SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20543
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED March 31, 1997
COMMISSION FILE NO. 1-11706
CARRAMERICA REALTY CORPORATION
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Maryland 52-1796339
- -------------------------------- ------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
1700 Pennsylvania Avenue, N.W., Washington, D.C. 20006
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(Address or principal executive office) (Zip code)
Registrant's telephone number, including area code (202) 624-7500
N/A
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Number of shares outstanding of each of the registrant's
classes of common stock, as of May 15, 1997:
Common Stock, par value $.01 per share: 57,047,297
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve (12) months (or such shorter period that the Registrant was
required to file such report) and (2) has been subject to such filing
requirements for the past ninety (90) days.
YES X NO
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<PAGE>
Index
<TABLE>
<CAPTION>
Page
----
Part I: Financial Information
Item 1. Financial Statements
<S> <C>
Condensed consolidated balance sheets of CarrAmerica Realty
Corporation and subsidiaries as of March 31, 1997 (unaudited) and
December 31, 1996..............................................................4
Condensed consolidated statements of operations of CarrAmerica Realty
Corporation and subsidiaries for the three months ended March 31, 1997
and 1996 (unaudited)...........................................................5
Condensed consolidated statements of cash flows of CarrAmerica Realty
Corporation and subsidiaries for the three months ended March 31, 1997
and 1996 (unaudited)...........................................................6
Notes to condensed consolidated financial statements......................7 to 12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................................13 to 21
Part II: Other Information
Item 1. Legal Proceedings .............................................................22
Item 2. Changes in Securities..........................................................22
Item 3. Defaults Upon Senior Securities................................................22
Item 4. Submission of Matters to a Vote of Security Holders............................22
Item 5. Other Information .............................................................22
Item 6. Exhibits and Reports on Form 8-K...............................................22
</TABLE>
2
<PAGE>
Part I
Item 1. Financial Information
The information furnished in the accompanying condensed consolidated
balance sheets, condensed consolidated statements of operations and condensed
consolidated statements of cash flows of CarrAmerica Realty Corporation and
subsidiaries (the "Company") reflect all adjustments which are, in the opinion
of management, necessary for a fair presentation of the aforementioned financial
statements for the interim periods.
The aforementioned financial statements should be read in conjunction
with the notes to such financial statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations.
3
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
As of March 31, 1997 and December 31, 1996
- --------------------------------------------------------------------------------
(In thousands, except share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
----------- -----------
Assets (unaudited)
Rental property (note 2):
<S> <C> <C>
Land $ 393,606 356,797
Buildings 1,169,160 1,017,313
Tenant improvements 107,144 99,760
Furniture, fixtures, and equipment 2,185 2,128
----------- -----------
1,672,095 1,475,998
Less - accumulated depreciation (133,559) (119,657)
----------- -----------
Total rental property 1,538,536 1,356,341
Land held for development 36,480 32,277
Construction in progress 55,183 31,723
Cash and cash equivalents 27,448 27,637
Restricted cash and cash equivalents (note 2) 7,749 8,229
Accounts and notes receivable 14,324 11,899
Investments 14,142 13,524
Accrued straight-line rents 25,331 23,810
Tenant leasing costs, net 16,777 13,499
Deferred financing costs, net 4,254 3,800
Prepaid expenses and other assets, net 17,092 13,825
----------- -----------
$ 1,757,316 1,536,564
=========== ===========
Liabilities, Minority Interest, and Stockholders' Equity
Liabilities:
Mortgages and credit facilities (note 2) 735,060 655,449
Accounts payable and accrued expenses 37,092 32,657
Rent received in advance and security deposits 14,355 10,383
----------- -----------
Total liabilities 786,507 698,489
Minority interest (note 3) 54,797 50,597
Stockholders' equity:
Preferred stock, $.01 par value, authorized 15,000,000 shares, 1,740,000
shares of Series A Cumulative Convertible Redeemable Preferred stock issued
and outstanding at March 31, 1997 and December 31, 1996 with an aggregate
liquidation preference of $43.5 million 17 17
Common stock, $.01 par value, authorized 90,000,000
shares, issued and outstanding 48,777,835 shares
at March 31, 1997 and 43,789,073 shares at
December 31, 1996 487 438
Additional paid in capital 974,662 837,355
Cumulative dividends in excess of net income (59,154) (50,332)
----------- -----------
Total stockholders' equity 916,012 787,478
----------- -----------
$ 1,757,316 1,536,564
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
For the Three Months Ended March 31, 1997 and 1996
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(Unaudited and in thousands, except per common share amounts)
<TABLE>
<CAPTION>
1997 1996
-------- --------
Real estate operating revenue: Rental revenue (note 4):
<S> <C> <C>
Minimum base rent $ 56,525 21,913
Recoveries from tenants 6,949 2,035
Parking and other tenant charges 2,815 1,402
-------- --------
Total rental revenue 66,289 25,350
Real estate service income 4,178 2,726
-------- --------
Total revenue 70,467 28,076
-------- --------
Real estate operating expenses:
Property operating expenses:
Operating expenses 17,266 6,231
Real estate taxes 6,377 2,760
Interest expense 11,257 6,532
General and administrative 5,156 2,748
Depreciation and amortization 15,916 5,484
-------- --------
Total operating expenses 55,972 23,755
-------- --------
Real estate operating income 14,495 4,321
-------- --------
Other operating income (expense):
Interest income 542 306
Equity in earnings (losses) of unconsolidated partnerships (61) 98
-------- --------
Total other operating income 481 404
-------- --------
Net operating income before minority interest 14,976 4,725
Minority interest (note 3) (1,717) (1,390)
-------- --------
Net income $ 13,259 3,335
======== ========
Net income per common share $ 0.26 0.25
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 1997 and 1996
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(Unaudited and in thousands)
<TABLE>
<CAPTION>
1997 1996
--------- ---------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 13,259 3,335
--------- ---------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 15,916 5,484
Minority interest in income 1,717 1,390
Loss on write off of assets 211 --
Equity in (earnings) losses of unconsolidated partnerships 61 (91)
(Increase) decrease in accounts receivable (2,425) 530
Increase in accrued straight-line rents (1,521) (164)
Additions to tenant leasing costs (4,069) (282)
Increase in prepaid expenses and other assets (3,889) (1,108)
Increase (decrease) in accounts payable and accrued expenses 4,435 (2,416)
Increase in rent received in advance and security deposits 3,972 2,323
--------- ---------
Total adjustments 14,408 5,666
--------- ---------
Net cash provided by operating activities 27,667 9,001
--------- ---------
Cash flows from investing activities:
Acquisitions of property (135,379) (168,156)
Additions to rental property (7,232) (969)
Additions to land held for development (6,340) --
Additions to construction in process (31,128) --
Investments in unconsolidated partnerships (608) (568)
Acquisition of minority interest -- (3)
Distributions from unconsolidated partnerships 54 7
Decrease in restricted cash and cash equivalents 480 193
--------- ---------
Net cash used by investing activities (180,153) (169,496)
--------- ---------
Cash flows from financing activities:
Net proceeds from sale of common stock 136,111 --
Net proceeds from exercise of options 1,219 --
Net borrowings on line of credit 55,000 180,000
Dividends paid (22,081) (5,914)
Repayment of mortgages payable (14,589) (417)
Additions to deferred financing costs (1,007) (361)
Loan to investment venture (125) --
Distributions to minority interest (2,231) (1,797)
--------- ---------
Net cash provided by financing activities 152,297 171,511
--------- ---------
Increase (decrease) in unrestricted cash and cash equivalents (189) 11,016
Unrestricted cash and cash equivalents, beginning of the period 27,637 9,217
--------- ---------
Unrestricted cash and cash equivalents, end of the period $ 27,448 20,233
========= =========
Supplemental disclosure of cash flow information:
Cash paid for interest, net of capitalized interest
of $1,670 and $226 for the three months ended
March 31, 1997 and 1996, respectively $ 11,181 6,417
========= =========
During the three month period ended March 31, 1997, the Company assumed
$39.2 million of mortgages payable and issued $4.7 million of Units in
connection with acquisitions of office properties and land held for
development.
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
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(1) Organization, Business and Summary of Significant Accounting Policies
(a) Organization and Business
CarrAmerica Realty Corporation (the "Company") is a
self-administered and self-managed equity real estate
investment trust (REIT), organized under the laws of Maryland,
which owns, develops, acquires and operates office buildings
located primarily in thirteen suburban markets across the
United States.
(b) Basis of Presentation
The accounts of the Company and its majority-owned
subsidiaries are consolidated in the accompanying financial
statements. The Company uses the equity method of accounting
for its investments in and earnings and losses of
unconsolidated partnerships not controlled by the Company.
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and
liabilities, revenues and expenses, and the disclosure of
contingent assets and liabilities to prepare these financial
statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
(c) Interim Financial Statements
The information furnished reflects all adjustments which are,
in the opinion of management, necessary to reflect a fair
presentation of the results for the interim periods, and all
such adjustments are of a normal, recurring nature.
(d) Rental Property
Rental property is recorded at cost less accumulated
depreciation (which is less than the net realizable value of
the property). Depreciation is computed on the straight-line
basis over the estimated useful lives of the assets, as
follows:
Base building.................... 30 to 50 years
Building components.............. 7 to 20 years
Tenant improvements.............. Terms of the leases or
useful lives,
whichever is shorter
Furniture, fixtures and
equipment..................... 5 to 15 years
Expenditures for maintenance and repairs are charged to
operations as incurred. Significant renovations are
capitalized.
The Company reviews its rental property, and certain
identifiable intangibles, for impairment whenever events or
changes in circumstances indicate that the Company amount of
an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying
amount of an asset to future net cash flows expected to be
generated by the asset. If such assets are considered
impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceeds the
fair value of the assets.
7
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
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(e) Development Property
Land held for development and construction in progress are
carried at cost. Specifically identifiable direct and indirect
acquisition, development and construction costs are
capitalized including, where applicable, salaries and related
costs, real estate taxes, interest and certain
pre-construction costs essential to the development of the
property.
(f) Tenant Leasing Costs
Fees and costs incurred in the successful negotiation of
leases have been deferred and are being amortized on the
straight-line basis over the terms of the respective leases.
(g) Deferred Financing Costs
Deferred financing costs include fees and costs incurred to
obtain long-term financing and are being amortized over the
terms of the respective loans on a basis which approximates
the interest method.
(h) Real Estate Service Contracts and Other Intangible Assets
Real estate service contracts and other intangible assets,
represent the purchase price of net assets of real estate
service operations acquired and are amortized on the
straight-line basis over the expected lives of the respective
real estate service contracts. The Company assesses the
recoverability of these intangible assets by determining
whether the amortization of the balance over its remaining
life can be recovered through undiscounted future operating
cash flows of the acquired operation. The amount of impairment
loss, if any, is measured as the amount by which the carrying
amount of the assets exceeds the fair value of the assets. The
assessment of the recoverability of these intangible assets
will be impacted if estimated future operating cash flows are
not achieved.
(i) Revenue Recognition
The Company reports base rental revenue for financial
statement purposes straight-line over the terms of the
respective leases. Accrued straight-line rents represent the
amount that straight-line rental revenue exceeds rents
collected in accordance with the lease agreements. Management,
considering current information and events regarding the
tenants' ability to fulfill their lease obligations, considers
accrued straight-line rents to be impaired if it is probable
that the Company will be unable to collect all rents due
according to the contractual lease terms. If accrued
straight-line rents associated with a tenant are considered to
be impaired, the amount of the impairment is measured based on
the present value of expected future cash flows. Impairment
losses, if any, are recorded through a loss on the write-off
of assets. Cash receipts on impaired accrued straight-line
rents are applied to reduce the remaining outstanding balance
and as rental revenue, thereafter.
The Company receives real estate service revenue for certain
properties it manages, leases and develops for third parties.
Such revenue is recognized as revenue as earned.
8
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
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(j) Income and Other Taxes
The Company qualifies as a REIT under Sections 856 through 860
of the Internal Revenue Code of 1986, as amended. A REIT will
generally not be subject to federal income taxation on that
portion of its income that qualifies as REIT taxable income to
the extent that it distributes at least 95 percent of its
taxable income to its shareholders and complies with certain
other requirements. Accordingly, no provision has been made
for federal income taxes for the Company and certain of its
subsidiaries in the accompanying condensed consolidated
financial statements.
Certain consolidated subsidiaries, organized as partnerships,
of the Company are subject to District of Columbia franchise
tax. Other consolidated subsidiaries file separate tax returns
and are subject to federal and state income taxes. Income
taxes are accounted for using the asset and liability method
of accounting. These taxes are recorded as general and
administrative expenses in the accompanying condensed
consolidated financial statements.
(k) Per Share Data
The computation of earnings per share in each year is based
upon the weighted average number of common shares outstanding.
When dilutive, stock options and Units are included as share
equivalents. The weighted average number of shares used in
computing earnings per share was 47,476,503, including
5,200,940 Units which are considered common stock equivalents,
and 13,574,715 for the three month periods ended March 31,
1997 and 1996, respectively. Net income used in the
computations for the three months ended March 31, 1997 was
reduced by cumulative preferred dividends of $761 thousand.
(l) Cash Equivalents
For the purposes of reporting cash flows, the Company
considers all highly liquid investments with a maturity of
three months or less at the time of purchase to be cash
equivalents.
(2) Mortgages and Credit Facilities
The Company's mortgages payable and credit facilities are summarized as
follows (in thousands):
March 31, December 31,
1997 1996
-------- -----------
Fixed rate mortgages $465,060 440,449
Unsecured credit facility 184,000 215,000
Secured credit facility 86,000 --
======== ========
$735,060 655,449
======== ========
Mortgages payable are collateralized by certain rental properties and
generally require monthly principal and/or interest payments. Mortgages
payable mature at various dates from February 1999 through July 2019.
The weighted average interest rates were 8.3%
9
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
and 8.1% at March 31, 1997 and December 31, 1996, respectively. As
required by the lender, a mortgage payable of $27.96 million at March
31, 1997 is specifically held at the subsidiary level by Carr Redmond
Corporation, a wholly-owned subsidiary of the Company, which owns the
Redmond East office campus.
The Company also has a $325.0 million unsecured credit facility with
Morgan Guaranty Trust Company of New York (Morgan), as agent for a
group of banks. The credit facility bears interest, as selected by the
Company, at either (i) the higher of the prime rate or the sum of .25
percent (.5 percent at December 31, 1996) plus the Federal Funds Rate
for such day or (ii) an interest rate equal to 1.375 percent (1.75
percent at December 31, 1996) above the London Interbank Offered Rate
(LIBOR). The credit facility matures in July 1998, with an option to
extend for one year.
The Company also has a $150.0 million secured credit facility with
Morgan, as agent for a group of banks, bearing interest, as selected by
the Company, at either (i) the higher of the prime rate or the sum of
.5 percent plus the Federal Funds Rate for such day or (ii) an interest
rate equal to 1.625 percent above LIBOR. The credit facility is secured
by certain rental properties and matures in July 1997 with two
six-month options to extend.
The annual maturities of debt at March 31, 1997 are summarized as
follows:
(in thousands)
1997 $ 89,517
1998 190,750
1999 33,062
2000 41,503
2001 70,723
Thereafter 309,505
--------
$735,060
========
Restricted cash and cash equivalents primarily consist of escrow
deposits required by lenders to be used for future building
renovations, tenant improvements or as collateral for letters of
credit.
(3) Minority Interest
In conjunction with the formation of the Company and its majority-owned
subsidiary, Carr Realty, L.P., persons contributing interests in
properties to Carr Realty, L.P. had the right to elect to receive
either common stock of the Company or Units in Carr Realty, L.P. In
addition, the Company has acquired certain assets since its formation
by issuing dividend paying Units and non-dividend paying Units of Carr
Realty, L.P. and CarrAmerica Realty, L.P. The non-dividend paying Units
are not entitled to any distributions until they automatically convert
into dividend paying Units at various dates in the future. Each
dividend paying Unit, subject to certain restrictions, may be redeemed
for either one share of common stock or, at the option of the Company,
cash equal to the fair market value of a share of common stock at the
time of the redemption. When a Unitholder redeems a dividend paying
Unit for a share of common stock or cash, minority interest is reduced
and the Company's investment in Carr Realty, L.P. or CarrAmerica
Realty, L.P., as the case may be, is increased. During the three month
period ended March 31, 1997, 60,192 dividend paying Units, of Carr
Realty, L.P. or CarrAmerica Realty, L.P., respectively, were redeemed
for common stock of the Company.
10
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
The following table sets forth the common stock and preferred stock of
the Company and the operating partnership Units:
<TABLE>
<CAPTION>
(in thousands) CarrAmerica CarrAmerica
Realty Realty
Corporation's Corporation's Dividend Non-Dividend
Common Shares Preferred Shares Paying Units Paying Units
Outstanding Outstanding Outstanding Outstanding
------------------ ------------------ ---------------- ----------------
<S> <C> <C> <C> <C>
Outstanding as of:
March 31, 1997 48,778 1,740 5,085 540
December 31, 1996 43,789 1,740 4,940 540
================== ================== ================ ================
Weighted average for the
three months ended March 31:
1997 47,254 1,740 4,938 540
1996 13,524 -- 3,992 668
================== ================== ================ ================
</TABLE>
Minority interest in the accompanying condensed consolidated financial
statements relates primarily to holders of Units.
(4) Lease Agreements
The Company receives minimum rentals under noncancelable tenant leases.
Certain leases provide for additional rentals based on increases in the
Consumer Price Index (CPI) and increases in operating expenses. The
increased rentals from operating expenses are generally payable in
equal installments throughout the year, based on estimated increases,
with any differences being adjusted in the succeeding year.
(5) New Accounting Pronouncements
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS No.
128), which supersedes APB No. 15 for periods ending after December 15,
1997. SFAS No. 128 specifies the computation, presentation, and
disclosure requirements for earnings per share. Primary EPS and Fully
Diluted EPS are replaced by Basic EPS and Diluted EPS, respectively.
Basic EPS, unlike Primary EPS, excludes all dilution while Diluted EPS,
like Fully Diluted EPS, reflects the potential dilution that could
occur if securities or other contracts to issue common stock were
exercised or converted into common stock.
On a pro forma basis, Basic EPS and Diluted EPS per share is as
follows:
Three Months
Ended March 31,
---------------
1997 1996
---- ----
Basic EPS $0.26 0.25
Diluted EPS $0.26 0.25
(6) Subsequent Events
From April 1, 1997 to May 14, 1997, the Company acquired 16 operating
office buildings, totaling approximately 1.4 million square feet, and
land that will support the development of up to 1.1 million square feet
of additional office space. The total purchase price for the properties
and land was approximately $167 million. The purchase of the properties
was financed by the assumption of $5 million in debt, the issuance of
$13 million in Units by subsidiaries of the Company and payment of
approximately $149 million in cash.
The Company sold its 5% interest in Greystone Square 127 Associates
(1776 Eye Street) for $312,000. In addition, the Company received
$327,000 for termination of its management and leasing agreement.
11
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
On April 18, 1997, the Company sold 8,214,285 shares of Common Stock
at $26.375 per share. The net proceeds of $209 million derived from
the sale were used to acquire properties and to repay amounts
outstanding on the Company's revolving credit facilities.
At the Company's Annual Meeting of Stockholders on May 8, 1997, the
stockholders approved the Company's 1997 Stock Option and Incentive
Plan (the "Plan") which has been established for the purpose of
attracting and retaining executive officers and other key employees.
The Company has 3,000,000 shares of common stock reserved for issuance
under the Plan. As of May 8, 1997, an aggregate of 861,500 options had
been granted under the Plan to 43 employees.
12
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company
- -------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion is based primarily on the Condensed
Consolidated Financial Statements of CarrAmerica Realty Corporation and
subsidiaries (the Company) as of March 31, 1997 and December 31, 1996, and for
the three months ended March 31, 1997 and 1996. This information should be read
in conjunction with the accompanying condensed consolidated financial statements
and notes thereto. These financial statements include all adjustments which are,
in the opinion of management, necessary to reflect a fair presentation of the
results for the interim periods, and all such adjustments are of a normal,
recurring nature.
Results of Operations - Three Months Ended March 31, 1997 and 1996
Real Estate Operating Revenue
Total real estate operating revenue increased $42.4 million, or 151.0%,
to $70.5 million for the three months ended March 31, 1997 as compared to $28.1
million for the three months ended March 31, 1996. The increase in revenue was
primarily attributable to a $40.9 million and a $1.5 million increase in rental
revenue and real estate service revenue, respectively. The Company experienced
net growth in its rental revenue as a result of its acquisitions since the first
quarter of 1996 which contributed approximately $41.0 million of additional
rental revenue in the three month period ended March 31, 1997. Rental revenue
from properties that were fully operating throughout both periods decreased by
approximately $.1 million as a result of increased vacancies experienced in
these properties. Real estate service revenue increased by $1.5 million, or
53.3%, for the three months ended March 31, 1997 to $4.2 million as compared to
$2.7 million for the three months ended March 31, 1996, primarily as a result of
development fees earned by Carr Development & Construction, Inc., which was
acquired by the Company in May 1996.
Real Estate Operating Expenses
Total real estate operating expenses increased $32.2 million for the
three months ended March 31, 1997, or 135.6%, to $56.0 million as compared to
$23.8 million for the three months ended March 31, 1996. The net increase in
operating expenses was attributable to a $14.7 million increase in property
operating expenses, a $4.7 million increase in interest expense, a $2.4 million
increase in general and administrative expenses, and a $10.4 million increase in
depreciation and amortization. The increase in property operating expenses was
primarily attributable to property acquisitions since the first quarter of 1996.
The increase in the Company's interest expense is primarily related to
borrowings for acquisitions. The increase in general and administrative expenses
is predominately a result of the addition of staff to implement the Company's
new business strategy, the addition of approximately $.6 million of general and
administrative expenses associated with Carr Development & Construction, Inc.,
and inflation. The increase in depreciation and amortization is predominately a
result of additional depreciation and amortization on the Company's real estate
acquisitions.
Other Operating Income (Expense)
Other operating income increased $.1 million for the three months ended
March 31, 1997, to $.5 million as compared to $.4 million for the three months
ended March 31, 1996, primarily due to an increase in interest income.
Net Income
Net income of $13.3 million was earned for the three months ended March
31, 1997 as compared to $3.3 million during the three month period ended March
31, 1996. The comparability of net income between the two periods is impacted by
the acquisitions the Company made and the other changes described above.
13
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company
- -------------------------------------------------------------------------------
Cash Flows
Net cash provided by operating activities increased $18.7 million, or
207.4%, to $27.7 million for the three months ended March 31, 1997 as compared
to $9.0 million for the three months ended March 31, 1996, primarily as a result
of the acquisitions made by the Company. Net cash used by investing activities
increased $10.7 million, to $180.2 million for the three months ended March 31,
1997 as compared to $169.5 million for the three months ended March 31, 1996,
primarily as a result of capital deployed by the Company for acquisitions of
office properties, land held for future development and for construction in
process. Net cash provided by financing activities decreased $19.2 million to
$152.3 million provided for the three months ended March 31, 1997 as compared to
$171.5 million used for the three months ended March 31, 1996, primarily as a
result of an increase in the dividends paid due to the increase in number of
shares outstanding and the repayment in full of a $13.0 million mortgage
payable.
Liquidity and Capital Resources
The Company seeks to create and maintain a capital structure that will
enable it to diversify its capital sources and thereby allow the Company to
obtain additional capital from a number of different sources, including
additional equity offerings of common and/or preferred stock, public and private
debt financings, and, when appropriate, asset sales. In order to access the
preferred stock and public debt markets at reasonable costs, the Company will
need to obtain and maintain an investment grade rating. On May 7, 1997, Duff &
Phelps Credit Rating Co. (DCR) assigned its BBB rating to prospective senior
unsecured debt offerings of the Company and its BBB- rating to prospective
cumulative preferred stock offerings of the Company. The Company is also seeking
investment grade ratings from Moody's Investor Service (Moody's) and Standard &
Poors (S&P). There can be no assurance, however, that the Company will be
successful in obtaining such an investment grade rating from Moody's or S&P.
Management believes that the Company will have access to the capital resources
necessary to expand and develop its business. The Company anticipates that
adequate cash will be available to fund its operating and administrative
expenses, to continue debt service obligations, to pay dividends in accordance
with REIT requirements, to acquire additional properties and land, and to pay
for construction in progress.
On April 18, 1997, the Company used the proceeds from its offering
of common stock to repay $185 million outstanding under its unsecured
revolving line of credit (the "unsecured facility") and $20 million outstanding
under its secured line of credit (the "secured facility"). This reduced the
Company's debt outstanding to $99 million under the unsecured facility and $66
million under the secured facility. The Company has drawn $57 million on the
unsecured facility and $20 million on the secured facility between April 19,
1997 and May 14, 1997. As a result, the remaining availability under the
unsecured and secured facilities was $169.0 and $3.0 million, respectively, as
of May 14, 1997, to acquire properties.
The Company's total indebtedness at March 31, 1997 was $735.1 million,
of which $270.0 million, or 36.7%, had a LIBOR-based floating interest rate. The
Company's fixed rate indebtedness had a weighted average interest rate of 8.3%
and had a weighted average term to maturity of 5.7 years. Based upon the
Company's total market capitalization at March 31, 1997 of $2.461 billion (the
stock price was $30.75 per share and the total shares/Units outstanding were
56,142,423), the Company's debt represented 29.9% of its total market
capitalization.
The Company will require capital to invest in its existing portfolio of
operating assets for major capital projects such as large-scale renovations,
routine capital expenditures and deferred maintenance on certain properties
recently acquired and tenant related capital expenditures, such as tenant
improvements and allowances and leasing commissions. With respect to major
capital projects, the Company is planning a renovation of a 327,000 square foot
property in Denver during 1997 which will cost $2.0 million, or approximately
$5.00 per square foot. During 1997, the Company is also completing renovations
of several garages in its downtown Washington, D.C. portfolio totaling
approximately $1.7 million. The Company intends to use cash flow from operations
and its unsecured facility to meet its working capital needs for its existing
portfolio of operating assets.
14
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company
- -------------------------------------------------------------------------------
The Company will also require a substantial amount of capital for
development projects currently underway and planned for the future. The Company
currently has a total of six development projects underway, one of which the
Company intends to sell to a third party upon completion of construction
pursuant to an existing contract. These projects are expected to require a total
investment by the Company of $115 million, with $108 million expected to be
invested in the five properties the Company intends to own and operate upon
completion of construction. Since March 31, 1997 the Company has placed one
development project into service and begun construction on two properties. The
Company intends to use cash flow from operations and its unsecured facility and
secured facility to meet its working capital needs for its development projects
underway.
The Company's estimates regarding capital expenditures set forth above
are forward-looking information representing the Company's best estimates based
on currently available information. As with any estimates, they are based on a
number of assumptions, any of which, if unrealized, could adversely affect the
accuracy of the estimates. These assumptions include that (i) the Company
experiences tenant retention rates consistent with its expectations, (ii) the
supply/demand characteristics for office space in the Company's target markets
do not vary materially from the Company's expectations, (iii) leasing
commissions associated with obtaining new tenants or retaining existing tenants
are consistent with the Company's past experience and future expectations, and
(iv) the Company does not acquire operating office properties in the future that
require unforeseen substantial renovations.
Net cash provided by operating activities was $27.7 million for the
three months ended March 31, 1997, compared to $9.0 million for the three months
ended March 31, 1996. The increase in net cash provided by operating activities
was primarily as a result of acquisitions made by the Company. The Company's
investing activities used approximately $180.2 million and $169.5 million for
the three months ended March 31, 1997 and 1996, respectively. The Company's
investment activities included the acquisitions of office buildings and land
held for future development and additions to construction in process of
approximately $172.8 million for the three months ended March 31, 1997, as
compared to $168.2 million in acquisitions during the same period in 1996.
Additionally, the Company invested approximately $7.2 million and $1.0 million
in its existing real estate assets for the three months ended March 31, 1997 and
1996, respectively. Net of distributions to the Company's shareholders and
minority interests, the Company's financing activities provided net cash of
$176.6 million and $179.2 million for the three months ended March 31, 1997 and
1996, respectively. For the three months ended March 31, 1997, the Company
raised $136.1 million through the sale of common stock which was used to repay
$101.0 million of its unsecured facility and to fund acquisitions. For the three
months ended March 31, 1997, the Company's borrowings were approximately $55.0
million to provide adequate capital for the Company's investing activities.
Rental revenue and real estate service revenue have been the principal
sources of capital to fund the Company's operating expenses, debt service and
capital expenditures, excluding nonrecurring capital expenditures. The Company
believes that rental revenue and real estate service revenue will continue to
provide the necessary funds for its operating expenses and debt service. The
Company expects to fund capital expenditures, including tenant concession
packages and building renovations from (a) available funds from operations; (b)
existing capital reserves; and (c) if necessary, credit facilities established
with third party lenders. If these sources of funds are insufficient, the
Company's ability to make expected dividends may be adversely impacted. At March
31, 1997, the Company had cash of $35.2 million, of which $7.7 million was
restricted.
The Company's dividends are paid quarterly. Amounts accumulated for
distribution will predominately be invested by the Company in short-term
investments that are collateralized by securities of the United States
Government or any of its agencies.
The Company believes that funds from operations is an appropriate
measure of the performance of an equity REIT because industry analysts have
accepted it as a performance measure of equity REITs. In accordance with the
final NAREIT White Paper on Funds From Operations as approved by the Board of
Governors of NAREIT on March 3, 1995, funds from operations represents net
income (loss) (computed in accordance with generally accepted accounting
principles), excluding gains (losses) from debt restructuring or sales of
property, plus depreciation and amortization of assets uniquely significant to
the real estate industry and after adjustments for unconsolidated partnerships
and joint ventures. Adjustments for unconsolidated partnerships and joint
ventures will be calculated to reflect funds from operations on the same basis.
Funds from
15
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company
- -------------------------------------------------------------------------------
operations does not represent net income or cash flows generated from operating
activities in accordance with generally accepted accounting principles and
should not be considered an alternative to net income as an indication of the
Company's performance or to cash flows as a measure of liquidity or the
Company's ability to make distributions.
The following table provides the calculation of the Company's funds
from operations (in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1997 1996
---- ----
<S> <C> <C>
Net income before minority interest $ 14,976 4,725
Adjustments to derive funds from operations:
Add:
Depreciation and amortization 15,016 5,171
Deduct:
Minority interests' (non Unitholders) share
of depreciation, amortization and net income (291) (395)
-------- ------
Funds from operations before allocation to
the minority Unitholders 29,701 9,501
Less: Funds from operations allocable to the
minority Unitholders (2,866) (2,164)
-------- ------
Funds from operations allocable
to CarrAmerica Realty Corporation $ 26,835 7,337
======== ======
</TABLE>
Changes in funds from operations are largely attributable to changes in
net income between the periods as previously discussed.
16
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company
- --------------------------------------------------------------------------------
Building and Lease Information
The following table sets forth certain lease related information about
each operating property owned by the Company as of March 31, 1997:
<TABLE>
<CAPTION>
Company's
Effective Net
Property Rentable Area Percent
Property Ownership (square feet)(1) Leased(2)
- --------- --------- ---------------- ---------
<S> <C> <C> <C>
Consolidated Properties
SOUTHEAST REGION
Downtown Washington, D.C.:
International Square (3 Properties) 100.0 % 1,017,511 91.7 %
1730 Pennsylvania Avenue 100.0 229,492 98.7
2550 M Street 100.0 187,931 100.0
1775 Pennsylvania Avenue (3) 100.0 143,981 99.1
900 19th Street 100.0 100,804 77.9
1747 Pennsylvania Avenue 89.7 (4) 152,119 83.6
1255 23rd Street 75.0 (5) 304,538 88.4
2445 M Street 74.0 (4) 266,902 90.1
Suburban Washington, D.C.:
One Rock Spring Plaza (3) 100.0 205,298 93.8
Tycon Courthouse 100.0 416,195 99.0
Three Ballston Plaza 100.0 302,797 99.1
Reston Quadrangle (3 Properties) 100.0 260,643 99.9
Parkway One 100.0 87,842 100.0
Suburban Atlanta:
Veridian (22 Properties) 100.0 187,842 97.0
Glenridge 100.0 64,431 96.0
Century Springs West 100.0 94,765 98.9
Holcomb Place 100.0 72,991 100.0
DeKalb Tech (5 Properties) 100.0 163,159 87.5
Midori 100.0 99,900 96.0
Crestwood 100.0 88,186 100.0
Parkwood 100.0 151,020 89.2
Lakewood 100.0 80,338 98.2
The Summit 100.0 178,382 100.0
Spalding Triangle II (3 Properties) 100.0 82,102 100.0
South Florida:
Lake Wyman Plaza 100.0 159,921 97.1
------- ----
Southeast Region Subtotal 5,099,090 95.2
PACIFIC REGION
Southern California:
Scenic Business Park (4 Properties) 100.0 137,436 89.7
Harbor Corporate Park (4 Properties) 100.0 147,263 62.2
Plaza PacifiCare 100.0 104,377 100.0
Katella Corporate Center 100.0 79,917 94.0
Warner Center (12 Properties) 100.0 342,664 94.4
Del Mar Corporate Plaza (2 Properties) 100.0 123,142 100.0
South Coast Executive Center (2 Properties) 100.0 161,301 95.3
Wateridge Pavilion 100.0 62,194 100.0
Warner Premier 100.0 61,553 100.0
Northern California:
AT&T Center (6 Properties) 100.0 949,281 100.0
Sunnyvale Research Plaza (3 Properties) 100.0 126,000 100.0
Rio Robles (7 Properties) 100.0 368,178 100.0
San Jose Orchard Business Park - B (6 Properties) 100.0 166,928 100.0
Orchard Bayshore Center (2 Properties) 100.0 195,249 100.0
Orchard Rincon Centre (3 Properties) 100.0 201,178 100.0
</TABLE>
17
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Company's
Effective Net
Property Rentable Area Percent
Property Ownership (square feet)(1) Leased(2)
- -------- --------- ---------------- ---------
<S> <C> <C> <C> <C>
Orchard Office Centre II (4 Properties) 100.0 212,082 62.4
Orchard Office Centre (2 Properties) 100.0 68,731 100.0
Orchard Centre (2 Properties) 100.0 102,291 100.0
San Jose Orchard Business Park - A 100.0 67,784 100.0
(2 Properties)
3745 North First Street 100.0 67,582 52.6
Mission Plaza (2 Properties) 100.0 102,687 100.0
Fortran (4 Properties) 100.0 299,233 100.0
Suburban Portland:
RadiSys 100.0 80,525 100.0
Suburban Seattle:
Redmond East (10 Properties) 100.0 398,977 99.9
------- ----
Pacific Region Subtotal 4,626,553 97.5
CENTRAL REGION
Austin, Texas:
Norwood Tower 100.0 111,992 77.0
Littlefield Complex (2 Properties) (3) 100.0 126,523 54.3
First State Bank Tower 100.0 258,113 72.8
Great Hills Plaza 100.0 135,333 100.0
Balcones Center 100.0 75,761 83.5
Park North (2 Properties) 100.0 132,778 98.7
The Settings (3 Properties) 100.0 136,183 95.3
Suburban Chicago:
Parkway North (2 Properties) 100.0 508,778 91.1
Unisys (2 Properties) 100.0 353,969 91.4
The Crossings (2 Properties) 100.0 296,231 95.9
Bannockburn I & II (2 Properties) 100.0 208,317 94.0
Suburban Dallas:
Greyhound 100.0 92,890 100.0
Search Plaza 100.0 151,048 95.7
Quorum North 100.0 117,790 81.4
Quorum Place 100.0 176,562 94.9
Cedar Maple (3 Properties) 100.0 112,177 94.0
------- ----
Central Region Subtotal 2,994,445 89.3
MOUNTAIN REGION
Southeast Denver:
Harlequin Plaza (2 Properties) 100.0 323,186 98.0
Quebec Court I & II (2 Properties) 100.0 285,829 100.0
The Quorum (2 Properties) 100.0 123,876 79.5
Greenwood Center 100.0 75,866 94.2
Quebec Center (3 Properties) 100.0 106,791 91.7
Panorama Corporate Center I 100.0 100,619 96.4
Suburban Phoenix:
Camelback Lakes (2 Properties) 100.0 200,453 90.7
Pointe Corridor IV 100.0 178,373 92.8
------- ----
Mountain Region Subtotal 1,394,993 94.8
--------- ----
TOTAL CONSOLIDATED PROPERTIES: 14,115,081
----------
WEIGHTED AVERAGE 94.7 %
----
</TABLE>
18
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Company's
Effective Net
Property Rentable Area Percent
Property Ownership (square feet)(1) Leased(2)
- -------- --------- ----------------- ---------
<S> <C> <C> <C>
Unconsolidated Properties
Downtown Washington, D.C.:
AARP Headquarters 24.0(6) 477,187 99.1
Bond Building 15.0(7) 162,097 100.0
Willard Office/Hotel 5.0(8) 242,787 91.9
1776 Eye Street 5.0(4) 212,774 92.3
Suburban Washington, D.C.:
Booz-Allen & Hamilton Building 50.0(9) 222,989 100.0
--------- -----
TOTAL UNCONSOLIDATED PROPERTIES: 1,317,834
---------
WEIGHTED AVERAGE 97.5%
-----
ALL OPERATING PROPERTIES
TOTAL: 15,432,915
==========
WEIGHTED AVERAGE 94.9%
====
</TABLE>
- ----------------------
(1) Includes office and retail space but excludes storage space.
(2) Includes space for leases that have been executed and have commenced as of
March 31, 1997.
(3) The Company owns the improvements on the property and has a leasehold
interest in all or a portion of the underlying land.
(4) The Company holds a general and/or limited partner interest in a partnership
that owns the property.
(5) The Company holds a 50% joint venture interest in the joint venture that
owns this property and a 50% joint venture interest in another joint
venture, which holds the remaining 50% interest in the joint venture that
owns the property. As a result of preferential rights to annual
distributions from another venture, the Company will receive distributions
of less than 75% (but in no event less than 50%) of the total amount
distributed with respect to this property in each year until the
preferential distribution requirements are satisfied, but will receive 100%
of any subsequent distributions during the year until its aggregate
distributions equal 75% of the cumulative distributions with respect to the
property since inception of the partnership. Thereafter, the Company will
receive 75% of the distributions made during the year with respect to the
property. Upon sale of the property, the Company will receive 75% of the
distributions until the Company receives its preference amount, 50% until
the remaining venturer receives its preference amount, and 75% of the
distributions thereafter.
(6) The Company holds an effective 24% interest in the property by virtue of a
48% general partner interest in a partnership that owns a 50% general
partner interest in the property.
(7) The Company holds an effective 15% interest in the property by virtue of a
30.6% limited partner interest in a partnership that has a 49% limited
partner interest in the property.
(8) The Company holds an effective 5% interest in the property by virtue of a
7.85% limited partner interest in a partnership that owns a 63.7% limited
partner interest in the property. The partnership in which the Company holds
an interest owns the improvements on the property and has a leasehold
interest in the underlying land.
(9) The Company holds a 50% joint venture interest, and is the managing partner.
19
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company
- --------------------------------------------------------------------------------
The following table sets forth a schedule of lease expirations for
executed leases as of March 31, 1997, for each of the 10 years beginning with
1997, for the 179 operating properties consolidated for financial statement
purposes, assuming that no tenants exercise renewal options:
<TABLE>
<CAPTION>
Percent of Total
Year of Net Rentable Area Leased Square Footage
Lease Subject to Expiring Represented by
Expiration Leases (Square Feet) Expiring Leases*
----------------- ---------------------- -----------------------
<S> <C> <C>
1997 1,456,786 10.9%
1998 2,319,318 17.4
1999 1,467,421 11.0
2000 1,543,380 11.5
2001 1,697,268 12.7
2002 1,220,309 9.1
2003 1,035,823 7.8
2004 412,703 3.1
2005 524,345 3.9
2006 and thereafter 1,686,734 12.6
</TABLE>
* Excludes 750,994 square feet of space vacant as of March 31, 1997.
The following table sets forth certain lease-related information for
the consolidated operating properties presented in order to show downtown
Washington, D.C. operating properties separate from other operating properties.
The table presents leases that commenced during the twelve month period from
April 1, 1996 to March 31, 1997, excluding the leases for operating properties
that were executed prior to the date of acquisition:
<TABLE>
<CAPTION>
Calculated on a Weighted Average Basis
------------------------------------------------------------------------------------
Downtown
Washington, D.C. Tenant Base
Properties Total Improvements Rent Leasing
Square & Cash per Lease Abatements Commission
Feet Allowances per Square Life in in Per Square
Type of Lease Leased Square Foot Foot Years Months Foot
------------- ------ -------------- ------ ------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Office 234,670 $ 14.79 $ 27.69 8.3 2.1 $ 5.91
Retail 9,805 22.13 27.78 9.0 2.1 5.94
------------
Total 244,475 15.09 27.69 8.3 2.1 5.91
============ =============== ======== ======= ============= =============
New leases or
expansion space 151,259 $ 17.15 $ 25.98 8.5 3.4 $ 6.50
Renewals of existing
tenants' space 93,216 11.74 30.46 8.0 0.0 4.95
------------
Total 244,475 15.09 27.69 8.3 2.1 5.91
============ =============== ======== ======= ============= =============
</TABLE>
20
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Calculated on a Weighted Average Basis
------------------------------------------------------------------------------------
All Other Operating Tenant Base
Properties Total Improvements Rent Leasing
Square & Cash per Lease Abatements Commission
Feet Allowances per Square Life in in Per Square
Type of Lease Leased Square Foot Foot Years Months Foot
------------- ------ -------------- ------ ------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Office 2,031,397 $ 6.17 $ 17.78 5.8 0.3 $ 2.07
Retail 9,800 0.00 6.62 7.3 0.0 1.73
---------
Total 2,041,197 6.14 17.73 5.8 0.3 2.07
========= ======= ======= === === =======
New leases or
expansion space 705,573 $ 8.88 $ 15.56 5.9 0.9 $ 2.93
Renewals of existing
tenants' space 1,335,624 4.70 18.87 5.7 0.1 1.61
---------
Total 2,041,197 6.14 17.73 5.8 0.3 2.07
========= ======= ======= === === =======
</TABLE>
21
<PAGE>
Part II
OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
On May 8, 1997, the Board of Directors of the Company appointed
Thomas A. Carr to be the Chief Executive Officer of the Company.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
3.1 Amendment to Second Amendment and Restatement of By-Laws of
CarrAmerica Realty Corporation effective May 8, 1997.
10.1 Amended and Restated Revolving Credit Agreement, dated as of
April 16, 1977.
10.2 Second Amended and Restated Agreement of Limited Partnership
of CarrAmerica Realty, L.P. dated as of May 9, 1997.
27. Financial Data Schedule
(b) Reports on Form 8-K
a. Current Report on Form 8-K dated and filed on March 27, 1997
relative to certain historical summaries.
b. Current Report on Form 8-K dated and filed on February 12,
1997 relative to the Company's secured credit facility.
c. Current Report on Form 8-K dated and filed on January 31, 1997
relative to a legal opinion of Hogan & Hartson.
d. Current Report on Form 8-K dated and filed on January 27, 1997
relative to certain acquisitions and probable acquisitions.
e. Current Report on Form 8-K dated and filed on January 23, 1997
relative to the acquisition of Rio Robles Technology Center.
f. Current Report on Form 8-K dated and filed on January 3, 1997
relative to the acquisition of Unisys Center.
22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CARRAMERICA REALTY CORPORATION
/s/ Thomas A. Carr
- -----------------------------------------------------
Thomas A. Carr, President and Chief Executive Officer
/s/ Brian K. Fields
- ----------------------------------------
Brian K. Fields, Chief Financial Officer
Date: May 15, 1997
23
<PAGE>
Exhibit Index
<TABLE>
<CAPTION>
Exhibit Description Page
- ------- ----------- ----
<S> <C>
3.1 Amendment to Second Amendment and Restatement of By-Laws of
CarrAmerica Realty Corporation effective May 8, 1997.
10.1 Amended and Restated Revolving Credit Agreement, dated April
16, 1997.
10.2 Second Amended and Restated Agreement of Limited Partnership
of CarrAmerica Realty, L.P. dated as of May 9, 1997.
27. Financial Data Schedule
</TABLE>
24
BY-LAW AMENDMENT
Approved by the Board of Directors
on March, 25 1997
Effective May 8, 1997
Section 4.02(a) of the By-laws of the Corporation is read in its
entirety as follows:
"(a) The Board of Directors shall consist of nine members or
such number as determined from time to time by amendment of this
subsection. The number of Directors shall in no event be less than
three. The term of office of a Director shall not be affected by any
decrease in the authorized number of Directors."
================================================================================
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
dated as of April 16, 1997
among
CARRAMERICA REALTY CORPORATION,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Bank and as Lead Agent for the Banks,
COMMERZBANK AKTIENGESELLSCHAFT, NEW YORK BRANCH,
as Bank and as Co-Agent
and
THE BANKS LISTED HEREIN
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS................................ 2
SECTION 1.1. Definitions................................ 2
SECTION 1.2. Accounting Terms and Determinations........ 17
SECTION 1.3. Types of Borrowings........................ 18
ARTICLE II
THE CREDITS................................ 18
SECTION 2.1. Commitments to Lend........................ 18
SECTION 2.2. Notice of Borrowing........................ 19
SECTION 2.3. Notice to Banks; Funding of Loans.......... 20
SECTION 2.4. Notes...................................... 21
SECTION 2.5. Maturity of Loans.......................... 22
SECTION 2.6. Interest Rates............................. 22
SECTION 2.7. Fees....................................... 24
SECTION 2.8. Mandatory Termination; Extension Option.... 24
SECTION 2.9. Mandatory Prepayment....................... 25
SECTION 2.10. Optional Prepayments...................... 27
SECTION 2.11. General Provisions as to Payments......... 28
SECTION 2.12. Funding Losses............................ 29
SECTION 2.13. Computation of Interest and Fees.......... 29
SECTION 2.14. Method of Electing Interest Rates......... 30
ARTICLE III
CONDITIONS................................. 32
SECTION 3.1. Closing.................................... 32
SECTION 3.2. Borrowings................................. 34
SECTION 3.3. Conditions Precedent to Additional
Mortgaged Property Assets................ 35
SECTION 3.4. Mortgaged Properties....................... 36
ARTICLE IV
REPRESENTATIONS AND WARRANTIES............. 39
SECTION 4.1. Existence and Power........................ 39
SECTION 4.2. Power and Authority........................ 40
SECTION 4.3. No Violation............................... 40
SECTION 4.4. Financial Information...................... 40
SECTION 4.5. Litigation................................. 41
SECTION 4.6. Compliance with ERISA...................... 42
SECTION 4.7. Environmental Compliance................... 42
SECTION 4.8. Taxes...................................... 44
SECTION 4.9. Full Disclosure............................ 44
<PAGE>
SECTION 4.10. Solvency.................................. 45
SECTION 4.11. Use of Proceeds; Margin Regulations....... 45
SECTION 4.12. Governmental Approvals.................... 45
SECTION 4.13. Investment Company Act; Public Utility
Holding Company Act..................... 45
SECTION 4.14. Closing Date Transactions................. 45
SECTION 4.15. Representations and Warranties in Loan
Documents............................... 46
SECTION 4.16. Intentionally Omitted..................... 46
SECTION 4.17. No Default................................ 46
SECTION 4.18. Licenses, etc............................. 46
SECTION 4.19. Compliance With Law....................... 46
SECTION 4.20. No Burdensome Restrictions................ 47
SECTION 4.21. Brokers' Fees............................. 47
SECTION 4.22. Labor Matters............................. 47
SECTION 4.23. Organizational Documents.................. 47
SECTION 4.24. Principal Offices......................... 48
SECTION 4.25. REIT Status............................... 48
SECTION 4.26. Ownership of Property..................... 48
SECTION 4.27. Security Interests and Liens.............. 48
SECTION 4.28. Structural Defects and Violation of Law... 48
ARTICLE V
AFFIRMATIVE AND NEGATIVE COVENANTS......... 49
SECTION 5.1. Information................................ 49
SECTION 5.2. Payment of Obligations..................... 53
SECTION 5.3. Maintenance of Property; Insurance......... 53
SECTION 5.4. Conduct of Business........................ 54
SECTION 5.5. Compliance with Laws....................... 54
SECTION 5.6. Inspection of Property, Books and Records.. 54
SECTION 5.7. Existence.................................. 55
SECTION 5.8. Financial Covenants........................ 55
SECTION 5.9. Restriction on Fundamental Changes;
Operation and Control.................... 56
SECTION 5.10. Intentionally Omitted..................... 56
SECTION 5.11. Sale of the Property...................... 56
SECTION 5.12. Fiscal Year; Fiscal Quarter............... 56
SECTION 5.13. Margin Stock.............................. 57
SECTION 5.14 Use of Proceeds........................... 57
ARTICLE VI
DEFAULTS................................... 57
SECTION 6.1. Events of Default.......................... 57
SECTION 6.2. Rights and Remedies........................ 60
SECTION 6.3. Notice of Default.......................... 61
<PAGE>
ARTICLE VII
THE LEAD AGENT............................. 62
SECTION 7.1. Appointment and Authorization.............. 62
SECTION 7.2. Lead Agent and Affiliates.................. 62
SECTION 7.3. Action by Lead Agent....................... 62
SECTION 7.4. Consultation with Experts.................. 62
SECTION 7.5. Liability of Lead Agent.................... 62
SECTION 7.6. Indemnification............................ 63
SECTION 7.7. Credit Decision............................ 63
SECTION 7.8. Successor Lead Agent....................... 63
SECTION 7.9. Lead Agent's Fee........................... 64
SECTION 7.10. Copies of Notices......................... 64
ARTICLE VIII
CHANGE IN CIRCUMSTANCES.................... 64
SECTION 8.1. Basis for Determining Interest Rate
Inadequate or Unfair..................... 64
SECTION 8.2. Illegality................................. 65
SECTION 8.3. Increased Cost and Reduced Return.......... 66
SECTION 8.4. Taxes...................................... 68
SECTION 8.5. Base Rate Loans Substituted for Affected
Euro-Dollar Loans........................ 70
ARTICLE IX
MISCELLANEOUS.............................. 71
SECTION 9.1. Notices.................................... 71
SECTION 9.2. No Waivers................................. 71
SECTION 9.3. Expenses; Indemnification.................. 71
SECTION 9.4. Sharing of Set-Offs........................ 74
SECTION 9.5. Amendments and Waivers..................... 75
SECTION 9.6. Successors and Assigns..................... 76
SECTION 9.7. Governing Law; Submission to Jurisdiction.. 77
SECTION 9.8. Marshaling; Recapture...................... 79
SECTION 9.9. Counterparts; Integration; Effectiveness... 79
SECTION 9.10. WAIVER OF JURY TRIAL...................... 79
SECTION 9.11. Survival.................................. 80
SECTION 9.12. Domicile of Loans......................... 80
SECTION 9.13. Limitation of Liability................... 80
SECTION 9.14. Confidentiality........................... 82
Exhibits Intentionally Omitted
<PAGE>
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT, dated as of April 16,
1997, among CARRAMERICA REALTY CORPORATION (the "Borrower"), MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, as Bank and as Lead Agent for the Banks, Commerzbank
Aktiengesellschaft, New York Branch, as Co-Agent, and the BANKS listed on the
signature pages hereof (the "Banks").
W I T N E S S E T H:
WHEREAS, the Borrower, Morgan Guaranty Trust Company of New York, as
Lead Agent and as a Bank, entered into the Revolving Credit Agreement, dated as
of January 28, 1997 (the "Initial Closing Date") (the "Existing Credit
Agreement"); and
WHEREAS, the parties hereto have agreed to amend and restate the terms
and conditions contained in the Existing Credit Agreement in their entirety as
hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
I. The Existing Credit Agreement is hereby modified so that all of the
terms and conditions of the aforesaid Existing Credit Agreement shall be
restated in their entirety as set forth herein, and the Borrower agrees to
comply with and be subject to all of the terms, covenants and conditions of this
Agreement.
II. This Agreement shall be binding upon and inure to the benefit of
the parties hereto, and their respective successors and assigns, and shall be
deemed to be effective as of the date hereof.
III. Any reference in the Mortgages, any other Loan Document or any
other document executed in connection with this Agreement to the Existing Credit
Agreement shall be deemed to refer to this Agreement.
<PAGE>
I
DEFINITIONS
I.1. Definitions. The following terms, as used herein, have the
following meanings:
"Adjusted London Interbank Offered Rate" has the meaning set forth in
Section 2.6(b).
"Administrative Questionnaire" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Lead Agent and
submitted to the Lead Agent (with a copy to the Borrower) duly completed by such
Bank.
"Agreement" means this Amended and Restated Revolving Credit Agreement
as the same may from time to time hereafter be modified, supplemented or
amended.
"Allocated Mortgaged Property Loan Amount" means as to any Mortgaged
Property, an amount equal to the lesser of sixty-five percent (65%) of (x) the
purchase price thereof and (y) the Appraised Value thereof. As of the date
hereof, the Allocated Mortgaged Property Loan Amounts for the Mortgaged
Properties are identified on Exhibit D attached hereto and made a part hereof.
"Applicable Lending Office" means, with respect to any Bank, (i) in
the case of its Base Rate Loans, its Domestic Lending Office and (ii) in the
case of its Euro-Dollar Loans, its Euro-Dollar Lending Office.
"Appraisals" means, with respect to each Mortgaged Property, the
independent appraisals, prepared and delivered to the Lead Agent at the
Borrower's sole cost and expense and conforming to the regulations promulgated
pursuant to FIRREA, initially completed by Cushman & Wakefield in the case of
Appraisals for the Mortgaged Properties as of the date of this Agreement;
provided, that apart from the Appraisal provided for each Real Property Asset at
the time it becomes a Mortgaged Property,
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the Lead Agent may commission Appraisals only in accordance with the provisions
of Section 3.4(b) hereof.
"Appraised Value" means the value of any Mortgaged Property as
indicated on the most recent Appraisal thereof.
"Assignee" has the meaning set forth in Section 9.6(c).
"Assignments" means the Assignments of Leases, Rents and Security
Deposits executed by the Borrower on or prior to the date hereof or as of the
date of acquisition of a Mortgaged Property, securing all or a portion of the
Loans.
"Bank" means each bank listed on the signature pages hereof, each
Assignee which becomes a Bank pursuant to Section 9.6(c), and their respective
successors.
"Bankruptcy Code" means Title 11 of the United States Code, entitled
"Bankruptcy", as amended from time to time, and any successor statute or
statutes.
"Base Rate" means, for any day, a rate per annum equal to the higher
of (i) the Prime Rate for such day and (ii) the sum of the Federal Fund's Rate
plus .50%.
"Base Rate Loan" means a Loan to be made by a Bank as a Base Rate Loan
in accordance with the applicable Notice of Borrowing or pursuant to Article
VIII.
"Benefit Arrangement" means at any time an employee benefit plan
within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"Borrower" means CarrAmerica Realty Corporation and its successors.
"Borrowing" means a borrowing hereunder consisting of Loans made to
the Borrower at the same time by the Banks pursuant to Article II. A Borrowing
is a
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"Domestic Borrowing" if such Loans are Base Rate Loans or a "Euro-Dollar
Borrowing" if such Loans are Euro-Dollar Loans.
"Closing Date" means the date on which the Lead Agent shall have
received the documents specified in or pursuant to Section 3.1.
"Collateral" means all property and interests in property now owned or
hereafter acquired in or upon which a Lien has been or is purported or intended
to have been granted to the Lead Agent on behalf of the Banks under each of the
Mortgages and other Loan Documents.
"Commitment" means, with respect to each Bank, the amount committed to
be loaned by such Bank pursuant to this Agreement, as such amount may be reduced
from time to time pursuant to Sections 2.8 and 2.9.
"Contingent Obligation" as to any Person means, without duplication,
(i) any contingent obligation of such Person required to be shown on such
Person's balance sheet in accordance with GAAP, and (ii) any obligation required
to be disclosed in the footnotes to such Person's financial statements,
guaranteeing partially or in whole any non-recourse Debt, lease, dividend or
other obligation, exclusive of contractual indemnities (including, without
limitation, any indemnity or price-adjustment provision relating to the purchase
or sale of securities or other assets) and guarantees of non-monetary
obligations (other than guarantees of completion) which have not yet been called
on or quantified, of such Person or of any other Person. Notwithstanding
anything contained herein to the contrary, "Contingent Obligations" shall not be
deemed to include guarantees of Unused Commitments or of construction loans to
the extent the same have not been drawn.
"Debt" of any Person means, without duplication, (A) as shown on such
Person's consolidated balance sheet (i) all indebtedness of such Person for
borrowed money or for the deferred purchase price of property and, (ii) all
indebtedness of such Person evidenced by a note, bond, debenture or similar
instrument (whether or not disbursed in full in the case of a construction
loan),
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(B) the face amount of all letters of credit issued for the account of
such Person and, without duplication, all unreimbursed amounts drawn thereunder,
(C) all Contingent Obligations of such Person, (D) all payment obligations of
such Person under any interest rate protection agreement (including, without
limitation, any interest rate swaps, caps, floors, collars and similar
agreements) and currency swaps and similar agreements which were not entered
into specifically in connection with Debt set forth in clauses (A), (B) or (C)
hereof.
"Debt Service" shall mean, measured as of the last day of each
calendar quarter, an amount equal to the greater of (i) the product of four (4)
and the amount of interest actually payable by the Borrower on the Loans for the
quarter then ended (so as to be determined on an annualized basis) and (ii)
Pro-Forma Debt Service.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are authorized by law to
close.
"Domestic Lending Office" means, as to each Bank, its office located
within the United States at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its Domestic
Lending Office) or such other office within the United States as such Bank may
hereafter designate as its Domestic Lending Office by notice to the Borrower and
the Lead Agent.
"Due Diligence Package" has the meaning provided in Section 3.3.
"Environmental Affiliate" means any partnership, or joint venture,
trust or corporation in which an equity interest is owned by the Borrower,
either directly or indirectly.
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"Environmental Approvals" means any permit, license, approval, ruling,
variance, exemption or other authorization required under applicable
Environmental Laws.
"Environmental Claim" means, with respect to any Person, any notice,
claim, demand or similar communication (written or oral) by any other Person
alleging potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damage, property damage, personal
injuries, fines or penalties arising out of, based on or resulting from (i) the
presence, or release into the environment, of any Material of Environmental
Concern at any location, whether or not owned by such Person or (ii)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law, in each case as to which there is a reasonable likelihood of
an adverse determination with respect thereto and which, if adversely
determined, would have a Material Adverse Effect.
"Environmental Indemnity" means the Environmental Indemnity(ies)
executed by the Borrower on or prior to the date hereof or as of the date of the
addition of a Real Property Asset to the Mortgaged Properties.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, judicial decisions,regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating to
the environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Material of Environmental
Concern or hazardous wastes into the environment including, without limitation,
ambient air, surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, Material of Environmental
Concern or hazardous wastes or the clean-up or other remediation thereof.
"Environmental Report" has the meaning set forth in Section 4.7.
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<PAGE>
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means the Borrower, any Subsidiary and all members of a
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"Euro-Dollar Borrowing" has the meaning set forth in Section 1.3.
"Euro-Dollar Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its office,
branch or affiliate located at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its
Euro-Dollar Lending Office) or such other office, branch or affiliate of such
Bank as it may hereafter designate as its Euro-Dollar Lending Office by notice
to the Borrower and the Lead Agent.
"Euro-Dollar Loan" means a Loan to be made by a Bank as a Euro-Dollar
Loan in accordance with the applicable Notice of Borrowing.
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section
2.6(b).
"Event of Default" has the meaning set forth in Section 6.1.
"Extension Date" has the meaning set forth in Section 2.8.
"Extension Notice" has the meaning set forth in Section 2.8.
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<PAGE>
"Extension Option" has the meaning set forth in Section 2.8.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day; provided that (i) if such day is not a Domestic
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on the
next succeeding Domestic Business Day, and (ii) if no such rate is so published
on such next succeeding Domestic Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to Morgan on such day on such transactions
as determined by the Lead Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System as constituted from time to time.
"FFO" means "funds from operations," as defined in the National
Association of Real Estate Investment Trusts ("NAREIT") White Paper on Funds
From Operations as approved by the NAREIT Board of Governors on March 3, 1995.
"Financing Statements" means those Uniform Commercial Code Financing
Statements executed by the Borrower on or prior to the date hereof or as of the
date of an addition of a Real Property Asset to the Mortgaged Properties for the
purpose of perfecting the security interest in any personal property serving as
collateral for the Loans pursuant to any Loan Document, as to which personal
property a security interest may properly be perfected by the filing, in the
relevant jurisdiction, of a Financing Statement.
"FIRREA" means the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended.
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"GAAP" means generally accepted accounting principles recognized as
such in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and Board or in such
other statements by such other entity as may be approved by a significant
segment of the accounting profession, which are applicable to the circumstances
as of the date of determination.
"Governmental Authority" means any Federal, state or local government
or any other political subdivision thereof or agency exercising executive,
legislative, judicial, regulatory or administrative functions having
jurisdiction over the Borrower or any Mortgaged Property.
"Group of Loans" means, at any time, a group of Loans consisting of
(i) all Loans which are Base Rate Loans at such time, or (ii) all Loans which
are Euro-Dollar Loans having the same Interest Period at such time; provided
that, if a Loan of any particular Bank is converted to or made as a Base Rate
Loan pursuant to Section 8.2 or 8.4, such Loan shall be included in the same
Group or Groups of Loans from time to time as it would have been in if it had
not been so converted or made.
"Improvements" has the meaning ascribed to it in each of the
Mortgages.
"Indemnitee" has the meaning set forth in Section 9.3(b).
"Initial Closing Date" has the meaning set forth in the recitals
hereto.
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such Borrowing and ending one,
two, three or six months thereafter, as the Borrower may elect in the applicable
Notice of Borrowing; provided that:
(a) any Interest Period which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day
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<PAGE>
falls in another calendar month, in which case such Interest Period shall
end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clause (c) below, end on the last Euro-Dollar Business
Day of a calendar month; and
(c) if any Interest Period includes a date on which a payment of
principal of the Loans is required to be made under Section 2.9 but does
not end on such date, then (i) the principal amount (if any) of each
Euro-Dollar Loan required to be repaid on such date shall have an Interest
Period ending on such date and (ii) the remainder (if any) of each such
Euro-Dollar Loan shall have an Interest Period determined as set forth
above.
(1) with respect to each Base Rate Borrowing, the period commencing on the date
of such Borrowing and ending 30 days thereafter; provided that:
(a) any Interest Period (other than an Interest Period determined
pursuant to clause (c)(i) above) which would otherwise end on a day which
is not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
(b) if any Interest Period includes a date on which a payment of
principal of the Loans is required to be made under Section 2.9 but does
not end on such date, then (i) the principal amount (if any) of each Base
Rate Loan required to be repaid on such date shall have an Interest Period
ending on such date and (ii) the remainder (if any) of each such Base Rate
Loan shall have an Interest Period determined as set forth above.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
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"Lead Agent" means Morgan Guaranty Trust Company of New York in its
capacity as Lead Agent for the Banks hereunder, and its successors in such
capacity.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset. For the purposes of this Agreement, each of
the Borrower and any Subsidiary shall be deemed to own subject to a Lien any
asset which it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such asset.
"Loan" means a Base Rate Loan or a Euro-Dollar Loan and "Loans" means
Base Rate Loans or Euro-Dollar Loans or any combination of the foregoing.
"Loan Amount" has the meaning set forth in Section 2.1(a).
"Loan Documents" means this Agreement, the Notes, the Mortgages, the
Assignments, the Environmental Indemnity, the Financing Statements and any
related documents.
"London Interbank Offered Rate" has the meaning set forth in Section
2.6(b).
"LTV Ratio" means the ratio, expressed as a percentage and calculated
on a quarterly basis, as of the last day of each calendar quarter, by the
Borrower, of the aggregate amount of the Loans outstanding as of the date of
determination, to the Mortgaged Properties Value as of the date of
determination.
"Margin Stock" shall have the meaning provided such term in Regulation
U and Regulation G of the Federal Reserve Board.
"Material Adverse Effect" means a material adverse effect upon the
ability of the Borrower to
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perform its obligations hereunder in all material respects, including to pay
interest and principal.
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $5,000,000.
"Material of Environmental Concern" means and includes pollutants,
contaminants, hazardous wastes, and toxic, radioactive, caustic or otherwise
hazardous substances, including petroleum, its derivatives, by-products and
other hydrocarbons, or any substance having any constituent elements displaying
any of the foregoing characteristics.
"Maturity Date" has the meaning set forth in Section 2.8.
"Minimum Debt Service Coverage" means as of the last day of each
calendar quarter, Net Operating Cash Flow equal to or greater than 125% of Debt
Service for periods ending on or prior to July 31, 1997 and 135% of Debt Service
for periods ending on or after August 1, 1997.
"Morgan" means Morgan Guaranty Trust Company of New York, in its
individual capacity.
"Mortgaged Properties" means, as of any date, the Real Property Assets
listed in Exhibit B attached hereto and made a part hereof, each of which is
100% owned in fee (or leasehold in the case of assets listed as such on Exhibit
B) by the Borrower, together with all Real Property Assets which have become
part of the Mortgaged Properties as of such date in accordance with Section 3.3
and excluding any Mortgaged Properties which have been released from this
Agreement, the Mortgage and the other Loan Documents as of such date in
accordance with Sections 3.4(c) and 5.13 and all other terms of this Agreement.
"Mortgaged Properties Value" means the aggregate of the Appraised
Values of the Mortgaged Properties.
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"Mortgages" shall mean the mortgage(s), deed(s) to secure debt, and/or
deed(s) of trust executed by the Borrower on or prior to the date hereof or as
of the date of the addition of a Real Property Asset to the Mortgaged
Properties, securing all or a portion of the Loans, each of which Mortgages
shall be a first mortgage lien with respect to each Real Property Asset which is
the subject thereof.
"Multiemployer Plan" means at any time an employee pension benefit
plan within the meaning of Section 4001(a)(3) of ERISA to which any member of
the ERISA Group is then making or accruing an obligation to make contributions
or has within the preceding five plan years made contributions, including for
these purposes any Person which ceased to be a member of the ERISA Group during
such five year period.
"Net Operating Cash Flow" means, as of any date of determination, with
respect to all Mortgaged Properties, the Property Income which is the product of
four (4) and the Property Income for the quarter then ended (so as to be
determined on an annualized basis), but less (x) the Property Expenses which are
the product of four (4) and the Property Expenses with respect to all such
Mortgaged Properties for the quarter then ended (so as to be determined on an
annualized basis), and (y) appropriate reserves for replacements of not less
than $1.50 per square foot per annum for each Mortgaged Property.
"Notes" means, collectively, the promissory notes of the Borrower,
each substantially in the form of Exhibit A hereto, evidencing the obligation of
the Borrower to repay the Loans, and "Note" means any one of such promissory
notes issued hereunder.
"Notice of Borrowing" means a Notice of Borrowing (as defined in
Section 2.2).
"Obligations" means all obligations, liabilities and indebtedness of
every nature of the Borrower from time to time owing to any Bank under or in
connection with this Agreement or any other Loan Document.
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"Outstanding Balance" means the aggregate outstanding and unpaid
principal balance of all Loans.
"Parent" means, with respect to any Bank, any Person controlling such
Bank.
"Participant" has the meaning set forth in Section 9.6(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted LTV Ratio" means any LTV Ratio which is 65% or lower.
"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Plan" means at any time an employee pension benefit plan (other than
a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"PML Reports" means one or more Probable Maximum Loss reports, in each
case reasonably acceptable to the Lead Agent.
"Prime Rate" means the rate of interest publicly announced by Morgan
in New York City from time to time as its Prime Rate.
"Pro-Forma Debt Service" means the amount determined by applying a
25-year mortgage style amortization schedule to the Loans outstanding as of the
last day
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of the calendar quarter then ended, using an annual interest rate equal to the
Treasury Rate plus 1.50%, determined on an annualized basis.
"Property Expenses" means, when used with respect to any Mortgaged
Property, the operating expenses of maintaining and operating such Real Property
Asset determined in accordance with GAAP, but excluding depreciation,
amortization and interest costs.
"Property Income" means, when used with respect to any Mortgaged
Property, cash rents and other cash revenues received in the ordinary course
therefrom, including, without limitation, revenues from any parking leases and
lease termination fees amortized over the remaining term of the lease for which
such termination fee was received (other than the pre-paid rents and revenues
and security deposits except to the extent applied in satisfaction of tenants'
obligations for rent).
"Property Release" has the meaning set forth in Section 3.4(c).
"Real Property Assets" means as of any time, the real property assets
owned directly or indirectly by the Borrower at such time.
"Reference Bank" means the principal London offices of Morgan.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Release" means any release, spill, emission, leaking, pumping,
pouring, dumping, emptying, deposit, discharge, leaching or migration.
"Release Date" has the meaning set forth in Section 3.4(c).
"Required Banks" means, at any time, Banks having at least 51% of the
aggregate amount of the Commitments or, if the Commitments shall have been
terminated,
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holding Notes evidencing at least 51% of the aggregate unpaid principal
amount of the Loans.
"Requirements" means all present and future laws, statutes, codes,
ordinances, orders, judgments, decrees, injunctions, rules, regulations and
requirements of every Governmental Authority having jurisdiction over any
Mortgaged Property and all restrictive covenants applicable to any Mortgaged
Property.
"Solvent" means, with respect to any Person, that the fair saleable
value of such Person's assets exceeds the Debts of such Person.
"Subsidiary" means any corporation or other entity of which securities
or other ownership interests representing either (i) ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions or (ii) a majority of the economic interest therein, are at the time
directly or indirectly owned by the Borrower, including, without limitation,
Carr Real Estate Services, Inc., Carr Real Estate Services of Northern Virginia,
Inc., Carr Development and Construction, Inc. and CarrAmerica Realty, L.P.
"Survey" means a survey (prepared in accordance with the ALTA
appropriate specifications) for each Mortgaged Property, prepared or
re-certified on a date not earlier than six (6) months prior to the date of the
applicable Mortgage, by a land surveyor duly licensed in the state in which such
Mortgaged Property is located.
"Term" has the meaning set forth in Section 2.8.
"Title Company" means, with respect to each Mortgaged Property, a
title insurance company of recognized national standing.
"Title Commitment" means, for each Mortgaged Property, an ALTA fee or
leasehold title commitment or title policy (if available in the state where the
applicable Mortgaged Property is located; otherwise, such other form of fee or
leasehold title commitment or title
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policy as is customarily used in such state) issued by the Title Company.
"Treasury Rate" means, as of any date, a rate equal to the annual
yield to maturity on the U.S. Treasury Constant Maturity Series with a ten-year
maturity, as such yield is reported in Federal Reserve Statistical Release H.15
- -- Selected Interest Rates, published most recently prior to the date the
applicable Treasury Rate is being determined. Such yield shall be determined by
straight line linear interpolation between the yields reported in Release H.15,
if necessary. In the event Release H.15 is no longer published, the Lead Agent
shall select, in its reasonable discretion, an alternate basis for the
determination of Treasury yield for U.S. Treasury Constant Maturity Series with
ten-year maturities.
"Unfunded Liabilities" means, with respect to any Plan at any time,
the amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
"United States" means the United States of America, including the
States and the District of Columbia, but excluding its territories and
possessions.
"Unused Commitments" means an amount equal to all unadvanced funds
(other than unadvanced funds in connection with any construction loan) which the
Banks are obligated to advance to the Borrower, pursuant to this Agreement.
I.2. Accounting Terms and Determinations. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial statements
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required to be delivered hereunder shall be prepared in accordance with GAAP,
applied on a basis consistent (except for changes concurred in by the Borrower's
independent public accountants) with the most recent audited consolidated
financial statements of the Borrower delivered to the Lead Agent and the Banks;
provided that, if the Borrower notifies the Lead Agent and the Banks that the
Borrower wishes to amend any covenant in Article V to eliminate the effect of
any change in GAAP on the operation of such covenant (or if the Lead Agent
notifies the Borrower that the Required Banks wish to amend Article V for such
purpose), then the Borrower's compliance with such covenant shall be determined
on the basis of GAAP in effect immediately before the relevant change in GAAP
became effective, until either such notice is withdrawn or such covenant is
amended in a manner satisfactory to the Borrower and the Required Banks.
I.3. Types of Borrowings. The term "Borrowing" denotes the aggregation
of Loans of one or more Banks to be made to the Borrower pursuant to Article II
on a single date and for a single Interest Period. Borrowings are classified for
purposes of this Agreement by reference to the pricing of Loans comprising such
Borrowing (e.g., a "Euro-Dollar Borrowing" is a Borrowing comprised of
Euro-Dollar Loans).
II
THE CREDITS
II.1. Commitments to Lend.
(a) Each Bank severally agrees, on the terms and conditions set forth
in this Agreement, to make the Loans to the Borrower pursuant to this Section
from time to time during the Term in amounts such that the aggregate principal
amount of the Loans by such Bank at any one time outstanding shall not exceed
the amount of its Commitment. The aggregate amount of Loans to be made hereunder
shall not exceed One Hundred Fifty Million Dollars ($150,000,000) (the "Loan
Amount"). Each Borrowing under this subsection (a) shall be in an aggregate
principal amount of at least $2,500,000, or an integral
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multiple of $1,000,000 in excess thereof and shall be made from the several
Banks ratably in proportion to their respective Commitments. Subject to the
limitations set forth herein, any amounts repaid may be reborrowed.
Notwithstanding anything to the contrary, the number of new Borrowings shall be
limited to two Borrowings per calendar month.
(b) Notwithstanding anything in the preceding subparagraph (a) to the
contrary, the Borrowings shall in no event exceed (and no Bank shall be deemed
to have committed to fund its pro rata share of an amount which exceeds) (A) the
aggregate of the Allocated Mortgaged Property Loan Amount for all Mortgaged
Properties, as it may increase or decrease from time to time in accordance with
the provisions hereof or (B) an amount which would result in the violation of
any provision of Section 5.8(a) or (b).
II.2. Notice of Borrowing. The Borrower shall give the Lead Agent
notice (a "Notice of Borrowing") not later than 10:00 a.m. (New York City time)
(x) one Domestic Business Day before each Base Rate Borrowing or (y) the third
Euro-Dollar Business Day before each Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic Business
Day in the case of a Domestic Borrowing or a Euro-Dollar Business Day in the
case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing are to be Base
Rate Loans or Euro-Dollar Loans,
(iv) in the case of a Euro-Dollar Borrowing, the duration of the
Interest Period applicable thereto, subject to the provisions of the definition
of Interest Period, and
(v) the intended use for the proceeds of such Borrowing.
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II.3. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the Lead Agent shall
notify each Bank on the same day as it receives the Notice of Borrowing of the
contents thereof and of such Bank's share of such Borrowing and such Notice of
Borrowing shall not thereafter be revocable by the Borrower.
(b) Not later than 2:00 P.M. (New York City time) on the date of
each Borrowing, each Bank shall (except as provided in subsection (c) of this
Section) make available its share of such Borrowing, in Federal or other funds
immediately available in New York City, to the Lead Agent at its address
referred to in Section 9.1. The Lead Agent will make the funds so received from
the Banks available to the Borrower at the Lead Agent's aforesaid address. Upon
any change in any of the Commitments in accordance herewith, there shall be an
automatic adjustment to each Bank's pro rata share thereof to reflect such
changed shares.
(c) Unless the Lead Agent shall have received notice from a Bank
prior to the date of any Borrowing that such Bank will not make available to the
Lead Agent such Bank's share of such Borrowing, the Lead Agent may assume that
such Bank has made such share available to the Lead Agent on the date of such
Borrowing in accordance with subsection (b) of this Section 2.3 and the Lead
Agent may, in reliance upon such assumption, make available to the Borrower on
such date a corresponding amount. If and to the extent that such Bank shall not
have so made such share available to the Lead Agent, such Bank and the Borrower
severally agree to repay to the Lead Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Lead Agent, at (i) in the case of the Borrower, a rate per annum
equal to the higher of the Federal Funds Rate and the interest rate applicable
thereto pursuant to Section 2.6 and (ii) in the case of such Bank, the Federal
Funds Rate. If such Bank shall repay to the Lead Agent such corresponding
amount, such amount so repaid shall constitute such
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Bank's Loan included in such Borrowing for purposes of this Agreement. Repayment
to Lead Agent by the Borrower of any such amounts not advanced by a Bank shall
not constitute a waiver by the Borrower of any of its rights or remedies against
such Bank or otherwise.
II.4. Notes.
(a) The Loans shall be evidenced by the Notes, each of which
shall be payable to the order of each Bank for the account of its Applicable
Lending Office in an amount equal to each such Bank's Commitment.
(b) Each Bank may, by notice to the Borrower and the Lead Agent,
request that its Loans of a particular type be evidenced by a separate Note in
an amount equal to the aggregate unpaid principal amount of such Loans. Each
such Note shall be in substantially the form of Exhibit A hereto, with
appropriate modifications to reflect the fact that it evidences solely Loans of
the relevant type. Each reference in this Agreement to the "Note" of such Bank
shall be deemed to refer to and include any or all of such Notes, as the context
may require.
(c) Upon receipt of each Bank's Note pursuant to Section 3.1(a),
the Lead Agent shall forward such Note to such Bank. Each Bank shall record the
date, amount, type and maturity of each Loan made by it and the date and amount
of each payment of principal made by the Borrower with respect thereto, and may,
if such Bank so elects in connection with any transfer or enforcement of its
Note, endorse on the schedule forming a part thereof appropriate notations to
evidence the foregoing information with respect to each such Loan then
outstanding; provided that the failure of any Bank to make any such recordation
or endorsement shall not affect the obligations of the Borrower hereunder or
under the Notes. Each Bank is hereby irrevocably authorized by the Borrower so
to endorse its Note and to attach to and make a part of its Note a continuation
of any such schedule as and when required.
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(d) There shall be no more than five (5) Euro-Dollar Borrowings
outstanding at any one time pursuant to this Agreement.
II.5. Maturity of Loans. The Loans shall mature, and the principal
amount thereof shall be due and payable, on the Maturity Date.
II.6. Interest Rates.
(a) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is made until it
becomes due, at a rate per annum equal to the sum of 0.50% plus the Base Rate
for such day. Such interest shall be payable for each Interest Period on the
last day thereof.
(b) Euro-Dollar Loan shall bear interest on the outstanding
principal amount thereof, for each day during the Interest Period applicable
thereto, at a rate per annum equal to the sum of 1.625% plus the Adjusted London
Interbank Offered Rate applicable to such Interest Period. Such interest shall
be payable for each Interest Period on the last day thereof and, if such
Interest Period is longer than three months, at intervals of three months after
the first day thereof.
"Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained (rounded
upward, if necessary, to the next higher 1/100 of 1%) by dividing (i) the
applicable London Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar
Reserve Percentage.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member bank of
the Federal Reserve System in New York City with deposits exceeding five billion
dollars in respect of "Eurocurrency liabilities" (or in respect of any other
category of liabilities which includes deposits by reference to which the
interest rate on Euro-Dollar Loans is determined or any category of extensions
of credit or
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other assets which includes loans by a non-United States office of any Bank to
United States residents). The Adjusted London Interbank Offered Rate shall be
adjusted automatically on and as of the effective date of any change in the
Euro-Dollar Reserve Percentage.
"London Interbank Offered Rate" applicable to any Interest Period
means the average (rounded upward, if necessary, to the next higher 1/16 of 1%)
of the respective rates per annum at which deposits in dollars are offered to
the Reference Bank in the London interbank market at approximately 11:00 a.m.
(London time) two Euro-Dollar Business Days before the first day of such
Interest Period in an amount approximately equal to the principal amount of the
Euro-Dollar Loan of such Reference Bank to which such Interest Period is to
apply and for a period of time comparable to such Interest Period.
(c) In the event that, and for so long as, any Event of Default
shall have occurred and be continuing, the outstanding principal amount of the
Loans, and, to the extent permitted by law, overdue interest in respect of all
Loans, shall bear interest at the annual rate of the sum of the Prime Rate and
four percent (4%).
(d) The Lead Agent shall determine each interest rate applicable
to the Loans hereunder. The Lead Agent shall give prompt notice to the Borrower
and the Banks of each rate of interest so determined, and its determination
thereof shall be conclusive in the absence of manifest error.
(e) The Reference Bank agrees to use its best efforts to furnish
quotations to the Lead Agent as contemplated by this Section. If the Reference
Bank does not furnish a timely quotation, the provisions of Section 8.1 shall
apply.
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II.7. Fees.
(a) Commitment Fee. During the Term, the Borrower shall pay Lead
Agent for the account of the Banks ratably in proportion to their respective
Commitments, a commitment fee at an annual rate of (i) .25% on the daily average
undrawn Commitments in any given quarter to the extent that the average of the
aggregate of undrawn Commitments calculated daily during such quarter is more
than 50% of the total Commitments or (ii) .1250% on the daily average undrawn
Commitments in any given quarter to the extent that the average of the aggregate
of undrawn Commitments calculated daily during such quarter is less than or
equal to 50% of the total Commitments, as applicable, payable quarterly, in
arrears. Such commitment fee shall accrue from and including the Initial Closing
Date to, but excluding, the Maturity Date (or, with respect to any Commitment,
such earlier date as such Commitment terminates in its entirety).
(b) Administration Fee. On the Initial Closing Date and on each
six-month anniversary thereof during the Term, the Borrower shall pay to the
Lead Agent, for its own account, a fee (in each case, an "Administration Fee")
of $25,000.
(c) Extension Fee. Simultaneously with the delivery of the
applicable Extension Notice, the Borrower shall pay to the Lead Agent with
respect to such Extension Option for the account of the Banks ratably in
proportion to their Commitments an extension fee of .125% of the aggregate
Commitments.
(d) Fees Non-Refundable. All fees set forth in this Section 2.7
shall be deemed to have been earned on the date payment is due in accordance
with the provisions hereof and shall be non-refundable. The obligation of the
Borrower to pay such fees in accordance with the provisions hereof shall be
binding upon the Borrower and shall inure to the benefit of the Lead Agent and
the Banks regardless of whether any Loans are actually made.
II.8. Mandatory Termination; Extension Option. The term (the "Term") of
the Commitments shall terminate
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and expire on July 28, 1997, except as otherwise provided in this Section 2.8
below (as the same may be extended in accordance with the provisions of this
Section 2.8, the "Maturity Date"); except that, subject to the following
conditions, the Borrower shall have two options (each, an "Extension Option")
exercisable upon delivery by the Borrower of written notice thereof to the Lead
Agent (the "Extension Notice") on or before the date which is thirty (30) days
prior to the Maturity Date (which Extension Notice the Lead Agent shall promptly
deliver to the Banks) to extend the Term of the Loans and the Maturity Date for
an additional six month period (each, an "Extension Period"), such that the Term
shall expire on January 28, 1998 or July 28, 1998, as the case may be. The
Borrower's right to exercise either Extension Option shall be subject to the
following terms and conditions: (i) no Event of Default shall have occurred and
be continuing both on the date the Borrower delivers the applicable Extension
Notice to the Lead Agent and on the date the applicable Extension Period shall
commence (each, an "Extension Date"), (ii) the Borrower shall pay to the Lead
Agent (x) for the account of the Banks ratably in proportion to their respective
Commitments, the Extension Fee within the time period set forth in Section
2.7(c), and (y) in the case of the second Extension Option, for its own account,
the additional fee pursuant to Section 2.7(b), and (iii) no Material Adverse
Effect shall have occurred. If any Loans are outstanding on the Maturity Date,
the same shall be due and payable (together with accrued interest thereon) on
the Maturity Date, and Borrower shall repay the same in full.
II.9. Mandatory Prepayment.
(a) If as of the last day of any calendar quarter the LTV Ratio
exceeds the Permitted LTV Ratio, provided that no Event of Default has occurred
and is continuing, either (i) the Borrower shall add additional Real Property
Assets to the Mortgaged Properties within 60 days of the date the LTV Ratio
exceeded the Permitted LTV Ratio, in accordance with the provisions of Section
3.3, or (ii) the Borrower shall pay to the Lead Agent, for the account of the
Banks, within 60 days of the date the LTV Ratio exceeded the Permitted LTV
Ratio, an amount such that the Loans outstanding subsequent to such payment
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do not cause the LTV Ratio to exceed the Permitted LTV Ratio.
(b) In the event that a Mortgaged Property is sold in accordance with
Section 3.4(c) hereof, the Borrower shall simultaneously with such sale, prepay
to the Lead Agent, for the account of the Banks, an amount such that the Loans
outstanding subsequently to such sale do not cause (i) the LTV Ratio with
respect to the remaining Mortgaged Properties to exceed the Permitted LTV Radio
or (ii) the Minimum Debt Service Coverage to be exceeded. Sale of a Mortgaged
Property in violation of this Section 2.9 shall constitute an Event of Default.
(c) In the event that the Minimum Debt Service Coverage is not
maintained as of the last day of a calendar quarter, either (i) the Borrower
will add a Real Property Asset to the Mortgaged Properties in accordance with
this Agreement which, on a pro forma basis (i.e. the Minimum Debt Service
Coverage shall be recalculated to include such Real Property Asset as though the
same had been a Mortgaged Property for the entire applicable period) would
result in compliance with the Minimum Debt Service Coverage or (ii) the Borrower
shall prepay to the Lead Agent, for the account of the Banks, an amount
necessary to cause the Minimum Debt Service Coverage to be in compliance within
60 days of the date on which the Minimum Debt Service Coverage failed to be
maintained. Failure by the Borrower to comply with the Minimum Debt Service
Coverage within 60 days of the date of such non-compliance shall be an Event of
Default.
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II.10. Optional Prepayments.
(a) The Borrower may, upon at least one Domestic Business Day's notice
to the Lead Agent, prepay to the Lead Agent, for the account of the Banks, any
Base Rate Borrowing in whole at any time, or from time to time in part in
amounts aggregating One Million Dollars ($1,000,000), or an integral multiple of
One Million Dollars ($1,000,000) in excess thereof or, if less, either (i) the
outstanding principal balance of all Loans hereunder or (ii) the amounts payable
calculated in accordance with the provisions of Section 2.9, by paying the
principal amount to be prepaid together with accrued interest thereon to the
date of prepayment. Each such optional prepayment shall be applied to prepay
ratably the Loans of the several Banks included in such Borrowing.
(b) Except as provided in Section 8.2, the Borrower may not prepay all
or any portion of the principal amount of any Euro-Dollar Loan prior to the
maturity of the Interest Period thereof unless the Borrower shall also pay any
applicable expenses pursuant to Section 2.12. Any such prepayment shall be upon
at least three (3) Euro-Dollar Business Days' notice to the Lead Agent.
(c) A Borrower may at any time and from time to time cancel all or any
part of the Commitments in amounts aggregating One Million Dollars ($1,000,000),
or an integral multiple of One Million Dollars ($1,000,000) in excess thereof,
by the delivery to the Lead Agent and the Banks of a notice of cancellation upon
at least three (3) Domestic Business Days' notice to Lead Agent and the Banks,
whereupon, all or such portion of the Commitments shall terminate as to the
Banks, pro rata on the date set forth in such notice of cancellation, and, if
there are any Loans then outstanding in an aggregate amount which exceeds the
aggregate Commitments (after giving effect to any such reduction), the Borrower
shall prepay to the Lead Agent, for the account of the Banks, all or such
portion of Loans outstanding on such date in accordance with the requirements of
Sections 2.10(a) and (b). The Borrower shall be permitted to designate in its
notice of cancellation which Loans, if any, are to be prepaid.
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(d) Upon receipt of a notice of prepayment or cancellation pursuant to
this Section, the Lead Agent shall promptly, and in any event within one (1)
Domestic Business Day, notify each Bank of the contents thereof and of such
Bank's ratable share (if any) of such prepayment or cancellation and such notice
shall not thereafter be revocable by the Borrower.
(e) Any amounts so prepaid pursuant to this Section 2.10 may be
reborrowed subject to the other terms of this Agreement. In the event that the
Borrower elects to cancel all or any portion of the Commitments pursuant to
Section 2.10(c) hereof, such amounts may not be reborrowed.
II.11. General Provisions as to Payments.
(a) The Borrower shall make each payment of principal of, and interest
on, the Loans and of fees hereunder, not later than 12:00 Noon (New York City
time) on the date when due, in Federal or other funds immediately available in
New York City, to the Lead Agent at its address referred to in Section 9.1. The
Lead Agent will distribute to each Bank its ratable share of each such payment
received by the Lead Agent for the account of the Banks on the same day as
received by the Lead Agent if received by the Lead Agent by 3:00 p.m. (New York
City time), or, if received by the Lead Agent after 3:00 p.m. (New York City
time), on the immediately following Domestic Business Day. Whenever any payment
of principal of, or interest on, the Base Rate Loans or of fees shall be due on
a day which is not a Domestic Business Day, the date for payment thereof shall
be extended to the next succeeding Domestic Business Day. Whenever any payment
of principal of, or interest on, the Euro-Dollar Loans shall be due on a day
which is not a Euro-Dollar Business Day, the date for payment thereof shall be
extended to the next succeeding Euro-Dollar Business Day unless such Euro-Dollar
Business Day falls in another calendar month, in which case the date for payment
thereof shall be the next preceding Euro-Dollar Business Day. If the date for
any payment of principal is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
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(b) Unless the Lead Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Banks hereunder that the
Borrower will not make such payment in full, the Lead Agent may assume that the
Borrower has made such payment in full to the Lead Agent on such date and the
Lead Agent may, in reliance upon such assumption, cause to be distributed to
each Bank on such due date an amount equal to the amount then due such Bank. If
and to the extent that the Borrower shall not have so made such payment, each
Bank shall repay to the Lead Agent forthwith on demand such amount distributed
to such Bank together with interest thereon, for each day from the date such
amount is distributed to such Bank until the date such Bank repays such amount
to the Lead Agent, at the Federal Funds Rate.
II.12. Funding Losses. If the Borrower makes any payment of principal
with respect to any Euro-Dollar Loan (pursuant to Article II, VI or VIII or
otherwise) on any day other than the last day of the Interest Period applicable
thereto, or the last day of an applicable period fixed pursuant to Section
2.6(b), or if the Borrower fails to borrow any Euro-Dollar Loans, after notice
has been given to any Bank in accordance with Section 2.3(a), the Borrower shall
reimburse each Bank within 15 days after demand for any resulting loss or
expense incurred by it, including (without limitation) any loss incurred in
obtaining, liquidating or employing deposits from third parties, but excluding
loss of margin for the period after any such payment or failure to borrow,
provided that such Bank shall have delivered to the Borrower a certificate as to
the amount of such loss or expense and the calculation thereof, which
certificate shall be prima facie evidence of the matters certified therein.
II.13. Computation of Interest and Fees. Interest based on the Prime
Rate hereunder shall be computed on the basis of a year of 365 days (or 366 days
in a leap year) and paid for the actual number of days elapsed (including the
first day but excluding the last day). All other interest and fees shall be
computed on the basis of a year of 360 days and paid for the actual
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number of days elapsed (including the first day but excluding the last day).
II.14. Method of Electing Interest Rates.
(a) The Loans included in each Borrowing shall bear interest initially
at the type of rate specified by the Borrower in the applicable Notice of
Borrowing. Thereafter, the Borrower may from time to time elect to change or
continue the type of interest rate borne by each Group of Loans (subject in each
case to the provisions of Article VIII), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect to
convert such Loans to Euro-Dollar Loans as of any Euro-Dollar Business Day;
(ii) if such Loans are Euro-Dollar Loans, the Borrower may elect
to convert such Loans to Base Rate Loans or elect to continue such Loans as
Euro-Dollar Loans for an additional Interest Period, in each case effective on
the last day of the then current Interest Period applicable to such Loans.
Each such election shall be made by delivering a notice (a "Notice of Interest
Rate Election") to the Lead Agent at least three (3) Euro-Dollar Business Days
before the conversion or continuation selected in such notice is to be effective
(unless the relevant Loans are to be continued as Base Rate Loans, in which case
such notice shall be delivered to the Lead Agent no later than 12:00 Noon (New
York City time) at least one (1) Domestic Business Day before such continuation
is to be effective). A Notice of Interest Rate Election may, if it so specifies,
apply to only a portion of the aggregate principal amount of the relevant Group
of Loans; provided that (i) such portion is allocated ratably among the Loans
comprising such Group, (ii) the portion to which such notice applies, and the
remaining portion to which it does not apply, are each $1,000,000 or any larger
multiple of $1,000,000, (iii) there shall be no more than five (5) Borrowings
comprised of Euro-Dollar Loans outstanding at any time under this Agreement,
(iv) no Loan may be continued as, or converted into, a Euro-Dollar Loan when any
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Event of Default has occurred and is continuing, and (v) no Interest Period
shall extend beyond the Maturity Date.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such notice
applies;
(ii) the date on which the conversion or continuation selected in
such notice is to be effective, which shall comply with the applicable clause of
subsection (a) above;
(iii) if the Loans comprising such Group are to be converted, the
new type of Loans and, if such new Loans are Euro-Dollar Loans, the duration of
the initial Interest Period applicable thereto; and
(iv) if such Loans are to be continued as Euro-Dollar Loans for
an additional Interest Period, the duration of such additional Interest Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election from the
Borrower pursuant to subsection (a) above, the Lead Agent shall notify each Bank
on the same day as it receives such Notice of Interest Rate Election of the
contents thereof and such notice shall not thereafter be revocable by the
Borrower. If the Borrower fails to deliver a timely Notice of Interest Rate
Election to the Lead Agent for any Group of Euro-Dollar Loans, such Loans shall
be converted into Base Rate Loans on the last day of the then current Interest
Period applicable thereto.
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III
CONDITIONS
III.1. Closing. The closing hereunder shall occur on the date (the
"Closing Date") when each of the following conditions is satisfied (or waived by
the Lead Agent), each document to be dated the Closing Date unless otherwise
indicated:
(a) the Borrower shall have executed and delivered to the Lead Agent a
Note for the account of each Bank dated on or before the Closing Date complying
with the provisions of Section 2.4;
(b) the Borrower shall have executed and delivered to the Lead Agent a
duly executed original of this Agreement;
(c) the Lead Agent shall have received an opinion of Mayer, Brown &
Platt, counsel for the Borrower, acceptable to the Lead Agent, the Banks and
their counsel;
(d) the Lead Agent shall have received all documents the Lead Agent
may reasonably request relating to the existence of the Borrower, the authority
for and the validity of this Agreement and the other Loan Documents, and any
other matters relevant hereto, all in form and substance reasonably satisfactory
to the Lead Agent. Such documentation shall include, without limitation, the
articles of incorporation and by-laws or the partnership agreement and limited
partnership certificate, as applicable, of the Borrower, as amended, modified or
supplemented to the Closing Date, each certified to be true, correct and
complete by a senior officer of the Borrower as of a date not more than
forty-five (45) days prior to the Closing Date, together with a good standing
certificate from the Secretary of State (or the equivalent thereof) of the State
of Maryland with respect to the Borrower and a good standing certificate from
the Secretary of State (or the equivalent thereof) of each other State in which
a Mortgaged Property is located, each to be dated not more than forty-five (45)
days prior to the Closing Date;
(e) the Lead Agent shall have received all certificates, agreements
and other documents and papers referred to in this Section 3.1 and Section 3.2,
unless
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otherwise specified, in sufficient counterparts, satisfactory in form and
substance to the Lead Agent in its sole discretion;
(f) the Borrower shall have taken all actions required to authorize
the execution and delivery of this Agreement and the other Loan Documents and
the performance thereof by the Borrower;
(g) the Lead Agent shall be reasonably satisfied that the Borrower is
not subject to any present or contingent environmental liability which could
have a Material Adverse Effect;
(h) the Lead Agent shall have received all financial statements of
the Borrower required to have been delivered by the Borrower on or before the
Closing Date pursuant to the Existing Credit Agreement;
(i) the Lead Agent shall have received wire transfer instructions in
connection with the Loans to be made on the Closing Date;
(j) the Lead Agent shall have received, for its and any other Bank's
account, all fees due and payable pursuant to Section 2.7 hereof on or before
the Closing Date, and the reasonable fees and expenses accrued through the
Closing Date of Skadden, Arps, Slate, Meagher & Flom LLP;
(k) the Lead Agent shall have received copies of all consents,
licenses and approvals, if any, required in connection with the execution,
delivery and performance by the Borrower, and the validity and enforceability
against the Borrower, of the Loan Documents, or in connection with any of the
transactions contemplated thereby, and such consents, licenses and approvals
shall be in full force and effect;
(l) the representations and warranties of the Borrower contained in
this Agreement shall be true and correct in all material respects on and as of
the Closing Date both before and after giving effect to the making of any Loans;
and
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(m) receipt by the Lead Agent and the Banks of a certificate of the
chief financial officer or the chief accounting officer of the Borrower
certifying that the Borrower is in compliance with all covenants of the Borrower
contained in this Agreement, including, without limitation, the requirements of
Section 5.8, as of the Closing Date.
The Lead Agent shall promptly notify the Borrower and the Banks of the Closing
Date, and such notice shall be conclusive and binding on all parties hereto.
III.2. Borrowings. The obligation of any Bank to make a Loan on the
occasion of any Borrowing is subject to the satisfaction of the following
conditions:
(a) the Closing Date shall have occurred on or prior to April 16,
1997;
(b) receipt by the Lead Agent of a Notice of Borrowing as required by
Section 2.2;
(c) immediately after such Borrowing, the Outstanding Balance will not
exceed the aggregate amount of the Commitments and with respect to each Bank,
such Bank's pro rata portion of the Loans on the amount permitted pursuant to
Section 2.1(b);
(d) immediately before and after such Borrowing, no Default or Event
of Default shall have occurred and be continuing both before and after giving
effect to the making of such Loans;
(e) the representations and warranties of the Borrower contained in
this Agreement shall be true and correct in all material respects on and as of
the date of such Borrowing both before and after giving effect to the making of
such Loans;
(f) no law or regulation shall have been adopted, no order, judgment
or decree of any governmental authority shall have been issued, and no
litigation shall be pending or threatened, which does or, with respect to any
threatened litigation, seeks to enjoin, prohibit or
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restrain, the making or repayment of the Loans or any participations therein or
the consummation of the transactions contemplated hereby; and
(g) no event, act or condition shall have occurred after the Closing
Date which, in the reasonable judgment of the Lead Agent or the Required Banks,
as the case may be, has had or is likely to have a Material Adverse Effect.
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Borrowing as to the facts specified in clauses
(c) through (g) of this Section (except that with respect to clause (f), such
representation and warranty shall be deemed to be limited to laws, regulations,
orders, judgments, decrees and litigation affecting the Borrower and not solely
the Banks).
III.3. Conditions Precedent to Additional Mortgaged Property Assets.
(a) All Real Property Assets to be added to the Mortgaged Properties
shall be approved by all of the Banks.
(b) The Borrower shall submit to the Lead Agent and the Banks as
provided in subsection (c) below the materials set forth below (the "Due
Diligence Package") relating to each Real Property Asset to be added to the
Mortgaged Properties. The Due Diligence Package shall include (i) a description
of the Real Property Asset, (ii) two years of historical cash flow operating
statements, if available, (iii) five years of cash flow projections (including
capital expenditures), (iv) the credit history of each existing tenant which
occupies more than 15% of such Real Property Asset or New Acquisition, (v) a map
and site plan, including an existing Survey of the property dated not more than
twelve (12) months prior to such submission, (vi) copies of all lease agreements
and, if then available, abstracts thereof with each existing tenant which
occupies more than 15% of such Real Property Asset and lease abstracts thereof,
(vii) a satisfactory environmental report indicating that the Real Property
Asset (A) complies with all Environmental
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Laws in all material respects, (B) is free of all Material of Environmental
Concern in all material respects and (C) is not subject to any Environmental
Claim, (viii) a satisfactory engineer's inspection report, (ix) an estoppel
certificate from each tenant which occupies 15% or more of the Real Property
Asset, (x) evidence of compliance with zoning and other local laws, (xi) a
satisfactory Title Commitment, (xii) a final investment memorandum prepared by
the Borrower in connection with the Real Property Asset, (xiii) a satisfactory
property inspection report, (xiv) a PML Report upon the reasonable request of
the Lead Agent and (xv) an Appraisal. The Borrower shall permit the Lead Agent
at all reasonable times and upon reasonable prior notice to make an inspection
of such Real Property Asset.
(c) The Borrower shall distribute a copy of each item constituting the
Due Diligence Package by overnight mail to each of the Banks for their review
and approval. Failure to respond to the Lead Agent in writing by any Bank within
fifteen (15) Domestic Business Days after receipt of the Due Diligence Package,
shall be deemed to be an approval by such Bank of such potential New Acquisition
or Real Property Asset.
III.4. Mortgaged Properties. (a) On the Closing Date, and on the date
of the addition of any Real Property Asset to the Mortgaged Properties, as
applicable, or as soon thereafter as is practicable, the Lead Agent shall cause
all of the Mortgages, the Assignments, the Environmental Indemnities and the
Financing Statements (collectively, the "Security Documents") (which are to be
recorded and/or filed) to be recorded and/or filed in the appropriate offices,
as security for the Loans, at the Borrower's sole cost and expense. Upon such
addition, the Borrower shall cause to be delivered to the Lead Agent, at the
Borrower's sole cost and expense, the Title Policies, and the Borrower will
cooperate with the Lead Agent and execute such further instruments and documents
and perform such further acts as the Lead Agent or the Title Company shall
reasonably request to carry out the creation and perfection of the liens and
security interests contemplated by the Security Documents.
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(a) The Lead Agent shall have the one-time right with respect to each
Real Property Asset which is or becomes a Mortgaged Property, prior to the
Maturity Date, as the same may be extended from time to time in accordance with
the provisions hereof, to commission, at the Borrower's sole cost and expense,
an updated Appraisal, and shall deliver copies of each such Appraisal to each
Bank and to the Borrower promptly after receipt thereof by the Lead Agent. Only
an Appraisal ordered in compliance with this subparagraph (b) may be used in
calculating the LTV Ratio.
(b) The Borrower shall be entitled to have one (1) or more of the
Mortgaged Properties released from the Lien of this Mortgage; provided, that the
Loans outstanding subsequent to such release do not cause (i) the LTV Ratio with
respect to the remaining Mortgaged Properties to exceed the Permitted LTV Ratio
or (ii) the Minimum Debt Service Coverage to be exceeded; provided, further,
that all of the conditions set forth below have been satisfied. The release of
any of the Mortgaged Properties shall be subject to the satisfaction of the
following conditions:
(i) Lead Agent shall have received from the Borrower at least 30
days' prior written notice of the date proposed for such release (the "Release
Date");
(ii) no Event of Default shall have occurred and be continuing as
of the date of such notice and the Release Date;
(iii) the Borrower shall pay to the Lead Agent for the account of
the Banks, the amounts, if any, required to be paid so that the Permitted LTV
Ratio and Minimum Debt Service Coverage requirements continue to be met with
respect to the remaining Mortgaged Properties, including any additions thereto;
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(iv) the Borrower shall have delivered to the Lead Agent an
officer's certificate, dated the Release Date, confirming the matters referred
to in clause (ii) above, certifying that the provisions of clause (iii) above
have been complied with and certifying that all conditions precedent for such
release contained in this Agreement have been complied with;
(v) the Borrower, at its sole cost and expense, shall have
delivered to the Lead Agent, one or more endorsements to the mortgagee policy of
title insurance delivered to the Lead Agent in connection with this Agreement
insuring that, after giving effect to such release, (x) the Liens created by the
Mortgage and insured thereunder are first priority Liens on the respective
remaining Mortgaged Properties subject only to the permitted exceptions
permitted pursuant to the Mortgage applicable to the remaining Mortgaged
Properties and (y) that such policy is in full force and effect and unaffected
by such release; and
(vi) there shall be no fewer than two (2) Mortgaged Properties at
any one time.
Upon or after payment of any amounts required to be paid pursuant
to clause (iii) above and the satisfaction of all other conditions provided for
herein, the Lead Agent shall effectuate the following (hereinafter referred to
as a "Property Release"): the security interest of the Banks in the Mortgage and
other Loan Documents relating to the released Mortgaged Property shall be
released from the Lien of the Mortgage and the Lead Agent will execute and
deliver any agreements reasonably requested by the Borrower to release and
terminate or reassign, at the Borrower's option, the Mortgage as to the released
Mortgaged Property; provided, that
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such release and termination or reassignment shall be without recourse to the
Lead Agent (except as contemplated hereby) and without any representation or
warranty except that the Lead Agent shall be deemed to have represented that
such release and termination or reassignment has been duly authorized and that
it has not assigned or encumbered the Mortgage or the other Loan Documents
relating to the released Mortgaged Property (except as contemplated hereby) and
the Lead Agent shall return the originals of any Loan Documents that relate
solely to the released Mortgaged Property to the Borrower; provided, further,
that upon the release and termination or reassignment of the Lead Agent's
security interest in the Mortgage relating to the released Mortgaged Property
all references herein to the Mortgage relating to the released Mortgaged
Property shall be deemed deleted, except as otherwise provided herein with
respect to indemnities.
IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Lead Agent and each of the other Banks which
may become a party to this Agreement to make the Loans, the Borrower makes the
following representations and warranties as of the date hereof. Such
representations and warranties shall survive the effectiveness of this
Agreement, the execution and delivery of the other Loan Documents and the making
of the Loans.
IV.1. Existence and Power. The Borrower is duly organized, validly
existing and in good standing as a corporation under the laws of the State of
Maryland and has all powers and all material governmental licenses,
authorizations, consents and approvals required to own its property and assets
and carry on its business as now conducted or as it presently proposes to
conduct and has been duly qualified and is in good standing in every
jurisdiction in which the failure to be so qualified and/or in good standing is
likely to have a Material Adverse Effect.
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IV.2. Power and Authority. The Borrower has the corporate power and
authority to execute, deliver and carry out the terms and provisions of each of
the Loan Documents to which it is a party and has taken all necessary action to
authorize the execution and delivery on behalf of the Borrower and the
performance by the Borrower of such Loan Documents. The Borrower has duly
executed and delivered each Loan Document to which it is a party, and each such
Loan Document constitutes the legal, valid and binding obligation of the
Borrower, enforceable in accordance with its terms, except as enforceability may
be limited by applicable insolvency, bankruptcy or other laws affecting
creditors rights generally, or general principles of equity, whether such
enforceability is considered in a proceeding in equity or at law.
IV.3. No Violation. Neither the execution, delivery or performance by
or on behalf of the Borrower of the Loan Documents, nor compliance by the
Borrower with the terms and provisions thereof nor the consummation of the
transactions contemplated by the Loan Documents, (i) will contravene any
applicable provision of any law, statute, rule, regulation, order, writ,
injunction or decree of any court or governmental instrumentality or (ii) will
conflict with or result in any breach of, any of the terms, covenants,
conditions or provisions of, or constitute a default under, or result in the
creation or imposition of (or the obligation to create or impose) any Lien upon
any of the property or assets of the Borrower pursuant to the terms of any
indenture, mortgage, deed of trust, or other agreement or other instrument to
which the Borrower (or of any partnership of which the Borrower is a partner) is
a party or by which it or any of its property or assets is bound or to which it
is subject or (iii) will cause a default by the Borrower under any
organizational document of any Subsidiary, or cause a default under its articles
of incorporation or by-laws.
IV.4. Financial Information.
(a) The unaudited consolidated balance sheet of the Borrower as of
December 31, 1996, a copy of which has been delivered to the Lead Agent, fairly
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presents, in conformity with GAAP, the consolidated financial position of the
Borrower as of such date and its consolidated results of operations for such
fiscal year.
(b) Since December 31, 1996, (i) there has been no material adverse
change in the business, financial position or results of operations of the
Borrower and (ii) except as previously disclosed to the Lead Agent, the Borrower
has not incurred any material indebtedness or guaranty.
IV.5. Litigation.
(a) There is no action, suit or proceeding pending against, or to the
knowledge of the Borrower, threatened against or affecting, (i) the Borrower or
any of its Subsidiaries, (ii) the Loan Documents or any of the transactions
contemplated by the Loan Documents or (iii) any of their assets, in any case
before any court or arbitrator or any governmental body, agency or official in
which there is a reasonable likelihood of an adverse decision which could,
individually or in the aggregate, have a Material Adverse Effect or which in any
manner draws into question the validity of this Agreement or the other Loan
Documents.
(b) There are no final nonappealable judgments or decrees in an
aggregate amount of Five Million Dollars ($5,000,000) or more entered by a court
or courts of competent jurisdiction against the Borrower (other than any
judgment as to which, and only to the extent, a reputable insurance company has
acknowledged coverage of such claim in writing).
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IV.6. Compliance with ERISA.
(a) Except as previously disclosed to the Lead Agent in writing, each
member of the ERISA Group has fulfilled its obligations under the minimum
funding standards of ERISA and the Internal Revenue Code with respect to each
Plan and is in compliance in all material respects with the presently applicable
provisions of ERISA and the Internal Revenue Code with respect to each Plan. No
member of the ERISA Group has (i) sought a waiver of the minimum funding
standard under Section 412 of the Internal Revenue Code in respect of any Plan,
(ii) failed to make any contribution or payment to any Plan or Multiemployer
Plan or in respect of any Benefit Arrangement, or made any amendment to any Plan
or Benefit Arrangement, which has resulted or could result in the imposition of
a Lien or the posting of a bond or other security under ERISA or the Internal
Revenue Code or (iii) incurred any liability under Title IV of ERISA other than
a liability to the PBGC for premiums under Section 4007 of ERISA.
(b) The transactions contemplated by the Loan Documents will not
constitute a nonexempt prohibited transaction (as such term is defined in
Section 4975 of the Code or Section 406 of ERISA) that could subject the Lead
Agent or the Banks to any tax or penalty or prohibited transactions imposed
under Section 4975 of the Code or Section 502(i) of ERISA.
IV.7. Environmental Compliance. To the best of Borrower's actual
knowledge, except as set forth in the environmental report(s) delivered to Lead
Agent with respect to each of the Mortgaged Properties (as supplemented or
amended, the "Environmental Reports"), (i) there are in effect all Environmental
Approvals which are required to be obtained under all Environmental Laws with
respect to the Property, except for such Environmental Approvals the absence of
which would not have a Material Adverse Effect, (ii) the Borrower is in
compliance in all material respects with the terms and conditions of all such
Environmental Approvals, and is also in compliance, with respect to the
Mortgaged Properties, in all material respects with all other Environmental Laws
or any plan,
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order, decree, judgment, injunction, notice or demand letter issued, entered or
approved thereunder, except to the extent failure to comply would not have a
Material Adverse Effect. The Environmental Reports as of the date hereof are
listed in Exhibit E attached hereto and made a part hereof.
Except as set forth in the Environmental Reports or otherwise
disclosed to the Lead Agent as of the Closing Date, to Borrower's actual
knowledge:
(i) There are no Environmental Claims or investigations pending
or threatened by any Governmental Authority with respect to any alleged
failure by the Borrower to have any Environmental Approval required in
connection with the conduct of the business of the Borrower on any of the
Mortgaged Properties, or with respect to any generation, treatment,
storage, recycling, transportation, Release or disposal of any Material of
Environmental Concern generated by the Borrower or any lessee on any of the
Mortgaged Properties;
(ii) No Material of Environmental Concern has been Released at
the Property to an extent that it may reasonably be expected to have a
Material Adverse Effect;
(iii) No PCB (in amounts or concentrations which exceed those set
by applicable Environmental Laws) is present at any of the Mortgaged
Properties;
(iv) No friable asbestos is present at any of the Mortgaged
Properties;
(v) There are no underground storage tanks for Material
Environmental Concern, active or abandoned, at any of the Mortgaged
Properties;
(vi) No Environmental Claims have been filed with a Governmental
Authority with respect to any of the Mortgaged Properties, and none of the
Mortgaged Properties is listed or proposed for listing on the National
Priority List promulgated pursuant
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to CERCLA, on CERCLIS or on any similar state list of sites requiring
investigation or clean-up;
(vii) There are no Liens arising under or pursuant to any
Environmental Laws on any of the Mortgaged Properties, and no government
actions have been taken or are in process which could subject any of the
Mortgaged Properties to such Liens; and
(viii) There have been no environmental investigations, studies,
audits, tests, reviews or other analyses conducted by, or which are in the
possession of, the Borrower in relation to any of the Mortgaged Properties
which have not been made available to the Lead Agent.
IV.8. Taxes. The initial tax year of the Borrower for federal income
tax purposes was 1993. The Borrower and its Subsidiaries have filed all United
States Federal income tax returns and all other material tax returns which are
required to be filed by them and have paid all taxes due pursuant to such
returns or pursuant to any assessment received by the Borrower or any Subsidiary
except if such assessment is being contested in good faith by appropriate
proceedings and adequate reserves have been established with respect thereto.
The charges, accruals and reserves on the books of the Borrower and its
Subsidiaries in respect of taxes or other governmental charges are, in the
opinion of the Borrower, adequate.
IV.9. Full Disclosure. All information heretofore furnished by the
Borrower to the Lead Agent or any Bank for purposes of or in connection with
this Agreement or any transaction contemplated hereby is true and accurate in
all material respects on the date as of which such information is stated or
certified. The Borrower has disclosed to the Banks in writing any and all facts
known to the Borrower which materially and adversely affect or are likely to
materially and adversely affect (to the extent the Borrower can now reasonably
foresee), the business, operations or financial condition of the Borrower
considered as one enterprise or the ability of the Borrower to perform its
obligations under this Agreement or the other Loan Documents.
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IV.10. Solvency. On the Closing Date and after giving effect to the
transactions contemplated by the Loan Documents occurring on the Closing Date,
the Borrower is Solvent.
IV.11. Use of Proceeds; Margin Regulations. All proceeds of the Loans
will be used by the Borrower only in accordance with the provisions hereof. No
part of the proceeds of any Loan will be used by the Borrower to purchase or
carry any Margin Stock or to extend credit to others for the purpose of
purchasing or carrying any Margin Stock. Neither the making of any Loan nor the
use of the proceeds thereof will violate or be inconsistent with the provisions
of Regulations G, T, U or X of the Federal Reserve Board.
IV.12. Governmental Approvals. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any governmental or public body or authority, or any subdivision
thereof, is required to authorize, or is required in connection with the
execution, delivery and performance of any Loan Document or the consummation of
any of the transactions contemplated thereby other than those that have already
been duly made or obtained and remain in full force and effect.
IV.13. Investment Company Act; Public Utility Holding Company Act. The
Borrower is not (x) an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended, (y) a "holding company" or a "subsidiary company" of a "holding
company" or an "affiliate" of either a "holding company" or a "subsidiary
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended, or (z) subject to any other federal or state law or regulation which
purports to restrict or regulate its ability to borrow money.
IV.14. Closing Date Transactions. On the Closing Date and immediately
prior to the making of the Loans, the transactions (other than the making of the
Loans) intended to be consummated on the Closing Date will have been consummated
in accordance with all applicable
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laws. All consents and approvals of, and filings and registrations with, and all
other actions by, any Person required in order to make or consummate such
transactions have been obtained, given, filed or taken and are in full force and
effect.
IV.15. Representations and Warranties in Loan Documents. All
representations and warranties made by the Borrower in the Loan Documents are
true and correct in all material respects.
IV.16. Intentionally Omitted.
IV.17. No Default. No Default or Event of Default exists under or with
respect to any Loan Document. The Borrower is not in default in any material
respect beyond any applicable grace period under or with respect to any other
material agreement, instrument or undertaking to which it is a party or by which
it or any of its property is bound in any respect, the existence of which
default is likely (to the extent that the Borrower can now reasonably foresee)
to result in a Material Adverse Effect.
IV.18. Licenses, etc. The Borrower has obtained and holds in full
force and effect, all franchises, licenses, permits, certificates,
authorizations, qualifications, accreditations, easements, rights of way and
other consents and approvals which are necessary for the operation of its
businesses as presently conducted on or with respect to the Mortgaged
Properties, the absence of which is likely (to the extent that the Borrower can
now reasonably foresee) to have a Material Adverse Effect.
IV.19. Compliance With Law. The Borrower is in compliance with all
laws, rules, regulations, orders, judgments, writs and decrees, including,
without limitation, all building and zoning ordinances and codes affecting the
Mortgaged Properties, the failure to comply with which is likely (to the extent
that the Borrower can now reasonably foresee) to have a Material Adverse Effect.
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IV.20. No Burdensome Restrictions. The Borrower is not a party to any
agreement or instrument or subject to any other obligation or any charter or
corporate or partnership restriction, as the case may be, which, individually or
in the aggregate, is likely (to the extent that the Borrower can now reasonably
foresee) to have a Material Adverse Effect.
IV.21. Brokers' Fees. The Borrower has not dealt with any broker or
finder with respect to the transactions contemplated by the Loan Documents
(except with respect to the acquisition or disposition of Real Property Assets)
or otherwise in connection with this Agreement, and the Borrower has not done
any acts, had any negotiations or conversation, or made any agreements or
promises which will in any way create or give rise to any obligation or
liability for the payment by the Borrower of any brokerage fee, charge,
commission or other compensation to any party with respect to the transactions
contemplated by the Loan Documents (except with respect to the acquisition or
disposition of Real Property Assets), other than the fees payable hereunder.
IV.22. Labor Matters. Except for the collective bargaining agreement
and participation in a Multiemployer Plan with Local 399 of the International
Union of Operating Engineers at the Usisys Property, there are no collective
bargaining agreements or Multiemployer Plans covering the employees of the
Borrower at any Mortgaged Property and the Borrower has not suffered any
strikes, walkouts, work stoppages or other material labor difficulty at any
Mortgaged Property within the last five (5) years or since the date on which the
Borrower acquired the Mortgaged Property in question if such date occurred less
than five (5) years prior to the date hereof.
IV.23. Organizational Documents. The documents delivered pursuant to
Section 3.1(d) constitute, as of the Closing Date, all of the organizational
documents (together with all amendments and modifications thereof) of the
Borrower. The Borrower represents that it has delivered to the Lead Agent true,
correct and complete copies of each of the documents set forth in this Section
4.23.
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IV.24. Principal Offices. The principal office, chief executive office
and principal place of business of the Borrower is 1700 Pennsylvania Avenue,
N.W., Washington, D.C.
IV.25. REIT Status. For the fiscal year ended December 31, 1996, the
Borrower qualified and the Borrower intends to continue to qualify as a real
estate investment trust under the Code.
IV.26. Ownership of Property. The Borrower owns fee simple or
leasehold title to the Mortgaged Properties except as shown on Exhibit B and on
the Title Commitments.
IV.27. Security Interests and Liens. The Mortgages create, as security
for the Obligations, valid and enforceable security interests in and Liens on
all of the Collateral in favor of the Lead Agent as agent for the ratable
benefit of the Banks, and subject to no other Liens (except as may be permitted
under any Mortgage with respect to the Mortgaged Property subject thereto),
except as enforceability may be limited by applicable insolvency, bankruptcy or
other laws affecting creditors' rights generally, or general principles of
equity, whether such enforceability is considered in a proceeding in equity or
at law. Such security interests in and Liens on the Collateral shall be superior
to and prior to the rights of all third parties in the Collateral (except as may
be permitted under any Mortgage with respect to the Mortgaged Property subject
thereto), and, other than in connection with any future change in Borrower's
name or the location of Borrower's chief executive office, no further recordings
or filings are or will be required in connection with the creation, perfection
or enforcement of such security interests and Liens, other than the filing of
continuation statements in accordance with applicable law.
IV.28. Structural Defects and Violation of Law. To the best of
Borrower's knowledge and except as set forth in the structural and engineering
reports delivered to the Lead Agent with respect to the Mortgaged Properties (as
supplemented or amended, the "Engineering
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Reports"), there are no material structural defects in any of the Improvements,
none of the Improvements is in violation of any Requirements, and the Borrower's
anticipated use of the Improvements will comply in all material respects with
applicable zoning ordinances, regulations, and restrictive covenants affecting
the applicable Mortgaged Property, except in each case as will not have a
Material Adverse Effect. The Engineering Reports as of the date hereof are
listed in Exhibit E attached hereto and made a part hereof.
V
AFFIRMATIVE AND NEGATIVE COVENANTS
The Borrower covenants and agrees that, so long as any Bank has any
Commitment hereunder or any Obligations remain unpaid:
V.1. Information. The Borrower will deliver to the Lead Agent and to
each of the Banks:
(a) as soon as available and in any event within 105 days after the
end of each fiscal year of the Borrower, an audited consolidated balance sheet
of the Borrower as of the end of such fiscal year and the related consolidated
statements of cash flow and operations for such fiscal year, setting forth in
each case in comparative form the figures for the previous fiscal year, audited
by KPMG Peat Marwick LLP or other independent public accountants of similar
standing;
(b) as soon as available and in any event within fifty (50) days after
the end of each quarter of each fiscal year of the Borrower, a statement of the
Borrower, prepared in accordance with GAAP, setting forth the operating income
and operating expenses of the Borrower, in sufficient detail so as to calculate
net operating cash flow of the Borrower for the immediately preceding quarter;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the chief
financial
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officer or the chief accounting officer of the Borrower (i) setting forth in
reasonable detail the calculations required to establish whether the Borrower
was in compliance with the requirements of Section 5.8 on the date of such
financial statements; and (ii) certifying (x) that such financial statements
fairly present the financial condition and the results of operations of the
Borrower as of the dates and for the periods indicated, in accordance with GAAP,
subject, in the case of interim financial statements, to normal year-end
adjustments, and (y) that such officer has reviewed the terms of the Loan
Documents and has made, or caused to be made under his or her supervision, a
review in reasonable detail of the business and condition of the Borrower during
the period beginning on the date through which the last such review was made
pursuant to this Section 5.1(c) (or, in the case of the first certification
pursuant to this Section 5.1(c), the Initial Closing Date) and ending on a date
not more than ten (10) Domestic Business Days prior to the date of such delivery
and that on the basis of such review of the Loan Documents and the business and
condition of the Borrower, to the best knowledge of such officer, no Default or
Event of Default has occurred or, if any such Default or Event of Default has
occurred, specifying the nature and extent thereof and, if continuing, the
action the Borrower proposes to take in respect thereof;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements confirming the
calculations set forth in the officer's certificate delivered simultaneously
therewith pursuant to clause (c) above;
(e) (i) within five (5) days after the president, chief financial
officer, treasurer, controller or other executive officer of the Borrower
obtains knowledge of any Default, if such Default is then continuing, a
certificate of the chief financial officer or the president of the Borrower
setting forth the details thereof and the action which the Borrower is taking or
proposes to take with respect thereto; (ii) promptly and in any event within ten
(10) days after the Borrower obtains
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knowledge thereof, notice of (x) any litigation or governmental proceeding
pending or threatened against the Borrower which, if adversely determined, is
likely to individually or in the aggregate, result in a Material Adverse Effect,
and (y) any other event, act or condition which is likely to result in a
Material Adverse Effect;
(f) if and when any member of the ERISA Group (i) gives or is required
to give notice to the PBGC of any "reportable event" (as defined in Section 4043
of ERISA) with respect to any Plan which might constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent
to terminate, impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of
such notice; (iv) applies for a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code, a copy of such application; (v) gives
notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of
such notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such
notice; or (vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted or could result
in the imposition of a Lien or the posting of a bond or other security, a
certificate of the chief financial officer or the chief accounting officer of
the Borrower setting forth details as to such occurrence and action, if any,
which the Borrower or applicable member of the ERISA Group is required or
proposes to take;
(g) promptly and in any event within five (5) Domestic Business Days
after the Borrower obtains actual knowledge of any of the following events, a
certificate
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of the Borrower executed by an officer of the Borrower specifying the nature of
such condition and the Borrower's, if the Borrower has actual knowledge thereof,
the Environmental Affiliate's proposed initial response thereto: (i) the receipt
by the Borrower, or, if the Borrower has actual knowledge thereof, any of the
Environmental Affiliates, of any communication (written or oral), whether from a
governmental authority, citizens group, employee or otherwise, that alleges that
the Borrower, or, if the Borrower has actual knowledge thereof, any of the
Environmental Affiliates, is not in compliance with applicable Environmental
Laws with respect to a Mortgaged Property, and such noncompliance is likely to
have a Material Adverse Effect, (ii) the Borrower shall obtain actual knowledge
that there exists any Environmental Claim pending or threatened against the
Borrower or any Environmental Affiliate with respect to a Mortgaged Property or
(iii) the Borrower obtains actual knowledge of any release, emission, discharge
or disposal of any Material of Environmental Concern that is likely to form the
basis of any Environmental Claim against the Borrower or any Environmental
Affiliate with respect to a Mortgaged Property;
(h) promptly and in any event within five (5) Domestic Business Days
after receipt of any material notices or correspondence from any company or
agent for any company providing insurance coverage to the Borrower relating to
any material loss of the Borrower with respect to any of the Mortgaged
Properties, copies of such notices and correspondence; and
(i) promptly upon the mailing thereof to the shareholders or partners
of the Borrower, copies of all financial statements, reports and proxy statement
so mailed;
(j) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their
equivalents) which the Borrower shall have filed with the Securities and
Exchange Commission;
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(k) simultaneously with delivery of the information required by
Sections 5.1(a) and (b), a statement of Net Operating Cash Flow with respect to
each Mortgaged Property and a list of all Mortgaged Properties; and
(l) from time to time such additional information regarding the
financial position or business of the Borrower as the Lead Agent, at the request
of any Bank, may reasonably request.
V.2. Payment of Obligations. The Borrower will pay and discharge, at
or before maturity, all its material obligations and liabilities relating to or
arising in connection with the ownership, operation, maintenance, repair or
restoration of the Mortgaged Properties including, without limitation, any
obligation pursuant to any agreement by which it or any of the Mortgaged
Properties is bound and any tax liabilities (except where such tax liabilities
are being contested by the Borrower in good faith by appropriate proceedings,
and the Borrower maintains in accordance with GAAP, appropriate reserves for the
accrual of any of the same), in any case, where failure to do so will likely
result in a Material Adverse Effect.
V.3. Maintenance of Property; Insurance.
(a) The Borrower will keep each of the Mortgaged Properties in good
repair, working order and condition, subject to ordinary wear and tear and in
accordance with the provisions of the applicable Mortgage.
(b) The Borrower shall (a) maintain insurance as specified in Section
5 of the Mortgage with insurers meeting the qualifications described therein,
which insurance shall in any event not provide for materially less coverage than
the insurance in effect on the Closing Date, and (b) furnish to each Bank from
time to time, upon written request, copies of the policies under which such
insurance is issued, certificates of insurance and such other information
relating to such insurance as such Bank may reasonably request. The Borrower
will deliver to the Banks (i) upon request of any Bank through the Lead Agent
from time to time, full information as to the insurance carried, (ii) within
five (5) days of receipt
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of notice from any insurer, a copy of any notice of cancellation or material
change in coverage from that existing on the date of this Agreement and (iii)
forthwith, notice of any cancellation or nonrenewal of coverage by the Borrower.
V.4. Conduct of Business. The Borrower will continue to engage in
business of the same general type as now conducted by it pertaining to the
Mortgaged Properties.
V.5. Compliance with Laws. The Borrower will comply in all material
respects with all applicable laws, ordinances, rules, regulations, and
requirements of governmental authorities pertaining to the Mortgaged Properties
(including, without limitation, Environmental Laws, all zoning and building
codes and ERISA and the rules and regulations thereunder) except where the
necessity of compliance therewith is contested in good faith by appropriate
proceedings, except to the extent that non-compliance will not have a Material
Adverse Effect.
V.6. Inspection of Property, Books and Records. The Borrower will keep
proper books of record and account in which full, true and correct entries shall
be made of all dealings and transactions in relation to its business and
activities; and will permit representatives of any Bank at such Bank's expense
to visit and inspect any of its properties to examine and make abstracts from
any of its books and records and to discuss its affairs, finances and accounts
with its officers, employees and independent public accountants, all at such
reasonable times, upon reasonable notice, and as often as may reasonably be
desired.
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V.7. Existence.
(a) The Borrower shall do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence or its
partnership existence, as applicable.
(b) The Borrower shall do or cause to be done all things necessary to
preserve and keep in full force and effect its patents, trademarks,
servicemarks, tradenames, copyrights, franchises, licenses, permits,
certificates, authorizations, qualifications, accreditations, easements, rights
of way and other rights, consents and approvals the nonexistence of which is
likely to have a Material Adverse Effect.
V.8. Financial Covenants.
(a) Debt Service Coverage. Measured as of the last day of each
calendar quarter, and as of the date of the addition or release of a Mortgaged
Property, the ratio of (i) Net Operating Cash Flow to (ii) Debt Service will not
be less than (A) 1.25:1 on or prior to July 31, 1997 and (B) 1.35:1 from and
after August 1, 1997, subject, however, to the Borrower's rights to cure
pursuant to Section 2.9(c). Failure to restore compliance with this Section
5.8(a) in accordance with Section 2.9(a) shall be an immediate Event of Default.
(b) LTV Ratio. As of the last day of each calendar quarter and as of
the date of any addition of a Mortgaged Property, the LTV Ratio shall not exceed
65%, subject, however, to the Borrower's rights to cure pursuant to Section
2.9(a). Failure to restore compliance with this Section 5.8(b) in accordance
with Section 2.9(a) shall be an immediate Event of Default.
(c) Negative Pledge. The Borrower will not create, assume or suffer to
exist any Lien on any Mortgaged Property, except for any encumbrances created or
permitted by the Loan Documents.
(d) Dividends. The Borrower will not, as determined on an aggregate
annual basis, pay any dividends
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in excess of 95% of its consolidated FFO for such year. During the continuance
of an Event of Default under Section 6.1(a), the Borrower shall pay only those
dividends necessary to maintain its status as a real estate investment trust.
V.9. Restriction on Fundamental Changes; Operation and Control. (a)
The Borrower shall not enter into any merger or consolidation, unless the
Borrower is the surviving entity, or liquidate, wind-up or dissolve (or suffer
any liquidation or dissolution), discontinue its business or convey, lease
(except as permitted under the Mortgage), sell, transfer or otherwise dispose
of, in one transaction or series of transactions, all or any substantial part of
its business or property, whether now or hereafter acquired, hold an interest in
any subsidiary which is not controlled by the Borrower or enter into other
business lines, without the prior written consent of the Lead Agent.
(b) The Borrower shall not amend its articles of incorporation,
by-laws or agreement of limited partnership, as applicable, in any material
respect which affects the control provisions thereof, without the Lead Agent's
consent, which shall not be unreasonably withheld.
V.10. Intentionally Omitted.
V.11. Sale of the Property. Subject to the provisions of Section
3.4(c), the Borrower shall not sell or otherwise transfer its interest in all or
any part of the Mortgaged Properties; provided, however, that nothing in this
Section 5.11 shall be deemed to prohibit the leasing of portions of the
Mortgaged Properties in the ordinary course of business for occupancy by the
tenants thereunder.
V.12. Fiscal Year; Fiscal Quarter. The Borrower shall not change its
fiscal year or any of its fiscal quarters.
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V.13. Margin Stock. None of the proceeds of the Loan will be used,
directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of buying or carrying any Margin Stock.
V.14. Use of Proceeds. The Borrower shall use the proceeds of the
Loans solely to finance the Mortgaged Properties as of the date hereof or as of
the date they become Mortgaged Properties, to repay borrowings made under the
line of credit facility made by the Lead Agent for itself and certain other
financial institutions which is currently evidenced by an Amended and Restated
Revolving Credit Agreement, dated as of August 23, 1996 (including any
modifications or replacements of said line of credit facility) and to finance
the acquisition of additional Mortgaged Properties or Real Property Assets.
VI
DEFAULTS
VI.1. Events of Default. If one or more of the following events
("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of any Loan,
or the Borrower shall fail to pay when due any interest on any Loan; provided,
however, that the Borrower shall be entitled to a three (3) Domestic Business
Day grace period with respect thereto but only as to two (2) payments of
interest during the Term, or the Borrower shall fail to pay within three (3)
Domestic Business Days after the same is due any fees or other amounts payable
hereunder;
(b) the Borrower shall fail to observe or perform any covenant
contained in Sections 5.7(a) and Sections 5.8 to 5.14, inclusive, subject to any
applicable grace periods set forth therein;
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(c) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause (a) or
(b) above) for 30 days after written notice thereof has been given to the
Borrower by the Lead Agent; provided, that in the case of any such failure that
is susceptible of cure but that cannot with reasonable diligence be cured within
such 30 day period, if the Borrower shall promptly have commenced to cure the
same and shall thereafter prosecute the curing thereof with reasonable
diligence, the period within which such failure may be cured shall be extended
for such further period as shall be reasonably necessary for the curing thereof
(and in the event such cure has not been completed within 30 days after the end
of the initial 30 day period, the Borrower shall inform the Lead Agent at least
once each month thereafter as to the status of such cure);
(d) any representation, warranty, certification or statement made by
the Borrower in this Agreement or in any certificate, financial statement or
other document delivered pursuant to this Agreement shall prove to have been
incorrect in any material respect when made (or deemed made);
(e) Intentionally Omitted;
(f) the Borrower shall commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of it or any substantial part of its
property, or shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due, or shall
take any corporate action to authorize any of the foregoing;
(g) an involuntary case or other proceeding shall be commenced against
the Borrower seeking liquidation, reorganization or other relief with respect to
it or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other
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proceeding shall remain undismissed and unstayed for a period of 60 days; or an
order for relief shall be entered against the Borrower under the federal
bankruptcy laws as now or hereafter in effect;
(h) the Borrower shall default in its obligations under any Loan
Document other than this Agreement beyond any applicable notice and grace
periods;
(i) any member of the ERISA Group shall fail to pay when due an amount
or amounts aggregating in excess of $5,000,000 which it shall have become liable
to pay under Title IV of ERISA, or notice of intent to terminate a Material Plan
shall be filed under Title IV of ERISA by any member of the ERISA Group, any
plan administrator or any combination of the foregoing, or the PBGC shall
institute proceedings under Title IV of ERISA to terminate, to impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or to cause
a trustee to be appointed to administer any Material Plan, or a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated, or there shall occur a
complete or partial withdrawal from, or a default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which
could cause one or more members of the ERISA Group to incur a current payment
obligation in excess of $5,000,000;
(j) Intentionally Omitted;
(k) (i) any Environmental Claim shall have been asserted against the
Borrower or any Environmental Affiliate, (ii) any release, emission, discharge
or disposal of any Material of Environmental Concern shall have occurred, and
such event is reasonably likely to form the basis of an Environmental Claim
against the Borrower or any Environmental Affiliate, or (iii) the Borrower or
the Environmental Affiliates shall have failed to obtain any Environmental
Approval necessary for the ownership, or operation of its business, property or
assets or any such Environmental Approval shall be revoked, terminated, or
otherwise cease to be in full force and effect, in the case of clauses (i), (ii)
or (iii) above, if the existence of such condition has had or is reasonably
likely to have a Material Adverse Effect;
(l) during any consecutive two year period commencing on or after the
date hereof, individuals who at the beginning of such period constituted the
Board of
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Directors of the Borrower (together with any new directors whose election by the
Board of Directors or whose nomination for election by the Borrower stockholders
was approved by a vote of at least a majority of the members of the Board of
Directors then in the office who either were members of the Board of Directors
at the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
members of the Board of Directors then in office;
(m) the Borrower shall cease at any time to qualify as a real estate
investment trust under the Internal Revenue Code;
(n) at any time, for any reason the Borrower seeks in a judicial
action to repudiate its obligations under any Loan Document;
(o) Intentionally Omitted; or
(p) any Mortgage or any Lien granted thereunder shall (except in
accordance with the terms hereof or thereof), in whole or in part, terminate,
cease to be effective or cease to be a legally valid, binding and enforceable
obligation of the Borrower, or any Lien securing the Loans shall, in whole or in
part, cease to be a perfected first priority Lien, subject to the Permitted
Exceptions (as defined in the Mortgages).
VI.2. Rights and Remedies. (a) Upon the occurrence of any Event of
Default described in Sections 6.1(f) or (g), the unpaid principal amount of, and
any and all accrued interest on, the Loans and any and all accrued fees and
other Obligations hereunder shall automatically become immediately due and
payable, with all additional interest from time to time accrued thereon and
without presentation, demand, or protest or other requirements of any kind
(including, without limitation, valuation and appraisement, diligence,
presentment, notice of intent to demand or accelerate and notice of
acceleration), all of which are hereby expressly waived by the Borrower; and
upon the occurrence and during the continuance of any other Event of Default,
the Lead Agent may exercise any of its rights and remedies hereunder and by
written notice to the Borrower, declare the unpaid principal amount of and any
and all accrued and unpaid interest on the Loans and any and all accrued fees
and other Obligations hereunder to be, and the same shall thereupon be,
immediately due and payable with all additional interest from time to time
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accrued thereon and without presentation, demand, or protest or other
requirements of any kind other than as provided in the Loan Documents
(including, without limitation, valuation and appraisement, diligence,
presentment, and notice of intent to demand or accelerate), all of which are
hereby expressly waived by the Borrower.
(a) Notwithstanding the foregoing, upon the occurrence and during the
continuance of any Event of Default other than any Event of Default described in
Sections 6.1(f) or (g), the Lead Agent shall not exercise any of its rights and
remedies hereunder nor declare the unpaid principal amount of and any and all
accrued and unpaid interest on the Loans and any and all accrued fees and other
Obligations hereunder to be immediately due and payable, until such time as the
Lead Agent shall have delivered a notice to the Banks specifying the Event of
Default which has occurred and whether Lead Agent recommends the acceleration of
the Obligations due hereunder or the exercise of other remedies hereunder. The
Banks shall notify the Lead Agent if they approve or disapprove of the
acceleration of the Obligations due hereunder or the exercise of such other
remedy recommended by Lead Agent within five (5) Domestic Business Days after
receipt of such notice. If any Bank shall not respond within such five (5)
Domestic Business Day period, then such Bank shall be deemed to have accepted
Lead Agent's recommendation for acceleration of the Obligations due hereunder or
the exercise of such other remedy. If the Required Banks shall approve the
acceleration of the Obligations due hereunder or the exercise of such other
remedy, then Lead Agent shall declare the unpaid principal amount of and any and
all accrued and unpaid interest on the Loans and any and all accrued fees and
other Obligations hereunder to be immediately due and payable or exercise such
other remedy approved by the Required Banks. If the Required Banks shall neither
approve nor disapprove the acceleration of the Obligations due hereunder or such
other remedy recommended by Lead Agent, then Lead Agent may accelerate the
Obligations due hereunder or exercise any of its rights and remedies hereunder
in its sole discretion. If the Required Banks shall disapprove the acceleration
of the Obligations due hereunder or the exercise of such other remedy
recommended by Lead Agent, but approve of another remedy, then to the extent
permitted hereunder, Lead Agent shall exercise such remedy.
VI.3. Notice of Default. If the Lead Agent shall not already have
given any notice to the Borrower under Section 6.1, the Lead Agent shall give
notice to
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the Borrower under Section 6.1 promptly upon being requested to do so
by the Required Banks and shall thereupon notify all the Banks thereof.
VII
THE LEAD AGENT
VII.1. Appointment and Authorization. Each Bank irrevocably appoints
and authorizes the Lead Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement and the other Loan Documents as are
delegated to the Lead Agent by the terms hereof or thereof, together with all
such powers as are reasonably incidental thereto.
VII.2. Lead Agent and Affiliates. Morgan shall have the same rights
and powers under this Agreement as any other Bank and may exercise or refrain
from exercising the same as though it were not the Lead Agent, and Morgan and
its affiliates may accept deposits from, lend money to, and generally engage in
any kind of business with the Borrower or any subsidiary or affiliate of the
Borrower as if it were not the Lead Agent hereunder, and the term "Bank" and
"Banks" shall include Morgan in its individual capacity.
VII.3. Action by Lead Agent. The obligations of the Lead Agent
hereunder are only those expressly set forth herein. Without limiting the
generality of the foregoing, the Lead Agent shall not be required to take any
action with respect to any Default, except as expressly provided in Article VI.
The Lead Agent shall at all times be deemed to have exercised reasonable care
with respect to the Collateral if it accords the Collateral treatment
substantially equal to that which the Lead Agent accords its own property, it
being understood that, assuming such treatment, the Lead Agent shall not have
any responsibility or liability with respect thereto.
VII.4. Consultation with Experts. The Lead Agent may consult with
legal counsel (who may be counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
VII.5. Liability of Lead Agent. Neither the Lead Agent nor any of its
affiliates nor any of their
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respective directors, officers, agents or employees shall be liable for any
action taken or not taken by it in connection herewith (i) with the consent or
at the request of the Required Banks or, where required by the terms of this
Agreement, all of the Banks, or (ii) in the absence of its own gross negligence
or willful misconduct. Neither the Lead Agent nor any of its directors,
officers, agents or employees shall be responsible for or have any duty to
ascertain, inquire into or verify (i) any statement, warranty or representation
made in connection with this Agreement or any borrowing hereunder; (ii) the
performance or observance of any of the covenants or agreements of the Borrower;
(iii) the satisfaction of any condition specified in Article III, except receipt
of items required to be delivered to the Lead Agent; or (iv) the validity,
effectiveness or genuineness of this Agreement, the other Loan Documents or any
other instrument or writing furnished in connection herewith. The Lead Agent
shall not incur any liability by acting in reliance upon any notice, consent,
certificate, statement, or other writing (which may be a bank wire, telex or
similar writing) believed by it in good faith to be genuine or to be signed by
the proper party or parties.
VII.6. Indemnification. Each Bank shall, ratably in accordance with
its Commitment, indemnify the Lead Agent, its affiliates and their respective
directors, officers, agents and employees (to the extent not reimbursed by the
Borrower) against any cost, expense (including counsel fees and disbursements),
claim, demand, action, loss or liability (except such as result from such
indemnitees' gross negligence or willful misconduct) that such indemnitees may
suffer or incur in connection with this Agreement, the other Loan Documents or
any action taken or omitted by such indemnitees hereunder.
VII.7. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Lead Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon the Lead
Agent or any other Bank, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking any action under this Agreement.
VII.8. Successor Lead Agent. The Lead Agent may resign at any time by
giving notice thereof to the
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Banks and the Borrower. Upon any such resignation or the removal of the Lead
Agent in accordance with Section 7.11, the Required Banks shall have the right
to appoint a successor Lead Agent. If no successor Lead Agent shall have been so
appointed by the Required Banks, and shall have accepted such appointment,
within 30 days after the retiring Lead Agent gives notice of resignation, then
the retiring Lead Agent may, on behalf of the Banks, appoint a successor Lead
Agent, which shall be a commercial bank organized or licensed under the laws of
the United States of America or of any State thereof and having a combined
capital and surplus of at least $50,000,000. Upon the acceptance of its
appointment as the Lead Agent hereunder by a successor Lead Agent, such
successor Lead Agent shall thereupon succeed to and become vested with all the
rights and duties of the retiring Lead Agent, and the retiring Lead Agent shall
be discharged from its duties and obligations hereunder first accruing or
arising after the effective date of such retirement. After any retiring Lead
Agent's resignation hereunder as Lead Agent, the provisions of this Article
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was the Lead Agent.
VII.9. Lead Agent's Fee. The Borrower shall pay to the Lead Agent or
any successor Lead Agent for its own account fees in the amounts and at the
times previously agreed upon between the Borrower and the Lead Agent or the
successor Lead Agent.
VII.10. Copies of Notices. Lead Agent shall deliver to each Bank a
copy of any notice sent to the Borrower by Lead Agent in connection with the
performance of its duties as Lead Agent hereunder.
VIII
CHANGE IN CIRCUMSTANCES
VIII.1. Basis for Determining Interest Rate Inadequate or Unfair. If
on or prior to the first day of any Interest Period for any Euro-Dollar
Borrowing:
(a) the Lead Agent is advised by the Reference Bank that deposits in
dollars (in the applicable amounts) are not being offered to the Reference Bank
in the relevant market for such Interest Period, or
(b) Banks having 50% or more of the aggregate amount of the
Commitments advise the Lead Agent that the
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Adjusted London Interbank Offered Rate as determined by the Lead Agent will not
adequately and fairly reflect the cost to such Banks of funding their
Euro-Dollar Loans for such Interest Period, the Lead Agent shall forthwith give
notice thereof to the Borrower and the Banks, whereupon until the Lead Agent
notifies the Borrower that the circumstances giving rise to such suspension no
longer exist, the obligations of the Banks to make Euro-Dollar Loans shall be
suspended. Unless the Borrower notifies the Lead Agent at least two Domestic
Business Days before the date of any Euro-Dollar Borrowing for which a Notice of
Borrowing has previously been given that it elects not to borrow on such date,
such Borrowing shall instead be made as a Base Rate Borrowing.
VIII.2. Illegality. If, after the date of this Agreement, the adoption
of any applicable law, rule or regulation, or any change in any existing
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Bank (or its Euro-Dollar Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency shall make it unlawful or impossible for any Bank (or its
Euro-Dollar Lending Office) to make, maintain or fund its Euro-Dollar Loans, and
such Bank shall so notify the Lead Agent, the Lead Agent shall forthwith give
notice thereof to the other Banks and the Borrower, whereupon until such Bank
notifies the Borrower and the Lead Agent that the circumstances giving rise to
such suspension no longer exist, the obligation of such Bank to make Euro-Dollar
Loans shall be suspended. Before giving any notice to the Lead Agent pursuant to
this Section, such Bank shall designate a different Euro-Dollar Lending Office
if such designation will avoid the need for giving such notice and will not, in
the judgment of such Bank, be otherwise disadvantageous to such Bank. If such
Bank shall determine that it may not lawfully continue to maintain and fund any
of its outstanding Euro-Dollar Loans to maturity and shall so specify in such
notice, the Borrower shall immediately prepay in full the then outstanding
principal amount of each such Euro-Dollar Loan, together with accrued interest
thereon. Concurrently with prepaying each such Euro-Dollar Loan, the Borrower
shall borrow a Base Rate Loan in an equal principal amount from such Bank (on
which interest and principal shall be payable contemporaneously with the related
Euro-Dollar Loans of the other Banks), and such Bank shall make such a Base Rate
Loan.
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VIII.3. Increased Cost and Reduced Return.
(a) If, after the date hereof, the adoption of any applicable law,
rule or regulation, or any change in any applicable law, rule or regulation, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Bank (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency shall impose, modify or
deem applicable any reserve (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System (but excluding
with respect to any Euro-Dollar Loan any such requirement reflected in an
applicable Euro-Dollar Reserve Percentage)), special deposit, insurance
assessment or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Bank (or its Applicable Lending Office)
or shall impose on any Bank (or its Applicable Lending Office) or on the London
interbank market any other condition affecting its Euro-Dollar Loans, its Note,
or its obligation to make Euro-Dollar Loans, and the result of any of the
foregoing is to increase the cost to such Bank (or its Applicable Lending
Office) of making or maintaining any Euro-Dollar Loan, or to reduce the amount
of any sum received or receivable by such Bank (or its Applicable Lending
Office) under this Agreement or under its Note with respect thereto, by an
amount deemed by such Bank to be material, then, within 15 days after demand by
such Bank (with a copy to the Lead Agent), which demand shall be accompanied by
a certificate showing, in reasonable detail, the calculation of such amount or
amounts, the Borrower shall pay to such Bank such additional amount or amounts
as will compensate such Bank for such increased cost or reduction.
(b) If any Bank shall have determined that, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change in any such law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on capital
of such Bank (or its Parent) as a consequence of
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such Bank's obligations hereunder to a level below that which such Bank (or its
Parent) could have achieved but for such adoption, change, request or directive
(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time, within 15
days after demand by such Bank (with a copy to the Lead Agent), which demand
shall be accompanied by a certificate showing, in reasonable detail, the
calculation of such amount or amounts, the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank (or its Parent) for
such reduction.
(c) Each Bank will promptly notify the Borrower and the Lead Agent of
any event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section and will designate a
different Applicable Lending Office if such designation will avoid the need for,
or reduce the amount of, such compensation and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section and setting forth the additional amount
or amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
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VIII.4. Taxes.
(a) Any and all payments by the Borrower to or for the account of any
Bank or the Lead Agent hereunder or under any other Loan Document shall be made
free and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Bank and the
Lead Agent, taxes imposed on its income, and franchise taxes imposed on it, by
the jurisdiction under the laws of which such Bank or the Lead Agent (as the
case may be) is organized or any political subdivision thereof and, in the case
of each Bank, taxes imposed on its income, and franchise or similar taxes
imposed on it, by the jurisdiction of such Bank's Applicable Lending Office or
any political subdivision thereof (and, if different from the jurisdiction of
such Bank's Applicable Lending Office, the jurisdiction of the domicile of its
Loans either established by the Bank pursuant to Section 9.12 or determined by
the applicable taxing authorities)(all such non-excluded taxes, duties, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"). If the Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder or under any Note or
participation therein to any Bank or the Lead Agent, (i) the sum payable shall
be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
8.4) such Bank or the Lead Agent (as the case may be) receives an amount equal
to the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions, (iii) the Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law and (iv) the Borrower shall furnish to the Lead
Agent, at its address referred to in Section 9.1, the original or a certified
copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes and any other excise or property taxes, or charges or
similar levies which arise from any payment made hereunder or under any Note or
participation therein or from the execution or delivery of, or otherwise with
respect to, this Agreement or any Note or participation therein (hereinafter
referred to as "Other Taxes").
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(c) The Borrower agrees to indemnify each Bank and the Lead Agent for
the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable
under this Section 8.4) paid by such Bank or the Lead Agent (as the case may be)
and any liability (including penalties, interest and expenses) arising therefrom
or with respect thereto. This indemnification shall be made within 15 days from
the date such Bank or the Lead Agent (as the case may be) makes demand therefor.
(d) Each Bank organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on the signature pages hereof and on
or prior to the date on which it becomes a Bank in the case of each other Bank,
and from time to time thereafter if requested in writing by the Borrower (but
only so long as such Bank remains lawfully able to do so), shall provide the
Borrower with Internal Revenue Service form 1001 or 4224, as appropriate, or any
successor form prescribed by the Internal Revenue Service, certifying that such
Bank is entitled to benefits under an income tax treaty to which the United
States is a party which reduces the rate of withholding tax on payments of
interest or certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the United
States. If the form provided by a Bank at the time such Bank first became a
party to this Agreement or at any time thereafter (other than solely by reason
of a change in United States law or a change in the terms of any treaty to which
the United States is a party after the date hereof) indicates a United States
interest withholding tax rate in excess of zero (or would have indicated such a
withholding tax rate if such form had been submitted and completed accurately
and completely and either was not submitted or was not completed accurately and
completely), or if a Bank otherwise is subject to United States interest
withholding tax at a rate in excess of zero at any time for any reason (other
than solely by reason of a change in United States law or regulation or a change
in any treaty to which the United States is a party after the date hereof),
withholding tax at such rate shall be considered excluded from "Taxes" as
defined in Section 8.4(a). In addition, any amount that otherwise would be
considered "Taxes" or "Other Taxes" for purposes of this Section 8.4 shall be
excluded therefrom if the Bank either has transferred the domicile of its Loans
pursuant to Section 9.12 or changed the Applicable Lending Office with respect
to such Loans and such amount would not have been incurred had such transfer or
change not been made.
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(e) For any period with respect to which a Bank has failed to provide
the Borrower with the appropriate form pursuant to Section 8.4(d) (unless such
failure is due to a change in treaty, law or regulation occurring subsequent to
the date on which a form originally was required to be provided), such Bank
shall not be entitled to indemnification under Section 8.4(a) with respect to
Taxes imposed by the United States; provided, however, that should a Bank, which
is otherwise exempt from or subject to a reduced rate of withholding tax, become
subject to Taxes because of its failure to deliver a form required hereunder,
the Borrower shall take such steps as such Bank shall reasonably request to
assist such Bank to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for
the account of any Bank pursuant to this Section 8.4, then such Bank will change
the jurisdiction of its Applicable Lending Office so as to eliminate or reduce
any such additional payment which may thereafter accrue if such change, in the
judgment of such Bank, is not otherwise disadvantageous to such Bank.
VIII.5. Base Rate Loans Substituted for Affected Euro-Dollar Loans. If
(i) the obligation of any Bank to make Euro-Dollar Loans has been suspended
pursuant to Sections 8.1 or 8.2 or (ii) any Bank has demanded compensation under
Section 8.3 or 8.4 with respect to its Euro-Dollar Loans and the Borrower shall,
by at least five Euro-Dollar Business Days' prior notice to such Bank through
the Lead Agent, have elected that the provisions of this Section shall apply to
such Bank, then, unless and until such Bank notifies the Borrower that the
circumstances giving rise to such suspension or demand for compensation no
longer exist:
(a) all Loans which would otherwise be made by such Bank as
Euro-Dollar Loans shall be made instead as Base Rate Loans (on which interest
and principal shall be payable contemporaneously with the related Euro-Dollar
Loans of the other Banks), and
(b) after each of its Euro-Dollar Loans has been repaid, all payments
of principal which would otherwise be applied to repay such Euro-Dollar Loans
shall be applied to repay its Base Rate Loans instead.
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IX
MISCELLANEOUS
IX.1. Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including bank wire, telex, facsimile
transmission or similar writing) and shall be given to such party: (x) in the
case of the Borrower, to CarrAmerica Realty Corporation, 1700 Pennsylvania
Avenue, N.W., Suite 700, Washington, D.C. 20006, Attention: Andrea F. Bradley,
Esq., and in the case of the Lead Agent, at its address or telecopy number set
forth on the signature pages hereof, together with copies thereof, in the case
of the Borrower, to Mayer, Brown & Platt, 141 East Palace Avenue, Santa Fe, New
Mexico 87501, Attention: George Ruhlen, Esq., Telephone: (505) 820-8180,
Telecopy: (505) 820-7334, and in the case of the Lead Agent, to Skadden, Arps,
Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York 10022,
Attention: Martha Feltenstein, Esq., Telephone: (212) 735-2272, Telecopy: (212)
735-2000, (y) in the case of any Bank, at its address or telecopy number set
forth on the signature pages hereof or in its Administrative Questionnaire or
(z) in the case of any party, such other address or telecopy number as such
party may hereafter specify for the purpose by notice to the Lead Agent, the
Banks and the Borrower. Each such notice, request or other communication shall
be effective (i) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified in this Section, (ii) if given by mail, 72 hours after
such communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the address specified in this Section; provided that notices to the Lead Agent
under Article II or Article VIII shall not be effective until received.
IX.2. No Waivers. No failure or delay by the Lead Agent or any Bank in
exercising any right, power or privilege hereunder or under any Note shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
IX.3. Expenses; Indemnification.
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(a) The Borrower shall pay (i) all reasonable out-of-pocket expenses
of the Lead Agent (including, without limitation, reasonable fees and
disbursements of special counsel Skadden, Arps, Slate, Meagher & Flom LLP, local
counsel for the Lead Agent, and travel, site visits, third party reports
(including Appraisals), mortgage recording taxes, environmental and engineering
expenses), in connection with the preparation and administration of this
Agreement, the Loan Documents and the documents and instruments referred to
therein, the syndication of the Loans, any waiver or consent hereunder or any
amendment or modification hereof or any Default or alleged Default hereunder and
(ii) if an Event of Default occurs, all out-of-pocket expenses incurred by the
Lead Agent and each Bank which are not unreasonably duplicative, including,
without limitation, reasonable fees and disbursements of counsel for the Lead
Agent, in connection with the enforcement of the Loan Documents and the
instruments referred to therein and such Event of Default and collection,
bankruptcy, insolvency and other enforcement proceedings resulting therefrom.
(b) The Borrower agrees to indemnify the Lead Agent and each Bank,
their respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel and settlements and settlement costs, which may be
incurred by such Indemnitee in connection with any investigative, administrative
or judicial proceeding (whether or not such Indemnitee shall be designated a
party thereto) that may at any time (including, without limitation, at any time
following the payment of the Obligations) be imposed on, asserted against or
incurred by any Indemnitee as a result of, or arising out of, or in any way
related to or by reason of, (i) any of the transactions contemplated by the Loan
Documents or the execution, delivery or performance of any Loan Document
(including, without limitation, the Borrower's actual or proposed use of
proceeds of the Loans, whether or not in compliance with the provisions hereof),
(ii) any violation by the Borrower or the Environmental Affiliates of any
applicable Environmental Law, (iii) any Environmental Claim arising out of the
management, use, control, ownership or operation of property or assets by the
Borrower or any of the Environmental Affiliates, including, without limitation,
all on-site and off-site activities involving Material of Environmental Concern,
(iv) the breach of any environmental representation or
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warranty set forth herein, (v) the grant to the Lead Agent and the Banks of any
Lien in any property or assets of the Borrower or any stock or other equity
interest in the Borrower in connection with the Loans hereunder, (vi) the loss
of all or any portion of the parking which is the subject of a ground lease for
premises located at the Mortgaged Property described on Exhibit B attached
hereto as the Unisys Center, Lombard, Illinois, as a direct or indirect result
of a foreclosure or assignment in lieu of foreclosure with respect to such
Mortgaged Property, where, in connection with such loss, any Indemnitee shall
construct additional parking in order to correct zoning violations resulting
from such loss (the indemnity described in this clause (vi), a "Parking
Indemnity"), such Parking Indemnity not to exceed an aggregate of $2,000,000,
(vii) any loss or damages in excess of the sum of the proceeds of any applicable
insurance plus a 15% deductible resulting from any uninsured earthquake casualty
at the Mortgaged Property described on Exhibit B attached hereto as the Rio
Robles Technology Center, San Jose, California (the indemnity described in this
clause (vii), an "Earthquake Indemnity"), such Earthquake Indemnity not to
exceed an aggregate of $1,000,000, and (viii) the exercise by the Lead Agent and
the Banks of their rights and remedies (including, without limitation,
foreclosure) under any agreements creating any such Lien (but excluding, as to
any Indemnitee, any such losses, liabilities, claims, damages, expenses,
obligations, penalties, actions, judgments, suits, costs or disbursements
incurred solely by reason of (i) the gross negligence or willful misconduct of
such Indemnitee as finally determined by a court of competent jurisdiction and
(ii) any investigative, administrative or judicial proceeding imposed or
asserted against any Indemnitee by any bank regulatory agency or by any equity
holder of such Indemnitee). The Borrower's obligations under this Section shall
survive the termination of this Agreement and the payment of the Obligations;
provided, however, that any liability hereunder for the payment of a Parking
Indemnity shall terminate upon provision by the Borrower of evidence acceptable
to the Lead Agent that the Borrower has (i) obtained amendments to existing
ground leases or (ii) entered into a reciprocal easement agreement for parking,
or similar agreement, which benefits such Mortgaged Property and runs with the
land, in either case such that the Agent is reasonably satisfied that, after a
foreclosure or assignment in lieu of foreclosure with respect to the Mortgaged
Property, sufficient parking shall be available at the Mortgaged Property to
cause the Mortgaged Property not to be in violation of any applicable zoning
rules and ordinances.
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(c) The Borrower shall pay, and hold the Lead Agent and each of the
Banks harmless from and against, any and all present and future U.S. stamp,
recording, transfer and other similar foreclosure related taxes with respect to
the foregoing matters and hold the Lead Agent and each Bank harmless from and
against any and all liabilities with respect to or resulting from any delay or
omission (other than to the extent attributable to such Bank) to pay such taxes.
IX.4. Sharing of Set-Offs. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence and during the continuance of any Event of
Default, each Bank is hereby authorized at any time or from time to time,
without presentment, demand, protest or other notice of any kind to the Borrower
or to any other Person, any such notice being hereby expressly waived, to set
off and to appropriate and apply any and all deposits (general or special, time
or demand, provisional or final), other than deposits held for the benefit of
third parties, and any other indebtedness at any time held or owing by such Bank
(including, without limitation, by branches and agencies of such Bank wherever
located) to or for the credit or the account of the Borrower against and on
account of the Obligations of the Borrower then due and payable to such Bank
under this Agreement or under any of the other Loan Documents, including,
without limitation, all interests in Obligations purchased by such Bank. Each
Bank agrees that if it shall, by exercising any right of set-off or counterclaim
or otherwise, receive payment of a proportion of the aggregate amount of
principal and interest due with respect to any Note held by it which is greater
than the proportion received by any other Bank in respect of the aggregate
amount of principal and interest due with respect to any Note held by such other
Bank, the Bank receiving such proportionately greater payment shall purchase
such participations in the Notes held by the other Banks, and such other
adjustments shall be made, as may be required so that all such payments of
principal and interest with respect to the Notes held by the Banks shall be
shared by the Banks pro rata; provided that nothing in this Section shall impair
the right of any Bank to exercise any right of set-off or counterclaim it may
have and to apply the amount subject to such exercise to the payment of
indebtedness of the Borrower other than its indebtedness under the Notes;
provided, further, that any such set-off with respect to a Mortgaged Property
located in the State of California shall be exercised by
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a Bank solely on the opinion of counsel. The Borrower agrees, to the fullest
extent that it may effectively do so under applicable law, that any holder of a
participation in a Note, whether or not acquired pursuant to the foregoing
arrangements, may exercise rights of set-off or counterclaim and other rights
with respect to such participation as fully as if such holder of a participation
were a direct creditor of the Borrower in the amount of such participation.
IX.5. Amendments and Waivers. Any provision of this Agreement, the
Notes or other Loan Documents may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Borrower and the Required
Banks (and, if the rights or duties of the Lead Agent are affected thereby, by
the Lead Agent); provided that no such amendment or waiver shall, unless signed
by all the Banks, (i) increase or decrease the Commitment of any Bank (except
for a ratable decrease in the Commitments of all Banks) or subject any Bank to
any additional obligation, (ii) reduce the principal of or rate of interest on
any Loan or any fees specified herein, including, without limitation, the waiver
of any Default or Event of Default in the payment of interest, principal or fees
hereunder if such waiver would result in a permanent reduction in the amount or
change in the timing of the payment of interest, principal or fees payable
hereunder by the Borrower, unless the Borrower has cured such Default or Event
of Default and paid all amounts, including any default interest, due hereunder
at the time a request for consent is made by Lead Agent to the Banks to the
waiver of any Default or Event of Default in the payment of interest, principal
or fees hereunder, in which event only the consent of the Required Banks to the
waiver of such Default or Event of Default shall be required, (iii) postpone the
date fixed for any payment of principal of or interest on any Loan or any fees
hereunder or for any reduction or termination of any Commitment, (iv) release
the Lien of any Mortgage or otherwise release any other collateral except as
expressly permitted in the Loan Documents, or (v) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the Notes, or the
number of Banks, which shall be required for the Banks or any of them to take
any action under this Section or any other provision of this Agreement.
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IX.6. Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, except that the Borrower may not assign or otherwise transfer any of
their rights under this Agreement or the other Loan Documents without the prior
written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment or
any or all of its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon notice to the
Borrower and the Lead Agent, such Bank shall remain responsible for the
performance of its obligations hereunder, and the Borrower and the Lead Agent
shall continue to deal solely and directly with such Bank in connection with
such Bank's rights and obligations under this Agreement. Any agreement pursuant
to which any Bank may grant such a participating interest shall provide that
such Bank shall retain the sole right and responsibility to enforce the
obligations of the Borrower hereunder including, without limitation, the right
to approve any amendment, modification or waiver of any provision of this
Agreement; provided that such participation agreement may provide that such Bank
will not agree to any modification, amendment or waiver of this Agreement
described in clause (i), (ii), (iii) or (iv) of Section 9.5 without the consent
of the Participant. The Borrower agrees that each Participant shall, to the
extent provided in its participation agreement, be entitled to the benefits of
Article VIII with respect to its participating interest. An assignment or other
transfer which is not permitted by subsection (c) or (d) below shall be given
effect for purposes of this Agreement only to the extent of a participating
interest granted in accordance with this subsection (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part of all, of its
rights and obligations under this Agreement, the Notes and the other Loan
Documents, and such Assignee shall assume such rights and obligations, pursuant
to an Assignment and Assumption Agreement in substantially the form of Exhibit C
attached hereto executed by such Assignee and such transferor Bank, with (and
subject to) the subscribed consent of the Lead Agent and, provided no Event of
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Default shall have occurred and be continuing, the Borrower, which consent shall
not be unreasonably withheld or delayed. Upon execution and delivery of such
instrument and payment by such Assignee to such transferor Bank of an amount
equal to the purchase price agreed between such transferor Bank and such
Assignee, such Assignee shall be a Bank party to this Agreement and shall have
all the rights and obligations of a Bank with a Commitment as set forth in such
instrument of assumption, and the transferor Bank shall be released from its
obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required. Upon the consummation of any assignment
pursuant to this subsection (c), the transferor Bank, the Lead Agent and the
Borrower shall make appropriate arrangements so that, if required, a new Note or
Notes are issued to the Assignee. In connection with any such assignment, the
transferor Bank shall pay to the Lead Agent an administrative fee for processing
such assignment in the amount of $2,500. If the Assignee is not incorporated
under the laws of the United States of America or a state thereof, it shall
deliver to the Borrower and the Lead Agent certification as to exemption from
deduction or withholding of any United States federal income taxes in accordance
with Section 8.4.
(d) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Note to a Federal Reserve Bank. No such assignment
shall release the transferor Bank from its obligations hereunder.
(e) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 8.3 or 8.4 than
such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Borrower's prior written
consent or by reason of the provisions of Section 8.2, 8.3 or 8.4 requiring such
Bank to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
IX.7. Governing Law; Submission to Jurisdiction.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS WERE NEGOTIATED IN NEW
YORK, AND EXECUTED BY LEAD AGENT IN THE STATE OF NEW YORK, AND THE BORROWINGS
WILL BE DISBURSED FROM NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL
RELATIONSHIP TO THE PARTIES AND TO THE
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UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS AGREEMENT AND THE LOAN DOCUMENTS AND THE OBLIGATIONS ARISING
HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
SUCH STATE AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT
AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE
LIENS AND SECURITY INTERESTS CREATED PURSUANT TO THE MORTGAGES AND THE OTHER
LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE
STATE IN WHICH THE MORTGAGED PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO
THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF
NEW YORK SHALL GOVERN THE VALIDITY AND THE ENFORCEABILITY OF THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS AND THE INDEBTEDNESS OR OBLIGATIONS ARISING HEREUNDER OR
THEREUNDER. EXCEPT AS PROVIDED IN THE PRIOR SENTENCE, TO THE FULLEST EXTENT
PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY
CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT,
THE NOTE AND THE OTHER LOAN DOCUMENTS AND THIS AGREEMENT, THE NOTE AND THE OTHER
LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAWS.
(b) Any legal action or proceeding with respect to this Agreement or
any other Loan Document and any action for enforcement of any judgment in
respect thereof may be brought in the courts of the State of New York or of the
United States of America for the Southern District of New York, and, by
execution and delivery of this Agreement, the Borrower hereby accepts for itself
and in respect of its property, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts and appellate courts from any thereof. The
Borrower irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the hand delivery, or
mailing of copies thereof by registered or certified mail, postage prepaid, to
the Borrower at its address set forth below. The Borrower hereby irrevocably
waives any objection which it may now or hereafter have to the laying of venue
of any of the aforesaid actions or proceedings arising out of or in connection
with this Agreement or any other Loan Document brought in the courts referred to
above and hereby further irrevocably waives and agrees not to plead or claim in
any such court that any such action or proceeding
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brought in any such court has been brought in an inconvenient forum. Nothing
herein shall affect the right of the Lead Agent, any Bank or any holder of a
Note to serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Borrower in any other jurisdiction.
IX.8. Marshaling; Recapture. Neither the Lead Agent nor any Bank shall
be under any obligation to marshal any assets in favor of the Borrower or any
other party or against or in payment of any or all of the Obligations. To the
extent any Bank receives any payment by or on behalf of the Borrower, which
payment or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to the Borrower
or its estate, trustee, receiver, custodian or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then to the
extent of such payment or repayment, the Obligation or part thereof which has
been paid, reduced or satisfied by the amount so repaid shall be reinstated by
the amount so repaid and shall be included within the liabilities of the
Borrower to such Bank as of the date such initial payment, reduction or
satisfaction occurred.
IX.9. Counterparts; Integration; Effectiveness. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof. This
Agreement shall become effective upon receipt by the Lead Agent of counterparts
hereof signed by each of the parties hereto (or, in the case of any party as to
which an executed counterpart shall not have been received, receipt by the Lead
Agent in form satisfactory to it of telegraphic, telex or other written
confirmation from such party of execution of a counterpart hereof by such
party).
IX.10. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE LEAD AGENT AND
THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
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IX.11. Survival. All indemnities set forth herein shall survive the
execution and delivery of this Agreement and the other Loan Documents and the
making and repayment of the Loans hereunder.
IX.12. Domicile of Loans. Subject to the provisions of Article VIII,
each Bank may transfer and carry its Loans at, to or for the account of any
domestic or foreign branch office, subsidiary or affiliate of such Bank.
IX.13. Limitation of Liability. (a) No claim may be made by the
Borrower or any other Person against the Lead Agent or any Bank or the
affiliates, directors, officers, employees, attorneys or agent of any of them
for any consequential or punitive damages in respect of any claim for breach of
contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement or by the other Loan Documents, or
any act, omission or event occurring in connection therewith; and the Borrower
hereby waives, releases and agrees not to sue upon any claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.
(a) Notwithstanding anything in this Agreement, the Mortgages, the
Notes or the other Loan Documents, no personal liability shall be asserted or
enforceable against (i) the Borrower, (ii) any affiliate of the Borrower, (iii)
any Person owning directly or indirectly, any legal or beneficial interest in
the Borrower or any affiliate of the Borrower, or (iv) any partner, principal,
officer, controlling person, beneficiary, trustee, advisor, shareholder, member,
employee, agent, affiliate or director of any Persons described in clauses (i)
through (iii) above (collectively, the "Exculpated Parties") by the Lead Agent
or the Banks in respect of the Obligations, this Agreement, the Mortgages, the
Note or any other Loan Document, or the making, issuance or transfer thereof,
all such liability, if any, being expressly waived by the Lead Agent, the Banks,
and each successive holder of any Note shall accept such Note and any security
therefor upon the express condition of this provision and limitation that in the
case of the occurrence and continuance of an Event of Default, Beneficiary's
remedies in its sole discretion shall be any or all of:
80
<PAGE>
1. Foreclosure of the lien of the Mortgage securing such Note in
accordance with the terms and provisions set forth in the applicable
Mortgage;
2. Action against any other security at any time given to secure
the payment of such Note and under the other Loan Documents; and
3. Exercise of any other remedy set forth in such Mortgage or any
other Loan Document.
The lien of any judgment against the Borrower and any proceeding
instituted on, under or in connection with any Note or Mortgage, or both, shall
not extend to any property now or hereafter owned by the Borrower or any
Exculpated Party other than the Net Operating Cash Flow arising after the
Borrower has received written notice of a Default from, and the ownership
interest of the Borrower in, the applicable Mortgaged Property and the other
security for the payment of such Note or Mortgage.
Notwithstanding anything to the contrary in this Agreement or any of
the Loan Documents, the Lead Agent and the Banks shall not be deemed to have
waived any right which any of them may have under Section 506(a), 506(b),
1111(b) or any other provisions of the Bankruptcy Code to file a claim for the
full amount of the Loan secured by any Mortgage or to require that all
Collateral shall continue to secure all of the Obligations owing to the Lead
Agent and the Banks in accordance with the Loan Documents.
Notwithstanding anything in this Agreement to the contrary, there
shall at no time be any limitation on the Borrower's liability for the payment
to the Lead Agent, in accordance with the provisions of any applicable Mortgage,
of: (1) condemnation proceeds or insurance proceeds which the Borrower has
received and to which the Lead Agent and the Banks are entitled pursuant to the
terms of such Mortgage or any of the Loan Documents to the extent the same have
not been applied toward payment of sums due under the applicable Note or under
such Mortgage, or used for the repair or replacement of the applicable Mortgaged
Property pursuant to such Mortgage, or (2) all loss, damage and expense as
incurred by the Lead Agent and arising from any fraud, or intentional
misrepresentation of the Borrower, (3) any misappropriation of rents arising
after the Borrower has received written notice of a Default or security deposits
by the Borrower or any affiliate of the Borrower (4) any Parking Indemnity or
(5) any Earthquake Indemnity.
81
<PAGE>
IX.14. Confidentiality.
Prior to the occurrence and continuance of an Event of Default and
except in connection with the sale or assignment or potential sale or assignment
of any Bank's Commitment or portion of its Commitment pursuant to Section 9.6,
each Bank agrees that it will use reasonable efforts, consistent with its
customary policies for maintaining information as confidential, not to disclose
without the prior consent of the Borrower (other than to its subsidiaries,
directors, agents, employees, auditors, counsel or other professional
consultants, provided that each such recipient shall either agree to be bound by
the terms of this Section 9.14 or is otherwise bound to keep such information
confidential on a similar basis pursuant to professional ethical obligations)
any information with respect to the Borrower, any Subsidiary thereof or any of
their assets or properties which is furnished pursuant to this Agreement or any
Loan Documents and which is designated as confidential, provided that any Bank
may disclose any such information (a) that has become generally available to the
public (other than as a consequence of any Bank's breach of this Section 9.14),
(b) as may be required or appropriate in any report, statement or testimony
submitted to any local, state or federal regulatory body having or claiming to
have jurisdiction over such Bank, any nationally recognized rating agency or
similar organization, (c) as may be required or appropriate in response to any
summons or subpoena or in connection with any litigation, or (d) in order to
comply with any applicable law, order, regulation or ruling; provided, further
that in the case of the foregoing clauses (b), (c) and (d), such Bank shall use
reasonable efforts to give the Borrower prior notice of any such disclosure.
82
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
CARRAMERICA REALTY CORPORATION
By:/s/Andrea F. Bradley
----------------------------------
Name: Andrea F. Bradley
Title: Vice President,
General Counsel and
Corporate Secretary
Commitments
$60,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By:/s/Timothy V. O'Donovan
----------------------------------
Name: Timothy V. O'Donovan
Title: Vice President
$30,000,000 COMMERZBANK AKTIENGESELLSCHAFT,
NEW YORK BRANCH
By:/s/Douglas P. Traynor
----------------------------------
Name: Douglas P. Traynor
Title: Vice President
By:/s/David M. Schwarz
----------------------------------
Name: David M. Schwarz
Title: Vice President
83
<PAGE>
$25,000,0000 BAYERISCHE HYPOTHEKEN -UND
WECHSEL-BANK
AKTIENGESELLSCHAFT, NEW YORK
BRANCH
By:/s/Stephen G. Melidones
----------------------------------
Name: Stephen G. Melidones
Title: Assistant Vice
President
By:/s/Leslie-Anne Lombardo
----------------------------------
Name: Leslie-Anne Lombardo
Title: Assistant Vice
President
$20,000,000 CORESTATES BANK, N.A.
By:/s/Glenn Gallagher
----------------------------------
Name: Glenn Gallagher
Title: Vice President
$15,000,000 KREDIETBANK, N.V.
By:/s/Francis X. Payne
----------------------------------
Name: Francis X. Payne
Title: Vice President
By:/s/Robert Snauffer
----------------------------------
Name: Robert Snauffer
Title: Vice President
84
<PAGE>
Total Commitments
$150,000,000
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Lead Agent
By:/s/Timothy O'Donovan
----------------------------------
Name: Timothy O'Donovan
Title: Vice President
60 Wall Street
New York, New York 10260-0060
Attention: Michael Erichetti
Telephone number: (212) 648-8127
Telecopy number: (212) 648-5336
Domestic and Euro-Currency
Lending Office:
Nassau, Bahamas Office
c/o J.P. Morgan Services Inc.
500 Stanton Christiana Road
Newark, Delaware 19173-2107
Attention: Nancy K. Dunbar
Telecopy number: (302) 634-4222
85
-----------------------------------------
SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
CARRAMERICA REALTY, L.P.
-----------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINED TERMS....................................................1
ARTICLE II ORGANIZATIONAL MATTERS..........................................12
Section 2.1 Organization...........................................12
Section 2.2 Name...................................................13
Section 2.3 Registered Office and Agent; Principal Office..........13
Section 2.4 Term...................................................13
ARTICLE III PURPOSE........................................................13
Section 3.1 Purpose and Business...................................13
Section 3.2 Powers.................................................14
ARTICLE IV CAPITAL CONTRIBUTIONS; ISSUANCES OF PARTNERSHIP INTERESTS.......14
Section 4.1 Capital Contributions of the Partners..................14
Section 4.2 Issuances of Additional Partnership Interests..........15
Section 4.3 No Preemptive Rights...................................16
ARTICLE V DISTRIBUTIONS....................................................16
Section 5.1 Requirement and Characterization of Distributions......16
Section 5.2 Amounts Withheld.......................................17
Section 5.3 Distributions Upon Liquidation.........................17
ARTICLE VI ALLOCATIONS.....................................................17
Section 6.1 Allocations For Capital Account Purposes...............17
ARTICLE VII MANAGEMENT AND OPERATIONS OF BUSINESS..........................18
Section 7.1 Management.............................................18
Section 7.2 Certificate of Limited Partnership.....................22
Section 7.3 Title to Partnership Assets............................22
Section 7.4 Reimbursement of the General Partner...................23
Section 7.5 Outside Activities of the General Partner and its
Affiliates...........................................23
Section 7.6 Transactions with Affiliates...........................24
Section 7.7 Indemnification........................................25
Section 7.8 Liability of the General Partner.......................27
Section 7.9 Other Matters Concerning the General Partner...........28
Section 7.10 Reliance by Third Parties.............................29
ARTICLE VIII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS....................29
Section 8.1 Limitation of Liability................................29
Section 8.2 Management of Business.................................30
Section 8.3 Outside Activities of Limited Partners.................30
Section 8.4 Return of Capital......................................30
Section 8.5 Rights of Limited Partners Relating to the Partnership.31
Section 8.6 Redemption Right.......................................32
ARTICLE IX BOOKS, RECORDS, ACCOUNTING AND REPORTS..........................34
i
<PAGE>
Section 9.1 Records and Accounting.................................34
Section 9.2 Fiscal Year............................................34
Section 9.3 Reports................................................34
ARTICLE X TAX MATTERS......................................................35
Section 10.1 Preparation of Tax Returns............................35
Section 10.2 Tax Elections.........................................35
Section 10.3 Tax Matters Partner...................................35
Section 10.4 Organizational Expenses...............................37
Section 10.5 Withholding...........................................37
ARTICLE XI TRANSFERS AND WITHDRAWALS.......................................38
Section 11.1 Transfer..............................................38
Section 11.2 General Partner's Rights to Transfer..................38
Section 11.3 Limited Partners' Rights to Transfer..................39
Section 11.4 Substituted Limited Partners..........................40
Section 11.5 Assignees.............................................41
Section 11.6 General Provisions....................................41
ARTICLE XII ADMISSION OF PARTNERS..........................................42
Section 12.1 Admission of Successor General Partner................42
Section 12.2 Admission of Additional Limited Partners..............42
Section 12.3 Amendment of Agreement and Certificate of
Limited Partnership.................................43
ARTICLE XIII DISSOLUTION AND LIQUIDATION...................................43
Section 13.1 Dissolution...........................................43
Section 13.2 Winding Up............................................44
Section 13.3 Compliance with Timing Requirements of Regulations....45
Section 13.4 Deemed Distribution and Recontribution................46
Section 13.5 Rights of Limited Partners............................46
Section 13.6 Notice of Dissolution.................................46
Section 13.7 Cancellation of Certificate of Limited Partnership....47
Section 13.8 Reasonable Time for Winding Up........................47
Section 13.9 Waiver of Partition...................................47
Section 13.10 Liability of Liquidator..............................47
ARTICLE XIV AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS...................48
Section 14.1 Amendments............................................48
Section 14.2 Meetings of the Partners..............................49
ARTICLE XV GENERAL PROVISIONS..............................................50
Section 15.1 Addresses and Notice..................................50
Section 15.2 Titles and Captions...................................50
Section 15.3 Pronouns and Plurals..................................51
Section 15.4 Further Action........................................51
Section 15.5 Binding Effect........................................51
Section 15.6 Creditors.............................................51
Section 15.7 Waiver................................................51
Section 15.8 Counterparts..........................................51
ii
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Section 15.9 Applicable Law........................................52
Section 15.10 Invalidity of Provisions.............................52
Section 15.11 Power of Attorney....................................52
Section 15.12 Entire Agreement.....................................53
Section 15.13 No Rights as Stockholders............................54
Section 15.14 Rights and Duties of CarrAmerica and Affiliates
of the General Partner.............................54
EXHIBIT A
---------
PARTNERS AND PARTNERSHIP INTERESTS
EXHIBIT B
---------
CAPITAL ACCOUNT MAINTENANCE
EXHIBIT C
---------
SPECIAL ALLOCATION RULES
EXHIBIT D
---------
NOTICE OF REDEMPTION
EXHIBIT E
---------
CLASS C UNITS
iii
<PAGE>
SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
CARRAMERICA REALTY, L.P.
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP, dated
as of May 9, 1997, is entered into by and among CarrAmerica Realty GP Holdings,
Inc., a Delaware corporation and wholly-owned subsidiary of Carr America Realty
Corporation, a Maryland corporation ("CarrAmerica"), as the General Partner, and
Carr America Realty LP Holdings, Inc., a Delaware corporation and wholly-owned
subsidiary of CarrAmerica, and the other Persons whose names are set forth on
Exhibit A as attached hereto who have been admitted as limited partners in
accordance with the provisions of the Agreement of Limited Partnership, dated as
of March 5, 1996, as amended prior to the date hereof, as the Limited Partners,
together with any other Persons who become Partners in the Partnership as
provided herein. CarrAmerica is a party to this Agreement solely for purpose of
Sections 7.4, 7.5, 7.7, 7.8, 8.6, 11.2, 15.13 and 15.14.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree to continue the
Partnership as a limited partnership under the Delaware Revised Uniform Limited
Partnership Act, as amended from time to time, as follows:
ARTICLE I
DEFINED TERMS
The following definitions shall be for all purposes, unless
otherwise clearly indicated to the contrary, applied to the terms used in this
Agreement.
"Act" means the Delaware Revised Uniform Limited Partnership Act, as
it may be amended from time to time, and any successor to such statute.
"Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 4.2 hereof and who is shown
as such on the books and records of the Partnership.
"Adjusted Capital Account" means the Capital Account maintained for
each Partner as of the end of each Partnership Year (i) increased by any amounts
which such Partner is obligated to restore pursuant to any provision of this
Agreement or is deemed to be obligated to restore pursuant to the penultimate
sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) and (ii)
decreased by the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of
<PAGE>
Adjusted Capital Account is intended to comply with the provisions of
Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith.
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Adjusted Capital Account
as of the end of the relevant Partnership Year
"Adjusted Property" means any property the Carrying Value of which
has been adjusted pursuant to Exhibit B hereof. Once an Adjusted Property is
deemed distributed by, and recontributed to, the Partnership for federal income
tax purposes upon a termination thereof pursuant to Section 708 of the Code,
such property shall thereafter constitute a Contributed Property until the
Carrying Value of such property is further adjusted pursuant to Exhibit B
hereof.
"Affiliate" means, with respect to any Person, (i) any Person
directly or indirectly controlling, controlled by or under common control with
such Person, (ii) any Person owning or controlling ten percent (10%) or more of
the outstanding voting interests of such Person, (iii) any Person of which such
Person owns or controls ten percent (10%) or more of the voting interests, or
(iv) any officer, director, general partner or trustee of such Person or any
Person referred to in clauses (i), (ii), and (iii) above. For purposes of this
definition, "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.
"Agreed Value" means (i) in the case of any Contributed Property as
of the time of its contribution to the Partnership, the 704(c) Value of such
property, reduced by any liabilities either assumed by the Partnership upon such
contribution or to which such property is subject when contributed, and (ii) in
the case of any property distributed to a Partner by the Partnership, the
Partnership's Carrying Value of such property at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner upon
such distribution or to which such property is subject at the time of
distribution as determined under Section 752 of the Code and the regulations
thereunder.
"Agreement" means this Second Amended and Restated Agreement of
Limited Partnership, as it may be amended, supplemented or restated from time to
time.
"Articles of Incorporation" means the Articles of Incorporation of
CarrAmerica filed in the State of Maryland on July 9, 1992, as amended or
restated from time to time.
"Assignee" means a Person to whom one or more Partnership Units have
been transferred in a manner permitted under this Agreement, but who has
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<PAGE>
not become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5.
"Available Cash" means, with respect to any period for which such
calculation is being made:
(a) all cash revenues and funds received by the Partnership from
whatever source (excluding the proceeds of any Capital Contribution) plus the
amount of any reduction (including, without limitation, a reduction resulting
because the General Partner determines such amounts are no longer necessary) in
reserves of the Partnership, which reserves are referred to in clause (b)(iv)
below;
(b) less the sum of the following (except to the extent made
with the proceeds of any Capital Contribution):
(i) all interests, principal and other debt payments made
during such period by the Partnership,
(ii) all cash expenditures (including capital
expenditures) made by the Partnership during such period,
(iii) investments in any entity (including loans made thereto)
to the extent that such investments are permitted under this
Agreement and are not otherwise described in clauses (b)(i) or (ii),
and
(iv) the amount of any increase in reserves established during
such period which the General Partner determines is necessary or
appropriate in its sole and absolute discretion.
Notwithstanding the foregoing, Available Cash shall not include any
cash received or reductions in reserves, or take into account any disbursements
made or reserves established, after commencement of the dissolution and
liquidation of the Partnership.
"Book-Tax Disparities" means, with respect to any item of
Contributed Property or Adjusted Property, as of the date of any determination,
the difference between the Carrying Value of such Contributed Property or
Adjusted Property and the adjusted basis thereof for federal income tax purposes
as of such date. A Partner's share of the Partnership's Book-Tax Disparities in
all of its Contributed Property and Adjusted Property will be reflected by the
difference between such Partner's Capital Account balance as maintained pursuant
to Exhibit B and the hypothetical balance of such Partner's Capital Account
computed as if it had been maintained strictly in accordance with federal income
tax accounting principles.
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<PAGE>
"Business Day" means any day except a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
law to close.
"Capital Account" means the Capital Account maintained for a Partner
pursuant to Exhibit B hereof.
"Capital Contribution" means, with respect to any Partner, any cash,
cash equivalents or the Agreed Value of Contributed Property which such Partner
contributes or is deemed to contribute to the Partnership pursuant to Section
4.1 or 4.2 hereof.
"CarrAmerica" means CarrAmerica Realty Corporation, a Maryland
corporation, or its successor.
"Carrying Value" means (i) with respect to a Contributed Property or
Adjusted Property, the 704(c) Value of such property reduced (but not below
zero) by all Depreciation with respect to such Contributed Property or Adjusted
Property, as the case may be, charged to the Partners' Capital Accounts and (ii)
with respect to any other Partnership property, the adjusted basis of such
property for federal income tax purposes, all as of the time of determination.
The Carrying Value of any property shall be adjusted from time to time in
accordance with Exhibit B hereof, and to reflect changes, additions or other
adjustments to the Carrying Value for dispositions and acquisitions of
Partnership properties, as deemed appropriate by the General Partner.
"Cash Amount" means an amount of cash per Partnership Unit equal to
the Value on the Valuation Date of the REIT Shares Amount.
"Certificate" means the Certificate of Limited Partnership relating
to the Partnership filed in the office of the Delaware Secretary of State, as
amended from time to time in accordance with the terms hereof and the Act.
"Class A Unit" means a Partnership Unit that is specifically
designated by the General Partner as being a Class A Unit.
"Class B Unit" means a Partnership Unit that is specifically
designated by the General Partner as being a Class B Unit.
"Class C Unit" means a Partnership Unit with such designations,
preferences, rights, powers and duties as are described in Exhibit E hereof and
that is specifically designated by the General Partner as being a Class C Unit.
"Code" means the Internal Revenue Code of 1986, as amended and in
effect from time to time, as interpreted by the applicable regulations
thereunder.
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<PAGE>
Any reference herein to a specific section or sections of the Code shall be
deemed to include a reference to any corresponding provision of future law.
"Consent" means the consent or approval of a proposed action by a
Partner given in accordance with Section 14.2 hereof.
"Contributed Property" means each property or other asset
contributed to the Partnership, in such form as may be permitted by the Act, but
excluding cash contributed or deemed contributed to the Partnership (or deemed
contributed to the Partnership on termination and reconstitution thereof
pursuant to Section 708 of the Code). Once the Carrying Value of a Contributed
Property is adjusted pursuant to Exhibit B hereof, such property shall no longer
constitute a Contributed Property for purposes of Exhibit B hereof, but shall be
deemed an Adjusted Property for such purposes.
"Conversion Factor" means 1.0, provided that in the event that
CarrAmerica (i) declares or pays a dividend on its outstanding REIT Shares in
REIT Shares or makes a distribution to all holders of its outstanding REIT
Shares in REIT Shares, without receiving consideration for such additional REIT
Shares, (ii) subdivides its outstanding REIT Shares, without a corresponding
action taken with respect to the Partnership Units, or (iii) combines its
outstanding REIT Shares into a smaller number of REIT Shares, the Conversion
Factor shall be adjusted by multiplying the Conversion Factor by a fraction, the
numerator of which shall be the number of REIT Shares issued and outstanding on
the record date for such dividend, distribution, subdivision or combination
(assuming for such purposes that such dividend, distribution, subdivision or
combination has occurred as of such time), and the denominator of which shall be
the actual number of REIT Shares (determined without the above assumption)
issued and outstanding on the record date for such dividend, distribution,
subdivision or combination. Any adjustment to the Conversion Factor shall become
effective immediately after the effective date of such event retroactive to the
record date, if any, for such event; it being intended that (i) adjustments to
the Conversion Factor are to be made in order to avoid unintended dilution or
anti-dilution as a result of transactions of the type described above, and (ii)
if a Specified Redemption Date shall fall between the record date and the
effective date of any event of the type described above, that the Conversion
Factor applicable to such redemption shall be adjusted to take into account such
event.
"Depreciation" means, for each fiscal year, an amount equal to the
federal income tax depreciation, amortization, or other cost recovery deduction
allowable with respect to an asset for such year, except that if the Carrying
Value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of such year or other period, Depreciation shall be an
amount which bears the same ratio to such beginning Carrying Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such year bears to
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<PAGE>
such beginning adjusted tax basis; provided, however, that if the federal income
tax depreciation, amortization, or other cost recovery deduction for such year
is zero, Depreciation shall be determined with reference to such beginning
Carrying Value using any reasonable method selected by the General Partner.
"Distribution Period" means any calendar quarter or shorter period
with respect to which a distribution of Available Cash is to be made to the
Partners by the Partnership.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"General Partner" means GP Holdings or its successors as general
partner of the Partnership.
"General Partner Interest" or "General Partnership Interest"
means a Partnership Interest held by the General Partner that is a general
partner interest. A General Partner Interest or General Partnership Interest
may be expressed as a number of Partnership Units.
"GP Holdings" means CarrAmerica Realty GP Holdings, Inc., a Delaware
corporation, or its successor.
"IRS" means the Internal Revenue Service, which administers the
internal revenue laws of the United States.
"Immediate Family" means, with respect to any natural Person, such
natural Person's spouse, parents, descendants, nephews, nieces, brothers, and
sisters.
"Incapacity" or "Incapacitated" means, (i) as to any individual
Partner, death, total physical disability or entry by a court of competent
jurisdiction adjudicating such Partner incompetent to manage his or her Person
or estate, (ii) as to any corporation which is a Partner, the filing of a
certificate of dissolution, or its equivalent, for the corporation or the
revocation of its charter, (iii) as to any partnership which is a Partner, the
dissolution and commencement of winding up of the partnership, (iv) as to any
estate which is a Partner, the distribution by the fiduciary of the estate's
entire interest in the Partnership, (v) as to any trustee of a trust which is a
Partner, the termination of the trust (but not the substitution of a new
trustee), or (vi) as to any Partner, the bankruptcy of such Partner. For
purposes of this definition, bankruptcy of a Partner shall be deemed to have
occurred when (a) the Partner commences a voluntary proceeding seeking
liquidation, reorganization or other relief under any bankruptcy, insolvency or
other similar law now or hereafter in effect, (b) the Partner is adjudged as
bankrupt or insolvent, or a final and nonappealable order for relief under any
bankruptcy, insolvency or similar law now or hereafter in effect has been
entered against the
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<PAGE>
Partner, (c) the Partner executes and delivers a general assignment for the
benefit of the Partner's creditors, (d) the Partner files an answer or other
pleading admitting or failing to contest the material allegations of a petition
filed against the Partner in any proceeding of the nature described in clause
(b) above, (e) the Partner seeks, consents to or acquiesces in the appointment
of a trustee, receiver or liquidator for the Partner or for all or any
substantial part of the Partner's properties, (f) any proceeding seeking
liquidation, reorganization or other relief under any bankruptcy, insolvency or
other similar law now or hereafter in effect has not been dismissed within one
hundred twenty (120) days after the commencement thereof, (g) the appointment
without the Partner's consent or acquiescence of a trustee, receiver of
liquidator has not been vacated or stayed within ninety (90) days of such
appointment, or (h) an appointment referred to in clause (g) is not vacated
within ninety (90) days after the expiration of any such stay.
"Indemnitee" means (i) any Person made a party to a proceeding by
reason of his status as (A) the General Partner or an Affiliate of the General
Partner (including, without limitation, CarrAmerica and LP Holdings), (B) a
Limited Partner or (C) a director or officer of the Partnership, the General
Partner or an Affiliate of the General Partner and (ii) such other Persons
(including Affiliates of the General Partner or the Partnership) as the General
Partner may designate from time to time (whether before or after the event
giving rise to potential liability), in its sole and absolute discretion.
"Limited Partner" means LP Holdings and any other Person named as a
Limited Partner in Exhibit A attached hereto, as such Exhibit may be amended
from time to time, or any Substituted Limited Partner or Additional Limited
Partner, in such Person's capacity as a Limited Partner in the Partnership.
"Limited Partner Interest" or "Limited Partnership Interest" means a
Partnership Interest of a Limited Partner in the Partnership representing a
fractional part of the Partnership Interests of all Limited Partners and
includes any and all benefits to which the holder of such a Partnership Interest
may be entitled as provided in this Agreement, together with all obligations of
such Person to comply with the terms and provisions of this Agreement. A Limited
Partner Interest or Limited Partnership Interest may be expressed as a number of
Partnership Units.
"Liquidator" has the meaning set forth in Section 13.2.
"LP Holdings" means CarrAmerica Realty LP Holdings, Inc., a Delaware
corporation, or its successor.
"Net Income" means, for any taxable period, the excess, if any, of
the Partnership's items of income and gain for such taxable period over the
Partnership's items of loss and deduction for such taxable period. The items
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included in the calculation of Net Income shall be determined in accordance with
Exhibit B. Once an item of income, gain, loss or deduction that has been
included in the initial computation of Net Income is subjected to the special
allocation rules in Exhibit C, Net Income or the resulting Net Loss, whichever
the case may be, shall be recomputed without regard to such item.
"Net Loss" means, for any taxable period, the excess, if any, of the
Partnership's items of loss and deduction for such taxable period over the
Partnership's items of income and gain for such taxable period. The items
included in the calculation of Net Loss shall be determined in accordance with
Exhibit B. Once an item of income, gain, loss or deduction that has been
included in the initial computation of Net Loss is subjected to the special
allocation rules in Exhibit C, Net Loss or the resulting Net Income, whichever
the case may be, shall be recomputed without regard to such item.
"New Securities" has the meaning set forth in Section 7.5.B.
"Nonrecourse Built-in Gain" means, with respect to any Contributed
Properties or Adjusted Properties that are subject to a mortgage or negative
pledge securing a Nonrecourse Liability, the amount of any taxable gain that
would be allocated to the Partners pursuant to Section 2.B of Exhibit C if such
properties were disposed of in a taxable transaction in full satisfaction of
such liabilities and for no other consideration.
"Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(c).
"Nonrecourse Liability" has the meaning set forth in Regulations
Section 1.752-1(a)(2).
"Notice of Redemption" means the Notice of Redemption substantially
in the form of Exhibit D to this Agreement.
"Partner" means a General Partner or a Limited Partner, and
"Partners" means the General Partner and the Limited Partners.
"Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if
such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Partner Nonrecourse Debt" has the meaning set forth in
Regulations Section 1.704-2(b)(4).
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"Partner Nonrecourse Deductions" has the meaning set forth in
Regulations Section 1.704-2(i)(2), and the Amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(i)(2).
"Partnership" means the limited partnership formed under the Act and
continued pursuant to this Agreement, and any successor thereto.
"Partnership Interest" means an ownership interest in the
Partnership representing a Capital Contribution by either a Limited Partner or
the General Partner and includes any and all benefits to which the holder of
such a Partnership Interest may be entitled as provided in this Agreement,
together with all obligations of such Person to comply with the terms and
provisions of this Agreement. A Partnership Interest may be expressed as a
number of Partnership Units.
"Partnership Minimum Gain" has the meaning set forth in Regulations
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in Partnership Minimum Gain, for a Partnership Year
shall be determined in accordance with the rules of Regulations Section
1.704-2(d).
"Partnership Record Date" means the record date established by the
General Partner for the distribution of Available Cash pursuant to Section 5.1
hereof, which record date shall be the same as the record date established by
the General Partner for a distribution to its shareholders of some or all of its
portion of such distribution.
"Partnership Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1 and 4.2,
and includes Class A Units, Class B Units and any other classes or series of
Partnership Units established after the date hereof. The number of Partnership
Units outstanding and the Percentage Interests in the Partnership represented by
such Partnership Units are set forth in Exhibit A hereto, as such Exhibit may be
amended from time to time. The ownership of Partnership Units may be evidenced
by a certificate in a form approved by the General Partner.
"Partnership Year" means the fiscal year of the Partnership, which
shall be the calendar year.
"Percentage Interest" means, as to a Partner, its interest in the
Partnership as determined by dividing the Partnership Units owned by such
Partner by the total number of Partnership Units then outstanding and as
specified in Exhibit A attached hereto, as such Exhibit may be amended from time
to time.
"Person" means a natural person, partnership (whether general or
limited), trust, estate, association, corporation, limited liability company,
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unincorporated organization, custodian, nominee or any other individual entity
in its own or any representative capacity.
"Recapture Income" means any gain recognized by the Partnership
(computed without regard to any adjustment required by Section 734 or 743 of the
Code) upon the disposition of any property or asset of the Partnership, which
gain is characterized as ordinary income because it represents the recapture of
deductions previously taken with respect to such property or asset.
"Redeeming Partner" has the meaning set forth in Section 8.6.
"Redemption Amount" means either the Cash Amount or the REIT Shares
Amount, as determined by the General Partner in its sole and absolute
discretion. A Redeeming Partner shall have no right, without the General
Partner's consent, to receive the Redemption Amount in the form of REIT Shares
Amount.
"Redemption Right" has the meaning set forth in Section 8.6.
"Regulations" means the Income Tax Regulations promulgated under the
Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"REIT" means a real estate investment trust under Section 856 of the
Code.
"REIT Share" shall mean a share of common stock of or comparable
equity interest in CarrAmerica.
"REIT Shares Amount" shall mean a number of REIT Shares equal to the
product of one times the Conversion Factor; provided that, in the event the
CarrAmerica issues to all holders of REIT Shares rights, options, warrants or
convertible or exchangeable securities entitling such holders to subscribe for
or purchase REIT Shares, or any other securities or property (collectively, the
"rights") then the REIT Shares Amount shall also include such rights that a
holder of that number of REIT Shares would be entitled to receive.
"Residual Gain" or "Residual Loss" means any item of gain or loss,
as the case may be, of the Partnership recognized for federal income tax
purposes resulting from a sale, exchange or other disposition of Contributed
Property or Adjusted Property, to the extent such item of gain or loss is not
allocated pursuant to Section 2.B.1(a) or 2.B.2(a) of Exhibit C to eliminate
Book-Tax Disparities.
"Securities Act" means the Securities Act of 1933, as amended.
"704(c) Value" of any Contributed Property means the fair market
value of such property at the time of contribution as determined by the General
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Partner using such reasonable method of valuation as it may adopt; provided,
however, that the 704(c) Value of any property deemed contributed to the
Partnership for federal income tax purposes upon termination and reconstitution
thereof pursuant to Section 708 of the Code shall be determined in accordance
with Exhibit B hereof. Subject to Exhibit B hereof, the General Partner shall,
in its sole and absolute discretion, use such method as it deems reasonable and
appropriate to allocate the aggregate of the 704(c) Value of Contributed
Properties in a single or integrated transaction among each separate property on
a basis proportional to its fair market values.
"Specified Redemption Date" means the tenth Business Day after
receipt by the General Partner of a Notice of Redemption; provided that, no
Specified Redemption Date with respect to a Partnership Unit shall occur before
one (1) year from the date such Partnership Unit was originally issued.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests is owned, directly or
indirectly, by such Person.
"Substituted Limited Partner" means a Person who is admitted as a
Limited Partner to the Partnership pursuant to Section 11.4.
"Terminating Capital Transaction" means any sale or other
disposition of all or substantially all of the assets of the Partnership for
cash or a related series of transactions that, taken together, result in the
sale or other disposition of all or substantially all of the assets of the
Partnership for cash.
"Termination Transaction" has the meaning set forth in Section
8.6.E.
"Unrealized Gain" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (i) the fair
market value of such property (as determined under Exhibit B hereof) as of such
date, over (ii) the Carrying Value of such property (prior to any adjustment to
be made pursuant to Exhibit B hereof) as of such date.
"Unrealized Loss" attributable to any item of Partnership property
means, as of any date of determination, the excess, if any, of (i) the Carrying
Value of such property (prior to any adjustment to be made pursuant to Exhibit B
hereof) as of such date, over (ii) the fair market value of such property (as
determined under Exhibit B hereof) as of such date.
"Valuation Date" means the date of receipt by the General Partner of
a Notice of Redemption or, if such date is not a Business Day, the first
Business Day thereafter.
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"Value" means, with respect to a REIT Share, the average of the
daily market price for the ten (10) consecutive trading days immediately
preceding the Valuation Date. The market price for each such trading day shall
be: (i) if the REIT Shares are listed or admitted to trading on any securities
exchange or the NASDAQ-National Market System, the closing price, regular way,
on such day, or if no such sale takes place on such day, the average of the
closing bid and asked prices on such day, (ii) if the REIT Shares are not listed
or admitted to trading on any securities exchange or the NASDAQ-National Market
System, the last reported sale price on such day or, if no sale takes place on
such day, the average of the closing bid and asked prices on such day, as
reported by a reliable quotation source designated by the General Partner, or
(iii) if the REIT Shares are not listed or admitted to trading on any securities
exchange or the NASDAQ-National Market System and no such last reported sale
price or closing bid and asked prices are available, the average of the reported
high bid and low asked prices on such day, as reported by a reliable quotation
source designated by the General Partner, or if there shall be no bid and asked
prices on such day, the average of the high bid and low asked prices, as so
reported, on the most recent day (not more than ten (10) days prior to the date
in question) for which prices have been so reported; provided that, if there are
no bid and asked prices reported during the ten (10) days prior to the date in
question, the Value of the REIT Shares shall be determined by the General
Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate. In the
event the REIT Shares Amount includes rights that a holder of REIT Shares would
be entitled to receive, then the Value of such rights shall be determined by the
General Partner acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate.
ARTICLE II
ORGANIZATIONAL MATTERS
Section 2.1 Organization
The Partnership is a limited partnership organized pursuant to the
provisions of the Act and upon the terms and conditions set forth in the
Agreement of Limited Partnership, dated as of March 5, 1996, as amended prior to
the date hereof. The Partners hereby continue the Partnership and amend and
restate such Agreement of Limited Partnership, as amended prior to the date
hereof, in its entirety. Except as expressly provided herein to the contrary,
the rights and obligations of the Partners and the administration and
termination of the Partnership shall be governed by the Act. The Partnership
Interest of each Partner shall be personal property for all purposes.
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Section 2.2 Name
The name of the Partnership is CarrAmerica Realty, L.P. The
Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, including the name of the General Partner or
any Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or
similar words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any jurisdiction that
so requires. The General Partner in its sole and absolute discretion may change
the name of the Partnership at any time and from time to time and shall notify
the Limited Partners of such change in the next regular communication to the
Limited Partners.
Section 2.3 Registered Office and Agent; Principal Office
The address of the registered office of the Partnership in the State
of Delaware is located at 1209 Orange Street, Wilmington, Delaware, and the
registered agent for service of process on the Partnership in the State of
Delaware at such registered office is Corporation Trust Company. The principal
office of the Partnership is 1700 Pennsylvania Avenue, N.W., Washington, D.C.
20006, or such other place as the General Partner may from time to time
designate by notice to the Limited Partners. The Partnership may maintain
offices at such other place or places within or outside the State of Delaware as
the General Partner deems advisable.
Section 2.4 Term
The term of the Partnership commenced on March 5, 1996 and shall
continue until December 31, 2095, unless it is dissolved sooner pursuant to the
provisions of Article XIII or as otherwise provided by law.
ARTICLE III
PURPOSE
Section 3.1 Purpose and Business
The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act, provided, however, that such
business shall be limited to and conducted in such a manner as to permit
CarrAmerica at all times to be classified as a REIT, unless CarrAmerica ceases
to qualify as a REIT for any reason or reasons not related to the business
conducted by the Partnership, (ii) to enter into any partnership, joint venture
or other similar arrangement to engage in any of the foregoing or the ownership
of interests in any entity engaged in any of the foregoing and (iii) to do
anything necessary or
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incidental to the foregoing. In connection with the foregoing and without
limiting CarrAmerica's right, in its sole discretion, to cease qualifying as a
REIT, the Partners acknowledge that CarrAmerica's status as a REIT inures to the
benefit of all the Partners and not solely the General Partner or its
Affiliates.
Section 3.2 Powers
The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein and
for the protection and benefit of the Partnership, including, without
limitation, full power and authority, directly or through its ownership interest
in other entities, to enter into, perform and carry out contracts of any kind,
borrow money and issue evidences of indebtedness whether or not secured by
mortgages, deed of trust, pledge or other lien, acquire and develop real
property and lease, sell, transfer and dispose of real property; provided,
however, that the Partnership shall not take, or refrain from taking, any action
which, in the judgment of the General Partner, in its sole and absolute
discretion, (i) could adversely affect the ability of CarrAmerica to continue to
qualify as a REIT, (ii) could subject CarrAmerica to any additional taxes under
Section 857 or Section 4981 of the Code or (iii) could violate any law or
regulation of any governmental body or agency having jurisdiction over
CarrAmerica or the General Partner or the securities of either of them, unless
such action (or inaction) shall have been specifically consented to by the
General Partner in writing.
ARTICLE IV
CAPITAL CONTRIBUTIONS; ISSUANCES
OF PARTNERSHIP INTERESTS
Section 4.1 Capital Contributions of the Partners
At the time of the execution of this Agreement, the Partners have
made the Capital Contributions set forth in Exhibit A hereto. To the extent the
Partnership acquires any property by the merger of any other Person into the
Partnership, Persons who receive Partnership Interests in exchange for their
interests in the Person merging into the Partnership shall become Partners and
shall be deemed to have made Capital Contributions as provided in the applicable
merger agreement and as set forth in Exhibit A hereto. The Partners own
Partnership Units in the amounts set forth in Exhibit A and have a Percentage
Interest in the Partnership as set forth in Exhibit A, which Percentage Interest
shall be adjusted in Exhibit A from time to time by the General Partner to the
extent necessary to reflect accurately redemptions, Capital Contributions, the
issuance of additional Partnership Units, or similar events having an effect on
a Partner's Percentage Interest. The number of Partnership Units held by the
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General Partner shall be equal to at least one percent (1%) of all outstanding
Partnership Units, shall be deemed to be the General Partner Partnership Units
and shall be the General Partnership Interest. Except as provided in Section
10.5, the Partners shall have no obligation to make any additional Capital
Contributions or loans to the Partnership. No Partner shall have any obligation
to restore any deficit that may exist in its Capital Account, either upon a
liquidation of the Partnership or otherwise.
Section 4.2 Issuances of Additional Partnership Interests
A. General. The General Partner is hereby authorized to cause
the Partnership from time to time to issue to Partners or other Persons other
than the General Partner (including, without limitation, in connection with
the contribution of property to the Partnership) additional Partnership Units
or other Partnership Interests in one or more classes, or one or more series
of any of such classes, with such designations, preferences and relative,
participating, optional or other special rights, powers and duties, including
rights, powers and duties senior to Limited Partnership Interests, all as
shall be determined by the General Partner in its sole and absolute
discretion subject to Delaware law, including, without limitation, (i) the
allocations of items of Partnership income, gain, loss, deduction and credit
to each such class or series of Partnership Interests, (ii) the right of each
such class or series of Partnership Interests to share in Partnership
distributions, and (iii) the rights of each such class or series of
Partnership Interests upon dissolution and liquidation of the Partnership.
B. Issuances of Additional Partnership Interests to the General
Partner. The General Partner may make Capital Contributions to the Partnership
at such times and in such amounts as the General Partner, in its sole and
absolute discretion, may determine advisable, but under no circumstances shall
the General Partner be obligated to make any such Capital Contribution. In
exchange for each such Capital Contribution, the Partnership shall issue to the
General Partner, at the election of the General Partner in its sole and absolute
discretion, (i) that number of Partnership Units equal to (a) the amount of the
Capital Contribution divided by (b) the Value of a REIT Share or (ii) or other
Partnership Interests, in one or more classes, or one or more series of any of
such classes, with such designations, preferences and relative, participating,
optional or other special rights, powers and duties, including rights, powers
and duties senior to Limited Partnership Interests, all as shall be determined
by the General Partner in good faith, subject to Delaware law, including,
without limitation, (x) the allocations of items of Partnership income, gain,
loss, deduction and credit to each such class or series of Partnership
Interests, (y) the right of each such class or series of Partnership Interests
to share in Partnership distributions, and (z) the rights of each such class or
series of Partnership Interests upon dissolution and liquidation of the
Partnership.
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C. Class C Units. Under the authority granted to it by Section 4.2.A
hereof, the General Partner has established an additional class of Partnership
Units entitled "Class C Units." Class C Units have the designations,
preferences, rights, powers and duties as set forth in Exhibit E hereto.
D. Minimum Percentage Interest of General Partner. The provisions of
this Section 4.2 shall be applied so that in all events the Percentage Interest
of the General Partner shall be equal to at least 1.00%. In the event the
issuance of additional Partnership Units or Partnership Interests pursuant to
Section 4.2.A would (but for this Section 4.2.D) have the effect of reducing the
Percentage Interest of the General Partner to less than 1.00%, LP Holdings shall
transfer Partnership Units to the General Partner (and, as of the effective date
of such issuance, LP Holdings shall be deemed to hold Partnership Units for the
benefit of the General Partner) to the extent necessary to cause the General
Partner's Percentage Interest, after giving effect to such issuance, to be equal
to at least 1.00%.
Section 4.3 No Preemptive Rights
No Person shall have any preemptive, preferential or other similar
right with respect to (i) additional Capital Contributions or loans to the
Partnership or (ii) issuance or sale of any Partnership Units or other
Partnership Interests.
ARTICLE V
DISTRIBUTIONS
Section 5.1 Requirement and Characterization of Distributions
The General Partner shall distribute at least quarterly an amount equal to one
hundred percent (100%) of Available Cash generated by the Partnership during
such quarter or shorter period to the Partners who are Partners on the
Partnership Record Date with respect to such quarter or shorter period as
follows: (i) to the extent that there is sufficient Available Cash, each holder
of Class A Units shall be entitled to a distribution per Class A Unit equal to
any accrued but unpaid distributions payable with respect to such Class A Unit,
if any, together with any accrued interest thereon, for all prior periods with
respect to which such Class A Unit was issued and outstanding (as described in
clause (ii) below); (ii) after the payment of any accrued but unpaid
distributions, if any, for all prior periods in accordance with the foregoing
clause (i), to the extent that there is sufficient Available Cash, each holder
of Class A Units shall be entitled to a distribution per Class A Unit
(multiplied by the Conversion Factor) in an amount equal to the dividend per
REIT Share paid by the General Partner for such quarter multiplied by a
fraction, the numerator of which is the number of days in the quarter or
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shorter period to which such distribution relates that the Class A Unit was
issued and outstanding, and the denominator of which is the total number of days
in the quarter or shorter period to which such distribution relates; provided,
that to the extent that there is not sufficient Available Cash to pay the
distributions per Class A Unit (multiplied by the Conversion Factor) in
accordance with this clause (ii), such deficit shall cumulate, and shall accrue
interest at a rate of eight percent (8%) per annum, and no distribution (other
than to a Redeeming Partner as provided in Section 8.6.C) shall be made for any
subsequent distribution period pursuant to clauses (ii) and (iii) hereof, unless
all such accrued but unpaid distributions (including any accrued interest
thereon) shall have been paid to the holders of the Class A Units pursuant to
clause (i) above for all prior periods; and (iii) to the extent there is excess
Available Cash after the application of clauses (i) and (ii), such excess shall
be distributed to each holder of Class B Units, on a pro rata basis.
Notwithstanding anything to the contrary contained herein, in no event may a
Partner receive a distribution of Available Cash with respect to a Partnership
Unit for a quarter or shorter period if such Partner is entitled to receive a
distribution with respect to a REIT Share for which such Unit has been redeemed
or exchanged.
Section 5.2 Amounts Withheld
All amounts withheld pursuant to the Code or any provisions of any
state or local tax law and Section 10.5 hereof with respect to any allocation,
payment or distribution to the General Partner, the Limited Partners or
Assignees shall be treated as amounts distributed to the General Partner,
Limited Partners, or Assignees pursuant to Section 5.1 for all purposes under
this Agreement.
Section 5.3 Distributions Upon Liquidation
Proceeds from a Terminating Capital Transaction shall be distributed
to the Partners in accordance with Section 13.2.
ARTICLE VI
ALLOCATIONS
Section 6.1 Allocations For Capital Account Purposes
For purposes of maintaining the Capital Accounts and in determining
the rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction (computed in accordance with Exhibit B hereof) shall be
allocated among the Partners in each taxable year (or portion thereof) as
provided herein below.
A. Net Income. After giving effect to the special allocations set
forth in Section 1 of Exhibit C, Net Income shall be allocated (i) first, to the
General
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Partner to the extent that Net Losses previously allocated to the General
Partner pursuant to the last sentence of Section 6.1.B exceed Net Income
previously allocated to the General Partner pursuant to this clause (i) of
Section 6.1.A, (ii) second, to the Class A Units in accordance with their
respective Percentage Interests to each Partner until each Class A Unit has been
allocated, on a cumulative basis pursuant to this clause (ii), Net Income equal
to the sum of the distributions paid with respect to such Class A Unit pursuant
to clauses (i) and (ii) of Section 5.1, if any, and (iii) thereafter, to the
Class B Units.
B. Net Losses. After giving effect to the special allocations set
forth in Section 1 of Exhibit C, Net Losses shall be allocated (i) first, to the
Class B Units to the extent that any prior allocations of Net Income to the
Class B Units pursuant to Section 6.1(a)(iii) exceed, on a cumulative basis,
distributions with respect to the Class B Units pursuant to clause (iii) of
Section 5.1, (ii) second, to the Class A Units to the extent that any prior
allocations of Net Income pursuant to Section 6.1(a)(ii) exceed, on a cumulative
basis, the distributions paid with respect to such Class A Units pursuant to
clauses (i) and (ii) of Section 5.1 and (iii) third, to the Partners in
accordance with their respective Percentage Interests, provided that Net Losses
shall not be allocated to any Limited Partner pursuant to this Section 6.1.B to
the extent that such allocation would cause such Limited Partner to have an
Adjusted Capital Account Deficit at the end of such taxable year (or increase
any existing Adjusted Capital Account Deficit). All Net Losses in excess of the
limitations set forth in this Section 6.1.B shall be allocated to the General
Partner.
C. Allocation of Nonrecourse Debt. For purposes of
Regulations Section 1.752-3(a), the Partners agree that Nonrecourse
Liabilities of the Partnership in excess of the sum of (i) the amount of
Partnership Minimum Gain and (ii) the total amount of Nonrecourse Built-in
Gain shall be allocated among the Partners in accordance with their
respective Percentage Interests.
D. Recapture Income. Any gain allocated to the Partners upon the
sale or other taxable disposition of any Partnership asset shall to the extent
possible, after taking into account other required allocations of gain pursuant
to Exhibit C, be characterized as Recapture Income in the same proportions and
to the same extent as such Partners have been allocated any deductions directly
or indirectly giving rise to the treatment of such gains as Recapture Income.
ARTICLE VII
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1 Management
A. Powers of General Partner. Except as otherwise expressly provided
in this Agreement, all management powers over the business and affairs of
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the Partnership are and shall be exclusively vested in the General Partner, and
no Limited Partner shall have any right to participate in or exercise control or
management power over the business and affairs of the Partnership. The General
Partner may not be removed by the Limited Partners with or without cause. In
addition to the powers now or hereafter granted a general partner of a limited
partnership under applicable law or which are granted to the General Partner
under any other provision of this Agreement, the General Partner shall have full
power and authority to do all things deemed necessary or desirable by it to
conduct the business of the Partnership, to exercise all powers set forth in
Section 3.2 hereof and to effectuate the purposes set forth in Section 3.1
hereof, including, without limitation:
(1) the making of any expenditures, the lending or borrowing of
money (including, without limitation, making prepayments on
loans and borrowing money to permit the Partnership to make
distributions to its Partners in such amounts as will permit
CarrAmerica (so long as CarrAmerica qualifies as a REIT) to
avoid the payment of any federal income tax (including, for
this purpose, any excise tax pursuant to Section 4981 of the
Code) and to make distributions to its shareholders sufficient
to permit CarrAmerica to maintain REIT status), the assumption
or guarantee of, or other contracting for, indebtedness and
other liabilities, the issuance of evidences of indebtedness
(including the securing of same by deed to secure debt,
mortgage, deed of trust or other lien or encumbrance on the
Partnership's assets) and the incurring of any obligations it
deems necessary for the conduct of the activities of the
Partnership;
(2) the making of tax, regulatory and other filings, or rendering
of periodic or other reports to governmental or other agencies
having jurisdiction over the business or assets of the
Partnership;
(3) the acquisition, disposition, mortgage, pledge, encumbrance,
hypothecation or exchange of any or all of the assets of the
Partnership (including the exercise or grant of any
conversion, option, privilege or subscription right or other
right available in connection with any assets at any time held
by the Partnership) or the merger or other combination of the
Partnership with or into another entity on such terms as the
General Partner deems proper, which powers shall include,
without limitation, the power to pledge any or all of the
assets of the Partnership to secure a loan or other financing
for the benefit of the General Partner or Carr Realty (the
proceeds of which are not required to be contributed or loaned
to the Partnership);
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(4) the use of the assets of the Partnership (including, without
limitation, cash on hand) for any purpose consistent with the
terms of this Agreement and on any terms it sees fit,
including, without limitation, the financing of the conduct of
the operations of the General Partner, CarrAmerica, the
Partnership or any of the Partnership's Subsidiaries, the
lending of funds to other Persons (including, without
limitation, the Partnership's Subsidiaries and CarrAmerica's
Subsidiaries) and the repayment of obligations of the
Partnership and its Subsidiaries and any other Person in which
it has an equity investment and the making of capital
contributions to its Subsidiaries;
(5) the management, operation, leasing, landscaping, repair,
alteration, demolition or improvement of any real property or
improvement owned by the Partnership or any Subsidiary of the
Partnership;
(6) the negotiation, execution, and performance of any contracts,
conveyances or other instruments that the General Partner
considers useful or necessary to the conduct of the
Partnership's operations or the implementation of the General
Partner's powers under this Agreement;
(7) the distribution of Partnership cash or other Partnership
assets in accordance with this Agreement;
(8) the holding, managing, investing and reinvesting of cash
and other assets of the Partnership;
(9) the collection and receipt of revenues and income of the
Partnership;
(10) the selection and dismissal of employees of the Partnership or
the General Partner (including, without limitation, employees
having titles such as "president," vice president,"
"secretary" and "treasurer") and agents, outside attorneys,
accountants, consultants and contractors of the Partnership or
the General Partner, and the determination of their
compensation and other terms of employment or hiring;
(11) the maintenance of such insurance for the benefit of the
Partnership and the Partners as it deems necessary or
appropriate;
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(12) the formation of, or acquisition of an interest in, and the
contribution of property to, any further limited or general
partnerships, joint ventures or other relationships that it
deems desirable (including, without limitation, the
acquisition of interests in, and the contributions of property
to its Subsidiaries and any other Person in which it has an
equity investment from time to time);
(13) the control of any matters affecting the rights and
obligations of the Partnership, including the conduct of
litigation and the incurring of legal expense and the
settlement of claims and litigation, and the indemnification
of any Person against liabilities and contingencies to the
extent permitted by law;
(14) the undertaking of any action in connection with the
Partnership's direct or indirect investment in its
Subsidiaries or any other Person (including, without
limitation, the contribution or loan of funds by the
Partnership to such Persons); and
(15) the determination of the fair market value of any Partnership
property distributed in kind using such reasonable method of
valuation as it may adopt.
B. No Approval by Limited Partners. Each of the Limited Partners
agrees that the General Partner is authorized to execute, deliver and perform
the above-mentioned agreements and transactions on behalf of the Partnership
without any further act, approval or vote of the Partners, notwithstanding any
other provision of this Agreement, the Act or any applicable law, rule or
regulation to the fullest extent permitted under the Act or other applicable
law. The execution, delivery or performance by the General Partner or the
Partnership of any agreement authorized or permitted under this Agreement shall
not constitute a breach by the General Partner of any duty that the General
Partner may owe the Partnership or the Limited Partners or any other Persons
under this Agreement or of any duty stated or implied by law or equity.
C. Insurance. At all times from and after the date hereof,
the General Partner may cause the Partnership to obtain and maintain (i)
casualty, liability and other insurance on the properties of the Partnership
and (ii) liability insurance for the Indemnitees hereunder.
D. Working Capital Reserves. At all times from and after the date
hereof, the General Partner may cause the Partnership to establish and maintain
working capital reserves in such amounts as the General Partner, in its sole and
absolute discretion, deems appropriate and reasonable from time to time.
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E. No Obligations to Consider Tax Consequences of Limited Partners.
In exercising its authority under this Agreement, the General Partner may, but
shall be under no obligation to, take into account the tax consequences to any
Partner of any action taken by it. The General Partner and the Partnership shall
not have liability to a Limited Partner under any circumstances as a result of
an income tax liability incurred by such Limited Partner as a result of an
action (or inaction) by the General Partner pursuant to its authority under this
Agreement.
Section 7.2 Certificate of Limited Partnership
The Certificate has been previously filed with the Secretary of
State of Delaware. To the extent that such action is determined by the General
Partner to be reasonable and necessary or appropriate, the General Partner shall
file amendments to and restatements of the Certificate and do all the things to
maintain the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) under the laws of the State of Delaware
and each other state, the District of Columbia or other jurisdiction in which
the Partnership may elect to do business or own property. Subject to the terms
of Section 8.5.A(4) hereof, the General Partner shall not be required, before or
after filing, to deliver or mail a copy of the Certificate or any amendment
thereto to any Limited Partner. The General Partner shall use all reasonable
efforts to cause to be filed such other certificates or documents as may be
reasonable and necessary or appropriate for the formation, continuation,
qualification and operation of a limited partnership (or a partnership in which
the limited partners have limited liability) in the State of Delaware and any
other state, the District of Columbia or other jurisdiction, in which the
Partnership may elect to do business or own property.
Section 7.3 Title to Partnership Assets
Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the Partnership
as an entity, and no Partner, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner or one or more nominees, as the General Partner may
determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership assets for which legal title
is held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be held by the General Partner for the use and benefit of
the Partnership in accordance with the provisions of this Agreement; provided,
however, that the General Partner shall use its best efforts to cause beneficial
and record title to such assets to be vested in the Partnership as soon as
reasonably practicable. All Partnership assets shall be
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recorded as the property of the Partnership in its books and records,
irrespective of the name in which legal title to such Partnership assets is
held.
Section 7.4 Reimbursement of the General Partner
A. No Compensation. Except as provided in this Section 7.4
and elsewhere in this Agreement (including the provisions of Articles V and
VI regarding distributions, payments, and allocations to which it may be
entitled), the General Partner shall not be compensated for its services as
general partner of the Partnership.
B. Responsibility for Partnership Expenses. The Partnership shall be
responsible for and shall pay all expenses relating to the Partnership's
organization, the ownership of its assets and its operations. The General
Partner shall be reimbursed on a monthly basis, or such other basis as the
General Partner may determine in its sole and absolute discretion, for all
expenses it incurs relating to the operation of, or for the benefit of, the
Partnership. The General Partner shall determine in good faith the amount of
expenses incurred by it related to the operation of, or for the benefit of, the
Partnership. In the event that certain expenses are incurred for the benefit of
the Partnership and other entities (including the General Partner), such
expenses will be allocated to the Partnership and such other entities in such a
manner as the General Partner in its sole and absolute discretion deems fair and
reasonable. Such reimbursements shall be in addition to any reimbursement to the
General Partner pursuant to Section 10.3(c) or as a result of indemnification
pursuant to Section 7.7 hereof. All payments and reimbursements hereunder shall
be characterized for federal income tax purposes as expenses of the Partnership
incurred on its behalf, and not as expenses of the General Partner.
C. Partnership Interest Issuance Expenses. The General
Partner also shall be reimbursed for all expenses it incurs relating to any
issuance of additional Partnership Interests pursuant to Section 4.2 hereof.
Section 7.5 Outside Activities of the General Partner and its
Affiliates
A. General. Nothing contained in this Agreement shall prevent or
prohibit the General Partner or any officer, director, employee, agent, trustee,
Affiliate or shareholder of the General Partner (including, without limitation,
CarrAmerica and LP Holdings) having business interests and engaging in business
activities in addition to those relating to the Partnership (including, without
limitation, owning and operating real estate and incurring indebtedness in its
own name, whether or not the proceeds of such indebtedness are used for the
benefit of
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the Partnership), including, without limitation, engaging in other business
interests and activities in direct or indirect competition with the Partnership.
Neither the Partnership nor any Partners shall have any right by virtue of this
Agreement or the partnership relationship established hereby in or to such other
ventures or activities or to the income or proceeds derived therefrom, and the
pursuit of such ventures, even if competitive with the business of the
Partnership (including, without limitation, causing tenants to transfer from one
of the Partnership's properties to other properties in which the General Partner
has an interest, directly or indirectly, without compensation to the
Partnership, or taking other actions for the benefit of the General Partner or
other entities affiliated with the General Partner that are detrimental to the
Partnership), shall not be deemed wrongful or improper. Neither the General
Partner nor any Affiliate of the General Partner (including, without limitation,
CarrAmerica and LP Holdings) shall be obligated to present any particular
opportunity to the Partnership even if such opportunity is of a character which,
if presented to the Partnership, could be taken by the Partnership, and,
regardless of whether or not such opportunity is competitive with the
Partnership, the General Partner or any Affiliate of the General Partner shall
have the right to take for its own account (individually or as a trustee,
partner or fiduciary), or to recommend to others, any such particular
opportunity. The General Partner and any Affiliates of the General Partner may
acquire Limited Partnership Interests and shall be entitled to exercise all
rights of a Limited Partner relating to such Limited Partnership Interests.
B. Sale and Purchase of REIT Shares. CarrAmerica may issue
additional REIT Shares or rights, options, warrants or convertible or
exchangeable securities containing the right to subscribe for or purchase REIT
Shares ("New Securities"), or purchase or redeem REIT Shares, at such times and
in such amounts and for such consideration as CarrAmerica, in its sole and
absolute discretion, determines. Under no circumstances shall CarrAmerica be
obligated to contribute to the General Partner or the Partnership all or any
part of the proceeds from any issuance of such New Securities or from the
exercise of rights contained in such New Securities, and CarrAmerica may, in its
sole and absolute discretion, retain all such proceeds, to be used by
CarrAmerica as it determines, in its sole and absolute discretion, to be
advisable.
Section 7.6 Transactions with Affiliates
A. Permitted Transactions. Subject to Section 7.6.B below, the
Partnership may lend or contribute funds to, borrow funds from, and enter into
any other transactions with (including, without limitation, the purchase or sale
of any property or the transfer of a tenant from one of the Partnership's
properties to other properties in which the General Partner has an interest,
directly or indirectly, without compensation to the Partnership), the General
Partner, the Partnership's Subsidiaries or other Persons in which it has an
equity investment, or Affiliates of the Partnership, the General Partner or such
Subsidiaries or other Persons, on
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terms and conditions established in the sole and absolute discretion of the
General Partner. The foregoing authority shall not create any right or benefit
in favor of any Subsidiary or any other Person. The Partnership may transfer
assets to joint ventures, other partnerships, corporations or other business
entities in which it is or thereby becomes a participant upon such terms and
subject to such conditions consistent with this Agreement and applicable law.
B. Transactions with Certain Affiliates. Except as expressly
permitted by this Agreement, the Partnership shall not, directly or indirectly,
sell, transfer or convey any property to, or purchase any property from, or
borrow funds from, or lend funds to, any Affiliate of the Partnership or the
General Partner that is not a Subsidiary of the Partnership or the General
Partner, except pursuant to transactions that are on terms that are fair and
reasonable and no less favorable to the Partnership than would be obtained from
an unaffiliated third party.
C. Benefit Plans. The General Partner, in its sole and absolute
discretion and without the approval of the Limited Partners, may propose and
adopt on behalf of the Partnership employee benefit plans funded by the
Partnership for the benefit of employees of the General Partner, the
Partnership, Subsidiaries of the Partnership or any Affiliate of any of them in
respect of services performed, directly or indirectly, for the benefit of the
Partnership, the General Partner, or any of the Partnership's Subsidiaries.
D. Redemption of Partnership Units held by General Partner. The
Partnership is expressly permitted to purchase Partnership Units held by the
General Partner at any time and upon such terms as the General Partner, in its
sole and absolute discretion, shall determine, subject to Section 7.6.B;
provided , that any such purchase of Partnership Units from the General Partner
shall be deemed to have complied with Section 7.6.B if the purchase price per
Partnership Unit is equal to either (i) the Value of a REIT Share or (ii) the
price paid by the General Partner for such Partnership Unit, if such Partnership
Unit has been acquired from a third party.
Section 7.7 Indemnification
A. General. The Partnership shall indemnify an Indemnitee from and
against any and all losses, claims, damages, liabilities, joint or several,
expenses (including, without limitation, attorneys fees and other legal fees and
expenses), judgments, fines, settlements, and other amounts arising from any and
all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that relate to the operations of the
Partnership as set forth in this Agreement in which any such Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, unless it is
established that: (i) the act or omission of the Indemnitee was material to the
matter giving rise to the proceeding and
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either was committed in bad faith or was the result of active and deliberate
dishonesty, (ii) the Indemnitee actually received an improper personal benefit
in money, property or services, or (iii) in the case of any criminal proceeding,
the Indemnitee had reasonable cause to believe that the act or omission was
unlawful. Without limitation, the foregoing indemnity shall extend to any
liability of any Indemnitee, pursuant to a loan guarantee or otherwise, for any
indebtedness of the Partnership or any Subsidiary of the Partnership (including,
without limitation, any indebtedness which the Partnership or any Subsidiary of
the Partnership has assumed or taken subject to), and the General Partner is
hereby authorized and empowered, on behalf of the Partnership, to enter into one
or more indemnity agreements consistent with the provisions of this Section 7.7
in favor of any Indemnitee having or potentially having liability for any such
indebtedness. The termination of any proceeding by judgment, order or settlement
does not create a presumption that the Indemnitee did not meet the requisite
standard of conduct set forth in this Section 7.7.A. The termination of any
proceeding by conviction or upon a plea of nolo contendere or its equivalent, or
an entry of an order of probation prior to judgment, creates a rebuttable
presumption that the Indemnitee acted in a manner contrary to that specified in
this Section 7.7.A with respect to the subject matter of such proceeding. Any
indemnification pursuant to this Section 7.7 shall be made only out of the
assets of the Partnership, and neither the General Partner nor any Limited
Partner shall have any obligation to contribute to the capital of the
Partnership or otherwise provide funds to enable the Partnership to fund its
obligations under this Section 7.7.
B. Advancement of Expenses. Reasonable expenses incurred by an
Indemnitee who is a party to a proceeding may be paid or reimbursed by the
Partnership in advance of the final disposition of the proceeding upon receipt
by the Partnership of (i) a written affirmation by the Indemnitee of the
Indemnitee's good faith belief that the standard of conduct necessary for
indemnification by the Partnership as authorized in this Section 7.7.A has been
met, and (ii) a written undertaking by or on behalf of the Indemnitee to repay
the amount if it shall ultimately be determined that the standard of conduct has
not been met.
C. No Limitation of Rights. The indemnification provided by this
Section 7.7 shall be in addition to any other rights to which an Indemnitee or
any other Person may be entitled under any agreement, pursuant to any vote of
the Partners, as a matter of law or otherwise, and shall continue as to an
Indemnitee who has ceased to serve in such capacity unless otherwise provided in
a written agreement pursuant to which such Indemnitee is indemnified.
D. Insurance. The Partnership may purchase and maintain
insurance, on behalf of the Indemnitees and such other Persons as the General
Partner shall determine, against any liability that may be asserted against
or expenses that may be incurred by such Person in connection with the
Partnership's
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activities, regardless of whether the Partnership would have the power to
indemnify such Person against such liability under the provisions of this
Agreement.
E. Benefit Plan Fiduciary. For purposes of this Section 7.7, (i) the
Partnership shall be deemed to have requested an Indemnitee to serve as
fiduciary of an employee benefit plan whenever the performance by it of its
duties to the Partnership also imposes duties on, or otherwise involves services
by, it to the plan or participants or beneficiaries of the plan, (ii) excise
taxes assessed on an Indemnitee with respect to an employee benefit plan
pursuant to applicable law shall constitute fines within the meaning of this
Section 7.7 and (iii) actions taken or omitted by the Indemnitee with respect to
an employee benefit plan in the performance of its duties for a purpose
reasonably believed by it to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose which is not
opposed to the best interests of the Partnership.
F. No Personal Liability for Partners. In no event may an
Indemnitee subject any of the Partners to personal liability by reason of the
indemnification provisions set forth in this Agreement.
G. Interested Transactions. An Indemnitee shall not be denied
indemnification in whole or in part under this Section 7.7 because the
Indemnitee had an interest in the transaction with respect to which the
indemnification applies if the transaction was otherwise permitted by the
terms of this Agreement.
H. Benefit. The provisions of this Section 7.7 are for the
benefit of the Indemnitees, their heirs, successors, assigns and
administrators and shall not be deemed to create any rights for the benefit
of any other Persons.
Section 7.8 Liability of the General Partner
A. General. Notwithstanding anything to the contrary set
forth in this Agreement, the General Partner shall not be liable for monetary
damages to the Partnership, any Partners or any Assignees for losses
sustained or liabilities incurred as a result of errors in judgment or of any
act or omission if the General Partner acted in good faith.
B. No Obligation to Consider Separate Interests of Limited Partners.
The Limited Partners expressly acknowledge that the General Partner is acting on
behalf of the Partnership, other partnerships in which the General Partner
serves as general partner and the General Partner's shareholders collectively,
that the General Partner is under no obligation to consider the separate
interests of the Limited Partners (including, without limitation, the tax
consequences to Limited Partners or Assignees) in deciding whether to cause the
Partnership to take (or decline to take) any actions, and that the General
Partner
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shall not be liable for monetary damages for losses sustained, liabilities
incurred, or benefits not derived by Limited Partners in connection with such
decisions.
C. Actions of Agents. Subject to its obligations and duties as
General Partner set forth in Section 7.1.A hereof, the General Partner may
exercise any of the powers granted to it by this Agreement and perform any of
the duties imposed upon it hereunder either directly or by or through its
agents. The General Partner shall not be responsible for any misconduct or
negligence on the part of any such agent appointed by it in good faith.
D. Effect of Amendment. Any amendment, modification or repeal of
this Section 7.8 or any provision hereof shall be prospective only and shall not
in any way affect the limitations on the General Partner's liability to the
Partnership and the Limited Partners under this Section 7.8 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.
Section 7.9 Other Matters Concerning the General Partner
A. Reliance on Documents. The General Partner may rely and shall be
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order, bond,
debenture, or other paper or document believed by it in good faith to be genuine
and to have been signed or presented by the proper party or parties.
B. Reliance on Advisors. The General Partner may consult with legal
counsel, accountants, appraisers, management consultants, investment bankers and
other consultants and advisers selected by it, and any act taken or omitted to
be taken in reliance upon the opinion of such Persons as to matters which the
General Partner reasonably believes to be within such Person's professional or
expert competence shall be conclusively presumed to have been done or omitted in
good faith and in accordance with such opinion.
C. Action Through Agents. The General Partner shall have the right,
in respect of any of its powers or obligations hereunder, to act through any of
its duly authorized officers and a duly appointed attorney or attorneys-in-fact.
Each such attorney shall, to the extent provided by the General Partner in the
power of attorney, have full power and authority to do and perform all and every
act and duty which is permitted or required to be done by the General Partner
hereunder.
D. Actions to Maintain REIT Status or Avoid Taxation of the General
Partner. Notwithstanding any other provisions of this Agreement or the Act, any
action of the General Partner on behalf of the Partnership or any decision
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of the General Partner to refrain from acting on behalf of the Partnership,
undertaken in the good faith belief that such action or omission is necessary or
advisable in order (i) to protect the ability of CarrAmerica to continue to
qualify as a REIT or (ii) to allow CarrAmerica to avoid incurring any liability
for taxes under Section 857 or Section 4981 of the Code, is expressly authorized
under this Agreement and is deemed approved by all of the Limited Partners.
Section 7.10 Reliance by Third Parties
Notwithstanding anything to the contrary in this Agreement, any
Person dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority, without the consent or approval of any
other Partner or Person, to encumber, sell or otherwise use in any manner any
and all assets of the Partnership, to enter into any contracts on behalf of the
Partnership and to take any and all actions on behalf of the Partnership, and
such Person shall be entitled to deal with the General Partner as if the General
Partner were the Partnership's sole party in interest, both legally and
beneficially. Each Limited Partner hereby waives any and all defenses or other
remedies which may be available against such Person to contest, negate or
disaffirm any action of the General Partner in connection with any such dealing.
In no event shall any Person dealing with the General Partner or its
representatives be obligated to ascertain that the terms of this Agreement have
been complied with or to inquire into the necessity or expedience of any act or
action of the General Partner or its representatives. Each and every
certificate, document or other instrument executed on behalf of the Partnership
by the General Partner or its representatives shall be conclusive evidence in
favor of any and every Person relying thereon or claiming thereunder that (i) at
the time of the execution and delivery of such certificate, document or
instrument, this Agreement was in full force and effect, (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership, and
(iii) such certificate, document or instrument was duly executed and delivered
in accordance with the terms and provisions of this Agreement and is binding
upon the Partnership.
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
Section 8.1 Limitation of Liability
The Limited Partners shall have no liability under this Agreement
except as expressly provided in this Agreement, including Section 10.5 hereof,
or under the Act.
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Section 8.2 Management of Business
No Limited Partner or Assignee (other than the General Partner, any
of its Affiliates or any officer, director, employee, partner, agent or trustee
of the General Partner, the Partnership or any of their Affiliates, in their
capacity as such) shall take part in the operation, management or control
(within the meaning of the Act) of the Partnership's business, transact any
business in the Partnership's name or have the power to sign documents for or
otherwise bind the Partnership. The transaction of any such business by the
General Partner, any of its Affiliates or any officer, director, employee,
partner, agent or trustee of the General Partner, the Partnership or any of
their Affiliates, in their capacity as such, shall not affect, impair or
eliminate the limitations on the liability of the Limited Partners or Assignees
under this Agreement.
Section 8.3 Outside Activities of Limited Partners
Any Limited Partner (including, without limitation, LP Holdings and
any other Affiliate of the General Partner which is a Limited Partner in the
Partnership) and any officer, director, employee, agent, trustee, Affiliate or
shareholder of any Limited Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities in direct or indirect
competition with the Partnership. Neither the Partnership nor any Partners shall
have any rights by virtue of this Agreement in any business ventures of any
Limited Partner or Assignee. None of the Limited Partners nor any other Person
shall have any rights by virtue of this Agreement or the partnership
relationship established hereby in any business ventures of any other Person and
such Person shall have no obligation pursuant to this Agreement to offer any
interest in any such business ventures to the Partnership, any Limited Partner
or any such other Person, even if such opportunity is of a character which, if
presented to the Partnership, any Limited Partner or such other Person, could be
taken by such Person.
Section 8.4 Return of Capital
Except pursuant to the right of redemption set forth in Section 8.6,
no Limited Partner shall be entitled to the withdrawal or return of his Capital
Contribution, except to the extent of distributions made pursuant to this
Agreement or upon termination of the Partnership as provided herein. No Limited
Partner or Assignee shall have priority over any other Limited Partner or
Assignee either as to the return of Capital Contributions or, except to the
extent provided by Exhibit C hereof or as permitted by Section 4.2.B, or
otherwise expressly provided in this Agreement, as to profits, losses or
distributions.
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Section 8.5 Rights of Limited Partners Relating to the Partnership
A. General. In addition to other rights provided by this
Agreement or by the Act, and except as limited by Section 8.5.C hereof, each
Limited Partner shall have the right, for a purpose reasonably related to
such Limited Partner's interest as a limited partner in the Partnership, upon
written demand with a statement of the purpose of such demand and at such
Limited Partner's own expense:
(1) to obtain a copy of the most recent annual and quarterly
reports filed with the Securities and Exchange Commission by
the General Partner pursuant to the Exchange Act;
(2) to obtain a copy of the Partnership's federal, state and
local income tax returns for each Partnership Year;
(3) to obtain a current list of the name and last known
business, residence or mailing address of each Partner;
(4) to obtain a copy of this Agreement and the Certificate and all
amendments thereto, together with executed copies of all
powers of attorney pursuant to which this Agreement, the
Certificate and all amendments thereto have been executed; and
(5) to obtain true and full information regarding the amount of
cash and a description and statement of any other property or
services contributed by each Partner and which each Partner
has agreed to contribute in the future, and the date on which
each became a Partner.
B. Notice of Change in Conversion Factor. The Partnership
shall notify each Limited Partner in writing of any change made to the
Conversion Factor within ten (10) Business Days of the date such change
becomes effective.
C. Notice of Extraordinary Transaction of CarrAmerica. CarrAmerica
shall not make any extraordinary distributions of cash or property to its
shareholders or effect a merger or sale of all or substantially all of its
assets without notifying the Limited Partners of its intention to make such
distribution or effect such merger or sale at least twenty (20) Business Days
prior to the record date to determine shareholders eligible to receive such
distribution or to vote upon the approval of such merger or sale.
D. Confidentiality. Notwithstanding any other provision of
this Section 8.5, the General Partner may keep confidential from the Limited
Partners,
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for such period of time as the General Partner determines in its
sole and absolute discretion to be reasonable, any information that (i) the
General Partner believes to be in the nature of trade secrets or other
information the disclosure of which the General Partner in good faith
believes is not in the best interests of the Partnership or could damage the
Partnership or its business or (ii) the Partnership is required by law or by
agreements with unaffiliated third parties to keep confidential.
Section 8.6 Redemption Right
A. General. Subject to Section 8.6.C, on or after the date one (1)
year after each Partnership Unit is issued, the holder of such Partnership Unit
other than the General Partner, shall have the right (the "Redemption Right") to
require the Partnership to redeem on a Specified Redemption Date such
Partnership Unit at a redemption price equal to and in the form of the
Redemption Amount to be paid by the Partnership. The Redemption Right shall be
exercised pursuant to a Notice of Redemption delivered to the General Partner by
the Limited Partner who is exercising the redemption right (the "Redeeming
Partner"). A Limited Partner may not exercise the Redemption Right for less than
one thousand (1,000) Partnership Units or, if such Limited Partner holds less
than one thousand (1,000) Partnership Units, all of the Partnership Units held
by such Partner. The Redeeming Partner shall have no right, with respect to any
Partnership Units so redeemed, to receive any distributions paid after the
Specified Redemption Date.
B. General Partner Assumption of Right. Notwithstanding the
provisions of Section 8.6.A, the General Partner may, in its sole and absolute
discretion, assume directly and satisfy a Redemption Right by paying to the
Redeeming Partner the Redemption Amount on the Specified Redemption Date,
whereupon the General Partner shall acquire the Partnership Units offered for
redemption by the Redeeming Partner and shall be treated for all purposes of
this Agreement as the owner of such Partnership Units. In the event the General
Partner shall exercise its right to satisfy the Redemption Right in the manner
described in the preceding sentence, the Partnership shall have no obligation to
pay any amount to the Redeeming Partner with respect to such Redeeming Partner's
exercise of the Redemption Right, and each of the Redeeming Partner, the
Partnership, and the General Partner shall treat the transaction between the
General Partner and the Redeeming Partner as a sale of the Redeeming Partner's
Partnership Units to the General Partner for federal income tax purposes. Each
Redeeming Partner agrees to execute such documents as the General Partner may
reasonably require in connection with the issuance of REIT Shares upon exercise
of the Redemption Right. Nothing contained in this Section 8.6.B shall imply any
right of the General Partner to require any Limited Partner to exercise the
Redemption Right afforded to such Limited Partner pursuant to Section 8.6.A
hereof.
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C. Payment of Accrued and Unpaid Distributions. On any Specified
Redemption Date occurring on or prior to the tenth anniversary of the date on
which the Redeeming Partner was admitted to the Partnership, the Partnership
shall pay to the Redeeming Partner the amount of all accrued and unpaid
distributions, if any, pursuant to Section 5.1. On any Specified Redemption Date
occurring after the tenth anniversary of the date on which the Redeeming Partner
was admitted to the Partnership, the Partnership shall pay to the Redeeming
Partner the amount of all accrued and unpaid distributions, if any, pursuant to
Section 5.1; provided, however, that no such payment of cumulated and unpaid
distributions shall be required if the Redemption Amount is at least 110% of the
sum of (i) the quotient obtained by dividing the Redeeming Partner's Capital
Contribution as set forth on Exhibit A by the number of the Partnership Units
(multiplied by the Conversion Factor) held by such Partner and (ii) all accrued
and unpaid distributions with respect to a Partnership Unit.
D. Exceptions to Exercise of Redemption Right. Notwithstanding the
provisions of Sections 8.6.A and 8.6.B, a Partner shall not be entitled to
exercise the Redemption Right pursuant to Section 8.6.A if the delivery of REIT
Shares to such Partner on the Specified Redemption Date (i) would be prohibited
under the Articles of Incorporation or (ii) would be prohibited under applicable
federal or state securities laws or regulations.
E. Redemption Amount Adjustment in Terminating Transaction.
Notwithstanding any other provision of this Agreement, in the event that
CarrAmerica Realty Corporation shall cease to exist for any reason (including,
without limitation, the merger of CarrAmerica Realty Corporation into another
entity or a sale of all or substantially all of the assets of CarrAmerica Realty
Corporation and distribution of the proceeds therefrom in liquidation) (referred
to as a "Termination Transaction"), the Redemption Amount thereafter shall be
equal to (i) the consideration received for one REIT Share in connection with
the Termination Transaction multiplied by (ii) the Conversion Factor at the time
of the Termination Transaction, which Redemption Amount the General Partner
shall pay upon an exercise of the Redemption Right, at its sole option, either
in the form of the consideration received by the CarrAmerica Realty Corporation
stockholders in connection with the Termination Transaction or in cash in an
amount equal to the value of such consideration at the time the Redemption Right
is exercised, as determined by the General Partner in good faith.
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ARTICLE IX
BOOKS, RECORDS, ACCOUNTING AND REPORTS
Section 9.1 Records and Accounting
The General Partner shall keep or cause to be kept at the principal
office of the Partnership appropriate books and records with respect to the
Partnership's business, including, without limitation, all books and records
necessary to provide to the Limited Partners any information, lists and copies
of documents required to be provided pursuant to Section 9.3 hereof. Any records
maintained by or on behalf of the Partnership in the regular course of its
business may be kept on, or be in the form of, punch cards, magnetic tape,
photographs, micrographics or any other information storage device, provided
that the records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for financial and tax reporting purposes, on an accrual basis in
accordance with generally accepted accounting principles.
Section 9.2 Fiscal Year
The fiscal year of the Partnership shall be the calendar year.
Section 9.3 Reports
A. Annual Reports. As soon as practicable, but in no event later
than the date on which CarrAmerica mails its annual report to its stockholders,
the General Partner shall cause to be mailed to each Limited Partner an annual
report, as of the close of the most recently ended Partnership Year, containing
financial statements of the Partnership, or of CarrAmerica if such statements
are prepared solely on a consolidated basis with CarrAmerica, for such
Partnership Year, presented in accordance with generally accepted accounting
principles, such statements to be audited by a nationally recognized firm of
independent public accountants selected by the General Partner.
B. Quarterly Reports. If and to the extent that CarrAmerica mails
quarterly reports to its stockholders, as soon as practicable, but in no event
later than the date on which such reports are mailed, the General Partner shall
cause to be mailed to each Limited Partner a report containing unaudited
financial statements, as of the last day of such calendar quarter, of the
Partnership, or of CarrAmerica if such statements are prepared solely on a
consolidated basis with CarrAmerica, and such other information as may be
required by applicable law or regulation, or as the General Partner determines
to be appropriate.
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ARTICLE X
TAX MATTERS
Section 10.1 Preparation of Tax Returns
The General Partner shall arrange for the preparation and timely
filing of all returns of Partnership income, gains, deductions, losses and other
items required of the Partnership for federal and state income tax purposes and
shall use all reasonable efforts to furnish, within ninety (90) days of the
close of each taxable year, the tax information reasonably required by Limited
Partners for federal and state income tax reporting purposes.
Section 10.2 Tax Elections
Except as otherwise provided herein, the General Partner shall, in
its sole and absolute discretion, determine whether to make any available
election pursuant to the Code; provided, however, that the General Partner shall
make the election under Section 754 of the Code in accordance with applicable
regulations thereunder. The General Partner shall have the right to seek to
revoke any such election (including, without limitation, the election under
Section 754 of the Code) upon the General Partner's determination in its sole
and absolute discretion that such revocation is in the best interests of the
Partners.
Section 10.3 Tax Matters Partner
A. General. The General Partner shall be the "tax matters partner"
of the Partnership for federal income tax purposes. Pursuant to Section
6223(c)(3) of the Code, upon receipt of notice from the IRS of the beginning of
an administrative proceeding with respect to the Partnership, the tax matters
partner shall furnish the IRS with the name, address and profit interest of each
of the Limited Partners and any Assignees; provided, however, that such
information is provided to the Partnership by the Limited Partners.
B. Powers. The tax matters partner is authorized, but not
required:
(1) to enter into any settlement with the IRS with respect
to any administrative or judicial proceedings for the
adjustment of Partnership items required to be taken
into account by a Partner for income tax purposes (such
administrative proceedings being referred to as a "tax
audit" and such judicial proceedings being referred to
as "judicial review"), and in the settlement agreement
the tax matters partner may expressly state that such
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agreement shall bind all Partners, except that such
settlement agreement shall not bind any Partner (i) who
(within the time prescribed pursuant to the Code and
Regulations) files a statement with the IRS providing
that the tax matters partner shall not have the
authority to enter into a settlement agreement on behalf
of such Partner or (ii) who is a "notice partner" (as
defined in Section 6231(a)(8) of the Code) or a member
of a "notice group" (as defined in Section 6223(b)(2) of
the Code);
(2) in the event that a notice of a final administrative
adjustment at the Partnership level of any item required
to be taken into account by a Partner for tax purposes
(a "final adjustment") is mailed to the tax matters
partner, to seek judicial review of such final
adjustment, including the filing of a petition for
readjustment with the Tax Court or the filing of a
complaint for refund with the United States Claims Court
or the District Court of the United States for the
district in which the Partnership's principal place of
business is located;
(3) to intervene in any action brought by any other
Partner for judicial review of a final adjustment;
(4) to file a request for an administrative adjustment with
the IRS at any time and, if any part of such request is
not allowed by the IRS, to file an appropriate pleading
(petition or complaint) for judicial review with respect
to such request;
(5) to enter into an agreement with the IRS to extend the
period for assessing any tax which is attributable to
any item required to be taken into account by a Partner
for tax purposes, or an item affected by such item; and
(6) to take any other action on behalf of the Partners of
the Partnership in connection with any tax audit or
judicial review proceeding to the extent permitted by
applicable law or regulations.
The taking of any action and the incurring of any expense by the tax
matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of the General
Partner
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set forth in Section 7.7 of this Agreement shall be fully applicable to the tax
matters partner in its capacity as such.
C. Reimbursement. The tax matters partner shall receive no
compensation for its services. All third party costs and expenses incurred by
the tax matters partner in performing his duties as such (including legal and
accounting fees and expenses) shall be borne by the Partnership. Nothing herein
shall be construed to restrict the Partnership from engaging an accounting firm
to assist the tax matters partner in discharging his duties hereunder, so long
as the compensation paid by the Partnership for such services is reasonable.
Section 10.4 Organizational Expenses
The Partnership shall elect to deduct expenses, if any, incurred by
it in organizing the Partnership ratably over a sixty (60) month period as
provided in Section 709 of the Code.
Section 10.5 Withholding
Each Limited Partner hereby authorizes the Partnership to withhold
from or pay on behalf of or with respect to such Limited Partner any amount of
federal, state, local, or foreign taxes that the General Partner determines that
the Partnership is required to withhold or pay with respect to any amount
distributable or allocable to such Limited Partner pursuant to this Agreement,
including, without limitation, any taxes required to be withheld or paid by the
Partnership pursuant to Section 1441, 1442, 1445, or 1446 of the Code. Any
amount paid on behalf of or with respect to a Limited Partner shall constitute a
loan by the Partnership to such Limited Partner, which loan shall be repaid by
such Limited Partner within fifteen (15) days after notice from the General
Partner that such payment must be made unless (i) the Partnership withholds such
payment from a distribution which would otherwise be made to the Limited Partner
or (ii) the General Partner determines, in its sole and absolute discretion,
that such payment may be satisfied out of the available funds of the Partnership
which would, but for such payment, be distributed to the Limited Partner. Any
amounts withheld pursuant to the foregoing clauses (i) or (ii) shall be treated
as having been distributed to such Limited Partner. Each Limited Partner hereby
unconditionally and irrevocably grants to the Partnership a security interest in
such Limited Partner's Partnership Interest to secure such Limited Partner's
obligation to pay to the Partnership any amounts required to be paid pursuant to
this Section 10.5. In the event that a Limited Partner fails to pay any amounts
owed to the Partnership pursuant to this Section 10.5 when due, the General
Partner may, in its sole and absolute discretion, elect to make the payment to
the Partnership on behalf of such defaulting Limited Partner, and in such event
shall be deemed to have loaned such amount to such defaulting Limited Partner
and shall succeed to all rights and remedies of the
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Partnership as against such defaulting Limited Partner (including, without
limitation, the right to receive distributions). Any amounts payable by a
Limited Partner hereunder shall bear interest at the base rate on corporate
loans at large United States money center commercial banks, as published from
time to time in the Wall Street Journal, plus four (4) percentage points (but
not higher than the maximum lawful rate) from the date such amount is due (i.e.,
fifteen (15) days after demand) until such amount is paid in full. Each Limited
Partner shall take such actions as the Partnership or the General Partner shall
request in order to perfect or enforce the security interest created hereunder.
ARTICLE XI
TRANSFERS AND WITHDRAWALS
Section 11.1 Transfer
A. Definition. The term "transfer," when used in this Article XI
with respect to a Partnership Interest or a Partnership Unit, shall be deemed to
refer to a transaction by which the General Partner purports to assign all or
any part of its General Partnership Interest to another Person or by which a
Limited Partner purports to assign all or any part of its Limited Partnership
Interest to another Person, and includes a sale, assignment, gift, pledge,
encumbrance, hypothecation, mortgage, exchange or any other disposition by law
or otherwise. The term "transfer" when used in this Article XI does not include
any redemption or repurchase of Partnership Units by the Partnership from a
Partner (including the General Partner pursuant to Section 7.6.D) or acquisition
of Partnership Units from a Limited Partner by the General Partner pursuant to
Section 8.6 or otherwise.
B. General. No Partnership Interest shall be transferred, in
whole or in part, except in accordance with the terms and conditions set
forth in this Article XI. Any transfer or purported transfer of a
Partnership Interest not made in accordance with this Article XI shall be
null and void.
Section 11.2 General Partner's Rights to Transfer
A. Limited Partnership Interests. The General Partner may transfer
all or any portion of its Limited Partnership Interests, or any of the rights
associated with such Limited Partnership Interests, to any party without the
consent of the Partnership or any Partner (regardless of whether such transfer
triggers a termination of the Partnership for tax purposes under Section 708 of
the Code).
B. General Partner Interest. The General Partner shall not be
permitted to transfer its General Partner Interest except (i) to an Affiliate of
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the General Partner, (ii) in connection with a sale of all or substantially all
of the General Partner's assets, or (iii) in connection with a merger,
consolidation or other business combination involving the General partner;
provided, that the foregoing transfers shall be permitted if the Person
succeeding as General Partner pursuant to clause (i), (ii) or (iii) above
assumes all of the obligations of the General Partner under the Partnership
Agreement.
Section 11.3 Limited Partners' Rights to Transfer
A. General. Subject to the provisions of Sections 11.3.C, 11.3.D,
11.3.E and 11.4, a Limited Partner (other than LP Holdings) may transfer, with
or without the consent of the General Partner, all or any portion of his
Partnership Interest, or any of such Limited Partner's rights as a Limited
Partner, to an Immediate Family Member or an Affiliate of such Limited Partner,
provided that prior written notice of such proposed transfer is delivered to the
General Partner. No other transfers of a Limited Partnership Interest may be
effected without the consent of the General Partner, which consent may be given
or denied by the General Partner in its sole and absolute discretion.
B. Incapacitated Limited Partners. If a Limited Partner is subject
to Incapacity, the executor, administrator, trustee, committee, guardian,
conservator or receiver of such Limited Partner's estate shall have all the
rights of a Limited Partner, but not more rights than those enjoyed by other
Limited Partners for the purpose of settling or managing the estate and such
power as the Incapacitated Limited Partner possessed to transfer all or any part
of his or its interest in the Partnership. The Incapacity of a Limited Partner,
in and of itself, shall not dissolve or terminate the Partnership.
C. No Transfers Violating Securities Laws. The General Partner may
prohibit any transfer of Partnership Units by a Limited Partner if, in the
opinion of legal counsel to the Partnership, such transfer would require filing
of a registration statement under the Securities Act or would otherwise violate
any federal, state or foreign securities laws or regulations applicable to the
Partnership or the Partnership Unit.
D. No Transfers Affecting Tax Status of Partnership. No transfer of
Partnership Units by a Limited Partner may be made to any Person if (i) in the
opinion of legal counsel for the Partnership, it would result in the Partnership
being treated as an association taxable as a corporation for federal income tax
purposes, (ii) in the opinion of legal counsel for the Partnership, it would
adversely affect the ability of CarrAmerica to continue to qualify as a REIT or
would subject CarrAmerica to any additional taxes under Section 857 or Section
4981 of the Code, or (iii) such transfer is attempted to be effectuated through
an "established
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securities market" or a "secondary market (or the substantial equivalent
thereof)" within the meaning of Section 7704 of the Code.
E. No Transfers to Holders of Nonrecourse Liabilities. No pledge,
assignment or other transfer of any Partnership Units may be made to a lender to
the Partnership or any Person who is related (within the meaning of Section
1.752-4(b) of the Regulations) to any lender to the Partnership whose loan
constitutes a Nonrecourse Liability without the consent of the General Partner,
in its sole and absolute discretion; provided that, as a condition to such
consent the lender will be required to enter into an arrangement with the
Partnership and the General Partner to exchange or redeem for the Redemption
Amount any Partnership Units in which a security interest is held simultaneously
with the time at which such lender would be deemed to be a partner in the
Partnership for purposes of allocating liabilities to such lender under Section
752 of the Code.
Section 11.4 Substituted Limited Partners
A. Consent of General Partner. No Limited Partner shall have the
right to substitute a transferee as a Limited Partner in his place. The General
Partner shall, however, have the right to consent to the admission of a
transferee of the interest of a Limited Partner pursuant to this Section 11.4 as
a Substituted Limited Partner, which consent may be given or withheld by the
General Partner in its sole and absolute discretion. The General Partner's
failure or refusal to permit a transferee of any such interests to become a
Substituted Limited Partner shall not give rise to any cause of action against
the Partnership or any Partner.
B. Rights of Substituted Limited Partner. A transferee who has been
admitted as a Substituted Limited Partner in accordance with this Article XI
shall have all the rights and powers and be subject to all the restrictions and
liabilities of a Limited Partner under this Agreement. The admission of any
transferee as a Substituted Limited Partner shall be conditioned upon the
transferee executing and delivering to the Partnership an acceptance of all the
terms and conditions of this Agreement (including, without limitation, the
provisions of Section 15.11 and such other documents or instruments as may be
required to effect the admission).
C. Amendment of Exhibit A. Upon the admission of a Substituted
Limited Partner, the General Partner shall amend Exhibit A to reflect the name,
address, number of Partnership Units, and Percentage Interest of such
Substituted Limited Partner and to eliminate or adjust, if necessary, the name,
address and interest of the predecessor of such Substituted Limited Partner.
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Section 11.5 Assignees
If the General Partner, in its sole and absolute discretion, does
not consent to the admission of any permitted transferee under Section 11.3 as a
Substituted Limited Partner, as described in Section 11.4, such transferee shall
be considered an Assignee for purposes of this Agreement. An Assignee shall be
entitled to all the rights of an assignee of a limited partnership interest
under the Act, including the right to receive distributions from the Partnership
and the share of Net Income, Net Losses, gain, loss and Recapture Income
attributable to the Partnership Units assigned to such transferee, but shall not
be deemed to be a holder of Partnership Units for any other purpose under this
Agreement, and shall not be entitled to vote such Partnership Units in any
matter presented to the Limited Partners for a vote (such Partnership Units
being deemed to have been voted on such matter in the same proportion as all
other Partnership Units held by Limited Partners are voted). In the event any
such transferee desires to make a further assignment of any such Partnership
Units, such transferee shall be subject to all the provisions of this Article XI
to the same extent and in the same manner as any Limited Partner desiring to
make an assignment of Partnership Units.
Section 11.6 General Provisions
A. Withdrawal of Limited Partner. No Limited Partner may withdraw
from the Partnership other than as a result of a permitted transfer of all of
such Limited Partner's Partnership Units in accordance with this Article XI or
pursuant to redemption of all of its Partnership Units under Section 8.6.
B. Termination of Status as Limited Partner. Any Limited Partner who
shall transfer all of its Partnership Units in a transfer permitted pursuant to
this Article XI or pursuant to redemption of all of its Partnership Units under
Section 8.6 shall cease to be a Limited Partner.
C. Timing of Transfers. Transfers pursuant to this Article XI
may only be made on the first day of a fiscal quarter of the Partnership,
unless the General Partner otherwise agrees.
D. Allocations. If any Partnership Interest is transferred during
any quarterly segment of the Partnership's fiscal year in compliance with the
provisions of this Article XI or redeemed or transferred pursuant to Section
8.6, Net Income, Net Losses, each item thereof and all other items attributable
to such interest for such fiscal year shall be divided and allocated between the
transferor Partner and the transferee Partner by taking into account their
varying interests during the fiscal year in accordance with Section 706(d) of
the Code, using the interim closing of the books method. Solely for purposes of
making such allocations, each of such items for the calendar month in which the
transfer or redemption
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occurs shall be allocated to the Person who is a Partner as of midnight on the
last day of said month. All distributions of Available Cash attributable to any
Partnership Unit with respect to which the Partnership Record Date is before the
date of such transfer, assignment or redemption shall be made to the transferor
Partner or the Redeeming Partner, as the case may be, and, in the case of a
transfer or assignment other than a redemption, all distributions of Available
Cash thereafter attributable to such Partnership Unit shall be made to the
transferee Partner.
ARTICLE XII
ADMISSION OF PARTNERS
Section 12.1 Admission of Successor General Partner
A successor to all of the General Partner's General Partner Interest
pursuant to Section 11.2 hereof who is proposed to be admitted as a successor
General Partner shall be admitted to the Partnership as the General Partner,
effective upon such transfer. Any such transferee shall carry on the business of
the Partnership without dissolution. In each case, the admission shall be
subject to the successor General Partner executing and delivering to the
Partnership an acceptance of all of the terms and conditions of this Agreement
and such other documents or instruments as may be required to effect the
admission.
Section 12.2 Admission of Additional Limited Partners
A. General. No Person shall be admitted as an Additional Limited
Partner without the consent of the General Partner, which consent may be given
or withheld in the General Partner's sole and absolute discretion. A Person who
makes a Capital Contribution to the Partnership in accordance with this
Agreement or who exercises an option to receive Partnership Units shall be
admitted to the Partnership as an Additional Limited Partner only with the
consent of the General Partner and only upon furnishing to the General Partner
(i) evidence of acceptance in form satisfactory to the General Partner of all of
the terms and conditions of this Agreement, including, without limitation, the
power of attorney granted in Section 15.11 hereof and (ii) such other documents
or instruments as may be required in the discretion of the General Partner in
order to effect such Person's admission as an Additional Limited Partner. The
admission of any Person as an Additional Limited Partner shall become effective
on the date upon which the name of such Person is recorded on the books and
records of the Partnership, following the consent of the General Partner to such
admission.
B. Allocations to Additional Parties. If any Additional Limited
Partner is admitted to the Partnership on any day other than the first day of a
Partnership Year, then Net Income, Net Losses, each item thereof and all other
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items allocable among Partners and Assignees for such Partnership Year shall be
allocated among such Additional Limited Partner and all other Partners and
Assignees by taking into account their varying interests during the Partnership
Year in accordance with Section 706(d) of the Code, using the interim closing of
the books method. Solely for purposes of making such allocations, each of such
items for the calendar month in which an admission of any Additional Limited
Partner occurs shall be allocated among all the Partners and Assignees including
such Additional Limited Partner. All distributions of Available Cash with
respect to which the Partnership Record Date is before the date of such
admission shall be made solely to Partners and Assignees other than the
Additional Limited Partner, and all distributions of Available Cash thereafter
shall be made to all the Partners and Assignees including such Additional
Limited Partner.
Section 12.3 Amendment of Agreement and Certificate of
Limited Partnership
For the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Act to amend
the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement (including an amendment of Exhibit A)
and, if required by law, shall prepare and file an amendment to the Certificate
and may for this purpose exercise the power of attorney granted pursuant to
Section 15.11 hereof.
ARTICLE XIII
DISSOLUTION AND LIQUIDATION
Section 13.1 Dissolution
The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the admission
of a successor General Partner in accordance with the terms of this Agreement.
Upon the withdrawal of the General Partner, any successor General Partner shall
continue the business of the Partnership. The Partnership shall dissolve, and
its affairs shall be wound up, upon the first to occur of any of the following
("Liquidating Events") :
(i) the expiration of its term as provided in Section 2.4
hereof;
(ii) an event of withdrawal of the General Partner, as defined in
the Act (other than an event of bankruptcy), unless, within ninety (90) days
after the withdrawal all the remaining Partners agree in writing to continue the
business of the Partnership and to the appointment, effective as of the date of
withdrawal, of a substitute General Partner;
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(iii) an election to dissolve the Partnership made by the General
Partner, in its sole and absolute discretion;
(iv) entry of a decree of judicial dissolution of the
Partnership pursuant to the provisions of the Act;
(v) the sale of all or substantially all of the assets and
properties of the Partnership in exchange for cash; or
(vi) a final and non-appealable judgment is entered by a court of
competent jurisdiction ruling that the General Partner is bankrupt or insolvent,
or a final and non-appealable order for relief is entered by a court with
appropriate jurisdiction against the General Partner, in each case under any
federal or state bankruptcy or insolvency laws as now or hereafter in effect,
unless prior to the entry of such order or judgment all of the remaining
Partners agree in writing to continue the business of the Partnership and to the
appointment, effective as of a date prior to the date of such order or judgment,
of a substitute General Partner.
Section 13.2 Winding Up
A. General. Upon the occurrence of a Liquidating Event, the
Partnership shall continue solely for the purposes of winding up its affairs in
an orderly manner, liquidating its assets, and satisfying the claims of its
creditors and Partners. No Partner shall take any action that is inconsistent
with, or not necessary to or appropriate for, the winding up of the
Partnership's business and affairs. The General Partner (or, in the event there
is no remaining General Partner, any Person elected by a majority in interest of
the Limited Partners (the "Liquidator")) shall be responsible for overseeing the
winding up and dissolution of the Partnership and shall take full account of the
Partnership's liabilities and property and the Partnership property shall be
liquidated as promptly as is consistent with obtaining the fair value thereof,
and the proceeds therefrom (which may, to the extent determined by the General
Partner, include equity or other securities of the General Partner, CarrAmerica
or any other entity) shall be applied and distributed in the following order:
(1) First, to the payment and discharge of all of the
Partnership's debts and liabilities to creditors other than
the Partners;
(2) Second, to the payment and discharge of all of the
Partnership's debts and liabilities to the General Partner;
(3) Third, to the payment and discharge of all of the
Partnership's debts and liabilities to the Partners; and
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(4) The balance, if any, to the Partners in accordance with their
Capital Accounts, after giving effect to all contributions,
distributions, and allocations for all periods.
The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article XIII.
B. Deferred Liquidation. Notwithstanding the provisions of Section
13.2.A hereof which require liquidation of the assets of the Partnership, but
subject to the order of priorities set forth therein, if prior to or upon
dissolution of the Partnership the Liquidator determines that an immediate sale
of part or all of the Partnership's assets would be impractical or would cause
undue loss to the Partners, the Liquidator may, in its sole and absolute
discretion, defer for a reasonable time the liquidation of any assets except
those necessary to satisfy liabilities of the Partnership (including to those
Partners as creditors) and/or distribute to the Partners, in lieu of cash, as
tenants in common and in accordance with the provisions of Section 13.2.A
hereof, undivided interests in such Partnership assets as the Liquidator deems
not suitable for liquidation. Any such distributions in kind shall be made only
if, in the good faith judgment of the Liquidator, such distributions in kind are
in the best interest of the Partners, and shall be subject to such conditions
relating to the disposition and management of such properties as the Liquidator
deems reasonable and equitable and to any agreements governing the operation of
such properties at such time. The Liquidator shall determine the fair market
value of any property distributed in kind using such reasonable method of
valuation as it may adopt.
Section 13.3 Compliance with Timing Requirements of Regulations
In the event the Partnership is "liquidated" within the meaning of
Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuant
to this Article XIII to the General Partner and Limited Partners who have
positive Capital Accounts in compliance with Regulations Section
1.704-1(b)(2)(ii)(b)(2). If any Partner has a deficit balance in his Capital
Account (after giving effect to all contributions, distributions and allocations
for all taxable years, including the year during which such liquidation occurs),
such Partner shall have no obligation to make any contribution to the capital of
the Partnership with respect to such deficit, and such deficit shall not be
considered a debt owed to the Partnership or to any other Person for any purpose
whatsoever. In the discretion of the General Partner, a pro rata portion of the
distributions that would otherwise be made to the General Partner and Limited
Partners pursuant to this Article XIII may be: (A) distributed to a trust
established for the benefit of the General Partner and Limited Partners for the
purposes of liquidating Partnership assets, collecting amounts owed to the
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Partnership, and paying any contingent or unforeseen liabilities or obligations
of the Partnership or of the General Partner arising out of or in connection
with the Partnership (in which case the assets of any such trust shall be
distributed to the General Partner and Limited Partners from time to time, in
the reasonable discretion of the General Partner, in the same proportions as the
amount distributed to such trust by the Partnership would otherwise have been
distributed to the General Partner and Limited Partners pursuant to this
Agreement); or (B) withheld to provide a reasonable reserve for Partnership
liabilities (contingent or otherwise) and to reflect the unrealized portion of
any installment obligations owed to the Partnership, provided that such withheld
amounts shall be distributed to the General Partner and Limited Partners as soon
as practicable.
Section 13.4 Deemed Distribution and Recontribution
Notwithstanding any other provision of this Article XIII, in the
event the Partnership is deemed liquidated within the meaning of Regulations
Section 1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the
Partnership's property shall not be liquidated, the Partnership's liabilities
shall not be paid or discharged, and the Partnership's affairs shall not be
wound up. Instead, for federal income tax purposes and for purposes of
maintaining Capital Accounts pursuant to Exhibit B hereof, the Partnership shall
be deemed to have distributed the Property in kind to the General Partner and
Limited Partners, who shall be deemed to have assumed and taken such property
subject to all Partnership liabilities, all in accordance with their respective
Capital Accounts. Immediately thereafter, the General Partner and Limited
Partners shall be deemed to have recontributed the Partnership property in kind
to the Partnership, which shall be deemed to have assumed and taken such
property subject to all such liabilities.
Section 13.5 Rights of Limited Partners
Except as otherwise provided in this Agreement, each Limited Partner
shall look solely to the assets of the Partnership for the return of its Capital
Contributions and shall have no right or power to demand or receive property
other than cash from the Partnership. No Limited Partner shall have priority
over any other Limited Partner as to the return of its Capital Contributions,
distributions, or allocations.
Section 13.6 Notice of Dissolution
In the event a Liquidating Event occurs or an event occurs that
would, but for provisions of Section 13.1, result in a dissolution of the
Partnership, the General Partner shall, within thirty (30) days thereafter,
provide written notice thereof to each of the Partners and to all other parties
with whom the Partnership regularly conducts business (as determined in the
discretion of the General Partner) and shall publish notice thereof in a
newspaper of general circulation in each place in which the Partnership
regularly conducts business (as determined in the discretion of the General
Partner).
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<PAGE>
Section 13.7 Cancellation of Certificate of Limited Partnership
Upon the completion of the liquidation of the Partnership cash and
property as provided in Section 13.2 hereof, the Partnership shall be terminated
and the Certificate and all qualifications of the Partnership as a foreign
limited partnership in jurisdictions other than the State of Delaware shall be
canceled and such other actions as may be necessary to terminate the Partnership
shall be taken.
Section 13.8 Reasonable Time for Winding Up
A reasonable time shall be allowed for the orderly winding up of the
business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2 hereof, in order to minimize any losses otherwise
attendant upon such winding-up, and the provisions of this Agreement shall
remain in effect among the Partners during the period of liquidation.
Section 13.9 Waiver of Partition
Each Partner hereby waives any right to partition of the Partnership
property.
Section 13.10 Liability of Liquidator
The Liquidator shall be indemnified and held harmless by the
Partnership from and against any and all claims, demands, liabilities, costs,
damages and causes of action of any nature whatsoever arising out of or
incidental to the Liquidator's taking of any action authorized under or within
the scope of this Agreement; provided, however, that the Liquidator shall not be
entitled to indemnification, and shall not be held harmless, where the claim,
demand, liability, cost, damage or cause of action at issue arises out of (i) a
matter entirely unrelated to the Liquidator's action or conduct pursuant to the
provisions of this Agreement, or, (ii) the proven willful misconduct or gross
negligence of the Liquidator.
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<PAGE>
ARTICLE XIV
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1 Amendments
A. General. Amendments to this Agreement may be proposed by the
General Partner or by any Limited Partners holding twenty-five percent (25%) or
more of the Partnership Interests. Following such proposal (except an amendment
pursuant to Section 14.1.B below), the General Partner shall submit any proposed
amendment to the Limited Partners. The General Partner shall seek the written
vote of the Partners on the proposed amendment or shall call a meeting to vote
thereon and to transact any other business that it may deem appropriate. For
purposes of obtaining a written vote, the General Partner may require a response
within a reasonable specified time, but not less than fifteen (15) days, and
failure to respond in such time period shall constitute a vote which is
consistent with the General Partner's recommendation with respect to the
proposal. Except as provided in Section 14.1.B, 14.1.C or 14.1.D, a proposed
amendment shall be adopted and be effective as an amendment hereto if it is
approved by the General Partner and it receives the Consent of Partners holding
a majority of the Percentage Interests of the Limited Partners (including
Limited Partnership Interests held by the General Partner).
B. Amendments Not Requiring Limited Partner Approval.
Notwithstanding Section 14.1.A, the General Partner shall have the power,
without the consent of the Limited Partners, to amend this Agreement as may
be required to facilitate or implement any of the following purposes:
(1) to add to the obligations of the General Partner or surrender
any right or power granted to the General Partner or any
Affiliate of the General Partner for the benefit of the
Limited Partners;
(2) to reflect the admission, substitution, termination, or
withdrawal of Partners in accordance with this Agreement
(which may be effected through the replacement of Exhibit A
hereto with an amended Exhibit A);
(3) to set forth the designations, rights, powers, duties, and
preferences of the holders of any additional Partnership
Interests issued pursuant to Section 4.2.A or Section 4.2.B
hereof;
(4) to modify the term of the Partnership as set forth in
Section 2.5;
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(5) to reflect a change that does not adversely affect the Limited
Partners in any material respect, or to cure any ambiguity,
correct or supplement any provision in this Agreement not
inconsistent with law or with other provisions, or make other
changes with respect to matters arising under this Agreement
that will not be inconsistent with law or with the provisions
of this Agreement; and
(6) to satisfy any requirements, conditions, or guidelines
contained in any order, directive, opinion, ruling or
regulation of a federal or state agency or contained in
federal or state law.
The General Partner shall provide notice to the Limited Partners when any action
under this Section 14.1.B has been taken.
C. Amendments Requiring Limited Partner Approval (Excluding General
Partner). Notwithstanding Section 14.1.A hereof, the General Partner shall not
amend Section 4.2.B, Article V, Article VI, Section 7.6, Section 7.8, Section
8.6 or Section 11.2 without the Consent of a majority of the Percentage
Interests of the Limited Partners, excluding Limited Partnership
Interests held by LP Holdings.
D. Amendments Requiring Unanimous Limited Partner Approval.
Notwithstanding anything in this Section 14.1 to the contrary, this Agreement
shall not be amended without the Consent of each Partner adversely affected if
such amendment would (i) convert a Limited Partner's interest in the Partnership
into a general partner's interest, (ii) modify the limited liability of a
Limited Partner, or (iii) amend this Section 14.1.D.
Section 14.2 Meetings of the Partners
A. General. Meetings of the Partners may be called by the General
Partner and shall be called upon the receipt by the General Partner of a written
request by Limited Partners holding twenty-five percent (25%) or more of the
Partnership Interests. The call shall state the nature of the business to be
transacted. Notice of any such meeting shall be given to all Partners not less
than seven (7) days nor more than thirty (30) days prior to the date of such
meeting. Partners may vote in person or by proxy at such meeting. Whenever the
vote or Consent of Partners is permitted or required under this Agreement, such
vote or Consent may be given at a meeting of Partners or may be given in
accordance with the procedure prescribed in Section 14.1.A hereof. Except as
otherwise expressly provided in this Agreement, the Consent of holders of a
majority of the Percentage Interests held by Limited Partners (including LP
Holdings and any other Affiliate of the General Partner) shall control.
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<PAGE>
B. Actions Without a Meeting. Any action required or permitted to be
taken at a meeting of the Partners may be taken without a meeting if a written
consent setting forth the action so taken is signed by a majority of the
Percentage Interests of the Partners (or such other percentage as is expressly
required by this Agreement). Such consent may be in one instrument or in several
instruments, and shall have the same force and effect as a vote of a majority of
the Percentage Interests of the Partners (or such other percentage as is
expressly required by this Agreement). Such consent shall be filed with the
General Partner. An action so taken shall be deemed to have been taken at a
meeting held on the effective date so certified.
C. Proxy. Each Limited Partner may authorize any Person or Persons
to act for him by proxy on all matters in which a Limited Partner is entitled to
participate, including waiving notice of any meeting, or voting or participating
at a meeting. Every proxy must be signed by the Limited Partner or his
attorney-in-fact. No proxy shall be valid after the expiration of eleven (11)
months from the date thereof unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the Limited Partner executing it.
D. Conduct of Meeting. Each meeting of Partners shall be
conducted by the General Partner or such other Person as the General Partner
may appoint pursuant to such rules for the conduct of the meeting as the
General Partner or such other Person deems appropriate.
ARTICLE XV
GENERAL PROVISIONS
Section 15.1 Addresses and Notice
Any notice, demand, request or report required or permitted to be
given or made to a Partner or Assignee under this Agreement shall be in writing
and shall be deemed given or made when delivered in person or when sent by first
class United States mail or by other means of written communication to the
Partner or Assignee at the address set forth in Exhibit A or such other address
as the Partners shall notify the General Partner in writing.
Section 15.2 Titles and Captions
All article or section titles or captions in this Agreement are for
convenience only. They shall not be deemed part of this Agreement and in no way
define, limit, extend or describe the scope or intent of any provisions hereof.
Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.
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<PAGE>
Section 15.3 Pronouns and Plurals
Whenever the context may require, any pronoun used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns, pronouns and verbs shall include the plural and vice
versa.
Section 15.4 Further Action
The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.
Section 15.5 Binding Effect
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.
Section 15.6 Creditors
None of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor of the Partnership.
Section 15.7 Waiver
No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of any
such breach or any other covenant, duty, agreement or condition.
Section 15.8 Counterparts
This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.
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<PAGE>
Section 15.9 Applicable Law
This Agreement shall be construed and enforced in accordance with
and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law.
Section 15.10 Invalidity of Provisions
If any provision of this Agreement is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby.
Section 15.11 Power of Attorney
A. General. Each Limited Partner and each Assignee who
accepts Units (or any rights, benefits or privileges associated therewith) is
deemed irrevocably to constitute and appoint the General Partner, any
Liquidator, and authorized officers and attorneys-in-fact of each, and each
of those acting singly, in each case with full power of substitution, as its
true and lawful agent and attorney-in-fact, with full power and authority in
its name, place and stead to:
(1) execute, swear to, acknowledge, deliver, file and record in
the appropriate public offices (a) all certificates, documents
and other instruments (including, without limitation, this
Agreement and the Certificate and all amendments or
restatements thereof) that the General Partner or any
Liquidator deems appropriate or necessary to form, qualify or
continue the existence or qualification of the Partnership as
a limited partnership (or a partnership in which the limited
partners have limited liability) in the State of Delaware and
in all other jurisdictions in which the Partnership may
conduct business or own property, (b) all instruments that the
General Partner or any Liquidator deems appropriate or
necessary to reflect any amendment, change, modification or
restatement of this Agreement in accordance with its terms,
(c) all conveyances and other instruments or documents that
the General Partner or any Liquidator deems appropriate or
necessary to reflect the dissolution and liquidation of the
Partnership pursuant to the terms of this Agreement,
including, without limitation, a certificate of cancellation,
(d) all instruments relating to the admission, withdrawal,
removal or substitution of any Partner pursuant to, or other
events described in, Article XI, XII or XIII hereof or the
Capital Contribution of any Partner, and (e) all certificates,
documents and other instruments relating to the
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<PAGE>
determination of the rights, preferences and privileges of
Partnership Interests; and
(2) execute, swear to, acknowledge and file all ballots, consents,
approvals, waivers, certificates and other instruments
appropriate or necessary, in the sole and absolute discretion
of the General Partner or any Liquidator, to make, evidence,
give, confirm or ratify any vote, consent, approval, agreement
or other action which is made or given by the Partners
hereunder or is consistent with the terms of this Agreement or
appropriate or necessary, in the sole discretion of the
General Partner or any Liquidator, to effectuate the terms or
intent of this Agreement.
Nothing contained herein shall be construed as authorizing the
General Partner or any Liquidator to amend this Agreement except in accordance
with Article XIV hereof or as may be otherwise expressly provided for in this
Agreement.
B. Irrevocable Nature. The foregoing power of attorney is hereby
declared to be irrevocable and a power coupled with an interest, in recognition
of the fact that each of the Partners will be relying upon the power of the
General Partner or any Liquidator to act as contemplated by this Agreement in
any filing or other action by it on behalf of the Partnership, and it shall
survive and not be affected by the subsequent Incapacity of any Limited Partner
or Assignee and the transfer of all or any portion of such Limited Partner's or
Assignee's Partnership Units and shall extend to such Limited Partner's or
Assignee's heirs, successors, assigns and personal representatives. Each such
Limited Partner or Assignee hereby agrees to be bound by any representation made
by the General Partner or any Liquidator, acting in good faith pursuant to such
power of attorney; and each such Limited Partner or Assignee hereby waives any
and all defenses which may be available to contest, negate or disaffirm the
action of the General Partner or any Liquidator, taken in good faith under such
power of attorney. Each Limited Partner or Assignee shall execute and deliver to
the General Partner or the Liquidator, within fifteen (15) days after receipt of
the General Partner's or Liquidator's request therefor, such further
designation, powers of attorney and other instruments as the General Partner or
the Liquidator, as the case may be, deems necessary to effectuate this Agreement
and the purposes of the Partnership.
Section 15.12 Entire Agreement
This Agreement contains the entire understanding and agreement among
the Partners with respect to the subject matter hereof and supersedes any prior
written oral understandings or agreements among them with respect thereto.
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<PAGE>
Section 15.13 No Rights as Stockholders
Nothing contained in this Agreement shall be construed as conferring
upon the holders of the Partnership Units any rights whatsoever as stockholders
of the General Partner or CarrAmerica, including, without limitation, any right
to receive dividends or other distributions made to shareholders of the General
Partner or CarrAmerica or to vote or to consent or receive notice as
shareholders in respect to any meeting of shareholders for the election of
directors of the General Partner or CarrAmerica or any other matter.
Section 15.14 Rights and Duties of CarrAmerica and Affiliates
of the General Partner
A. Dividends on REIT Shares. Notwithstanding anything contained in
this Agreement to the contrary, any reference herein to dividends paid or
payable by CarrAmerica on REIT Shares shall be deemed to be a reference to such
dividends as have been paid or are payable by CarrAmerica.
B. Liability of CarrAmerica. Notwithstanding anything to the
contrary set forth in this Agreement, CarrAmerica shall not be liable for
monetary damages to the Partnership, any Partners or any Assignees for losses
sustained or liabilities incurred as a result of errors in judgment or of any
act or omission of the General Partner.
C. No Redemptions by LP Holdings. Notwithstanding anything to
the contrary set forth in this Agreement, LP Holdings shall not be entitled
to exercise the Redemption Right with respect to any Limited Partnership
Units held by it.
D. Assumption of Redemption Right by CarrAmerica. Notwithstanding
anything to the contrary set forth in this Agreement, any assumption of a
Redemption Right by the General Partner pursuant to Section 8.6.B hereof shall
be deemed to be an assumption of such Redemption Right by CarrAmerica, and all
rights and duties of the General Partner with respect to such Redemption Right
shall be deemed and treated as the rights and duties of CarrAmerica. In the
event that CarrAmerica determines to pay the Redeeming Partner the Redemption
Amount in the form of REIT Shares, the total number of REIT Shares to be paid to
the Redeeming Partner in exchange for that Redeeming Partner's Partnership Units
shall be the applicable REIT Shares Amount multiplied by the number of
Partnership Units being redeemed. In the event this product is not a whole
number, the Redeeming Partnership shall be paid (x) that number of REIT Shares
which equals the nearest whole number less than such product plus (y) an amount
of cash which CarrAmerica determines, in its sole and absolute discretion, to
represent the fair value of the remaining fractional REIT Share which would
otherwise be payable to the Redeeming Partner.
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<PAGE>
E. Transfer Rights. Notwithstanding anything to the contrary set
forth in this Agreement, an Affiliate of the General Partner (including, without
limitation, LP Holdings and CarrAmerica) may transfer all or any portion of its
Limited Partnership Interests, or any of the rights associated with such Limited
Partnership Interests, to any party without the consent of the Partnership or
any Partner (regardless of whether such transfer triggers a termination of the
Partnership for tax purposes under Section 708 of the Code).
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first written above.
GENERAL PARTNER:
CARRAMERICA REALTY GP
HOLDINGS, INC.
By: /s/ Brian K. Fields
---------------------------
Name: Brian K.Fields
---------------------------
Title: Chief Financial Officer
---------------------------
LIMITED PARTNERS:
By: CarrAmerica Realty GP
Holdings, Inc., as Attorney-in-
Fact for the Limited Partners
By: /s/ Brian K. Fields
---------------------------
Name: Brian K. Fields
---------------------------
Title: Chief Financial Officer
---------------------------
CARRAMERICA REALTY CORPORATION, solely
for purposes of Sections 7.4, 7.5, 7.7,
7.8, 8.6, 11.2, 15.13 and 15.14 of this
Agreement
By: /s/ Brian K. Fields
---------------------------
Name: Brian K. Fields
---------------------------
Title: Chief Financial Officer
---------------------------
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<PAGE>
Effective as of May 9, 1997
EXHIBIT A
PARTNERS AND PARTNERSHIP INTERESTS
<TABLE>
<CAPTION>
Class A Class B Class C Agreed
Partnership Partnership Partnership Initial Percentage
Name and Address of Partner Units Units Units Capital Interest
- --------------------------- ----- ----- ----- ------- --------
<S> <C> <C> <C> <C> <C>
GENERAL PARTNER:
CarrAmerica Realty GP 89,723 $ 2,264,695 1.00%
Holdings, Inc. Class B (1.20% of
1700 Pennsylvania Avenue, N.W. Units Class B
Washington D.C. 20006 Units)
LIMITED PARTNERS:
CarrAmerica Realty LP 7,392,797 $186,348,830 82.40%
Holdings, Inc. Class B (98.80% of
1700 Pennsylvania Avenue, N.W. Units Class B
Washington D.C. 20006 Units)
Jeffrey L. Minch 190,796 243,795 $10,484,508 4.84%
1402 Etheredge Class A Class C (20.08% of
Austin, Texas 78703 Units Units Class A
Units,
45.18% of
Class C
Units)
Frank P. Krasovec 164,588 243,795 $9,852,240 4.55%
c/o Littlefield Real Class A Class C (17.32% of
Estate Company Units Units Class A
Congress at 6th Street Units,
Austin, Texas 78701 45.18% of
Class C
Units)
Carlton R. Williams, Jr. 52,003 $1,254,572 0.58%
c/o Littlefield Real Class C (9.64% of
Estate Company Units Class C
Congress at 6th Street Units)
Austin, Texas 78701
Plaza Developers Holdings LLC 11,452 $280,000 0.13%
c/o John Madden Company Class A (1.21% of
6400 Fiddlers Green Circle Units Class A
Englewood, Colorado 80111 Units)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class A Class B Class C Agreed
Partnership Partnership Partnership Initial Percentage
Name and Address of Partner Units Units Units Capital Interest
- --------------------------- ----- ----- ----- ------- --------
<S> <C> <C> <C> <C> <C>
Bristol Plaza 3,781 $100,000 0.04%
3100 Bristol Street Class A (0.40% of
Suite 260 Units Class A
Costa Mesa, California Units)
92626
Bannockburn General 144,094 $4,553,364 1.61%
Partnership Class A (15.17% of
1401 Oak Knoll Avenue Units Class A
Pasadena, California 91106 Units)
James Lee Sorenson 100,016 $2,945,465 1.11%
1405 East Siesta Drive Class A (10.53% of
Sandy, Utah 84093 Units Class A
Units)
Ralph B. Johnson 100,016 $2,945,465 1.11%
433 East Holstein Way Class A (10.53% of
Murray, Utah 84107 Units Class A
Units)
Joseph T. Sorenson 9,162 $269,838 0.10%
437 Evesham Drive Class A (0.96% of
Murray, Utah 84107 Units Class A
Units)
F. Tim Fenton 9,162 $269,838 0.10%
6290 Shenandoah Park Avenue Class A (0.96% of
Salt Lake City, Utah 84107 Units Class A
Units)
James LeVoy Sorenson 84,789 $2,497,036 0.95%
2511 South West Temple Class A (8.93% of
Salt Lake City, Utah 84115 Units Class A
Units)
MSI, Inc. 132,255 $3,894,898 1.47%
Arrow Press Square Class A (13.92% of
165 South West Temple Units Class A
Suite 300 Units)
Salt Lake City, Utah 84101
------- --------- ------- ------------ -------
TOTAL: 950,111 7,482,520 539,593 $227,960,749 100.00%
===============================================================
</TABLE>
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<PAGE>
EXHIBIT B
CAPITAL ACCOUNT MAINTENANCE
1. Capital Accounts of the Partners
A. The Partnership shall maintain for each Partner a separate
Capital Account in accordance with the rules of Regulations Section
l.704-l(b)(2)(iv). Such Capital Account shall be increased by (i) the amount of
all Capital Contributions and any other deemed contributions made by such
Partner to the Partnership pursuant to this Agreement and (ii) all items of
Partnership income and gain (including income and gain exempt from tax) computed
in accordance with Section 1.B hereof and allocated to such Partner pursuant to
Section 6.1.A of the Agreement and Exhibit C hereof, and decreased by (x) the
amount of cash or Agreed Value of all actual and deemed distributions of cash or
property made to such Partner pursuant to this Agreement and (y) all items of
Partnership deduction and loss computed in accordance with Section 1.B hereof
and allocated to such Partner pursuant to Section 6.1.B of the Agreement and
Exhibit C hereof.
B. For purposes of computing the amount of any item of income, gain,
deduction or loss to be reflected in the Partners' Capital Accounts, unless
otherwise specified in this Agreement, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for federal income tax purposes determined in
accordance with Section 703(a) of the Code (for this purpose all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a) (1) of the Code shall be included in taxable income or loss),
with the following adjustments:
(1) Except as otherwise provided in Regulations Section
1.704-1(b)(2)(iv)(m), the computation of all items of income,
gain, loss and deduction shall be made without regard to any
election under Section 754 of the Code which may be made by
the Partnership, provided that the amounts of any adjustments
to the adjusted bases of the assets of the Partnership made
pursuant to Section 734 of the Code as a result of the
distribution of property by the Partnership to a Partner (to
the extent that such adjustments have not previously been
reflected in the Partners' Capital Accounts) shall be
reflected in the Capital Accounts of the Partners in the
manner and subject to the limitations prescribed in
Regulations Section l.704-1(b)(2)(iv) (m)(4).
(2) The computation of all items of income, gain, and deduction
shall be made without regard to the fact that items described
in Sections 705(a)(l)(B) or 705(a)(2)(B) of the Code are not
includable gross income or are neither currently deductible
nor capitalized for federal income tax purposes.
(3) Any income, gain or loss attributable to the taxable
disposition of any Partnership property shall be determined as
if the adjusted basis of such property as of such date of
disposition were equal in amount to the Partnership's Carrying
Value with respect to such property as of such date.
(4) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such
taxable income or loss, there shall be taken into account
Depreciation for such fiscal year.
(5) In the event the Carrying Value of any Partnership Asset is
adjusted pursuant to Section 1.D hereof, the amount of any
such adjustment shall be taken into account as gain or loss
from the disposition of such asset.
<PAGE>
(6) Any items specially allocated under Section 2 of Exhibit C
hereof shall not be taken into account.
C. Generally, a transferee (including any Assignee) of a Partnership
Unit shall succeed to a pro rata portion of the Capital Account of the
transferor; provided, however, that, if the transfer causes a termination of the
Partnership under Section 708(b)(l)(B) of the Code, the Partnership's properties
shall be deemed, solely for federal income tax purposes, to have been
distributed in liquidation of the Partnership to the holders of the Partnership
units (including transferee) and recontributed by such Persons in reconstitution
of the Partnership. In such event, the Carrying Values of the Partnership
properties shall be adjusted immediately prior to such deemed distribution
pursuant to Section 1.D(2) hereof. The Capital Accounts of such reconstituted
Partnership shall be maintained in accordance with the principles of this
Exhibit B.
D. (1) Consistent with the provisions of Regulations Section
1.704-1(b)(2)(iv)(f), and as provided in Section 1.D(2), the
Carrying Values of all Partnership assets shall be adjusted
upward or downward to reflect any Unrealized Gain or
Unrealized Loss attributable to such Partnership property, as
of the times of the adjustments provided in Section 1.D(2)
hereof, as if such Unrealized Gain or Unrealized Loss had been
recognized on an actual sale of each such property and
allocated pursuant to Section 6.1 of the Agreement.
(2) Such adjustments shall be made as of the following times: (a)
immediately prior to the acquisition of an additional interest
in the Partnership by any new or existing Partner in exchange
for more than a de minimis Capital Contribution; (b)
immediately prior to the distribution by the Partnership to a
Partner of more than a de minimis amount of property as
consideration for an interest in the Partnership; and (c)
immediately prior to the liquidation of the Partnership within
the meaning of Regulations Section 1.704-l(b)(2)(ii)(g),
provided however that adjustments pursuant to clauses (a) and
(b) above shall be made only if the General Partner determines
that such adjustments are necessary or appropriate to reflect
the relative economic interests of the Partners in the
Partnership.
(3) In accordance with Regulations Section 1.704- l(b)(2)(iv)(e),
the Carrying Value of Partnership assets distributed in kind
shall be adjusted upward or downward to reflect any Unrealized
Gain or Unrealized Loss attributable to such Partnership
property, as of the time any such asset is distributed.
(4) In determining Unrealized Gain or Unrealized Loss for purposes
of this Exhibit B, the aggregate cash amount and fair market
value of all Partnership assets (including cash or cash
equivalents) shall be determined by the General Partner using
such reasonable method of valuation as it may adopt, or in the
case of a liquidating distribution pursuant to Article XIII of
the Agreement, shall be determined and allocated by the
Liquidator using such reasonable methods of valuation as it
may adopt. The General Partner, or the Liquidator, as the case
may be, shall allocate such aggregate fair market value among
the assets of the Partnership in such manner as it determines
in its sole and absolute discretion to arrive at a fair market
value for individual properties.
E. The provisions of the Agreement (including this Exhibit B and the
other Exhibits to the Agreement) relating to the maintenance of Capital Accounts
are intended to comply with Regulations Section 1.704-1(b), and shall be
interpreted and applied in a manner consistent with such Regulations. In the
event the General Partner shall determine that it is prudent to modify
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<PAGE>
the manner in which the Capital Accounts, or any debits or credits thereto
(including, without limitation, debits or credits relating to liabilities which
are secured by contributed or distributed property or which are assumed by the
Partnership, the General Partner, or the Limited Partners) are computed in order
to comply with such Regulations, the General Partner may make such modification
without regard to Article XIV of the Agreement, provided that it is not likely
to have a material effect on the amounts distributable to any Person pursuant to
Article XIII of the Agreement upon the dissolution of the Partnership. The
General Partner also shall (i) make any adjustments that are necessary or
appropriate to maintain equality between the Capital Accounts of the Partners
and the amount of Partnership capital reflected on the Partnership's balance
sheet, as computed for book purposes, in accordance with Regulations Section
l.704-l(b)(2)(iv)(q), and (ii) make any appropriate modifications in the event
unanticipated events might otherwise cause this Agreement not to comply with
Regulations Section l.704-1(b).
2. No Interest
No interest shall be paid by the Partnership on Capital
Contributions or on balances in Partners' Capital Accounts.
3. No Withdrawal
No Partner shall be entitled to withdraw any part of its Capital
Contribution or Capital Account or to receive any distribution from the
Partnership, except as provided in Articles IV, V, VII and XIII of the
Agreement.
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<PAGE>
EXHIBIT C
SPECIAL ALLOCATION RULES
1. Special Allocation Rules.
Notwithstanding any other provision of the Agreement or this Exhibit
C, the following special allocations shall be made in the following order:
A. Minimum Gain Chargeback. Notwithstanding the provisions of
Section 6.1 of the Agreement or any other provisions of this Exhibit C, if there
is a net decrease in Partnership Minimum Gain during any Partnership Year, each
Partner shall be specially allocated items of Partnership income and gain for
such year (and, if necessary, subsequent years) in an amount equal to such
Partner's share of the net decrease in Partnership Minimum Gain, as determined
under Regulations Section 1.704-2(g). Allocations pursuant to the previous
sentence shall be made in proportion to the respective amounts required to be
allocated to each Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(f) (6). This
Section 1.A is intended to comply with the minimum gain chargeback requirements
in Regulations Section 1.704-2(f) and for purposes of this Section 1.A only,
each Partner's Adjusted Capital Account Deficit shall be determined prior to any
other allocations pursuant to Section 6.1 of this Agreement with respect to such
Partnership Year and without regard to any decrease in Partner Minimum Gain
during such Partnership Year.
B. Partner Minimum Gain Chargeback. Notwithstanding any other
provision of Section 6.1 of this Agreement or any other provisions of this
Exhibit C (except Section 1.A hereof), if there is a net decrease in Partner
Minimum Gain attributable to a Partner Nonrecourse Debt during any Partnership
Year, each Partner who has a share of the Partner Minimum Gain attributable to
such Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i) (5), shall be specially allocated items of Partnership income and
gain for such year (and, if necessary, subsequent years) in an amount equal to
such Partner's share of the net decrease in Partner Minimum Gain attributable to
such Partner Nonrecourse Debt, determined in accordance with Regulations Section
1.704-2(i) (5). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each General
Partner and Limited Partner pursuant thereto. The items to be so allocated shall
be determined in accordance with Regulations Section 1.704-2(i) (4). This
Section 1.B is intended to comply with the minimum gain chargeback requirement
in such Section of the Regulations and shall be interpreted consistently
therewith. Solely for purposes of this Section 1.B, each Partner's Adjusted
Capital Account Deficit shall be determined prior to any other allocations
pursuant to Section 6.1 of the Agreement or this Exhibit with respect to such
Partnership Year, other than allocations pursuant to Section 1.A hereof.
C. Qualified Income Offset. In the event any Partner unexpectedly
receives any adjustments, allocations or distributions described in Regulations
Sections 1.704-l(b)(2)(ii)(d)(4), l.704-1(b)(2)(ii)(d)(5), or 1.704-
l(b)(2)(ii)(d)(6), and after giving effect to the allocations required under
Sections 1.A and 1.B hereof, such Partner has an Adjusted Capital Account
Deficit, items of Partnership income and gain (consisting of a pro rata portion
of each item of Partnership income, including gross income and gain for the
Partnership Year) and shall be specifically allocated to such Partner in an
amount and manner sufficient to eliminate, to the extent required by the
Regulations, its Adjusted Capital Account Deficit created by such adjustments,
allocations or distributions as quickly as possible. This Section 1.C is
intended to constitute a "qualified income offset" under Regulations Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
D Nonrecourse Deductions. Nonrecourse Deductions for any Partnership
Year shall be allocated to the Partners in accordance with their respective
Percentage Interests. If the
<PAGE>
General Partner determines in its good faith discretion that the Partnership's
Nonrecourse Deductions must be allocated in a different ratio to satisfy the
safe harbor requirements of the Regulations promulgated under Section 704(b) of
the Code, the General Partner is authorized, upon notice to the Limited
Partners, to revise the prescribed ratio for such Partnership Year to the
numerically closest ratio which would satisfy such requirements.
E. Partner Nonrecourse Deductions. Any Partner Nonrecourse
Deductions for any Partnership Year shall be specially allocated to the Partner
who bears the economic risk of loss with respect to the Partner Nonrecourse Debt
to which such Partner Nonrecourse Deductions are attributable in accordance with
Regulations Sections 1.704-2(b)(4) and 1.704-2(i).
F. Code Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Partnership asset pursuant to Section 734(b) or 743(b)
of the Code is required, pursuant to Regulations Section 1.704-l(b)(2)(iv)(m),
to be taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if the
adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis), and such item of gain or loss shall be specially
allocated to the Partners in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such Section of the
Regulations.
2. Allocations for Tax Purposes
A. Except as otherwise provided in this Section 2, for federal
income tax purposes, each item of income, gain, loss and deduction shall be
allocated among the Partners in the same manner as its correlative item of
"book" income, gain, loss or deduction is allocated pursuant to Section 6.1 of
the Agreement and Section 1 of this Exhibit C.
B. In an attempt to eliminate Book-Tax Disparities attributable to a
Contributed Property or Adjusted Property, items of income, gain, loss, and
deduction shall be allocated for federal income tax purposes among the Partners
as follows:
(1) (a) In the case of a Contributed Property, such items
attributable thereto shall be allocated among the
Partners consistent with the principles of Section
704(c) of the Code to take into account the variation
between the 704(c) Value of such property and its
adjusted basis at the time of contribution (taking into
account Section 2.C of this Exhibit C); and
(b) any item of Residual Gain or Residual Loss attributable
to a Contributed Property shall be allocated among the
Partners in the same manner as its correlative item of
"book" gain or loss is allocated pursuant to Section 6.1
of the Agreement and Section 1 of this Exhibit C.
(2) (a) In the case of an Adjusted Property, such items shall
(i) first, be allocated among the Partners in a manner
consistent with the principles of Section 704(c) of the
Code to take into account the Unrealized Gain or
Unrealized Loss attributable to such property and the
allocations thereof pursuant to Exhibit B, and
(ii) second, in the event such property was originally a
Contributed Property, be allocated among the Partners in
a manner consistent with Section 2.B(1) of this Exhibit
C; and
-2-
<PAGE>
(b) any item of Residual Gain or Residual Loss attributable
to an Adjusted Property shall be allocated among the
Partners in the same manner its correlative item of
"book" gain or loss is allocated pursuant to Section 6.1
of the Agreement and Section 1 of this Exhibit C.
(3) all other items of income, gain, loss and deduction shall be
allocated among the Partners the same manner as their
correlative item of "book" gain or loss is allocated pursuant
to Section 6.1 of the Agreement and Section 1 of this Exhibit
C.
C. To the extent Regulations promulgated pursuant to Section 704(c)
of the Code permit a Partnership to utilize alternative methods to eliminate the
disparities between the Carrying Value of property and its adjusted basis, the
General Partner shall, subject to the following, have the authority to elect the
method to be used by the Partnership and such election shall be binding on all
Partners. With respect to the Contributed Property transferred to the
Partnership pursuant to certain Contribution Agreements dated May 24, 1996 by
and between the Partnership and certain contributors, the Partnership shall
elect to use the "traditional method" set forth in Treasury Regulation
ss.1.704-3(b).
-3-
<PAGE>
EXHIBIT D
NOTICE OF REDEMPTION
The undersigned hereby irrevocably (i) redeems _________ Partnership
Units in CarrAmerica Realty, L.P. in accordance with the terms of the Agreement
of Limited Partnership of CarrAmerica Realty, L.P., as amended, and the
Redemption Right referred to therein, (ii) surrenders such Partnership Units and
all right, title and interest therein and (iii) directs that the Cash Amount or
REIT Shares Amount (as determined by CarrAmerica) deliverable upon exercise of
the Redemption Right be delivered to the address specified below, and if REIT
Shares are to be delivered, such REIT Shares be registered or placed in the
name(s) and at the address(es) specified below. The undersigned hereby
represents, warrants, and certifies, that the undersigned (a) has marketable,
and unencumbered title to such Partnership Units, free and clear of the rights
of or interests of any other person or entity, (b) has the full right, power and
authority to redeem and surrender such Partnership Units as provided herein and
(c) has obtained the consent or approval of all persons or entities, if any,
having the right to consult or approve such redemption and surrender.
Dated:______________________ Name of Limited Partner:______________________
__________________________________
(Signature of Limited Partner)
__________________________________
(Street Address)
__________________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
__________________________________
If REIT Shares are to be issued, issue to:
Name:
Please insert social security or identifying number:
<PAGE>
EXHIBIT E
CLASS C UNITS
Notwithstanding any other provision of the Agreement, including the
provisions of Exhibits A through D thereof, Class C Units shall have the
following designations, preferences, rights, powers and duties:
(1) General. Except as otherwise provided below, each Class C Unit
shall have the same designations, preferences, rights, powers and duties as each
Class A Unit.
(2) Distributions. No distributions of Available Cash as described
in Section 5.1 of the Agreement shall be made with respect to a Class C Unit
while such Class C Unit is outstanding.
(3) Redemption Right. A holder of Class C Units shall not have the
Redemption Right under Section 8.6 of the Agreement with respect to such Class C
Units. The Redemption Right for a holder of Class A Units received with respect
to such holder's Class C Units pursuant to clause (4) below shall be the same as
set forth in Section 8.6 of the Agreement, except that such Redemption Right
shall be exercisable immediately upon issuance of such Class A Units (or on such
other terms as may be set forth in the contribution agreement pursuant to which
such Class C Units are issued).
(4) Conversion to Class A Units.
(a) Beginning on the third anniversary of the date of issuance
of a Class C Unit and on each anniversary thereafter, up to and including the
seventh anniversary of such issuance, each holder of a Class C Unit shall
receive a number of Class A Units, with respect to each Class C Unit owned as of
such date, equal to (A) the greater of (y) one (1) or (z) $24.125 divided by the
average of the daily market price for the ten (10) consecutive trading days
immediately preceding such anniversary date of a REIT Share (determining the
"market price" consistent with the method set forth in the definition of "Value"
in the Agreement), multiplied by (B) .20. On each date of issuance of Class A
Units pursuant to this subparagraph (a), one-fifth of the Class C Units held by
each holder thereof immediately prior to such date shall be canceled and
retired.
(b) If, prior to the fifth anniversary of the date hereof, the
Partnership consummates the sale of any of the Contributed Properties (other
than The Littlefield Complex) in a transaction that triggers gain for a
Contributor under Section 704(c) of the Code, then, upon the closing of any such
sale, each holder of a Class C Unit shall receive a number of Class A Units,
with respect to each Class C Unit, equal to (A) the greater of (y) one (1) or
(z) $24.125 divided by the average of
<PAGE>
the daily market price for the ten (10) consecutive trading days immediately
preceding such closing date (determining the "market price" consistent with the
method set forth in the definition of "Value" in the Agreement), multiplied by
(B) a fraction, the numerator of which is the "Contribution Value" for the
Contributed Property so sold, as set forth in Schedule 1 of the Contribution
Agreement, and the denominator of which is the total "Contribution Value," as
set forth in Schedule 1 to the Contribution Agreement. On each date of issuance
of Class A Units pursuant to this subparagraph (b), a number of Class C Units
held by each holder thereof immediately prior to such date equal to (i) the
number of Class C Units held by such holder immediately prior to such date,
multiplied by (ii) the fraction set forth in clause (B) above, shall be canceled
and retired.
(c) Notwithstanding the provisions of subparagraph (a) or (b)
above, each holder of a Class C Unit shall receive a number of Class A Units,
with respect to each Class C Unit, equal to the greater of (y) one (1) or (z)
$24.125 divided by the average of the daily market price for the ten (10)
consecutive trading days immediately preceding the date of the occurrence of any
of the events described below (determining the "market price" consistent with
the method set forth in the definition of "Value" in the Agreement), immediately
upon the occurrence of any of the following events: (i) the Partnership enters
into a binding agreement that would result in a Terminating Capital Transaction;
(ii) a Liquidating Event occurs (as defined in Section 13.1 of the Partnership
Agreement); (iii) the General Partner enters into a binding agreement to
transfer its General Partner Interest, except for a transfer (y) to an Affiliate
of the General Partner (in which event the term REIT Share shall continue to
mean a share of common stock of CarrAmerica) or (z) in connection with a merger,
consolidation or other business combination involving the General Partner and in
which individuals who immediately prior to such merger, consolidation or other
business combination constituted the board of directors of the General Partner
constitute a majority of the board of directors of the successor General
Partner; or (iv) during any consecutive two-year period commencing on or after
the date hereof, individuals who at the beginning of such period constituted the
board of directors of the General Partner (together with any new directors whose
election by the board of directors or whose nomination for election by
stockholders of the General Partner was approved by a vote of at least a
majority of the members of the board of directors then in office who either were
members of the board of directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the members of the board of directors then in
office. Upon the occurrence of any of the events described in this subparagraph
(c), each Class C Unit shall be canceled and retired. The General Partner shall
provide each holder of Class C Units with prompt notice of any of the events
described in this subparagraph (c), so as to enable such holder to avail itself
of the Redemption Right with respect to the Class A Units into which such Class
C Units are converted pursuant to this subparagraph (c).
<PAGE>
(5) Capital Accounts. A Capital Account shall be maintained with
respect to each Class C Unit. The Capital Account for each Class C Unit
initially shall be $24.125, which Capital Account shall be reduced by 20% each
year beginning on the third anniversary of the date of issuance of such Class C
Unit, until the seventh anniversary of the date of such issuance, at which time
the Capital Account for such Class C Unit shall equal to zero (unless a Class A
Unit shall have been issued pursuant to clause (4)(c) above, at which time the
Capital Account for such Class C Unit shall equal zero). The Capital Account for
each Class A Unit issued with respect to a Class C Unit pursuant to clause (4)
above initially shall be $24.125.
(6) Allocations. No allocations of Partnership items of income,
gain, loss and deduction will be made for tax purposes with respect to the Class
C Units, except as may be required by Section 704(c) of the Code and the
corresponding provisions of the Agreement. For purposes of the Section 704(c)
allocations attributable to property transferred in exchange for the Class C
Units, the Partnership shall use a modified "traditional method" whereby special
curative allocations of gain on the disposition of the property are made to a
Partner holding the Class C Units.
(7) Certain Definitions. Capitalized terms used in this Exhibit E
shall have the meanings given them in the Agreement unless otherwise defined
herein.
(a) "Contributed Properties" means those certain office
properties known as Great Hills Plaza, Park North, Balcones Center, First State
Bank (Lone Star Tower), The Setting, The Littlefield Complex, Riata and Aubrey
Smith which were received by the Partnership from the Contributors pursuant to
the Contribution Agreement.
(b) "Contribution Agreement" means that certain Contribution
Agreement dated as of June 26, 1996 by and between the Partnership and various
parties thereto.
(c) "Contributors" means those certain partnerships and
corporations which received Class A Units and Class C Units of Limited
Partnership Interest in the Partnership in exchange for the Contributed
Properties and certain other assets pursuant to the Contribution Agreement.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CARRAMERICA
REALTY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET AS OF
MARCH 31, 1997 AND FROM CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH
31, 1997.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1.000
<CASH> 35,197
<SECURITIES> 0
<RECEIVABLES> 14,324<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,672,095
<DEPRECIATION> 133,559
<TOTAL-ASSETS> 1,757,316
<CURRENT-LIABILITIES> 0
<BONDS> 735,060
0
17
<COMMON> 487
<OTHER-SE> 915,508
<TOTAL-LIABILITY-AND-EQUITY> 1,757,316
<SALES> 0
<TOTAL-REVENUES> 70,467
<CGS> 0
<TOTAL-COSTS> 55,972
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 14,976
<INCOME-TAX> 0
<INCOME-CONTINUING> 14,976
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,259
<EPS-PRIMARY> 0.26
<EPS-DILUTED> 0.26
<FN>
<F1>
Notes & accounts receivable are presented net of allowance for doubtful
accounts as the allowance is immaterial.
</FN>
</TABLE>
