contribution pursuant to Section 6.1. In the event any General Partner or any
controlling person of such General Partner files a bankruptcy or similar
proceeding with respect to the Partnership without first obtaining the prior
written approval of at least one other General Partner, the Capital Account, the
Partnership Percentage Interest, Class C Percentage Interest and/or Class D
Percentage Interest of such General Partner and of whichever of the Berkshire
Group, the Whitehall Group or The Blackstone Group of which it is a member shall
be reduced to zero (0).
(b) The Capital Account of each Partner shall be increased by (i) the
amount of any cash and the agreed Book Value of any property (net of liabilities
encumbering such property) as of the date of contribution subsequently
contributed as a Capital Contribution to the capital of the Partnership by such
Partner and (ii) the amount of any Profits allocated to such Partner. The
Capital Account of each Partner shall be decreased by (i) the amount of any
Losses allocated to such Partner and (ii) the amount of distributions (including
the fair market value of any property distributions (net of liabilities
encumbering such Properties)) to such Partner. In all respects, the Partner's
Capital Accounts shall be determined in accordance with the detailed capital
accounting rules set forth in Treasury Regulations Section 1.704-1(b)(2)(iv) and
shall be adjusted upon the occurrence of certain events as provided in Treasury
Regulations Section 1.704-1(b)(2)(iv)(F).
(c) A transferee of all (or a portion) of an Interest shall succeed to
the Capital Account (or portion of the Capital Account) attributable to the
transferred Interest.
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7.2 PROFITS AND LOSSES.
(a) The profits and losses of the Partnership ("PROFITS" and "LOSSES")
shall be the net income or net loss (including capital gains and losses),
respectively, of the Partnership determined for each Fiscal Year in accordance
with the accounting method followed for federal income tax purposes except that
(i) in computing Profits and Losses, all depreciation and cost recovery
deductions shall be deemed equal to Depreciation, (ii) in computing Profits and
Losses, gains or losses shall be determined by reference to Book Value rather
than tax basis, (iii) any tax-exempt income received by the Partnership shall be
included as an item of gross income; (iv) the amount of any adjustments to the
Book Values of any assets of the Partnership pursuant to Code Section 743 shall
not be taken into account except to the extent provided in the penultimate
sentence of Treasury Regulation Section 1.704-1(b)(2)(iv)(M)(2), (v) any
expenditure of the Partnership described in Code Section 705(a)(2)(B) (including
any expenditures treated as being described in Section 705(a)(2)(B) pursuant to
Treasury Regulations under Code Section 704(b)) shall be treated as a deductible
expense, (vi) the amount of items of income, gain, loss or deduction specially
allocated to any Partners pursuant to Section 7.2(f) shall not be included in
the computation and (vii) the amount of any increases or decreases in the Book
Value of any asset upon an adjustment to the Book Values of the assets pursuant
to Treasury Regulation Section 1.704-1(b)(2)(iv)(F) shall be included in the
computation as items of gain and loss respectively.
(b) Whenever a proportionate part of the Profits or Losses is allocated
to a Partner, every item of income, gain, loss, deduction or credit entering
into the computation of such Profits or Losses or arising from the transactions
with respect to which such Profits or Losses were realized shall be credited or
charged, as the case may be, to such Partner in the same proportion; PROVIDED,
HOWEVER, that "RECAPTURE INCOME", if any, shall be allocated to the Partners who
were allocated the corresponding depreciation deductions.
(c) If any Partner transfers all or any part of its Interest during any
Fiscal Year or its Interest is increased or decreased, Profits and Losses
attributable to such Interest for such Fiscal Year shall be apportioned between
the transferor and transferee or computed as to such Partners, as the case may
be, ratably on a daily basis, provided in all events that any apportionment
described above shall be permissible under the Code and applicable regulations
thereunder.
(d) For all purposes, including federal, state and local income tax
purposes, Profits shall be allocated each year among all the Partners as
follows:
(i) First, PRO RATA among all the Partners in proportion to
the amounts allocated and previously allocated pursuant to Section
7.2(e)(viii) hereof until the amount allocated and previously allocated
pursuant to this Section 7.2(d)(i) equals the amount allocated and
previously allocated pursuant to Section 7.2(e)(viii) hereof;
(ii) Second, to the Partners so that the cumulative amounts
allocated to each of them pursuant to this Section 7.2(d)(ii) equals
the cumulative amount distributed to each of them for the current
period and all prior periods pursuant to Section 8.1(b)(1) hereof
(including amounts distributed on a sale or other disposition of all or
substantially
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all of the Partnership Assets pursuant to the accrued and unpaid
distribution clause of Section 10.3(5));
(iii) Third, to the Partners in proportion to the amounts
distributable and previously distributed pursuant to Section 8.1(b)(2)
hereof (excluding amounts attributable to Capital Contributions but
including amounts (x) that would be distributable pursuant to Section
8.1(b)(2) hereof as a result of the application of Section 10.3(6) upon
a sale or other disposition of all or substantially all of the
Partnership Assets, or (y) that would have been distributable if the
Partnership had received and distributed the full amount of cash
attributable to the income being allocated) until the amount allocated
and previously allocated pursuant to this Section 7.2(d)(iii) (and not
reversed by Section 7.2(e) (vii) hereof) equals such distributed or
distributable amounts;
(iv) Fourth, to the Partners in proportion to the amounts
distributable and previously distributed pursuant to Section 8.1(b)(3)
hereof (excluding amounts attributable to Capital Contributions but
including amounts (x) that would be distributable pursuant to Section
8.1(b)(3) as a result of the application of Section 10.3(6) upon a sale
or other disposition of all or substantially all of the Partnership
Assets, or (y) that would have been distributable if the Partnership
had received and distributed the full amount of cash attributable to
the income being allocated) until the amount allocated and previously
allocated pursuant to this Section 7.2(d)(iv) (and not reversed by
Section 7.2(e)(vi) hereof) equals such distributed or distributable
amounts;
(v) Fifth, to the Partners in proportion to the amounts
distributable and previously distributed pursuant to Section 8.1(b)(4)
hereof (excluding amounts attributable to Capital Contributions but
including amounts (x) that would have been distributable pursuant to
Section 8.1(b)(4) as a result of the application of Section 10.3(6)
upon a sale or other disposition of all or substantially all of the
Partnership Assets, or (y) that would have been distributable if the
Partnership had received and distributed the full amount of cash
attributable to the income being allocated) until the amount allocated
and previously allocated pursuant to this Section 7.2(d)(v) (and not
reversed by Section 7.2(e)(v) hereof) equals such distributed or
distributable amounts;
(vi) Sixth, to the Partners in proportion to the amounts
distributable and previously distributed pursuant to Section 8.1(b)(5)
hereof (excluding amounts attributable to Capital Contributions but
including amounts (x) that would be distributable pursuant to Section
8.1(b)(5) as a result of the application of Section 10.3(6) upon a sale
or other disposition of all or substantially all of the Partnership
Assets, or (y) that would have been distributable if the Partnership
had received and distributed the full amount of cash attributable to
the income being allocated) until the amount allocated and previously
allocated pursuant to this Section 7.2(d)(vi) (and not reversed by
Section 7.2(e)(iv) hereof) equals such distributed or distributable
amounts;
(vii) Seventh, to the Partners in proportion to the amounts
distributable and previously distributed pursuant to Section 8.1(b)(6)
hereof (including amounts (x) that
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would be distributable pursuant to Section 8.1(b)(6) as a result of the
application of Section 10.3(6) upon a sale or other disposition of all
or substantially all of the Partnership Assets, or (y) that would have
been distributable if the Partnership had received and distributed the
full amount of cash attributable to the income being allocated) until
the amount allocated and previously allocated pursuant to this Section
7.2(d)(vii) (and not reversed by Section 7.2(e)(iii) hereof) equals
such distributed or distributable amounts; and
(viii) Thereafter, (A) with respect to periods during which
BGP is the Administering General Partner, (I) seventeen and one-half
percent (17 1/2%) PRO Rata to the Class D Partners, (II) seven and
one-half percent (7 1/2%) to the Class E Limited Partners (in
proportion to their respective Class E Percentage Interests) and (iii)
seventy-five percent (75%) to the Partners other than the Class A
Preferred Limited Partners and Class E Limited Partners (PRO RATA in
proportion to their Partnership Percentage Interests, or (B) with
respect to periods during which BGP is not the Administering General
Partner, (I) seventeen and one-half percent (17 1/2%) to the Class E
Limited Partners and (II) the remainder to the Partners other than the
Class A Preferred Limited Partners and Class E Limited Partners (PRO
RATA in proportion to their Partnership Percentage Interests).
(e) For all purposes, including federal, state and local income tax
purposes, Losses shall be allocated each year among all the Partners as follows:
(i) First, PRO RATA to the Class D Partners in proportion
to and to the extent of their positive Capital Account balances;
(ii) Second, to the Partners in proportion to and to the
extent of the excess of (A) the respective aggregate amount allocated
to them pursuant to Section 7.2(d)(viii) hereof over (B) the respective
amounts previously allocated to them pursuant to this Section
7.2(e)(ii);
(iii) Third, to the Partners in proportion to and to the
extent of the excess of (A) the respective aggregate amount allocated
to them pursuant to Section 7.2(d)(vii) hereof over (B) the respective
amounts previously allocated to them pursuant to this Section
7.2(e)(iii);
(iv) Fourth, to the Partners in proportion to and to the
extent of the excess of (A) the respective aggregate amount allocated
to them pursuant to Section 7.2(d)(vi) hereof over (B) the respective
amounts previously allocated to them pursuant to this Section
7.2(e)(iv);
(v) Fifth, to the Partners in proportion and to the extent of
the excess of (A) the respective aggregate amount allocated to them
pursuant to Section 7.2(d)(v) hereof over (B) the respective amounts
previously allocated to them pursuant to this Section 7.2(e)(v);
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(vi) Sixth, to the Partners in proportion to and to the extent
of the excess of (A) the respective aggregate amount allocated to them
pursuant to Section 7.2(d)(iv) hereof over (B) the respective amounts
previously allocated to them pursuant to this Section 7.2(e)(vi);
(vii) Seventh, to the Partners in proportion to and to the
extent of the excess of (a) the respective aggregate amount allocated
to them pursuant to Section 7.2(d)(iii) hereof over (B) the respective
amounts previously allocated pursuant to this Section 7.2(e)(vii); and
(viii) Thereafter, PRO RATA among all the Partners in
proportion to their Partnership Percentage Interests.
(f) Notwithstanding Sections 7.2(d) and (e) hereof,
(i) For federal income tax purposes but not for purposes of
crediting or charging Capital Accounts, depreciation or gain or loss
realized by the Partnership with respect to any property that was
contributed to the Partnership (including any dividend or other income
realized by the Partnership with respect to Berkshire's contribution to
the Partnership of the BRI common stock and operating partnership
units) or that was held by the Partnership at a time when the Book
Value of the Partnership Assets was adjusted pursuant to the third
sentence of Section 7.1(b) shall, in accordance with the "TRADITIONAL
METHOD" under Section 704(c) of the Code and Treasury Regulation
Sections 1.704- 1(b)(2)(iv)(d) and (f) and 1.704-3(b), be allocated
among the Partners in a manner which takes into account the differences
between the adjusted basis for federal income tax purposes to the
Partnership of its interest in such property and the fair market value
of such interest at the time of its contribution or revaluation.
(ii) If there is a net decrease in the Minimum Gain of the
Partnership during a taxable year (including any Minimum Gain
attributable to Partner-Funded Debt), each Partner at the end of such
year shall be allocated, prior to any other allocations required under
this Article 7, items of gross income for such year (and, if necessary,
for subsequent years) in the amount and proportions described in
Treasury Regulation Sections 1.704-2(g) and 1.704-2(i)(4).
(iii) Notwithstanding the allocations provided for in Sections
7.2(d), (e) and (f) no allocation of an item of loss or deduction shall
be made to a Partner to the extent such allocation would cause or
increase a deficit balance in such Partner's Capital Account as of the
end of the taxable year to which such allocation relates. If any
Partner receives an adjustment, allocation or distribution that causes
or increases such a deficit balance, taking into account the rules of
Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6), such
Partner shall be allocated (after taking into account any allocations
made pursuant to Section 7.2(g)(ii)) items of income and gain in an
amount and manner to eliminate the Partner's Capital Account deficit
attributable to such adjustment, allocation or distribution as quickly
as possible. For purposes of this Section 7.2(g)(iii), there shall
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be excluded from a Partner's deficit Capital Account balance at the end
of a taxable year of the Partnership (a) such Partner's share,
determined in accordance with Section 704(b) of the Code and Treasury
Regulation Section 1.704-2(g) of Minimum Gain (provided that in the
case of Minimum Gain attributable to Partner-Funded Debt, such Minimum
Gain shall be allocated to the Partner or Partners to whom such debt is
attributable pursuant to Treasury Regulation Section 1.704-2(i)) and
(b) the amount, if any, that such Partner is obligated to restore to
the Partnership under Treasury Regulation Section 1.704-
1(b)(2)(ii)(c).
(iv) Notwithstanding the allocations provided for in
subsection (i) of this Section 7.2(g) and Sections 7.2(d), (e) and (f),
if there is a net increase in Minimum Gain of the Partnership during a
taxable year of the Partnership that is attributable to Partner-Funded
Debt then first Depreciation, to the extent the increase in such
Minimum Gain is allocable to depreciable property, and then a
proportionate part of other deductions and expenditures described in
Section 705(a)(2)(B) of the Code, shall be allocated to the lending or
guaranteeing Partner (and to joint lenders or guarantors in proportion
to their relative obligations), provided that the total amount of
deductions so allocated for any year shall not exceed the increase in
Minimum Gain attributable to such Partner-Funded Debt in such year.
(v) Subject to the provisions of Section 7.2(f)(iv), above,
all Non-recourse Deductions of the Partnership for any year shall be
allocated to the Class A, Class B and Class D Partners in the same
manner and proportion as their relative shares of Profits and Losses
for such year, and the Partnership shall allocate "excess non-recourse
liabilities" (as determined under Treasury Regulation Section
1.752-3(a)(3)) in the same ratio.
(vi) Any special allocation under Sections 7.2(f)(ii) through
(v) shall be taken into account (to the extent appropriate) in
computing subsequent allocations of Profits and Losses of any item
thereof pursuant to this Article 7 so that the net amount of any items
so allocated and the Profits, Losses and all items thereof allocated to
each Partner pursuant to this Article 7 shall, to the extent
permissible under Sections 704(b) of the Code and the Treasury
Regulations promulgated thereunder, be equal to the net amount that
would have been allocated to each Partner pursuant to this Article 7 if
such special allocation had not occurred.
ARTICLE 8.
APPLICATIONS AND DISTRIBUTIONS
OF AVAILABLE CASH
8.1 APPLICATIONS AND DISTRIBUTIONS.
(a) Distributions of Available Cash (subject to all restrictions
contained in the definition of such term) for each quarter shall be made to the
Partners by the Administering
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General Partner on behalf of the Partnership in accordance with Section 8.1(b)
within 60 days after the end of such quarter of each Fiscal Year.
(b) Available Cash shall be distributed to the Partners in the
following order of priority (and the calculations described in the following
clauses shall be made as of the date of each distribution, on a cumulative
basis), subject to the other terms of this Article 8 and the terms of Section
6.3:
(1) First, to the Class A Preferred Limited Partners, PRO RATA
in accordance with their respective Class A Preferred Percentage
Interests, until each of the Class A Preferred Limited Partners has
received a cumulative, compounded quarterly to the extent not paid on a
quarterly basis, return of 7.5% per annum on the amount of such Class A
Preferred Limited Partner's Capital Contribution taking into account
the amount and timing of all prior distributions under this Section
8.1(b)(1) (any shortfall in the full payment of such return, from time
to time, being referred to in this Agreement as an unpaid and accrued
distribution in respect of the Class A Preferred Units).
(2) Second, to holders of Class C Preferred Units (PRO RATA in
proportion to the amount of any accrued and unpaid return owing with
respect to the Class C Preferred Units held by each such Partner) until
each of such Partners has received, taking into account the amount and
timing of all prior distributions under this Section 8.1(b)(2) and of
all prior Capital Contributions made pursuant to Sections 6.1 and 6.2
(to the extent made in respect of Class C Preferred Units) by such
Partner, a Rate of Return on the aggregate Capital Contributions made
by it in respect of the Class C Preferred Units equal to twelve percent
(12%).
(3) Third, to the holders of Class B Units and Class D Units
on a pari passu basis (PRO RATA in proportion to the amount of any
accrued and unpaid return owing with respect to the Class B Units and
Class D Units held by each such Partner) until each such Partner has
received, taking into account the amount and timing of all prior
distributions under this Section 8.1(b)(3) and of all prior Capital
Contributions made in respect of such Class B Units or Class D Units,
as applicable, pursuant to Section 6.1 by such Partner, a Rate of
Return on the aggregate Capital Contributions made in respect of the
Class B Units and Class D Units equal to twelve percent (12%).
(4) Fourth, to all of the Partners other than the Class A
Preferred Limited Partners and the Class E Limited Partners (PRO RATA
in proportion to their relative Capital Contributions) until each
Partner other than the Class A Preferred Limited Partners and the Class
E Limited Partners has received, taking into account the amount and
timing of all prior distributions under this Section 8.1(b)(4) and
under Sections 8.1(b)(2) and 8.1(b)(3) and of all prior Capital
Contributions made by such Partner, a Rate of Return on the aggregate
Capital Contributions made in respect of the Partnership Units held by
such Partner equal to fifteen percent (15%).
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(5) Fifth, (i) 80% to all of the Partners other than the Class
A Preferred Limited Partners and the Class E Limited Partners (PRO RATA
in proportion to their relative Capital Contributions) and (ii) with
respect to periods during which BGP is the Administering General
Partner, fourteen percent (14%) to the Class D Partners (PRO RATA in
proportion to their relative Class D Percentage Interests), and (iii)
6% to the Class E Limited Partners as IMP (PRO RATA in proportion to
their respective Class E Percentage Interests) until each Partner other
than the Class A Preferred Limited Partners and the Class E Limited
Partners has received, taking into account the amount and timing of all
prior distributions under this Sections 8.1(b)(5) and under Sections
8.1(b)(2), 8.1(b)(3) and 8.1(b)(4) and the amount and timing of all
prior Capital Contributions, a Rate of Return on the aggregate Capital
Contributions made in respect of the Partnership Units held by such
Partner equal to twenty percent (20%).
(6) Sixth, (i) with respect to periods during which BGP is the
Administering General Partner, seventy percent (70%) to the Class D
Partners (PRO RATA in proportion to their relative Class D Percentage
Interests) and (ii) thirty percent (30%) to the Class E Limited
Partners as IMP (in proportion to their respective Class E Percentage
Interests) until the Class D Partners, if applicable, and the Class E
Limited Partners have received under this Section 8.1(b)(6) together
with the amounts previously received under Section 8.1(b)(5)(ii) or
8.1(b)(5)(iii), (but only to the extent amounts previously received
under Section 8.1(b)(5)(ii) or 8.1(b)(5)(iii) are received after each
Partner other than the Class A Preferred Limited Partners and the Class
E Limited Partners has received a Rate of Return on the aggregate
Capital Contributions made by such Partner in respect of the
Partnership Units held by such Partner equal to seventeen and one half
percent (17 1/2%)) as applicable, an amount equal to twenty-five
percent (25%) of the Second Tier Differential.
(7) Seventh, (i) with respect to periods during which BGP is
the Administering General Partner, seventeen and one-half percent (17
1/2%) of the remainder to the Class D Partners (PRO RATA in proportion
to their relative Class D Percentage Interests), (ii) seven and
one-half percent (7 1/2%) of the remainder to the Class E Limited
Partners as IMP (PRO RATA in proportion to their respective Class E
Percentage Interests) and (iii) seventy-five percent (75%) of the
remainder to the Partners other than the Class A Preferred Limited
Partners and the Class E Limited Partners (PRO RATA in proportion to
their relative Capital Contributions).
With respect to periods during which BGP is not the
Administering General Partner, amounts otherwise distributable to the holders of
the Class D Units pursuant to Sections 8.1(b)(5)(ii), (6)(i) and (7)(i) shall be
distributable under Sections 8.1(b)(5)(i), (6)(ii) and (7)(iii), respectively,
unless the General Partners (other than BGP) desire to admit a new Administering
General Partner, in which case the General Partners may jointly determine to
distribute part or all of such amounts instead to such new Administering General
Partner or otherwise as such other General Partners shall determine.
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(c) The Partnership shall endeavor to distribute in each Fiscal Year
(and, to the extent required, the immediately following Fiscal Year) Available
Cash (strictly in accordance with the priorities set forth in Section 8.1(b)) in
an amount at least sufficient (taking into account all other distributions) for
the Investor Group Partners' (and if such Investor Group Partner is a
pass-through entity for tax purposes, the shareholders, members or partners
comprising such Investor Group Partner) payment of federal, state and local
income taxes arising in respect of each Investor Group Partner's share (or the
share of the shareholders, members or partners comprising such Investor Group
Partner) of the income of the Partnership for such Fiscal Year, assuming the
highest combined effective tax rate applicable to an individual resident in
Massachusetts (but the foregoing shall not be grounds for an Additional Capital
Call), PROVIDED, HOWEVER, that in the case of phantom income for any member of
the Berkshire Group, such distribution shall be made in proportion to the
Partnership Percentage Interests of the Investor Group Partners PROVIDED,
HOWEVER, that no distributions may be made pursuant to this clause (c) at any
time when distributions to be paid under Section 8.1(b)(1) are accrued and
unpaid and PROVIDED FURTHER that such distributions shall offset amounts
otherwise distributable to partners currently or in the future.
8.2 LIQUIDATION. In the event of the sale or other disposition of all
or substantially all of the Partnership Assets, the Partnership shall be
dissolved and the proceeds of such sale or other disposition shall be
distributed to the Partners in liquidation as provided in Article 10, except
that to the extent that the Partnership receives a purchase money note or notes
in exchange for all or a portion of such assets, the Partnership shall continue
until such purchase money notes or notes have been paid in full.
ARTICLE 9.
TRANSFER OF COMPANY INTERESTS
9.1 LIMITATIONS ON ASSIGNMENTS OF INTERESTS BY PARTNERS.
(a) Except as provided in this Article 9, no Partner shall Transfer (as
hereinafter defined) all or any portion of its Interest or permit such a
Transfer or contract to do so, without the consent of each of the General
Partners (which consent may be withheld in such General Partner's sole
discretion for any reason or no reason) and in strict compliance with the
provisions of this Article 9. Notwithstanding the foregoing, but subject to
Section 9.9, (i) each member of the Whitehall Group, the Blackstone Group or the
Berkshire Group may, at any time, and without the prior consent of the General
Partners, Transfer all or any portion of its Interest to a Person qualifying as
an Affiliate under clause (i) of its definition hereof of such transferring
Partner and (ii) each member of the Berkshire Group and each Class A Preferred
Limited Partner and Class B Limited Partner may at any time, and without the
prior consent of the General Partners, and solely for estate planning purposes,
Transfer all or any portion of its Interest to one or more family members of the
Berkshire Principals, or to trusts established for such family members or, as
applicable, to family members of or trusts established for the families of such
Class A Preferred Limited Partners or Class B Limited Partners. In addition each
Class A Preferred Limited Partner and Class B Limited Partner may transfer its
Class A Preferred Units or Class B Units to one or
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more Affiliates of such Class A Preferred Limited Partner or Class B Limited
Partner satisfying the requirements of clause (i) of the definition of
"AFFILIATE". As used herein "TRANSFER" of an Interest means, with respect to any
Partner, any transfer, sale, pledge, hypothecation, encumbrance, assignment or
other disposition of any portion of the Interest of such Partner or the proceeds
thereof (whether voluntarily, involuntarily, by operation of law or otherwise,
other than a pledge permitted under Section 9.1 (b)). Any purported Transfer in
violation of this Article 9 shall be void AB INITIO, and shall not bind the
Partnership, and the Partners making such purported transfer, sale or assignment
shall indemnify and hold the Partnership and the other Partners harmless from
and against any federal, state or local income taxes, or transfer taxes,
including without limitation, transfer gains taxes, arising as a result of, or
caused directly or indirectly by, such purported Transfer. The giving of any
consent to a Transfer in any one or more instances shall not limit or waive the
need for such consent in any other or subsequent instances. Notwithstanding the
foregoing, a Class A Preferred Limited Partner or a Class B Limited Partner may
(after giving the Partnership and the Class C Partners and Class D Partners the
right to purchase such Partnership Unit described in this Section 9.1(a))
Transfer all, but not less than all, of its Class A Preferred Units or Class B
Units, respectively, to an "accredited investor" (as such term is defined in
Regulation D under the Securities Act) as long as (i) prior to such Transfer,
such Class A Preferred Limited Partner or Class B Limited Partner offers to the
Partnership and the Class C Partners and the Class D Partners the right to
purchase such Partnership Units in accordance with the procedures described
below in this Section 9.1, (ii) such transferee agrees to be bound by all of the
provisions of this Agreement, (iii) prior to such Transfer outside legal counsel
to the Partnership delivers (at the sole expense of the transferring Partner
except as provided below) an opinion to the Partnership to the effect that such
transfer does not require registration under the Securities Act and does not
cause the Partnership to be a "publicly traded partnership" within the meaning
of Section 7704 of the Code (it being understood and agreed that (a) the
Partnership shall spend up to $50,000 in legal fees and expenses in any fiscal
year in respect of any such transfers, but that any legal fees or expenses in
excess of such amount shall be for the account of the transferring Partner or
Partners; (b) that the Partnership shall not be obligated to pay (and the
transferring Partner shall be obligated to pay) any and all fees and expenses
incurred by such transferring Partner including, without limitation, transfer
and similar taxes, and fees and expenses of legal counsel engaged by such
transferring Partners or the transferee and (c) the Partnership shall not charge
the transferring Partner with other fees and expenses incurred by the
Partnership in connection with such transfer), and (iv) such Transfer otherwise
complies with the provisions of Sections 9.5, 9.7, 9.8, 9.9, and this Section
9.1. Prior to any Transfer of Class A Preferred Units or Class B Units pursuant
to this Section 9.1(a), a Partner desiring to transfer such Partnership Units (a
"TRANSFERRING PARTNER") shall first give written notice (a "NOTICE OF SALE") to
the Partnership and the General Partners, which Notice of Sale shall state the
Transferring Partner's desire to make such Transfer, the number and Class of
Units held by such Transferring Partner (the "OFFERED INTEREST") and the price
and such other terms on which the Transferring Partner proposes to Transfer its
Interest (collectively, the "OFFER TERMS"). Each Notice of Sale shall constitute
an irrevocable offer by the Transferring Partner to sell to the Partnership and
the General Partners the Offered Interest on the Offer Terms. No Offer Terms in
respect of an Offered Interest may include any form of consideration other than
cash (which may be paid at closing, in installments or after any period of time
(as set forth in the Offer Terms) or
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indebtedness (secured, unsecured, guaranteed, supported by a letter of credit or
otherwise) (as set forth in the Offer Terms) of the Purchaser (as defined below)
of such Offered Interest.
The Partnership may elect to purchase (or cause an Affiliate
designated by the Partnership to purchase) the Offered Interest on the Offer
Terms by delivering to the Transferring Partner, with a copy to the Partnership
and the General Partners, within twenty-five (25) days following the date the
Notice of Sale is received by the Partnership and all of the General Partners,
notice of such election (a "NOTICE OF PURCHASE"). The decision of the
Partnership to purchase an Offered Interest shall be a Unanimous Decision.
In addition, if the Partnership does not elect to purchase the
Offered Interest on the Offer Terms the General Partners may, by delivering a
Notice of Purchase not more than five (5) days after the expiration of the
25-day period specified above, elect to purchase (or cause an Affiliate designed
by them to purchase) stating (x) the maximum share of the Offered Interest that
such General Partner (or such designated Affiliate) elects to purchase (the
"MAXIMUM SHARE") (which Maximum Share may be greater than such General
Partners's proportionate share of the Offered Interest calculated in accordance
with its Partnership Percentage Interest), (y) that the election made by such
Notice of Purchase is irrevocable and (z) that such General Partner irrevocably
commits to purchase any share of the Offered Interest up to and including the
Maximum Share specified in preceding clause (x) on the Offer Terms. Each of the
General Partners that delivers a Notice of Purchase (each, a "PURCHASER") shall
be allocated the Maximum Share of the Offered Interest set forth in such
Purchaser's Notice of Purchase, unless such allocation, together with the shares
of the Offered Interest allocated to the other Purchasers, exceeds one hundred
percent (100%) of the Offered Interest, in which case each Purchaser whose
Maximum Share is less than such Purchaser's proportionate share of the Offered
Interest calculated in accordance with its Percentage Interest shall receive its
Maximum Share, and the remaining share of the Offered Interest shall be
allocated among the remaining Purchasers ratably in accordance with their
respective Percentage Interests. A Notice of Purchase shall be deemed to be an
irrevocable commitment by the Purchaser to purchase from the Transferring
Partner on the Offer Terms the Maximum Share of the Offered Interest that such
Purchaser has elected to purchase pursuant to its Notice of Purchase.
If in the aggregate the Purchasers do not commit to purchase
the entire Offered Interest within the time periods specified in Section 9.2(b),
the Transferring Partner (i) shall be under no obligation to sell any portion of
the Offered Interest to any Purchaser, unless the Transferring Partner so
elects, and (ii) may, within a period of 6 months from and after the later of
(x) the date of the last Notice of Purchase delivered to the Transferring
Partner in accordance with Section 9.2(b) hereof and (y) the date which is
twenty five (25) days from the date of the Notice of Sale, Transfer the entire
Offered Interest to one or more Persons at a price equal to or higher than the
price included in the Offer Terms. If the Transferring Partner shall not have
consummated the Transfer of the Offered Interest to any Person or Persons prior
to the expiration of such six month period then the provisions of this Section
9.2 shall again apply.
(b) Subject to compliance with the remaining provisions of this Article
9 and notwithstanding anything to the contrary set forth in Section 9.1(a)
above, each of the Investor
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Group Partners, Class A Preferred Limited Partners and Class B Limited Partners
may, from time to time and without any consent or approval, pledge or otherwise
grant a security interest in all or part of such Partner's Interest to an
Institutional Lender to secure a loan made to such Partner or its Affiliates (a
"PLEDGOR") by such Institutional Lender (a "PLEDGEE"); PROVIDED, HOWEVER, that
with regard to any such pledges made by a member of the Berkshire Group, any
Class A Preferred Limited Partner or any Class B Limited Partner, (i) such
pledged Interest may not be transferred to the Pledgee by foreclosure,
assignment in lieu thereof or other enforcement of such pledge, (ii) such
Partner may pledge only its economic interests in the Partnership and no other
rights hereunder, (iii) such pledges shall be securing a loan which is fully
recourse to such Partner and, in the case of a pledge by a member of the
Berkshire Group, The Berkshire Companies Limited Partnership (or its successor)
or one or more of the Berkshire Principals and (iv) Blackstone GP and WHGP shall
have the right to review and reasonably approve, the documents relating to such
loan to confirm the non-foreclosable nature of the pledge and the recourse
nature of the loan. Any right of the Pledgee in the Interest shall be expressly
subordinated to the rights (then existing or thereafter arising) of any Partner
in the Interest as a result of any claims for indemnification pursuant to
Section 4.3.
(c) Any direct or indirect transfer of interests in Berkshire or BGP
shall require the consent of all of the GPs to the extent such transfer results
in Berkshire or BGP no longer being controlled (directly or indirectly) by a
Berkshire Principal. Any direct or indirect transfer of interests in Whitehall
or WHGP shall require the consent of all of the GPs to the extent such transfer
results in Whitehall or WHGP no longer being controlled (directly or indirectly)
by or under common control with a member of the Whitehall Group or GS Group. Any
direct or indirect transfer of interests in Blackstone GP or Blackstone LP shall
require the consent of all of the GPs to the extent such transfer results in
Blackstone GP or Blackstone LP no longer being controlled (directly or
indirectly) by or under common control with Blackstone Real Estate Acquisitions
III L.L.C.
9.2 SALE OF ALL OF THE PROPERTIES BEFORE THE FIFTH ANNIVERSARY OF THE
CLOSING DATE AT THE OPTION OF BERKSHIRE.
(a) Notwithstanding any other provisions herein, at any time during the
period beginning on the date that is the second anniversary of the Closing Date
and ending on the day that is the date immediately before the date that is the
fifth anniversary of the Closing Date, the Berkshire Group, may, by delivering
written notice (a "SALES NOTICE") to WHGP and Blackstone GP (the Berkshire
Group, or such member thereof as shall deliver such Sales Notice, being referred
to as a "TRIGGERING PARTY" and the recipients of such Sales Notice each being
referred to as a "NON-TRIGGERING PARTY", and collectively as the "NON-TRIGGERING
PARTIES"), require the Partnership (and act on behalf of the Partnership with
full right, power and authority) to sell all or substantially all of the
Properties in one or more transactions to a Person not Affiliated with any
member of the Berkshire Group (including by merger of the Partnership), subject
to the provisions of this Section 9.2. Any such Sales Notice shall state the
cash price (the "TOTAL PRICE") at which the Triggering Party desires to sell the
Properties, free and clear of any liens. Any sale of the Properties pursuant to
this Section 9.2 may be accomplished by a sale of the Partnership itself
(including by merger of the Partnership) or of all of the Partnership Assets,
provided that
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such a proposed transaction may provide for the members of the Berkshire Group
to receive consideration other than cash and for the other Partners to receive
at their election, either cash or such other consideration.
(b) Concurrently with the delivery of the Sales Notice referred to in
Section 9.2(a), the Triggering Party shall submit to the Non-Triggering Parties
an offer (the "OFFER"), to sell (or cause the Partnership to sell) the
Properties to the Non-Triggering Parties (or their designees) for cash in
exchange for the Non-Triggering Parties (or their designees) paying to the
Partnership the Total Price, failing which the Triggering Party shall be
entitled to market the Properties, as more particularly set forth below in this
Section 9.2. The Offer shall also set forth any other material economic terms of
the purchase; PROVIDED that, any Offer may include a holdback for breaches of
representations or warranties (which may survive for claims made within no more
than one year from the transfer of the Properties) by the Partnership (which in
each case shall be as outlined by the Triggering Party in the Offer) not to
exceed 5% of the purchase price, which holdback amount may be available for no
more than the survival period of the representations and warranties; provided,
further, that the terms of the transaction shall not, in any event, provide for
the personal liability of any Partner in the event of the breach of such
representations and warranties.
(c) Within thirty (30) days after receiving the Offer, each
Non-Triggering Party shall deliver a notice (a "SALES RESPONSE NOTICE") to the
Triggering Party, stating the election by such Non-Triggering Party of one of
the two following options:
(1) to purchase (or have its Affiliate purchase) for the Total
Price the Properties on or before the date (the "APPLICABLE CLOSING
DATE") specified in such Sales Response Notice (which date shall be no
later than sixty (60) days after the Sales Response Notice is
delivered) and in accordance with the terms set forth in the Offer;
concurrently with the delivery of a Sales Response Notice, and as a
condition to its effectiveness under this Section 9.2(c), such
Non-Triggering Party shall also deliver to the Partnership (for the
account of the Triggering Party) a down payment equal to the product of
(i) 5% of the Total Price and (ii) the aggregate Partnership Percentage
Interest of the Triggering Party and each Non-Triggering Party that
does not elect to purchase the Properties pursuant to this clause (c)),
(provided that if more than one Non-Triggering party makes such an
election, each such non-Triggering Partner shall pay a pro rata portion
of such deposit based on its respective Partnership Percentage
Interest) which shall not be refundable except if the Partnership
defaults as a seller of the Properties; or
(2) to agree to the sale of the Properties in accordance with
the terms of the Offer, subject to such changes therein as are
contemplated by the terms of this Section 9.2 provided below, in which
event, such Non-Triggering Party shall have no further rights to
purchase the Properties, except as may be expressly provided for below
in this Section 9.2.
If any Non-Triggering Party fails to elect, by written notice, one of the above
two options within said thirty (30)-day period, or fails to deliver the down
payment required as a condition of such election, then it shall be conclusively
presumed that such Non-Triggering Party elected option (2)
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above (and such Non-Triggering Party hereby consents to such sale in such case).
In the event that both the Whitehall Group and the Blackstone Group, as
Non-Triggering Parties, make an election pursuant to Section 9.2(c)(1), they
shall each acquire 50% of each Property.
(d) Promptly after an election by a Non-Triggering Party pursuant to
Section 9.2(c)(1), the Partnership and such electing Non-Triggering Party (or
its Affiliate(s)) shall proceed with such purchase and sale, the closing for
which shall be held on or before the Applicable Closing Date, during normal
business hours at the offices of counsel to the Non-Triggering Party. The
Non-Triggering Party shall be entitled to one five (5) Business Day adjournment,
whereupon time shall be of the essence with respect to the Non-Triggering
Party's obligation to close on the purchase of the Properties in accordance with
the terms of this Section 9.2(d) on or before the Applicable Closing Date, and
if the Non-Triggering Party does not close in accordance with this paragraph,
the Triggering Party shall be entitled, as the sole and exclusive remedies of
the Triggering Party, to market and sell the Properties on behalf of the
Partnership in accordance with this Section 9.2 as if the Non-Triggering Party
made the election described in Section 9.2(c)(2) and the Triggering Party and
each Non-Triggering Party that did not elect to purchase the Properties or that
is not in default shall be entitled, as its sole and exclusive remedy, to keep a
portion of the down payment described in Section 9.2(c)(1) above (pro rata based
on its respective Partnership Interests) (unless the failure to close is due to
the default of the Partnership, in which case the Triggering Party shall not be
entitled to the foregoing remedies). No defaulting Non-Triggering Party shall
have any rights of first offer under this Section 9.2 after such default in
respect of any subsequent offers.
(e) Upon an election (or deemed election) by each Non-Triggering Party
pursuant to Section 9.2(c)(2), the Triggering Party shall have the right to
cause the Partnership to market the Properties for a period (the "MARKETING
PERIOD") of one hundred and eighty (180) days commencing with the earlier to
occur of (i) the thirtieth (30th) day after the delivery of the Offer to the
Non-Triggering Parties or (ii) the notice by each Non-Triggering Party to the
Triggering Party of each Non-Triggering Party's election to proceed under
Section 9.2(c)(2). The Partners shall cooperate fully with the efforts of the
Triggering Party to market the Properties and shall use their good faith efforts
to cause the sale of the Properties on the terms set forth in the Offer or on
terms more favorable to the Partnership.
(f) Subject to the provisions of Section 9.2(l), if (i) during the
Marketing Period, the Partnership receives a third-party offer to purchase the
Properties for all cash (a "THIRD PARTY OFFER") that the Triggering Party
desires to accept, (ii) the sale price provided for therein (the "THIRD PARTY
OFFER PRICE") is equal to 100% or more of the Total Price, (iii) the terms are
otherwise no less favorable to the Partnership than those set forth in the Offer
and shall not provide for any additional or separate consideration to the
Triggering Party (or its Affiliates), or to Berkshire, BGP, or any member of the
Berkshire Group or any of their respective Affiliates (whether through the
payment of fees, salaries, consideration or otherwise) then the Partnership
shall sell the Properties in accordance with the terms of such Third Party Offer
(the Triggering Party being fully authorized and empowered to execute and
deliver all necessary documents, agreements and instruments on the Partnership's
or the Non-Triggering Parties' behalf and to make the representations and
warranties on the Partnership's (but not the Non-Triggering Parties') behalf
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that were outlined in the Offer) and no Non-Triggering Party shall have any
right to purchase the Properties or to object to or otherwise interfere with
such sale, PROVIDED that the closing of such sale shall occur not later than the
one hundred eightieth (180th) day after the commencement of the Marketing
Period. In the event that the closing shall not occur within such one hundred
eighty (180)-day period, or the Partnership does not receive a Third Party Offer
that satisfies the conditions of this Section 9.2(f) during the Marketing
Period, then the Triggering Party shall have the right at any time thereafter to
further attempt to sell the Properties, subject to the rights of the
Non-Triggering Parties under Section 9.2(a), which shall be reinstated with
respect to any such further decision on the part of Triggering Party to sell the
Properties. Any purchase and sale or other agreement documenting such Third
Party Offer shall provide that the Non-Triggering Parties may exercise their
rights and the Partnership its obligations to the Non-Triggering Parties set
forth in the immediately previous sentence without penalty to the Partnership.
(g) If a Non-Triggering Party, having elected to proceed under Section
9.2(c)(1), defaults on its obligation to purchase the Properties as required
thereunder, then as set forth in clause (d) above the Triggering Party and each
Non-Triggering Party that does not elect to purchase the Properties or that is
not in default shall be entitled to retain, as liquidated damages, its portion
of the down payment received in contemplation of such sale (as determined
above), it being agreed that the amount represents a fair and equitable estimate
of the damages to be suffered by the Triggering Party or the Partnership if a
Non-Triggering Party were to so default and that actual damages would be highly
impracticable to determine. If the Partnership defaults on its obligation to
sell the Properties to a Non-Triggering Party pursuant to such Non-Triggering
Party's election to purchase the Properties under Section 9.2(c)(1), then such
Non-Triggering Party shall be entitled to specific performance by the
Partnership.
(h) Notwithstanding anything to the contrary, the Triggering Party
shall, subject to and in accordance with this Section 9.2, have full right,
power and authority (acting alone) to execute, deliver and perform, for and in
the name of the Partnership and, in the case of a sale of the Partnership, of
the Partners, and each Partner hereby agrees to execute, deliver and perform,
any and all documents, agreements and instruments, and to take any other actions
as may be required or desirable for the purpose of transferring the Properties,
to the maker of the Third Party Offer or a Non-Triggering Party, as the case may
be.
(i) The following provisions shall apply to a purchase by a
Non-Triggering Party pursuant to the election in Section 9.2(c)(1):
(i) If such Non-Triggering Party is any of the Whitehall
Group, the Blackstone Group or both of such Groups, such Non-Triggering
Party may elect either (a) to purchase the Properties, in which case,
the price payable to the Partnership shall be the Total Price (in the
case of a purchase by such Non-Triggering Party pursuant to Section
9.2(c)(1)) less the principal and accrued interest on account of any
third party debt that will be assumed by such Non-Triggering Party or
be paid at closing by such Non-Triggering Party (or its designee) from
its own funds or (b) to purchase all of the Interests (other than the
Class A Preferred Units and Class B Units) not already owned by such
Non-Triggering Party, which Interests shall be sold free and clear of
any liens or
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encumbrances. Subject to subparagraph (iii) of this Section 9.2(i), if
such Non-Triggering Party elects to purchase the Interests (other than
the Class A Preferred Units and Class B Units) not already owned by
such Non-Triggering Party, such Non-Triggering Party shall pay to the
other Partners an amount in cash that the other Partners would have
received had the Properties been sold to a third party for the Total
Price (in the case of a purchase by a Non-Triggering Party pursuant to
Section 9.2(c)(1)) and the net proceeds (after deducting all fees,
costs and expenses incurred in connection with such transaction) of
such sale were distributed pursuant to Section 10.3 and any required
deposits shall be calculated in respect of such amount. In the event
more than one Non-Triggering Party makes an election under this clause
(k), such Non-Triggering Partners shall purchase, on a PRO RATA basis
(based on their respective Partnership Percentage Interests), the
Interests not owned by them and to be purchased pursuant to this
Section 9.2(i)(i). In the event that two Non-Triggering Partners elect
to purchase the Partnership's assets pursuant to this Section 9.2, such
Non-Triggering Partners shall use commercially reasonable efforts to
permit the Class A Limited Partners and the Class B Limited Partners to
invest in such entity in similar proportions, and subject to
substantially the same terms and conditions, as the investment of the
Class A Limited Partners and the Class B Limited Partners in the
Partnership and in a manner that permits such Partners to defer the
recognition of any gain attributable to their Interests.
(ii) All transfer costs (including transfer taxes) shall be
paid in accordance with customary practices in the relevant
jurisdiction (unless the Offer provided otherwise) and there shall be
an adjustment of the purchase price at closing to reflect a proration
of any accrued income and expenses, excluding non-cash items, provided
that each of the Triggering Party and such Non-Triggering Party shall
bear its own attorneys' fees. Within forty-five (45) days after the
closing, such Non-Triggering Party shall direct the independent
accountants for the Partnership to complete an audit of the Partners'
proration and such independent accountants shall deliver their audit
report to the partners. If such audit report shall adjust such
proration, the party in whose favor such adjustment is made shall
promptly be paid by the other party the amount of such adjustment.
(iii) On payment of the purchase price, such Non-Triggering
Party shall, with respect to each Partnership debt, obligation and
claim against the Partnership for which the Partnership or any Partner
(or any guarantor affiliated therewith or which delivered the guaranty
on behalf of such Person) is or may be personally liable with respect
to the Properties at the option of such Non-Triggering Party either (i)
obtain a release of the Partnership and each such Partner (and any
guarantor affiliated therewith or which delivered the guaranty on
behalf of such Person) from all liability, direct or contingent, from
holders of such debt, obligation or claim or (ii) deliver to the
Partnership and each such Partner, an agreement in form and substance
reasonably satisfactory to the Partnership and each such Partner, which
satisfaction may require a creditworthy guarantor, to defend, indemnify
and hold the Partnership and each such Partner (and any guarantor
affiliated therewith or which delivered the guaranty on behalf of such
Person) harmless from any actions, including attorneys' fees and costs
of litigation, claims or loss arising from such debt, obligation or
claim. In no event shall such indemnity apply to
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liabilities resulting from the breach by any Partner of its obligations
under this Agreement. This subparagraph (iii) shall not apply to any
debt, obligation or claim which is fully insured by public liability
insurer(s) reasonably acceptable to the Partnership and each Partner.
(j) Notwithstanding anything contained herein to the contrary, the
Berkshire Group may not, without the consent of each General Partner other than
BGP, sell all of the Properties of the Partnership in one or more transactions
pursuant to this Section 9.2 (i) to any member of the Berkshire Group or any
Affiliate thereof or (ii) unless the net proceeds from all sales that are, at
the time of the calculation pursuant to this clause (ii), subject to binding
agreements would result in a 12% per annum annually compounded Rate of Return
(taking into account the timing of the receipt of the proceeds of such sale and
the amount thereof and the timing and amount of prior distributions from the
Partnership pursuant to Section 8.1(b)) to each of the Whitehall Group and the
Blackstone Group in respect of all their Capital Contributions prior to the date
of the receipt of such sale proceeds (it being understood and agreed that the
Berkshire Group may, at its election, make payments to the Whitehall Group and
the Blackstone Group in amounts necessary to achieve such Rate of Return for all
of the members of the Whitehall Group and the Blackstone Group in respect of all
such Capital Contributions and, provided that as a result of any such payments
and the sale of the Properties contemplated hereby all of the members of the
Whitehall Group and the Blackstone Group achieve such Rate of Return in respect
of all of their Capital Contributions prior to such date, may consummate such
sales although the net proceeds of such sales alone would not be sufficient to
result in the achievement of such Rate of Return thresholds).
9.3 SALE OF ALL OF THE PROPERTIES BEFORE THE FIFTH ANNIVERSARY OF THE
CLOSING DATE AT THE OPTION OF TWO GENERAL PARTNERS.
(a) Notwithstanding any other provisions herein, at any time during the
period beginning on the date that is forty-two (42) months after the Closing
Date and ending on the day that is immediately before the date that is the fifth
anniversary of the Closing Date, WHGP and Blackstone GP, acting together,
(acting as if such decision were a Majority Decision) may, by delivering written
notice (a "MAJORITY SALES NOTICE") to any General Partner that did not join in
such decision, require the Partnership (and act on behalf of the Partnership
with full right, power and authority) to sell all or substantially all the
Properties in one or more bona fide transactions to parties that are not
Affiliates of any Majority Triggering Party and in which no Majority Triggering
Party has a continuing interest.
(b) Subject to the provisions of Section 9.3(c), if following the
delivery of a Majority Sales Notice, the Partnership receives a third-party
offer to purchase the Properties for all cash (a "MAJORITY THIRD PARTY OFFER")
that the General Partners delivering the Majority Sales Notice (the "MAJORITY
TRIGGERING PARTIES") desire to accept, then the Partnership shall sell the
Properties in accordance with the terms of such Majority Third Party Offer (the
Majority Triggering Parties being fully authorized and empowered to execute and
deliver all necessary documents, agreements and instruments on the Partnership's
behalf or on behalf of the Partners other than the Majority
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Triggering Parties and to make the representations and warranties on the
Partnership's (but not such other Partners') behalf that were outlined in the
Majority Third Party Offer).
(c) Notwithstanding anything contained herein to the contrary, if a
sale of the Properties pursuant to this Section 9.3 closes during the period
beginning on the date that is forty-two (42) months after the Closing Date and
ending on the date that is fifty-four (54) months after the Closing Date, then
the Majority Triggering Parties shall ensure that in connection with such sale,
the members of the Berkshire Group and the Class B Limited Partners receive, in
accordance with Section 10.3, an amount at least equal to the excess of the
aggregate amount of Capital Contributions made by the members of the Berkshire
Group or the Class B Limited Partners, as applicable through the date of such
sale over the amount of any distributions from the Partnership previously
received by such member of the Berkshire Group (or its Affiliates or
predecessors).
Any sale of the Properties pursuant to this Section 9.3 may be
accomplished by a sale of the Partnership itself (including by merger of the
Partnership) or of all of the Partnership Assets. Notwithstanding anything to
the contrary, the Majority Triggering Parties shall, subject to and in
accordance with this Section 9.3, have full right, power and authority to
execute, deliver and perform, for and in the name of the Partnership and, in the
case of a sale of the Partnership, of the Partners, and each Partner hereby
agrees to execute, deliver and perform, any and all documents, agreements and
instruments, and to take any other actions, as may be required or desirable for
the purpose of transferring the Properties to the purchaser of the Partnership's
assets or the Partnership under this Section 9.3.
Any sale of the Properties pursuant to this Section 9.3 (x) shall not
contain any representations by any Partner without the consent of such Partner
(but may contain representations by the Partnership), and (y) may include a
holdback for breaches of representations or warranties (which may survive for
claims made within no more than one year from the transfer of the Properties) by
the Partnership not to exceed 5% of the purchase price, which holdback amount
may be available for no more than the survival period of the representations and
warranties; provided, further, that the terms of the transaction shall not, in
any event, provide for the personal liability of any Partner in the event of the
breach of such representations and warranties.
9.4 SALE OF THE PROPERTIES AFTER THE FIFTH ANNIVERSARY. Notwithstanding
any other provisions herein, at any time after the date that is the fifth
anniversary of the Closing Date, each of the General Partners shall be
authorized unilaterally to cause a sale in which each General Partner will have
the option to receive consideration consisting of all cash of (i) all or
substantially all of the Properties or (ii) the Partnership in one or more bona
fide transactions to a Person in which none of the Whitehall Group, the
Blackstone Group or the Berkshire Group and no Affiliate of any of the Whitehall
Group, the Blackstone Group or the Berkshire Group has an interest; PROVIDED,
HOWEVER, that BGP may not exercise such right until the date that is three
months following the fifth anniversary of the Closing Date, unless during such
three month period (i) the DK Employment Agreement is terminated for reasons
other than Cause or Company Cause and (ii) neither WHGP nor Blackstone GP has
already exercised its rights under this Section 9.4. In the event that one or
more General Partners elect to cause the sale of the Properties pursuant
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to this Section 9.4 by giving written notice of such election to any General
Partner not joining in such election, no other General Partner may subsequently
make an election pursuant to this Section 9.4 until the date that is 180 days
after the date such electing General Partner or General Partners deliver such
notice of election.
Any sale of the Properties pursuant to this Section 9.4 may be
accomplished by a sale of the Partnership itself (including by merger of the
Partnership) or of all of the Partnership Assets. Notwithstanding anything to
the contrary, the General Partners shall, subject to and in accordance with this
Section 9.4, have full right, power and authority to execute, deliver and
perform, for and in the name of the Partnership and, in the case of a sale of
the Partnership, of the Partners, and each Partner hereby agrees to execute,
deliver and perform, any and all documents, agreements and instruments, and to
take any other actions as may be required or desirable for the purpose of
transferring the Properties, to the purchaser of the Partnership's assets or the
Partnership under this Section 9.4.
Any sale of the Properties pursuant to this Section 9.4 (x) shall not
contain any representations by any Partner without the consent of such Partner
(but may contain representations by the Partnership) and (y) may include a
holdback for breaches of representations or warranties (which may survive for
claims made within no more than one year from the transfer of the Properties) by
the Partnership not to exceed 5% of the purchase price, which holdback amount
may be available for no more than the survival period of the representations and
warranties; provided, further, that the terms of the transaction shall not, in
any event, provide for the personal liability of any Partner in the event of the
breach of such representations and warranties.
9.5 ASSIGNMENT BINDING ON PARTNERSHIP. No Transfer of all or any part
of the Interest of a Partner permitted to be made under this Agreement shall be
binding upon the Partnership unless and until a duplicate original of such
assignment or instrument of transfer, duly executed and acknowledged by the
assignor or transferor, has been delivered to the Partnership, and such
instrument evidences (i) the written acceptance by the assignee of all of the
terms and provisions of this Agreement, (ii) the assignee's representation that
such assignment was made in accordance with all applicable laws and regulations
and (iii) the consent to the Transfer of the Interest required pursuant to
Section 9.1, if any. In addition, a Person to whom a Transfer may be made
pursuant to this Article 9, other than pursuant to Section 9.1(a), may also be
required, in the reasonable discretion of any of the General Partners, and as a
condition precedent to its becoming a transferee to make certain
representations, warranties and covenants to evidence compliance with U.S.
federal and state securities laws including, but not limited to, representations
as to its net worth, sophistication and investment intent.
9.6 BANKRUPTCY OF A LIMITED PARTNER. The Partnership shall not be
dissolved or terminated by reason of the Bankruptcy, removal, withdrawal,
dissolution or admission of any Limited Partner.
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9.7 SUBSTITUTED PARTNERS.
(a) Partners who assign all their Interests pursuant to an assignment
or assignments permitted under this Agreement shall cease to be Partners of the
Partnership except that unless and until a Substituted Partner is admitted in
its stead, the assigning Partner shall not cease to be a Partner of the
Partnership under the Act and shall retain the rights and powers of a member
under the Act and hereunder, PROVIDED that such assigning Partner may, prior to
the admission of a Substituted Partner, assign its economic interest in its
Interest, to the extent otherwise permitted under Article 9. Any Person who is
an assignee of any portion of the Interest of a Partner and who has satisfied
the requirements of Article 9 shall become a Substituted Partner only when (i)
the Administering General Partner has entered such assignee as a Partner on the
books and records of the Partnership, which the Administering General Partner is
hereby directed to do upon satisfaction of such requirements, and (ii) such
assignee shall have paid all reasonable legal fees and filing costs in
connection with the substitution as a Partner except as otherwise provided in
Section 9.1(a).
(b) Any Person who is an assignee of any of the Interest of a Partner
but who does not become a Substituted Partner and desires to make a further
assignment of any such Interest, shall be subject to all the provisions of this
Article 9 to the same extent and in the same manner as any Partner desiring to
make an assignment of its Interest.
9.8 ACCEPTANCE OF PRIOR ACTS. Any person who becomes a Partner, by
becoming a Partner, accepts, ratifies and agrees to be bound by all actions duly
taken pursuant to the terms and provisions of this Agreement by the Partnership
prior to the date it became a Partner and, without limiting the generality of
the foregoing, specifically ratifies and approves all agreements and other
instruments as may have been executed and delivered on behalf of the Partnership
prior to said date and which are in force and effect on said date.
9.9 ADDITIONAL LIMITATIONS. Notwithstanding anything contained in this
Agreement, no Transfer of an Interest shall be made, and any General Partner
shall have the right to prohibit and may refuse to accept any Transfer, unless
(i) registration is not required under the Securities Act of 1933, as amended,
in respect of such Transfer; (ii) such Transfer does not violate any applicable
federal or state securities, real estate syndication, or comparable laws; (iii)
except as otherwise provided in Section 9.2, 9.3 or 9.4 such Transfer will not
be subject to, or such Transfer, when aggregated with prior Transfers in
accordance with applicable law will not result in the imposition of, any state,
city or local transfer taxes, including, without limitation, any transfer gains
taxes, unless such assignor pays such taxes; and (iv) such Transfer will not
cause the Partnership to be treated as a "PUBLICLY-TRADED PARTNERSHIP" within
the meaning of Section 7704 of the Code. Any General Partner may elect prior to
any Transfer to require an opinion of counsel with respect to any of the
foregoing matters.
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9.10 PURCHASE OF THE BERKSHIRE GROUP'S INTEREST UPON THE TERMINATION OF
DOUGLAS KRUPP'S EMPLOYMENT UNDER THE DK EMPLOYMENT AGREEMENT.
(a) In the event that Douglas Krupp is terminated as chief executive
officer of the Partnership as a result of a Performance Termination, the
Berkshire Group shall have the right (but not the obligation), exercisable at
any time within 60 days after such termination, to require the Partnership to
acquire its Interest (including the DK IMP) for a price equal to the Fair Market
Value (as such term is defined below) of its Interest (including the DK IMP) on
the date such right is exercised.
(b) In the event that Douglas Krupp (i) is terminated as chief
executive officer of the Partnership for Company Cause, or for Cause at any
time, or (ii) resigns or otherwise terminates the DK Employment Agreement on or
prior to the fifth anniversary of the Closing Date, the Partnership shall have
the right (but not the obligation), exercisable at any time within 60 days after
such termination or resignation, to purchase the Interest of the Berkshire Group
for a price equal to the greater of (x) the Fair Market Value of the Berkshire
Group's Interest (excluding the DK IMP which shall be forfeited upon the
occurrence of any of the events described in clause (i) and (ii) above) on the
date such right is exercised or (y) the amount equal to the aggregate amount of
Capital Contributions made by the Berkshire Group prior to the date of such
termination or resignation less any prior distributions made to the Berkshire
Group.
(c) In the event Douglas Krupp is terminated as chief executive officer
of the Partnership prior to the fifth anniversary of the Closing Date for any
reason other than for Company Cause, Cause, a Performance Termination or Douglas
Krupp's death or disability, the Partnership shall purchase the Interest of the
Berkshire Group for a cash price equal to the greater of (i) the Fair Market
Value of the Berkshire Group's Interest (including the DK IMP) at the date of
such termination or (ii) the sum of (x) an amount equal to a 12% Rate of Return
on the amount of the Berkshire Group's Capital Contributions made prior to the
date of such termination, for the five year period ending with fifth anniversary
of the Closing Date (taking into account the amount and timing of prior
distributions to the Berkshire Group and discounting back such amount to the
date of payment utilizing as the discount rate the then current Treasury rate
for Treasury obligations with a maturity equal to or approximating the term
between the date of such termination and the fifth anniversary of the Closing
Date) plus (y) an amount in cash equal to $10 million (in full payment of the DK
IMP).
(d) For purposes of this Section 9.10, "FAIR MARKET VALUE" of the
Berkshire Group's Interest (either including or excluding the DK IMP as
specified above) will be the amount the Berkshire Group would have received upon
the full liquidation of the tangible assets then owned by the Partnership at the
fair market value of such assets (with all intangible assets being valued at
zero) and the distribution of the proceeds pursuant to Section 10.3. "FAIR
MARKET VALUE" will be determined based upon what a willing buyer, under no
compulsion to buy, would pay a willing seller, under no compulsion to sell. If
all three General Partners cannot agree on a fair market value after a 30-day
resolution period, each of BGP, on the one hand, and WHGP and Blackstone GP, on
the other hand, shall select an independent, disinterested appraiser who is a
certified member of the Appraisal Institute with at least ten (10) years'
established experience in appraising
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properties and interests of the same type and in the same geographic areas as
the Properties ("APPRAISER") and have an appraisal prepared (the "INITIAL
APPRAISALS") within sixty (60) days after the expiration of the thirty (30) day
period described above. If the lower of the Initial Appraisals is not more than
ten percent (10%) less than the higher of the Initial Appraisals, then the
Initial Appraisals shall be averaged and such average shall be the Fair Market
Value for the Properties. If the lower of the Initial Appraisals is more than
ten percent (10%) less than the higher of the Initial Appraisals, then within
ten (10) days after the date on which the last Initial Appraisal is delivered to
the other party the two Appraisers shall select a third Appraiser or, if the two
Appraisers are unable to agree on a third Appraiser within such time period, the
third Appraiser shall be designated by the American Arbitration Association's
New York, New York, office at the request of either party. The third Appraiser
shall conduct a third, independent appraisal (the "THIRD APPRAISAL") within
twenty (20) days. If the Third Appraisal is required, the Fair Market Value
shall be the appraised value of whichever Initial Appraisal is closest to the
appraised value of the Third Appraisal. Each such Initial Appraisal and Third
Appraisal shall be made as of the date of the termination of the DK Employment
Agreement. Each side will bear its own costs and expenses in the arbitration. If
the requisite General Partners (other than BGP) elect, at any time before the
arbitration panel is selected, to cause a sale of the Properties, rather than
having the fair market value determined by the arbitration panel, the Berkshire
Group will receive its share of the sale proceeds (either including or excluding
its share of any IMP as specified above) that instead of the amount it would
have received based on the arbitrated value.
9.11 TRANSFERS BY THE BLACKSTONE GROUP AND THE WHITEHALL GROUP. Each of
the Partners acknowledges and agrees that the Blackstone LP intends to Transfer
its Interests to one or more persons satisfying the condition of clause (i) of
the definition of Affiliate after the date hereof, and that no consent of any
Partner shall be required in connection therewith. Upon such transfer such
Affiliate(s) shall automatically become Substituted Partner(s) without any
further action and, upon Transfer by the Blackstone LP of all its entire
Interest, shall be deemed to have assumed all of Blackstone LP's obligations
hereunder with respect to such Interest so transferred and Blackstone LP shall
be released from any liabilities under or relating to this agreement with
respect to such Interests so transferred.
(b) Each of the Partners acknowledges and agrees that Whitehall may
Transfer its Interests to one or more persons satisfying the condition of clause
(i) of the definition of Affiliate after the date hereof, and that no consent of
any Partner shall be required in connection therewith. Upon such Transfer such
Affiliate(s) shall automatically become Substituted Partner(s) without any
further action and, upon Transfer by Whitehall of such Interest, shall be deemed
to have assumed all of Whitehall's obligations hereunder with respect to such
Interest so transferred and Whitehall shall be released from any liabilities
under or relating to this agreement with respect to such Interests so
transferred.
9.12 PURCHASE OF THE CLASS A PREFERRED UNITS AND CLASS B UNITS.
(a) Each holder of Class A Preferred Units shall, from and after the
date that is the five years after the Closing Date, have the right, by
delivering written notice to the Partnership, to require the Partnership to
purchase all, but not less than all of its Class A Preferred Units for
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an amount in cash equal to $12.25 per Class A Preferred Unit, plus an amount
equal to the accrued and unpaid distributions on such Class A Preferred Units
for all fiscal quarters ending on or prior to the Holder Purchase Date. Any
notice of redemption delivered pursuant to this Section 9.12(a), will be mailed
to the Partnership, by certified mail, postage prepaid, not less than 180 days
prior to the date upon which the holder designates such purchase is to occur
(the "HOLDER PURCHASE DATE"). The Partnership shall pay the holders of the Class
A Preferred Units as to which such an election has duly been made hereunder the
full amount due under this Section 9.12(a) on the Holder Purchase Date.
(b) The Partnership shall have the right, from and after the earlier to
occur of (i) the sixth anniversary of the Closing Date, (ii) the consummation by
the Partnership (or its successor) of an underwritten public offering of its
equity securities, (iii) the time immediately prior to the consummation of a
merger, consolidation or other business combination (other than (x) a merger,
consolidation or other business combination with a General Partner or an
Affiliate of a General Partner or (y) a merger in which the holders of
Partnership Units prior to such merger, consolidation or other business
combination hold 51% or more of the partnership interests in the surviving
entity after the consummation of such merger, consolidation or other business
combination) involving, the Partnership or (iv) the sale of all or substantially
all of the assets of the Partnership (other than such a sale to a General
Partner or an Affiliate of a General Partner), to (1) redeem all the Class A
Preferred Units for a cash price equal to $12.25 per Class A Preferred Unit,
plus an amount equal to the accrued and unpaid distributions on such Class A
Preferred Units for all fiscal quarters ending on or prior to the date of such
redemption (it being understood and agreed that no payment shall be made in
respect of any other quarterly distribution period), and (2) redeem all of the
Class B Units held by any Partner for a cash price equal to the fair market
value of such Class B Units, as such fair market value shall be reasonably
determined by the General Partners (taking into account appraisals that have
been performed at the request of the Partnership prior to the date of such
determination, without imposing any obligation on the Partnership to obtain any
such appraisals). Any notice of redemption delivered pursuant to this Section
9.12(b) will be mailed by the Partnership, by certified mail, postage prepaid,
not less than 10 nor more than 60 days prior to the date upon which such
redemption is to occur (the "PARTNERSHIP REDEMPTION DATE"), addressed to each
holder of record of the Partnership Units to be redeemed at such holder's
address as it appears on the records of the Partnership. No failure to give or
defect in such notice shall affect the validity of the proceedings for the
redemption of any Partnership Units. In addition to any information required by
law, each such notice shall state: (a) the Partnership Redemption Date, (b) the
redemption price, (c) the aggregate number of each class of Partnership Units to
be redeemed, and (d) the place or places where such Partnership Units to be
redeemed are to be surrendered for payment of the amount payable upon
redemption. Notwithstanding the foregoing, in the event of a public offering of
equity securities of the Partnership prior to the date that is five and one half
years after the Closing Date, the Partnership shall use its commercially
reasonable efforts to structure such offering in a manner that would permit the
holders of the Class A Preferred Units and Class B Units to remain Partners in
the Partnership; PROVIDED, HOWEVER, if the lead underwriters of such public
offering advise the Partnership that such structure would adversely affect the
price to be obtained in such offering or otherwise materially adversely affect
the offering, the provisions of this sentence shall not apply
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and instead the Partnership shall have the right to redeem the Class A Preferred
Units or Class B Units pursuant to this Section 9.12(b).
(c) Except as provided above in clause (a) or clause (b), the
Partnership shall make no payment or allowance for unpaid distributions, whether
or not in arrears, on any Partnership Units purchased or called for redemption
or purchase pursuant to clause (a) or (b) of this Section 9.12. On and after a
Holder Purchase Date or a Partnership Redemption Date, distributions will cease
to accumulate on the Partnership Units for which the holder purchase option has
been exercised or Partnership Units called for redemption, as applicable, unless
the Partnership defaults in payment of the full redemption price therefor. If
any date fixed for redemption or purchase of Partnership Units is not a Business
Day, then payment of the redemption price payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on the originally scheduled redemption date. If payment of the redemption or
purchase price is improperly withheld or refused and not paid by the
Partnership, distributions on such Partnership Units will continue to accumulate
from the originally scheduled redemption date to the date of payment.
(d) In the event the Partnership defaults in its obligations to
purchase Class A Preferred Units under Section 9.12(a) for a period of more than
fifteen (15) days, the coupon rate on such Class A Preferred Units shall
increase to a rate per annum, compounded quarterly, to the extent not paid on
quarterly basis, equal to 12% during such period of default and the Partnership
shall reimburse the holder of any such Class A Preferred Units as to which such
a default has occurred for all reasonable out of pocket expenses incurred by
such holder in enforcing the collection of such defaulted amounts.
(e) In the event that prior to the date that is five and one half years
after the Closing Date the Partnership proposes to make a distribution which,
after giving effect to such distribution, will result in the Investor Group
Partners having received cumulative distributions from the Partnership pursuant
to Section 8.1(b) or 8.1(c) equal to more than 50% of their aggregate Capital
Contributions, then (i) the Partnership shall, not fewer than thirty (30) days
prior to such scheduled distribution, provide notice of such proposed
distribution to the Class A Preferred Limited Partners and provide to the Class
A Preferred Limited Partners the opportunity to accelerate their rights under
this Section 9.12(a) to the date of such proposed distribution (and each such
Class A Preferred Limited Partner shall have the right to exercise such right by
delivering to the Partnership, by hand delivery or nationally recognized
overnight courier, such election not less than five (5) business days prior to
such proposed distribution and (ii) the Partnership shall, on or prior to the
date of such proposed distribution purchase all such the Class A Preferred Units
as to which such an election has been made at a price equal to the purchase
price specified in Section 9.12(a)
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9.13 SUBSEQUENT TRANSACTIONS.
(a) As a result of the closing of the Mergers under the BRI Merger
Agreement and the BRI OP Merger Agreement, immediately after the Closing Date
the Partnership shall be the sole owner (directly and/or indirectly) of all of
the ownership interests of BRI OP, and BRI OP shall be the sole owner (directly
and/or indirectly) of all of the Properties. The Administering General Partner
hereby acknowledges and agrees that, unless there has been a change in law that
would make the structure below not effective in achieving its intended purpose,
it shall cause the Partnership to undertake the following actions to occur
promptly following the closing of the loan contemplated by the Freddie Mac
Parameters (but in no event later than January 15, 2000) in a manner consistent
with its obligations under Section 4.8 hereof, (collectively, the "SECTION 9.13
STRUCTURE"):
(1) with respect to the 17 properties listed on SCHEDULE
9.13(A)(1) attached:
(i) the Partnership shall form a limited liability
company under the laws of the State of Delaware (the "PROPERTY
LLC") with the Partnership as the sole member in the Property
LLC; and the Partnership shall elect that the Property LLC be
taxed as a partnership or a "DISREGARDED ENTITY" under any
applicable federal and state taxation laws;
(ii) each Property listed on SCHEDULE 9.13(A)(1)
attached hereto shall be transferred to the Property LLC
either (A) through an asset transfer with the entity which
directly owns such Property (each such entity, a "PROPERTY
OWNING ENTITY") as the transferor, (B) by transfer of all of
the ownership interests in the Property Owning Entity for such
Property, or (C) by other means that minimize expenses or
taxes (including transfer taxes) without impairing the tax
benefits afforded by the Section 9.13 Structure;
(2) with respect to the 22 Properties listed on SCHEDULE
9.13(A)(2):
(i) the Partnership shall acquire 100% of the
outstanding common shares of capital stock of one or more
newly formed REITs, and 100 individuals or entities to be
selected jointly by the Blackstone GP and WHGP shall acquire
preferred shares of the stock of each REIT;
(ii) the REITs described in clause (i) shall elect to
be treated as real estate investment trusts (as defined in
Parts II and III of Subchapter M of Chapter 1 of Subtitle A of
the Code) and shall comply with any and all requirements,
restrictions and limitations imposed on real estate investment
trusts under the Code or any other applicable laws or
governmental rules or regulations;
(iii) the Partnership shall form one or more Delaware
limited partnerships whose partners shall consist of the
Partnership with a 1% general
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partnership interest and one of the REITs described in
clause (i) with a 99% limited partnership interest;
(iv) each Property listed on SCHEDULE 9.13(A)(2)
shall be transferred to a limited partnership described in
clause (iii) either (A) through an asset transfer with the
Property Owning Entity of such Property, as the transferor,
(B) by transfer of all of the ownership interests in the
Property Owning Entity of such Property or (C) by other means
that minimize expenses or taxes (including transfer taxes),
without impairing the tax benefits afforded by the Section
9.13 structure;
(3) with respect to the 33 Properties listed on Schedule
9.13(a)(3):
(i) the Partnership shall acquire 100% of the
outstanding common shares of capital stock of a newly formed
REIT ("REIT 33"), and 100 individuals or entities to be
selected jointly by the Blackstone GP and the Whitehall GP
shall purchase 100 preferred shares of the stock of REIT 33;
(ii) REIT 33 shall elect to be treated as a real
estate investment trust (as defined in Parts II and III of
Subchapter M of Chapter 1 of Subtitle A of the Code) and shall
comply with any and all requirements, restrictions and
limitations imposed on real estate investment trusts under the
Code or any other applicable laws or governmental rules or
regulations; and
(iii) the Partnership shall transfer to REIT 39 a 99%
interest in BRI OP, and the REIT 33 shall become a 99% limited
partner in BRI OP.
(b) In the event that the Administering General Partner does not cause
the Partnership to undertake the actions set forth in Section 9.13(a) to occur
(unless there has been a change in law that would make the Section 9.13
Structure not effective in achieving its intended purpose) by January 15, 2000,
the Blackstone GP and the Whitehall GP shall each be entitled, without the
consent of any other Partner, to cause such actions to occur at any time after
such date, and each of the Blackstone GP and the Whitehall GP shall have the
full right, power and authority (acting alone) to execute, deliver and perform,
for and in the name of the Partnership, any and all documents, agreements and
instruments, and to take any other actions, as may be required or desirable in
order to cause the actions set forth in Section 9.13(a) to occur.
(c) If in lieu of (i) implementing the structure set forth in Section
9.13(a) (the "SECTION 9.13 STRUCTURE") or (ii) maintaining the ownership
structure of the Properties and BRI OP in effect immediately after the closings
under the BRI Merger Agreement and BRI OP Merger Agreement, any General Partner
proposes a change in the structure (a "Revised Section 9.13 Structure") of the
ownership of any of the Properties or entities then supporting one or more
Guarantees contemplated by Section 4.8 or BRI OP (other than in connection with
a third party transaction otherwise authorized under this Agreement), and such
Revised Section 9.13 Structure, in the opinion of each General Partner (in its
sole discretion) does not (i) generate increased
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Unrelated Business Taxable Income for the Partnership, (ii) diminish or impair
the economic and tax benefits received by the Investor Group Partners under this
Agreement and the Section 9.13 Structure, or (iii) otherwise adversely affect
the rights (including the governance rights under Article 3 and the sale rights
under Article 9) and remedies of the Investor Group Partners under this
Agreement and the Section 9.13 Structure, then the General Partners, subject to
the other provisions of this Agreement, including, without limitation, Section
4.8, shall cause the Partnership to implement the Revised Section 9.13
Structure, in lieu of the Section 9.13 Structure but otherwise in accordance
with this Section 9.13. The Blackstone GP and the Whitehall GP each agrees to
use commercially reasonable efforts to cooperate with BGP in developing a
Revised Section 9.13 Structure which meets the requirements set forth in this
Section 9.13(c) and eliminates the necessity of (or reduces the amount of) the
guarantees from BGP or its Affiliates. Notwithstanding the foregoing provisions
of this Section 9.13(c), the Partnership shall not undertake, and no Partner
shall cause the Partnership to undertake, any restructuring involving any
Revised Section 9.13 Structure hereof unless either (i) an opinion of counsel
reasonably satisfactory to BGP is obtained to the effect that such restructuring
would not increase the risk that any Limited Partner or BGP would be required to
recognize taxable income or (ii) the Partnership agrees to fully indemnify BGP
and any Limited Partner that is required to recognize taxable income as a result
of the consummation of such Revised Section 9.13 Structure.
(d) Any expenses incurred by the Partnership or the General Partners in
implementing the Section 9.13 Structure (or Revised Section 9.13 Structure, as
applicable), including, without limitation attorneys and accountants fees and
disbursements, transfer taxes, recording costs, and the formation costs of the
REIT and the Property LLC, shall constitute expenses of the Partnership.
ARTICLE 10.
DISSOLUTION OF THE PARTNERSHIP;
WINDING UP AND DISTRIBUTION OF ASSETS
10.1 DISSOLUTION.
(a) The Partnership shall be dissolved and its affairs shall be wound
up upon the first to occur of the following:
(1) the dissolution or Bankruptcy of any General Partner or
the occurrence of any other event that terminates the continued
membership of a General Partner in the Partnership, unless the business
of the Partnership is continued by the consent of the majority of the
outstanding Partnership Interests ninety (90) days following the
occurrence of any such event;
(2) the sale or other disposition of all of the Partnership
Assets and receipt of the final payment of any installment obligation
received as a result of any such sale or disposition;
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(3) the written consent of all of the General Partners;
(4) any event which makes it unlawful for the
Partnership's business to be continued;
(5) the issuance of a decree by any court of competent
jurisdiction that the Partnership be dissolved and liquidated;
(6) December 31, 2049.
(b) No Partner shall have the right to (i) withdraw or resign as a
Partner of the Partnership, (ii) redeem, or request redemption of, its Interest
or any part thereof, other than pursuant to Section 9.10(a), or (iii) dissolve
itself voluntarily.
10.2 WINDING UP.
(a) In the event of the dissolution of the Partnership pursuant to
Section 10.1(a), the Majority-in-Interest may wind up the Partnership's affairs.
(b) Upon dissolution of the Partnership and until the filing of a
certificate of cancellation as provided in the Act, two General Partners (acting
as if such action were a Majority Decision) or a liquidating trustee, as the
case may be, may, in the name of, and for and on behalf of, the Partnership,
prosecute and defend suits, whether civil, criminal or administrative, gradually
settle and close the Partnership's business, dispose of and convey the
Partnership's property, discharge or make reasonable provision for the
Partnership's liabilities, and distribute to the Partners in accordance with
Section 10.3 any remaining assets of the Partnership, all without affecting the
liability of Partners and without imposing liability on any liquidating trustee.
(c) Upon the completion of winding up of the Partnership, two General
Partners (acting as if such action were a Majority Decision) or liquidating
trustee, as the case may be, shall file a certificate of cancellation in the
Office of the Secretary of State of Delaware as provided in the Act.
10.3 DISTRIBUTION OF ASSETS. Upon the winding up of the Partnership,
the assets shall be distributed as follows:
(1) to the payment of expenses of the liquidation;
(2) to the payment of debts and liabilities of the
Partnership, in order of priority as provided by law, other than debts
and liabilities owed to Partners;
(3) to the setting up of any reserves that the two General
Partners or the liquidating trustee, as the case may be, shall
determine are reasonably necessary for any contingent or unforeseen
liabilities or obligations of the Partnership or the Partners;
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(4) to the payment of debts and liabilities of the
Partnership owed to Partners;
(5) to the Partners who are holders of Class A Preferred
Units, in proportion to the respective number of Class A Preferred
Units, in an amount not to exceed an amount per Class A Preferred Unit
equal to $12.25, plus an amount equal to the accrued and unpaid
distributions for each quarterly period ended prior to the date of such
redemption (it being understood and agreed that no payment shall be
made in respect of any other distribution period); and
(6) to the Partners other than holders of Class A Preferred
Units in accordance with Section 8.1(b).
10.4 SPECIAL ALLOCATION. It is intended that, to the extent possible,
at the liquidation of the Partnership each Partner's Capital Account balance
will be equal to such Partner's Targeted Capital Account Balance.
Notwithstanding anything in Article 7, if the ending Capital Account balance of
any partner immediately prior to the distributions to be made pursuant to
Section 10.3 is more or less than such Partner's Targeted Capital Account
Balance, then Partnership Profit and Loss, including items of income, gain, loss
and deduction, shall be specially allocated among the Partners for the year in
which liquidating distributions are made pursuant to Section 10.3 until each
Partner's actual Capital Account balance, to the extent possible, is equal to
such Partner's Targeted Capital Account Balance. The special allocation
provision provided by this Section 10.4 shall be applied in such a manner so as
to cause the difference between each Partner's Targeted Capital Account Balance
and the actual balance in its Capital Account (determined after this allocation,
but immediately prior to the distributions pursuant to this Article 10) to be
the smallest dollar amount possible.
ARTICLE 11.
AMENDMENTS
11.1 AMENDMENTS. Subject to Sections 3.7(b) and 3.7(c), amendments may
be made to this Agreement from time to time by the Administering General Partner
with the consent of each of the General Partners and without the consent of any
Limited Partner; PROVIDED, HOWEVER, that no such amendment shall without such
Partner's consent reduce the amounts distributable to any Partner (in a manner
that is not PRO RATA with respect to all Interests of a class of Interests),
increase the obligations or liabilities of any Partner hereunder, or otherwise
impair the rights of any Partner under this Agreement, other than an impairment
of rights that is PRO RATA with other Partners holding the same class of
Interests. Without the consent of the holders of a majority of the outstanding
Class A Preferred Units and Class B Units (excluding holders that are General
Partners or Affiliates of General Partners), voting together as a single class,
this Agreement may not be amended to change materially the nature of the
business of the Partnership or to change this sentence. No amendment,
modification, supplement, discharge or waiver hereof or hereunder shall require
the consent of any Person not a party to this Agreement. Notwithstanding the
foregoing, (a) no consent of any Partner other than WHGP and Blackstone GP shall
be required
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for an amendment entered into to reflect any assignment made pursuant to Section
9.10, (b) no amendment of the proviso clause of the first sentence of this
Section 11.1 shall be made without the consent of all Partners, (c) no amendment
of Section 3.7(b) or this clause (c) shall be made without the consent of the
holders of a majority of the outstanding Class A Preferred Units (excluding
holders that are General Partners or Affiliates of General Partners), and (d) no
amendment of Section 3.7(c) or this clause (d) shall be made without the consent
of the holders of a majority of the outstanding Class B Units (excluding holders
that are General Partners or Affiliates of General Partners).
11.2 ADDITIONAL PARTNERS. If this Agreement shall be amended as a
result of adding or substituting a Partner, the amendment to this Agreement
shall be signed by the General Partners, by the Person to be added or
substituted and by the assigning Partner, if any. In making any amendments, the
Administering General Partner shall prepare and file for recordation such
documents and certificates as shall be required to be prepared and filed.
ARTICLE 12.
MISCELLANEOUS
12.1 FURTHER ASSURANCES. Each party to this Agreement agrees to
execute, acknowledge, deliver, file and record such further certificates,
amendments, instruments and documents, and to do all such other acts and things,
as may be required by law or as, in the reasonable judgment of any General
Partner, may be necessary or advisable to carry out the intent and purpose of
this Agreement.
12.2 NOTICES. Unless otherwise specified in this Agreement, all
notices, demands, elections, requests or other communications that any party to
this Agreement may desire or be required to give hereunder shall be in writing
and shall be given by hand by depositing the same in the United States mail,
first class postage prepaid, certified mail, return receipt requested, or by a
recognized overnight courier service providing confirmation of delivery, to the
addresses set forth in Sections 2.5 and 2.6, as applicable, or at such other
address as may be designated by the addressee thereof (which in the case of the
Partnership, shall be designated by the Administering General Partner) upon
written notice to all of the Partners. All notices given pursuant to this
Section 12.2 shall be deemed to have been given (i) if delivered by hand on the
date of delivery or on the date delivery was refused by the addressee or (ii) if
delivered by United States mail or by overnight courier, on the date of delivery
as established by the return receipt or courier service confirmation (or the
date on which the return receipt or courier service confirms that acceptance of
delivery was refused by the addressee).
12.3 HEADINGS AND CAPTIONS. All headings and captions contained in this
Agreement and the table of contents hereto are inserted for convenience only and
shall not be deemed a part of this Agreement.
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12.4 VARIANCE OF PRONOUNS. All pronouns and all variations thereof
shall be deemed to refer to the masculine, feminine or neuter, singular or
plural, as the identity of the person or entity may require.
12.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one Agreement.
12.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO CONFLICT
OF LAW PROVISIONS THEREOF.
12.7 CONSENT TO JURISDICTION. Each party hereto hereby irrevocably
consents and agrees, for the benefit of each party, that any legal action, suit
or proceeding against it with respect to its obligations, liabilities or any
other matter under or arising out of or in connection with this Agreement and
with respect to the enforcement, modification, vacation or correction of an
award rendered in an arbitration proceeding may be brought in any state or
federal court located in the Borough of Manhattan, The City of New York (a "NEW
YORK COURT"), and hereby irrevocably accepts and submits to the non-exclusive
jurisdiction of each New York Court, as the case may be, with respect to any
such action, suit or proceeding. Each party hereto also hereby irrevocably
consents and agrees, for the benefit of each other party, that any legal action,
suit or proceeding against it shall be brought in any New York Court, and hereby
irrevocably accepts and submits to the exclusive jurisdiction of each such New
York Court with respect to any such action, suit or proceeding. Each party
hereto waives any objection which it may now or hereafter have to the laying of
venue of any of the aforesaid actions, suits or proceedings brought in any such
New York Court and hereby further waives and agrees not to plead or claim in any
such New York Court that any such action, suit or proceeding brought therein has
been brought in an inconvenient forum.
12.8 ARBITRATION.
(a) Arbitration shall be the exclusive method for resolution of any
claims or disputes arising in connection with this Agreement, and the
determination of the arbitrators shall be final and binding (except to the
extent there exist grounds for vacation or an award under applicable arbitration
statutes) on the Partners. The parties agree that they will give conclusive
effect to the arbitrators' determination and award and that judgment thereon may
be entered in any court having jurisdiction. Each party shall bear its own
costs, in any arbitration.
(b) The number of arbitrators shall be three, each of whom shall be
disinterested in the dispute or controversy and shall be impartial with respect
to all parties hereto. The Whitehall Group, the Blackstone Group, and the
Berkshire Group shall each appoint one arbitrator within ten (10) business days
of notice from a party that arbitration is requested. Notwithstanding the
foregoing, in the event one or more Class A Limited Partners or Class B Limited
Partners are claimants in such arbitration proceedings, such Class A Limited
Partners and/or Class B Limited Partners shall collectively have the right to
designate one arbitrator to such arbitration panel, the
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Partnership (as if such decision were a Majority Decision) or the General
Partners involved in such proceeding, as applicable, collectively shall appoint
one arbitrator, and such two appointed arbitrators shall appoint the third
arbitrator. In the event the parties fail to agree upon the arbitrators, the
arbitrators (or such number thereof as shall not have been agreed upon) shall be
appointed under the commercial arbitration rules of the American Arbitration
Association.
(c) The place of arbitration shall be the Borough of Manhattan, The
City of New York. The arbitration shall be conducted in the English language.
The arbitrators shall give effect insofar as possible to the desire of the
parties hereto that the dispute or controversy be resolved in accordance with
good commercial practice. The arbitrators shall decide such dispute in
accordance with the law of the State of Delaware. The arbitrators shall decide
such dispute within thirty (30) days of selection of the arbitrators. The
arbitration shall be conducted in accordance with the commercial arbitration
rules of the American Arbitration Association.
12.9 PARTITION. The Partners hereby agree that no Partner nor any
successor-in-interest to any Partner shall have the right 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, and each Partner, on behalf of himself, his successors,
representatives, heirs and assigns, hereby waives any such right.
12.10 INVALIDITY. Every provision of this Agreement is intended to be
severable. The invalidity and unenforceability of any particular provision of
this Agreement in any jurisdiction shall not affect the other provisions hereof,
and this Agreement shall be construed in all respects as if such invalid or
unenforceable provision were omitted.
12.11 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
parties hereto and their respective successors, executors, administrators, legal
representatives, heirs and legal assigns and shall inure to the benefit of the
parties hereto and, except as otherwise provided herein, their respective
successors, executors, administrators, legal representatives, heirs and legal
assigns. No Person other than the parties hereto and their respective
successors, executors, administrators, legal representatives, heirs and
permitted assigns shall have any rights or claims under this Agreement.
12.12 ENTIRE AGREEMENT. This Agreement supersedes all prior agreements
among the parties with respect to the subject matter hereof and contains the
entire Agreement among the parties with respect to such subject matter.
12.13 WAIVERS. No waiver of any provision hereof by any party hereto
shall be deemed a waiver by any other party nor shall any such waiver by any
party be deemed a continuing waiver of any matter by such party.
12.14 NO BROKERS. Each of the Partners hereto warrants to each other
that, except as set forth in Section 2.9(b) (it being understood, however, that
BRI and BRIOP, in connection with the Merger, hired Lazard Freres & Co LLC,
Lehman Brothers Inc. and Prudential Securities Incorporated as their financial
advisors and paid fees to such parties), there are no brokerage
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commissions or finders' fees (or any basis therefor) resulting from any action
taken by such Partner or any Person acting or purporting to act on their behalf
upon entering into this Agreement. Each Partner agrees to indemnify and hold
harmless each other Partner for all costs, damages or other expenses arising out
of any misrepresentation made in this Section 12.14.
12.15 MAINTENANCE AS A SEPARATE ENTITY. The Partnership shall maintain
books and records and bank accounts separate from those of its Affiliates; shall
at all times hold itself out to the public as a legal entity separate and
distinct from any of its Affiliates (including in its operating activities, in
entering into any contract, in preparing its financial statements, and on its
stationery and any signs it posts), and shall cause its Affiliates to do the
same and to conduct business with it on an arm's-length basis; shall not
commingle its assets with assets of any of its Affiliates; shall not guarantee
any obligation of any of its Affiliates; shall cause its business to be carried
on by the General Partners and shall keep minutes of all meetings of the
Partners.
12.16 CONFIDENTIALITY. Each Partner agrees not to disclose or permit
the disclosure of any of the terms of this Agreement or of any other
confidential, non-public or proprietary information relating to this Agreement
(collectively, "CONFIDENTIAL INFORMATION"), provided that such disclosure may be
made (a) to any Person who is a member, partner, officer, director or employee
of such Partner or counsel to or accountants of such Partner solely for their
use and on a need-to-know basis, provided that such Persons are notified of the
Partners' confidentiality obligations hereunder, (b) with the prior consent of
the other Partners, (c) subject to the next paragraph, pursuant to a subpoena or
order issued by a court, arbitrator or governmental body, agency or official,
(d) to any lender providing financing to the Partnership, (e) in connection with
a purchase agreement under Section 9.2, to the sellers thereunder (f) to a bona
fide potential transferee of an Interest who agrees in writing with the
Partnership to be bound by the provisions of this Section 12.16 or (g) as
required by law or regulation.
In the event that a Partner shall receive a request to disclose any
Confidential Information under a subpoena or order, such Partner shall (i)
promptly notify the other General Partners thereof, (ii) consult with the other
General Partners on the advisability of taking steps to resist or narrow such
request and (iii) if disclosure is required or deemed advisable, cooperate with
any of the other General Partners in any attempt it may make to obtain an order
or other assurance that confidential treatment will be accorded the Confidential
Information that is disclosed.
No Partner shall issue any press release or other public communication
about the formation or existence of the Partnership without the express written
consent of BGP, WHGP and Blackstone GP.
12.17 NO THIRD PARTY BENEFICIARIES. This Agreement is not intended and
shall not be construed as granting any rights, benefits or privileges to any
Person not a party to this Agreement. Without limiting the generality of the
foregoing, no creditor of the Partnership, or of any Partner shall have any
right whatsoever to require any Partner to contribute capital to the
Partnership.
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<PAGE>
12.18 POWER OF ATTORNEY.
(a) Each of the Limited Partners (other than the Investor Group
Partners) does hereby irrevocably constitute and appoint each of WHGP,
Blackstone GP and, for so long as it is the Administering General Partner, BGP
with full power of substitution, as its true and lawful attorney, in its name,
place and stead, to execute, acknowledge, swear to, deliver, record and file, as
appropriate and in accordance with this Agreement (i) all amendments to the
original Certificate required or permitted by law or the provisions of this
Agreement, (ii) all certificates and other instruments requiring execution by
the Partners or any of them and deemed necessary or advisable by WHGP,
Blackstone GP or BGP to qualify or continue the Partnership as a Partnership
wherein the Partners have limited liability in the jurisdictions where the
Partnership may be conducting its operations, (iii) all instruments requiring
execution by the Partners or any of them and that WHGP, Blackstone GP or BGP
deems appropriate to reflect a change or modification of this Agreement or the
Partnership in accordance with this Agreement, including, without limitation,
the substitution of assignees as Substituted Partners pursuant to Section 9.6
(PROVIDED, HOWEVER, that any such modification is otherwise in accordance with
this Agreement), and (iv) all conveyances and other instruments deemed necessary
or advisable by WHGP, Blackstone GP or BGP to effect the dissolution and
termination of the Partnership in accordance with this Agreement. Nothing
contained in this Section 12.18 shall empower any General Partner to take any
action requiring the consent of any other General Partner hereunder unless such
consent is first obtained.
(b) The powers of attorney granted pursuant to this Section 12.18 are
coupled with an interest and shall be irrevocable and survive and not be
affected by the subsequent death, incapacity, disability, Bankruptcy or
dissolution of the grantor; may be exercised by any of the General Partners
either by signing separately as attorney-in-fact for each Partner or by the
General Partners acting as attorneys-in-fact for all of them; and shall survive
the delivery of an assignment by a Partner of the whole or any fraction of its
Interest, except that, where the whole of such Partner's Interest has been
assigned or diluted in accordance with this Agreement, the power of attorney of
the assignor shall survive the delivery of such assignment for the sole purpose
of enabling the General Partners to execute, acknowledge, swear to, deliver,
record and file any instrument necessary or appropriate to effect such
substitution. In the event of any conflict between this Agreement and any
document, instrument, conveyance or certificate executed or filed by any General
Partner pursuant to such power of attorney, this Agreement shall control.
(c) Each Partner shall execute and deliver to any General Partner,
within five days after the receipt of such General Partner's request therefor,
such further designations, powers of attorney and other instruments as such
General Partner deems necessary or appropriate to carry out the provisions of
this Agreement.
(d) Notwithstanding the foregoing provisions of this Section 12.18, in
the event that BGP has been removed as the Administering General Partner or any
General Partner has been removed or has resigned as a General Partner pursuant
to the terms of this Agreement or has voluntarily ceased to manage or administer
the day-to-day business of the Partnership as contemplated by Section 3.2, then,
in either case, the power of attorney granted to BGP or such
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<PAGE>
General Partner, as applicable, pursuant to this Section 12.18 shall immediately
be revoked and terminated.
12.19 CONSTRUCTION OF DOCUMENTS. The parties hereto acknowledge that
they were represented by counsel in connection with the review, negotiation and
drafting of this Agreement and that this Agreement shall not be subject to the
principle of construing their meaning against the party that drafted same.
12.20 TIME OF ESSENCE. Time is of the essence in the performance of
each and every term of this Agreement.
12.21 DEFAULT BY PARTNERSHIP. In the event that on or prior to the
Closing Date, one or more of the Investor Group Partners defaults in its
obligations to make Capital Contributions hereunder, then (i) in the event such
default results in the Partnership defaulting in its obligations under the BRI
Merger Agreement and the Partnership's deposit thereunder being retained by BRI,
such defaulting Partner or Partners shall immediately pay in cash to the
non-defaulting Partners, as sole and liquidated damages under this Agreement,
the amount of any Capital Contributions previously made to the Partnership by
such non-defaulting Partners and (ii) the defaulting Partner or Partners shall
forfeit their respective Interests in the Partnership and immediately be deemed
to have withdrawn from the Partnership. To the extent there is more than one
defaulting Partner under this Section, amounts to be paid by the defaulting
Partners hereunder shall be paid by each such defaulting Partner in relative
proportion to their relative Partnership Percentage Interests. Amounts due to
any Partner under this Section and not paid shall accrue interest and compound
annually at a rate per annum (until paid in full) equal to the lesser of (i) 20%
or (ii) the maximum rate permitted by law.
12.22 SUBSIDIARY JOINT VENTURES. The Partnership agrees that it will
not, without the consent of the holders of a majority of the Class A Preferred
Units (excluding any Class A Preferred Units held by a General Partner or an
Affiliate of a General Partner), voting as a separate class, transfer Properties
of the Partnership having a total value of more than one-third of the total
value of all of the Properties of the Partnership to one or more joint venture
companies, partnerships or similar entities, if such joint venture companies,
partnerships, or similar entities issue equity securities to a party other than
the Partnership that rank prior to the Class A Preferred Units with respect to
distributions or receipt of proceeds upon liquidation.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement of Limited Partnership as of the day and year first above written.
GENERAL PARTNERS:
WXI/BRH Gen-Par LLC
By: /s/ Steven Feldman
--------------------------------------
Name: Steven Feldman
Title: Vice President
BRE/Berkshire GP L.L.C.
By: /s/ Kenneth C. Whitney
--------------------------------------
Name: Kenneth C. Whitney
Title: Vice President
Aptco Gen-Par, L.L.C.
By: /s/ Douglas Krupp
--------------------------------------
Name: Douglas Krupp
Title: Authorized Signatory
LIMITED PARTNERS:
Whitehall Street Real Estate
Limited Partnership XI
By: WH Advisors, L.L.C. XI
By: /s/ Steven Feldman
--------------------------------------
Name: Steven Feldman
Title: Vice President
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<PAGE>
BRE/Berkshire L.P. L.L.C.
By: /s/ Kenneth C. Whitney
--------------------------------------
Name: Kenneth C. Whitney
Title: Vice President
Aptco Holdings, L.L.C.
By: /s/ Douglas Krupp
--------------------------------------
Name: Douglas Krupp
Title: Authorised Signatory
Stone Street Real Estate Fund 1998 L.P.
By: Stone Street Advantage Realty Corp.,
its General Partner
By: /s/ Alan Fava
--------------------------------------
Name: Alan Fava
Title: Vice President
Bridge Street Real Estate Fund 1998 L.P.
By: Stone Street Advantage Realty Corp.,
its General Partner
By: /s/ Alan Fava
--------------------------------------
Name: Alan Fava
Title: Vice President
Stone Street WXI/BRH Corp.
By: /s/ Alan Fava
--------------------------------------
Name: Alan Fava
Title: Vice President
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<PAGE>
For the purposes of Section 4.4(c):
The Berkshire Companies Limited Partnership
By: /s/ Douglas Krupp
--------------------------------------
Name: Douglas Krupp
Title: Vice President
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<PAGE>
EXHIBIT 99.11
April 13, 1999
Reference is hereby made to (i) that certain Agreement of Limited
Partnership of Berkshire Realty Holdings, L.P. dated as of the date hereof
(as it may be amended, modified or supplemented from time to time, the
"Partnership Agreement") and (ii) that certain commitment letter date as of
the date hereof (the "Bridge Loan Commitment Letter") issued by Whitehall
Street Real Estate Limited Partnership XI and Blackstone Real Estate
Acquisitions III L.L.C. All capitalized terms used herein and not otherwise
defined herein shall have the meanings ascribed to such terms in the
Partnership Agreement.
Each General Partner hereby acknowledges and agrees that any election or
decision to be made by the Partnership with respect to the Bridge Loan
Commitment Letter, including, without limitation, the election by the
Partnership to borrow the Bridge Loan thereunder, shall require the approval
of both the Blackstone GP and WHGP, each of which approvals may be withheld
in their sole discretion. BGP and Berkshire acknowledge that in the event the
Blackstone GP and WHGP elect not to authorize a borrowing under the Bridge
Loan Commitment Letter, the Partnership may be unable to satisfy its
obligations under the Merger Agreements and as a result, the Cash Collateral
(as defined in the Merger Agreement) (or its substitute) may be forfeited
thereunder. Failure of the Blackstone GP or WHGP to approve the Partnership's
borrowing of the Bridge Loan, whether or not such failure leads to a loss of
the Cash Collateral or other assets of the Partnership, shall not (i)
constitute a default by such Partner under the Partnership Agreement,
including under Section 12.21 of the Partnership Agreement, (ii) otherwise
constitute a breach of any obligations, express or implied, at law or in
equity, which otherwise may be owed by the Blackstone GP or WHGP to the
Partnership or (iii) excuse Berkshire or BGP from any of its obligations
under Section 12.21 of the Partnership Agreement.
The Partners acknowledge that, on the date hereof, the Partnership will
deliver a letter of credit issued by The Chase Manhattan Bank ("Chase") in the
amount of $29,500,000 (the "LC") to American Stock Transfer Trust Company, as
escrowee, pursuant to the terms of the Merger Agreement. In connection with
the issuance of the LC, each of the Investor Group Partners have entered into
reimbursement obligations with Chase with respect to the LC as follows:
(i) the members of the Blackstone Group have jointly agreed to reimburse Chase
for up to 40% of amounts due with respect to the LC; (ii) the members of the
Whitehall Group have jointly agreed to reimburse Chase for up to 40% of
amounts due with respect to the LC; and (iii) the members of the Berkshire
Group have jointly agreed to reimburse Chase for up to 20% of amounts due
with respect to the LC. The foregoing obligations of the members of the
Blackstone Group shall be several from the foregoing obligations of
the members of the Whitehall Group and the Berkshire Group; the foregoing
obligations of the members of the Whitehall Group shall be several from the
foregoing obligations of the members of the Blackstone Group and the Berkshire
Group; and the foregoing obligations of the members of the Berkshire
<PAGE>
Group shall be several from the foregoing obligations of the members of the
Whitehall Group and the Blackstone Group. The Partners further acknowledge
and agree that for the purposes of the Section 12.21 of the Partnership
Agreement, the amount any Partner shall be responsible for in connection with
its reimbursement obligations with respect to the LC shall be deemed to be
such Partner's Capital Contributions made to the Partnership which will be
reimbursed by a defaulting Partner in accordance with the provisions of
Section 12.21.
The Partners acknowledge and agree that as promptly as practicable after
the full execution and delivery of the BRI Merger Agreement and BRI OP Merger
Agreement (and in any event within seven (7) days after the date hereof), the
General Partners shall cause the Partnership to purchase an interest rate
hedge agreement having the following characteristics (such agreement, the
"Hedge"): (i) the Hedge will be a European style put option with a strike
rate equal to 50 basis points (0.50%) above the yield on the five year U.S.
Treasury security on the date of purchase; (ii) the expiration date of the
Hedge will be August 4, 1999 (or as soon thereafter as is available); and
(iii) the notional amount of the Hedge will be approximately $593,000,000.
Any two General Partners shall have the authority to execute on behalf of the
Partnership any and all documentation required to implement the Hedge and all
of the Partners agree to take any steps reasonably required to implement the
Hedge. Each of the Investor Group Partners shall fund its pro rata share of
the cost of the Hedge, based on its Partnership Percentage Interest.
By its execution below, each of The Berkshire Companies Limited
Partnership and Douglas Krupp, jointly and severally, hereby guarantees to
the Partnership and the Partners the full payment and performance of all of
the obligations of BGP and Berkshire under Section 12.21 of the Agreement.
By its execution below, Blackstone Real Estate Acquisitions III L.L.C.
hereby guarantees to the Partnership and the Partners the full payment and
performance of all of the obligations of the Blackstone GP and the Blackstone
LP under Section 12.21 of the Agreement.
By its execution below, Whitehall Street Real Estate Limited Partnership
XI hereby guarantees to the Partnership and the Partners the full payment and
performance of all of the obligations of WHGP, Whitehall, StoneStreet
BridgeStreet and StoneCorp under Section 12.21 of the Agreement.
The Partnership Agreement, as modified hereby, is and remains in full
force and effect and is hereby ratified and confirmed.
This terms of this letter shall be binding upon, and inure to the
benefit of, each of the parties hereto and their respective successors and
assigns.
This letter shall be governed by and construed in accordance with the
laws of the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this letter as of
the date written above.
GENERAL PARTNERS:
WXI/BRH GEN-PAR LLC
By: /s/ SUSAN SACK
--------------------------
Name: Susan Sack
Title: Vice President
BRE/BERKSHIRE GP L.L.C.
By: /s/ KENNETH C. WHITNEY
--------------------------
Name: Kenneth C. Whitney
Title: Vice President
APTCO GEN-PAR, L.L.C.
By: /s/ DOUGLAS KRUPP
--------------------------
Name: Douglas Krupp
Title: Authorized Signatory
<PAGE>
LIMITED PARTNERS:
WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP XI
By: WH Advisors, L.L.C. XI, its general
partner
By: /s/ SUSAN SACK
--------------------------
Name: Susan Sack
Title: Vice President
STONE STREET REAL ESTATE FUND 1998 L.P.
By: Stone Street Advantage Realty
Corp., its general partner
By: /s/ SUSAN SACK
--------------------------
Name: Susan Sack
Title: Vice President
BRIDGE STREET REAL ESTATE FUND 1998 L.P.
By: Stone Street Advantage Realty
Corp., its general partner
By: /s/ SUSAN SACK
--------------------------
Name: Susan Sack
Title: Vice President
STONE STREET WXI/BRH CORP.
By: /s/ SUSAN SACK
--------------------------
Name: Susan Sack
Title: Vice President
BRE/BERKSHIRE LP L.L.C.
By: /s/ KENNETH C. WHITNEY
--------------------------
Name: Kenneth C. Whitney
Title: Vice President
APTCO HOLDINGS, L.L.C.
By: /s/ DOUGLAS KRUPP
--------------------------
Name: Douglas Krupp
Title: Authorized signatory
<PAGE>
GUARANTORS:
THE BERKSHIRE COMPANIES LIMITED
PARTNERSHIP
By: /s/ DOUGLAS KRUPP
--------------------------
Name: Douglas Krupp
Title: Authorized signatory
/s/ DOUGLAS KRUPP
-----------------------------------
DOUGLAS KRUPP
BLACKSTONE REAL ESTATE ACQUISITIONS III
L.L.C.
By: /s/ KENNETH C. WHITNEY
--------------------------
Name: Kenneth C. Whitney
Title: Vice President
WHITEHALL STREET REAL ESTATE LIMITED
PARTNERSHIP XI
By: WH Advisors, L.L.C. XI, its
general partner
By: /s/ SUSAN SACK
--------------------------
Name: Susan Sack
Title: Vice President
