As filed with the Securities and Exchange Commission on September 16, 1997
Registration Statement No. 333--29003
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
__________________
RECKSON ASSOCIATES REALTY CORP.
(Exact name of registrant as specified in its charter)
MARYLAND 11-3233650
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification number)
225 BROADHOLLOW ROAD
MELVILLE, NEW YORK 11747
(516) 694-6900
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
DONALD J. RECHLER
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
RECKSON ASSOCIATES REALTY CORP.
225 BROADHOLLOW ROAD
MELVILLE, NEW YORK 11747
(516) 694-6900
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
___________________
Copy to:
THOMAS R. SMITH, ESQ.
BROWN & WOOD LLP
ONE WORLD TRADE CENTER, 58TH FLOOR
NEW YORK, N.Y. 10048
___________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF PUBLIC:
From time to time after this Registration Statement becomes effective.
___________________
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box./ /
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, please check the following box./x/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering./ /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering./ /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box./ /
___________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
PROSPECTUS
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SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED SEPTEMBER 16, 1997
7,774,810 SHARES
RECKSON ASSOCIATES REALTY CORP.
COMMON STOCK
_________________
Reckson Associates Realty Corp. along with its subsidiaries (the
"Company") owns a portfolio of Class A office properties and other commercial
properties located primarily in the New York metropolitan area, as well as
commercial real estate development, construction, acquisition, leasing,
design and management businesses. The Company is a self-administered and
self-managed real estate investment trust (a "REIT").
This Prospectus relates to (i) the possible issuance by the Company of
up to 6,974,810 shares (the "Redemption Shares") of common stock, $.01 par
value per share ("Common Stock"), of the Company if and to the extent that
the Company elects to issue such Redemption Shares to holders of up to
6,974,810 units ("Outstanding OP Units") of limited partnership interest ("OP
Units") in Reckson Operating Partnership, L.P. (the "Operating Partnership"),
of which the Company is the sole general partner and owns a controlling
interest, upon the tender of such Outstanding OP Units for redemption; (ii)
the offer and sale from time to time of up to 800,000 shares of Common Stock
(the "Original Shares") by the holders thereof; and (iii) the offer and sale
from time to time of any Redemption Shares that may be issued to and held by
persons who may be affiliates of the Company (such persons, together with the
holders of the Original Shares, the "Selling Stockholders"). The Original
Shares and 5,517,920 of the Outstanding OP Units were issued in connection
with the series of transactions in which the Company and the Operating
Partnership were formed (the "Formation Transactions"). The other 1,456,890
Outstanding OP Units were issued by the Operating Partnership in connection
with its acquisition of interests in real property and related assets and in
connection with the hiring of two officers of the Company, subsequent to the
Formation Transactions. The Company has registered the issuance of the
Redemption Shares and the offer and sale of Redemption Shares and Original
Shares by affiliates of the Company (collectively, the "Registered Shares")
to permit the holders thereof to sell such shares without restriction in the
open market or otherwise, but the registration of the Registered Shares does
not necessarily mean that any of the Registered Shares will be issued by the
Company (with respect to the Redemption Shares) or be offered or sold by the
Selling Stockholders.
Pursuant to the amended and restated agreement of limited partnership of
the Operating Partnership (the "Partnership Agreement"), a Unitholder may
tender all or a portion of its Units to the Operating Partnership for
redemption for the cash equivalent of an equivalent number of shares of
Common Stock; provided, however, that the Company, in its sole and absolute
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discretion, may acquire any Units so tendered for an equivalent number of
shares of Common Stock or for the cash equivalent of an equivalent number of
shares of Common Stock. The Company anticipates that it generally will elect
to acquire directly Units tendered for redemption and to issue Common Stock
in exchange therefor rather than paying cash. As a result, the Company may
from time to time issue up to 6,974,810 Redemption Shares upon the
acquisition of Units tendered to the Operating Partnership for redemption.
Accordingly, the Company is registering the Redemption Shares to provide
Unitholders with freely tradeable securities upon redemption.
The Selling Stockholders from time to time may offer and sell the
Registered Shares held by them directly or through agents or broker-dealers
on terms to be determined at the time of sale. To the extent required, the
names of any agent or broker-dealer and applicable commissions or discounts
and any other required information with respect to any particular offer will
be set forth in the section of this Prospectus entitled "Plan of
Distribution" or in an accompanying Prospectus Supplement. Each of the
Selling Stockholders reserves the sole right to accept or reject, in whole or
in part, any proposed purchase of the Registered Shares to be made directly
or through agents.
The Company will not receive any of the proceeds from the sale of any
Registered Shares by the Selling Stockholders, but has agreed to bear certain
expenses of registration of the Registered Shares under Federal and state
securities laws. The Company will acquire Outstanding OP Units in the
Operating Partnership in connection with the redemption of any Redemption
Shares.
The aggregate proceeds to the Selling Stockholders from the sale of the
shares of Common Stock offered hereby (the "Offering") will be the purchase
price of the shares of Common Stock sold less the aggregate agents'
commissions and underwriters' discounts, if any, and other expenses of
issuance and distribution not borne by the Company. The Company will pay all
of the expenses of the Offering other than agents' commissions and
underwriters' discounts with respect to the shares of Common Stock offered
hereby, and transfer taxes, if any.
The Selling Stockholders and any agents, dealers or underwriters that
participate with the Selling Stockholders in the distribution of the shares
of Common Stock may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), in which case any
commissions received by such agents, dealers or underwrites and any profit on
the resale of the shares of Common Stock purchased by them may be deemed
underwriting commissions or discounts under the Securities Act. See "Plan of
Distribution" for indemnification arrangements between the Company and the
Registering Stockholders.
The Common Stock is listed on the New York Stock Exchange ("NYSE") under
the symbol "RA". To ensure that the Company maintains its qualification as a
Realty Estate Investment Trust (a "REIT"), ownership by any single person is
limited to 9.0% of the value of the outstanding capital stock of the Company.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 OF THIS PROSPECTUS FOR A
DESCRIPTION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PURCHASERS OF THE
SECURITIES.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
_________________________
THE DATE OF THIS PROSPECTUS IS SEPTEMBER 16, 1997.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Reports,
proxy statements and other information filed by the Company may be inspected
and copied at the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as the
regional offices of the Commission at 7 World Trade Center (13th Floor), New
York, New York 10048, and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. Copies of such information can be
obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Such
materials can also be inspected at the office of the New York Stock Exchange,
Inc. ("NYSE"), 20 Broad Street, New York, New York 10005. The Commission
maintains a Web site at http://www.sec.gov containing reports, proxy and
information statements and other information regarding registrants, including
the Company, that file electronically with the Commission.
The Company has filed with the Commission a Registration Statement on
Form S-3 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Securities. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which
have been omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company and the
Securities, reference is made to the Registration Statement, including the
exhibits filed as a part thereof and otherwise incorporated therein.
Statements made in this Prospectus as to the contents of any contract,
agreement or other documents referred to are not necessarily complete; with
respect to each such contract, agreement or other document filed as an
exhibit to the Registration Statement, reference is made to such exhibit for
a more complete description of the matter involved, and each such statement
shall be deemed qualified in its entirety by such reference. Copies of the
Registration Statement and the exhibits may be inspected, without charge, at
the offices of the Commission, or obtained at prescribed rates from the
Public Reference Section of the Commission, or obtained at prescribed rates
from the Public Reference Section of the Commission at the address set forth
above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the
Commission pursuant to the Exchange Act are incorporated by reference in this
Prospectus:
1. Annual Report on Form 10-K for the year ended December 31, 1996.
2. Quarterly Report on Form 10-Q for the quarters ended March 31, 1997
and June 30, 1997.
3. Current Reports on Form 8-K (including Form 8-K/A) and dated March
27, 1996, October 1, 1996, February 18, 1997, May 15, 1997,
June 12, 1997, August 7, 1997 and September 9, 1997, respectively.
4. The description of the Company's Common Stock which is contained in
Item 1 of the Company's registration statement on Form 8-A, as
amended, filed May 9, 1995 pursuant to Section 12 of the Exchange
Act.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Securities hereunder shall be
deemed to be incorporated by reference herein and to be a part hereof from
the date of the filing of such reports and documents. Any statement
contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for the
purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is incorporated or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide a copy of any or all of such documents
(exclusive of exhibits unless such exhibits are specifically incorporated by
reference therein), without charge, to each person to whom this Prospectus is
delivered, upon written or oral request to Reckson Associates Realty Corp.,
225 Broadhollow Road, Melville, New York 11747, Attn: Jason M. Barnett,
Senior Vice President and General Counsel, (516) 694-6900.
THE COMPANY
Reckson Associates Realty Corp. (including, as the context requires, its
subsidiaries, the "Company") was incorporated in September 1994 and commenced
operations effective with the completion of its initial public offering (the
"IPO") on June 2, 1995. The Company, together with Reckson Operating
Partnership, L.P. (the "Operating Partnership"), was formed for the purpose
of continuing the commercial real estate business of Reckson Associates, its
affiliated partnerships and other entities ("Reckson"). For more than 35
years, Reckson has been engaged in the business of owning, developing,
acquiring, constructing, managing and leasing suburban office and industrial
properties in the New York metropolitan area. Based on industry surveys,
management believes that the Company is one of the largest owners and
managers of Class A suburban office and industrial properties in the New York
City metropolitan Tri-State area of New York, New Jersey and Connecticut (the
"Tri-State area"). The Company's growth strategy is currently focused on
suburban markets within a 50-mile radius surrounding New York City. The
Company operates as a fully-integrated, self administered and self-managed
REIT. As of June 30, 1997, the Company owned 138 properties (including eight
properties under contract and three joint ventures) (the "Properties")
encompassing approximately 12.2 million rentable square feet, all of which
are managed by the Company. The Properties consist of 44 Class A suburban
office properties (the "Office Properties") encompassing approximately 6.3
million rentable square feet, 92 industrial properties (the "Industrial
Properties") encompassing approximately 5.9 million rentable square feet and
two 10,000 square foot retail properties. In addition, as of June 30, 1997,
the Company owned or had contracted to acquire approximately 698 acres of
land (including 400 acres under option) that may present future development
opportunities and had invested approximately $52.1 million in certain
mortgage indebtedness encumbering five Class A office properties on Long
Island encompassing an aggregate of approximately 928,000 square feet. In
addition, the Company has invested $17 million in a note receivable secured
by the interest of Odyssey Partners, L.P. in Omni Partners, L.P.
The Office Properties are Class A suburban office buildings and are
well-located, well-maintained and professionally managed. In addition, these
properties are modern with high finishes or have been modernized to
successfully compete with newer buildings and achieve among the highest rent,
occupancy and tenant retention rates within their markets. The majority of
the Office Properties are located in six planned office parks and are
tenanted primarily by national service firms such as "big six" accounting
firms, securities brokerage houses, insurance companies and health care
providers. The Industrial Properties are utilized for distribution,
warehousing, research and development and light manufacturing/assembly
activities and are located primarily in three planned industrial parks.
The Company's executive offices are located at 225 Broadhollow Road,
Melville, New York 11747 and its telephone number at that location is (516)
694-6900. At June 30, 1997, the Company had approximately 170 employees.
RISK FACTORS
This Prospectus contains forward-looking statements which involve risks
and uncertainties. The Company's actual results may differ significantly
from the results discussed in the forward-looking statements. Factors that
might cause such a difference include, but are not limited to, those
discussed below. Unitholders and other prospective investors should
carefully consider the following information in conjunction with the other
information contained in this Prospectus before making an investment decision
regarding the Redemption Shares.
TAX CONSEQUENCES TO UNITHOLDERS OF EXCHANGE OF UNITS
Tax Consequences of Exchange of Units. In the event that the Company
exercises its right to acquire Units tendered for redemption in exchange for
cash or Redemption Shares, the Company's acquisition of such Units will be
treated for tax purposes as a sale of the Units by the Unitholder. Such a
sale will be fully taxable to the Unitholder and the Unitholder will be
treated as realizing for tax purposes an amount equal to the sum of the cash
received or the value of the Redemption Shares received in the exchange plus
the amount of any Operating Partnership liabilities allocable to the
exchanged Units at the time of the redemption or exchange. It is possible
that the amount of gain recognized or even the tax liability resulting from
such gain could exceed the amount of cash and the value of other property
(e.g., Redemption Shares) received upon such disposition. See "Description
of Units and Redemption of Units -- Tax Consequences of Redemption." In
addition, the ability of the Unitholder to sell a substantial number of
Redemption Shares in order to raise cash to pay tax liabilities associated
with the redemption of Units may be limited as a result of fluctuations in
the market price of the Common Stock, and the price the Unitholder receives
for such shares may not equal the value of its Units at the time of
redemption or exchange.
In the event that the Company does not exercise its right to acquire
Units tendered for redemption in exchange for cash or Redemption Shares, and
such Units are redeemed by the Operating Partnership for cash, the tax
consequences may differ. See "Description of Units and Redemption of Units."
Potential Change in Investment Upon Redemption of Units. If a
Unitholder exercises its right to require the redemption of all or a portion
of its Units, the Unitholder may receive cash or, at the option of the
Company, Redemption Shares in exchange for its Units. If the Unitholder
receives cash from either the Operating Partnership or the Company, the
Unitholder will not have any interest in the Company or the Operating
Partnership (except to the extent that it retains Units) and will not benefit
from any subsequent increases in the value of Common Stock and will not
receive any future distributions from the Company or the Operating
Partnership (unless the Unitholder retains or acquires in the future
additional Common Stock or Units). If the Unitholder receives Common Stock,
the Unitholder will become a stockholder of the Company rather than a holder
of Units in the Operating Partnership. See "Description of Units and
Redemption of Units -- Comparison of Ownership of Units and Common Stock."
DEPENDENCE ON TRI-STATE AREA MARKET CONDITIONS DUE TO LIMITED GEOGRAPHIC
DIVERSIFICATION
Currently, all of the Properties are located in the Tri-State area.
Consequently, the Company is dependent upon the continued demand for office,
industrial and other commercial space in the Tri-State area. Like other real
estate markets, the commercial real estate markets have experienced periodic
economic fluctuations and a future decline in the Tri-State area economy or
in the market for commercial real estate could affect the Company's cash
available for distribution and its ability to make distributions to
shareholders.
CONFLICTS OF INTEREST IN THE BUSINESS OF THE COMPANY
Tax Consequences Upon Sale or Refinancing. Holders of units of limited
partnership of the Operating Partnership ("Units") or co-owners of properties
not owned entirely by the Company may suffer different and more adverse tax
consequences than the Company upon the sale or refinancing of the Properties
owned by the Operating Partnership and therefore such holders or co-owners
and the Company may have different objectives regarding the appropriate
pricing and timing of any sale or refinancing of such Properties. While the
Company, as the sole general partner of the Operating Partnership, has the
exclusive authority as to whether and on what terms to sell or refinance each
Property owned solely by the Operating Partnership, those Directors and
officers of the Company who hold Units may seek to influence the Company not
to sell or refinance the Properties, even though such a sale might otherwise
be financially advantageous to the Company, or may seek to influence the
Company to refinance a Property with a higher level of debt.
Policies With Respect to Conflicts of Interest. The Company has adopted
certain policies designed to eliminate or minimize conflicts of interest.
These policies include a requirement that all transactions in which officers
or Directors have a conflicting interest must be approved by a majority of
the Directors of the Company who are neither officers of the Company nor
affiliated with Reckson (the "Independent Directors"). However, there can be
no assurance that these policies will be successful in minimizing or
eliminating such conflicts and, if they are not successful, decisions could
be made that might fail to reflect fully the interests of all stockholders.
RISKS OF ADVERSE EFFECT ON COMPANY FROM DEBT SERVICING AND REFINANCING,
INCREASES IN INTEREST RATES, FINANCIAL COVENANTS AND ABSENCE OF LIMITATION ON
DEBT
Debt Financing. The Company is subject to the risks normally associated
with debt financing, including the risk that the Company's cash flow will be
insufficient to meet required payments of principal and interest, the risk
that existing indebtedness on the Properties (which in most cases will not
have been fully amortized at maturity) will not be able to be refinanced or
that the terms of such refinancing will not be as favorable as the terms of
the existing indebtedness. There can be no assurance that the Company will
be able to refinance any indebtedness the Company may incur or to otherwise
obtain funds by selling assets or raising equity to make required payments on
maturing indebtedness.
Existing Debt Maturities; Foreclosures. The Company anticipates that
only a portion of the principal of the Company's mortgage indebtedness
currently outstanding will be repaid prior to maturity. However, the Company
may not have on hand funds sufficient to repay such indebtedness at maturity;
it may therefore be necessary for the company to refinance debt through
additional debt financing or equity offerings. If the Company is unable to
refinance this indebtedness on acceptable terms, the Company may be forced to
dispose of properties upon disadvantageous terms, which could result in
losses to the Company and adversely affect the amount of cash available for
distribution to stockholders. Further, if a property or properties are
mortgaged to secure payment of indebtedness and the Company is unable to meet
mortgage payments, the property or properties could be foreclosed upon by or
otherwise transferred to the mortgagee with a consequent loss of income and
asset value to the Company. In addition, even with respect to non-recourse
indebtedness, the lender may have the rights to recover deficiencies from the
Company in certain circumstances, including fraud and environmental
liabilities.
Risk of Rising Interest Rates. Outstanding advances under the Credit
Facility (defined below) bear interest at a variable rate. In addition, the
Company may incur indebtedness in the future that also bears interest at a
variable rate or may be required to refinance its debt at higher rates.
Accordingly, increases in interest rates could increase the Company's
interest expense, which could adversely affect the Company's ability to pay
expected distributions to stockholders.
Credit Facility Requirements. The Company has obtained a three-year
unsecured credit facility from The Chase Manhattan Bank and Union Bank of
Switzerland, as co-arrangers. The Credit Facility provides for a maximum
borrowing amount of up to $250 million. The Company's ability to borrow
under the Credit Facility is subject to the satisfaction of certain financial
covenants, including covenants relating to limitations on unsecured and
secured borrowings, minimum interest and fixed charge coverage ratios, a
minimum equity value and a maximum dividend payout ratio. In addition,
borrowings under the Credit Facility bear interest at a floating rate equal
to one, two, three or six month LIBOR (at the Company's election) plus a
spread ranging from 1.125% to 1.5%, based on the Company's leverage ratio.
No Limitation on Debt. The Company currently has a policy of incurring
debt only if upon such incurrence the Company's Debt Ratio would be 50% or
less. For these purposes, Debt Ratio is defined as the total debt of the
Company as a percentage of the market value of outstanding shares of Common
Stock on a fully diluted basis plus total debt. Certain of the Company's
indebtedness contains limitations on the ability of the Operating Partnership
to incur additional indebtedness. However, the organizational documents of
the Company do not contain any limitation on the amount of indebtedness the
Company may incur. Accordingly, the Board of Directors could alter or
eliminate this policy and would do so, for example, if it were necessary in
order for the Company to continue to qualify as a REIT. If this policy were
changed, the Company could become more highly leveraged, resulting in an
increase in debt service that could adversely affect the Company's cash
available for distribution to stockholders and could increase the risk of
default on the Company's indebtedness.
LIMITS ON OWNERSHIP AND CHANGES IN CONTROL MAY DETER CHANGES IN MANAGEMENT
AND THIRD PARTY ACQUISITION PROPOSALS
Ownership Limit. In order to maintain its qualification as a REIT, not
more than 50% in value of the outstanding capital stock of the Company may be
owned, directly or indirectly, by five or fewer individuals (as defined in
the Internal Revenue Code of 1986, as amended (the "Code"), to include
certain entities) during the last half of a taxable year (other than the
first year). In order to protect the Company against the risk of losing REIT
status due to a concentration of ownership among its stockholders, the
Charter of the Company limit ownership of the issued and outstanding Common
Stock by any single stockholder to 9.0% of the lesser of the number or value
of the outstanding shares of Common Stock from time to time. See
"Restrictions on Ownership of Capital Stock." Such provision may have the
effect of delaying, deferring or preventing a change of control of the
Company or other transaction without the consent of the Board of Directors
even if a change of control were in the best interests of stockholders.
Staggered Board. The Board of Directors of the Company is divided into
three classes of directors. The terms of the Class I, Class II and Class III
directors will expire in 1999, 2000 and 1998, respectively. Directors for
each class are chosen for a three-year term upon the expiration of the
applicable prior term.
Required Consent of Holders of Units for Certain Transactions. For the
five-year period following completion of the IPO (i.e. through June 2, 2000),
the Operating Partnership may not sell, transfer or otherwise dispose of all
or substantially all of its assets or engage in any other similar transaction
(regardless of the form of such transaction) without the consent of the
holders of 85% of all outstanding Units. This voting requirement could
delay, defer or prevent a change in control of the Company.
Future Issuances of Common Stock. The Charter authorizes the Board of
Directors to issue additional shares of Common Stock without shareholder
approval. Any such issuance could have the effect of diluting existing
shareholders' interests in the Company.
Preferred Stock. The Charter authorizes the Board of Directors to issue
up to 25 million shares of preferred stock, $.01 par value per share (the
"Preferred Stock" and, together with the Common Stock, the "Stock"), to
reclassify unissued shares of Stock, and to establish the preferences,
conversion and other rights, voting powers, restrictions, limitations and
restrictions on ownership, limitations as to dividends or other
distributions, qualifications, and terms and conditions of redemption for
each such class or series of any Preferred Stock issued.
Limitations on Acquisition of and Changes in Control Pursuant to
Maryland Law. Certain provisions of the Maryland General Corporation Law
(the "MGCL") may have the effect of inhibiting a third party from making an
acquisition proposal for the Company or of delaying, deferring or preventing
a change in control of the Company under circumstances that otherwise could
provide the holders of shares of Common Stock with the opportunity to realize
a premium over the then-prevailing market price of such shares. However, as
permitted by the MGCL, the Bylaws of the Company contain a provision
exempting from the control share acquisition statute any and all acquisitions
by any person of the Company's shares of stock. In addition, the board of
directors has adopted a resolution exempting the Company from the provisions
of the business combination statute. There can be no assurance that such
provisions will not be amended or eliminated at any time in the future.
RISKS OF ACQUISITION, DEVELOPMENT AND CONSTRUCTION ACTIVITIES
The Company intends to acquire existing office and industrial properties
to the extent that they can be acquired on advantageous terms and meet the
Company's investment criteria. Acquisitions of commercial properties entail
general investment risks associated with any real estate investment,
including the risk that investments will fail to perform as expected or that
estimates of the cost of improvements to bring an acquired property up to
standards established for the intended market position may prove inaccurate.
The Company also intends to continue the selective development and
construction of office and industrial properties in accordance with the
Company's development and underwriting policies as opportunities arise in the
future. Risks associated with the Company's development and construction
activities include the risks that: the Company may abandon development
opportunities after expending resources to determine feasibility;
construction costs of a project may exceed original estimates; occupancy
rates and rents at a newly completed property may not be sufficient to make
the property profitable; financing may not be available on favorable terms
for development of a property; and construction and lease-up may not be
completed on schedule, resulting in increased debt service expense and
construction costs. Development activities are also subject to risks
relating to the inability to obtain, or delays in obtaining, all necessary
zoning, land-use, building, occupancy and other required governmental permits
and authorizations. If any of the above occur, the Company's ability to make
expected distributions to stockholders could be adversely affected. In
addition, new development activities, regardless of whether or not they are
ultimately successful, typically require a substantial portion of
management's time and attention.
REAL ESTATE INVESTMENT RISKS
General Risks. Investments of the Company are subject to the risks
incident to the ownership and operation of commercial real estate generally.
The yields available from equity investments in real estate depend on the
amount of income generated and expenses incurred. If the Company's
properties do not generate revenues sufficient to meet operating expenses,
including debt service and capital expenditures, the Company's cash available
for distributions and ability to make distributions to its stockholders will
be adversely affected.
A commercial property's revenues and value may be adversely affected by
a number of factors, including the national, state and local economic climate
and real estate conditions (such as oversupply of or reduced demand for space
and changes in market rental rates); the perceptions of prospective tenants
of the safety, convenience and attractiveness of the properties; the ability
of the owner to provide adequate management, maintenance and insurance; the
ability to collect on a timely basis all rent from tenants; the expense of
periodically renovating, repairing and reletting spaces; and increasing
operating costs (including real estate taxes and utilities) which may not be
passed through to tenants. Certain significant expenditures associated with
investments in real estate (such as mortgage payments, real estate taxes,
insurance and maintenance costs) are generally not reduced when circumstances
cause a reduction in rental revenues from the property. If a property is
mortgaged to secure the payment of indebtedness and if the Company is unable
to meet its mortgage payments, a loss could be sustained as a result of
foreclosure on the property or the exercise of other remedies by the
mortgagee. In addition, real estate values and income from properties are
also affected by such factors as compliance with laws, including tax laws,
interest rate levels and the availability of financing. Also, the rentable
square feet of commercial property is often affected by market conditions and
may therefore fluctuate over time.
Tenant Defaults. Substantially all of the Company's income is derived
from rental income from real property and, consequently, the Company's
distributable cash flow and ability to make expected distributions to
stockholders would be adversely affected if a significant number of tenants
of its properties failed to meet their lease obligations. In the event of a
default by a lessee, the Company may experience delays in enforcing its
rights as lessor and may incur substantial costs in protecting its
investment.
Market Illiquidity. Equity real estate investments are relatively
illiquid. Such illiquidity will tend to limit the ability of the Company to
vary its portfolio promptly in response to changes in economic or other
conditions. In addition, provisions of the Code limit a REIT's ability to
sell properties held for fewer than four years, which may affect the
Company's ability to sell properties at a time when it is otherwise
economically advantageous to do so, thereby adversely affecting returns to
stockholders.
Operating Risks. The Properties are subject to operating risks common
to commercial real estate in general, any and all of which may adversely
affect occupancy or rental rates. The Properties are subject to increases in
operating expenses such as cleaning; electricity; heating, ventilation and
air conditioning ("HVAC"); elevator repair and maintenance; insurance and
administrative costs; and other general costs associated with security,
landscaping, repairs and maintenance. While the Company's tenants generally
are currently obligated to pay a portion of these escalating costs, there can
be no assurance that tenants will agree to pay such costs upon renewal or
that new tenants will agree to pay such costs. If operating expenses
increase, the local rental market may limit the extent to which rents may be
increased to meet increased expenses without decreasing occupancy rates.
While the Company implements costs saving incentive measures at each of its
Properties, if any of the above occurs, the Company's ability to make
distributions to stockholders could be adversely affected.
Competition. There are numerous commercial properties that compete with
the Company in attracting tenants and numerous companies that compete in
selecting land for development and properties for acquisition.
Third-Party Property Management and Construction. The Company pursues
actively (through its affiliated management company) the management of
properties which are owned by third parties. Risks associated with the
management of properties owned by third parties include the risk that
management contracts (which are typically cancelable without notice) will be
terminated by the entity controlling the property or in connection with the
sale of such property, that contracts may not be renewed upon expiration or
may not be renewed on terms consistent with current terms and that the rental
revenues upon which management fees are based will decline as a result of
general real estate market conditions or specific market factors affecting
properties managed by the Company, resulting in decreased management fee
income. The Company's third-party interior construction business (which is
conducted through its affiliated construction company) is subject to similar
risks.
Uninsured Loss. The Company carries comprehensive liability, fire,
extended coverage and rental loss insurance with respect to all of the
Properties, with policy specifications, insured limits and deductibles
customarily carried for similar properties. There are, however, certain
types of losses (such as losses arising from acts of war or relating to
pollution) that are not generally insured because they are either uninsurable
or not economically insurable. Should an uninsured loss or a loss in excess
of insured limits occur, the Company could lose its capital invested in a
property, as well as the anticipated future revenue from such property and
would continue to be obligated on any mortgage indebtedness or other
obligations related to the property. Any such loss would adversely affect
the business of the Company and its financial condition and results of
operations.
Investments in Mortgage Debt. From time to time, the Company may invest
in mortgages which are secured by office or industrial properties and, in
certain circumstances, may result in the acquisition of the related
properties through foreclosure proceedings or negotiated settlements. In
addition to the risks associated with investments in commercial properties,
investments in mortgage indebtedness present additional risks, including the
risk that the fee owners of such properties may default in payments of
interest on a current basis and that the Company may not realize its
anticipated return or sustain losses relating to such investments. In that
regard, as of June 30, 1997, the Company had invested approximately $52.1
million in mortgage indebtedness encumbering fIVE Class A office properties
on Long Island.
RISKS INVOLVED IN PROPERTY OWNERSHIP THROUGH PARTNERSHIPS AND JOINT VENTURES
The Company owns through the Operating Partnership a 60% general partner
interest in Omni Partners, L.P. (the "Omni Partnership"), the partnership
that owns the Omni, a 575,000 square foot office building located in the
Company's Nassau West Corporate Center office park. Odyssey Partners, L.P.
and an affiliate of Odyssey (collectively, "Odyssey") own the remaining 40%
interest. Through its partnership interest, the Company acts as managing
partner and has the sole authority to conduct the business and affairs of the
Omni Partnership subject to the limitations set forth in the amended and
restated agreement of limited partnership of Omni Partners, L.P. (the "Omni
Partnership Agreement"). These limitations include Odyssey's right to
negotiate under certain circumstances a refinancing of the mortgage debt
encumbering the Omni and the right to approve any sale of the Omni made on or
before March 13, 2007 (the "Acquisition Date"). The Operating Partnership
will continue to act as the sole managing partner of the Omni Partnership
unless certain conditions specified in the Omni Partnership Agreement shall
occur. Upon the occurrence of any of such conditions the Operating
Partnership's general partnership interest shall be converted to a limited
partnership interest (in which case an affiliate of Odyssey shall be the sole
managing partner), or at the option of Odyssey, the Operating Partnership
shall be a co-managing partner with an affiliate of Odyssey. In addition, on
the Acquisition Date, the Operating Partnership will have the right to
purchase Odyssey's interest in the Omni Partnership at a price (the "Option
Price") based on 90% of its fair market value. If the Operating Partnership
fails to exercise such option, Odyssey has the right to require the Operating
Partnership to purchase Odyssey's interest in the Omni Partnership on the
Acquisition Date at the Option Price. The Operating Partnership has the
right to extend the Acquisition Date until March 13, 2012. The Option Price
shall be applied to the payment of all sums due under a loan (the "Odyssey
Loan") made by the Operating Partnership in March 1997 to Odyssey in the
amount of approximately $17 million. The Odyssey Loan matures on the
Acquisition Date (subject to the Operating Partnership's right to extend the
Acquisition Date as set forth above) and is secured by a pledge of all of
Odyssey's right, title and interest in the Omni Partnership. All
distributions of net cash flow which Odyssey would otherwise be entitled to
shall be applied to all interest which is due under the Odyssey Loan. All
distributions from a sale or refinancing of the Omni which Odyssey would
otherwise be entitled to shall be applied to the interest and principal
outstanding under the Odyssey Loan.
In addition, the Company may in the future acquire either a limited
partnership interest in a property partnership without partnership management
responsibility or a co-venturer interest or co-general partnership interest
in a property partnership with shared responsibility for managing the affairs
of a property partnership or joint venture and, therefore, will not be in a
position to exercise sole decision-making authority regarding the property
partnership or joint venture. In that regard, the Company (through the
Operating Partnership) owns a 60% managing member interest in a limited
liability company that owns 520 White Plains Road, a 171,761 square foot
office building located in Tarrytown, New York. The remaining 40% member
interest is held by Tarrytown Corporate Center III, L.P., a partnership
affiliated with the Halpern organization ("TCC"). Pursuant to the member
agreement governing the joint venture arrangement, the Company will be
required to obtain the consent of TCC prior to engaging in certain
activities, including entering into or modifying a major lease (i.e., a lease
for more than 25,000 rentable square feet), financing or refinancing
indebtedness encumbering the property and selling or otherwise transferring
the property. The Company also owns (through the Operating Partnership) a
50% co-managing member interest in a limited liability company that owns 360
Hamilton Avenue, a 365,000 square foot office building located in White
Plains, New York. The remaining 50% co-managing member interest is held by
an unaffiliated corporation. Pursuant to the member agreement governing this
joint venture, decisions that affect the business and affairs of the joint
venture generally require the approval of both co-managing members and such
members are jointly responsible for the day-to-day operation of the property.
Partnership or joint venture investments may, under certain
circumstances, involve risks not otherwise present, including the possibility
that the Company's partners or co-venturer might become bankrupt, that such
partners or co-venturer might at any time have economic or other business
interests or goals which are inconsistent with the business interests or
goals of the Company, and that such partners or co-venturer may be in a
position to take action contrary to the instructions or the requests of the
Company and contrary to the Company's policies or objectives, including the
Company's policy with respect to maintaining its qualification as a REIT.
Such investments may also have the potential risk of impasse on decisions,
such as a sale, because neither the Company nor the partner or co-venturer
would have full control over the partnership or joint venture. Consequently,
actions by such partner or co-venturer might result in subjecting properties
owned by the partnership or joint venture to additional risk. The Company
will, however, seek to maintain sufficient control of such partnerships or
joint ventures to permit the Company's business objectives to be achieved.
There is no limitation under the Company's organizational documents as to the
amount of available funds that may be invested in partnerships or joint
ventures.
POTENTIAL ENVIRONMENTAL LIABILITY RELATED TO THE PROPERTIES
Under various Federal, state and local laws, ordinances and regulations,
an owner of real estate is liable for the costs of removal or remediation of
certain hazardous or toxic substances on or in such property. These laws
often impose such liability without regard to whether the owner knew of, or
was responsible for, the presence of such hazardous or toxic substances. The
cost of any required remediation and the owner's liability therefore as to
any property is generally not limited under such enactments and could exceed
the value of the property and/or the aggregate assets of the owner. The
presence of such substances, or the failure to properly remediate such
substances, may adversely affect the owner's ability to sell or rent such
property or to borrow using such property as collateral. Persons who arrange
for the disposal or treatment of hazardous or toxic substances may also be
liable for the costs of removal or remediation of such substances at a
disposal or treatment facility, whether or not such facility is owned or
operated by such person. Certain environmental laws govern the removal,
encapsulation or disturbance of asbestos-containing materials ("ACMs") when
such materials are in poor condition, or in the event of renovation or
demolition. Such laws impose liability for release of ACMs into the air and
third parties may seek recovery from owners or operators of real properties
for personal injury associated with ACMs. In connection with the ownership
(direct or indirect), operation, management and development of real
properties, the Company may be considered an owner or operator of such
properties or as having arranged for the disposal or treatment of hazardous
or toxic substances and, therefore, potentially liable for removal or
remediation costs, as well as certain other related costs, including
governmental fines and injuries to persons and property.
All of the Office Properties and all of the Industrial Properties have
been subjected to a Phase I or similar environmental site assessment after
April 1, 1994 (which involved general inspections without soil sampling,
ground water analysis or radon testing and, for the Properties constructed in
1978 or earlier, survey inspections to ascertain the existence of ACMs were
conducted) completed by independent environmental consultant companies
(except for 35 Pinelawn Road which was originally developed by Reckson and
subjected to a Phase I in April 1992). These environmental site assessments
have not revealed any environmental liability that would have a material
adverse effect on the Company's business.
RISKS OF FAILURE TO QUALIFY AS A REIT
The Company has operated (and intends to operate) so as to qualify as a
REIT under the Code commencing with its taxable year ended December 31, 1995.
Although management of the Company believes that the Company has been
organized and operates in such a manner, no assurance can be given that the
Company will qualify or remain qualified as a REIT. See "Federal Income Tax
Considerations."
EFFECT OF MARKET INTEREST RATES ON PRICE OF COMMON STOCK
One of the factors that influences the market price of the shares of
Common Stock in public markets is the annual yield on the price paid for
shares of Common Stock from distributions by the Company. An increase in
market interest rates may lead prospective purchasers of the Common Stock to
demand a higher annual yield from future distributions. Such an increase in
the required distribution yield may adversely affect the market price of the
Common Stock.
DESCRIPTION OF UNITS AND REDEMPTION OF UNITS
GENERAL
Unitholders may, subject to certain limitations, require the Operating
Partnership to redeem all or a portion of their Units (the "Redemption
Right"). This Redemption Right may be exercised by Unitholders pursuant to a
notice of redemption delivered to the Operating Partnership, with a copy
delivered to the Company. Upon redemption, a Unitholder will receive for
each Unit redeemed cash in an amount equal to the market value (as defined
below) of a share of Common Stock (subject to certain adjustments in the
event of stock dividends and stock splits; provided, however, that the
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Company may, in its sole discretion, by notice to the Unitholder within five
business days after receipt of the notice of redemption, elect to acquire any
Unit presented to the Operating Partnership for redemption for cash or for
one share of Common Stock (subject to the same adjustments). The market
value of the Common Stock for purposes of redeeming Units will be equal to
the average of the closing trading price of the Common Stock for the ten
trading days prior to the day on which the redemption notice was received by
the Operating Partnership.
The Company anticipates that it generally will elect to acquire any
Units presented to the Operating Partnership for redemption by the issuance
of the Redemption Shares. Such an acquisition by the Company will be treated
as a sale of the Units by the Unitholder to the Company for Federal income
tax purposes. See "--Tax Consequences of Redemption." Upon a redemption or
exchange for cash, a Unitholder's right to receive distributions with respect
to the Units redeemed will cease. Upon the receipt of Redemption Shares, a
Unitholder will have rights as a stockholder of the Company, including the
right to receive dividends from the time of its acquisition of the Redemption
Shares.
A Unitholder must notify the Company of its desire to require the
Operating Partnership to redeem Units. A Unitholder must request the
redemption of at least 1,000 Units, unless such Unitholder is requesting
redemption of all of its Units. No redemption can occur if the delivery of
Redemption Shares would be prohibited under the provisions of the Company's
Articles of Incorporation to protect the Company's qualification as a REIT.
TAX CONSEQUENCES OF REDEMPTION
The following discussion summarizes certain Federal income tax
considerations that may be relevant to a Unitholder should it exercise its
right to redeem its Units.
Tax Treatment of Exchange or Redemption of Units. If the Company elects
to purchase Units tendered for redemption, the Partnership Agreement provides
that each of the Unitholder, the Operating Partnership and the Company shall
treat the transaction between the Unitholder and the Company as a sale of
Units by the Unitholder at the time of such redemption. Such sale will be
fully taxable to the Unitholder and the Unitholder will be treated as
realizing for tax purposes an amount equal to the sum of the cash or the
value of the Common Stock received plus the amount of any Operating
Partnership liabilities allocable to the redeemed Units at the time of the
redemption. The determination of the amount of gain or loss is discussed
more fully below. If the Company does not elect to purchase a Unitholder's
Units tendered for redemption and the Operating Partnership redeems such
Units for cash that the Company contributes to the Operating Partnership to
effect such redemption, the redemption likely would be treated for tax
purposes as a sale of such Units to the Company in a fully taxable
transaction, although the matter is not free from doubt. In that event, the
Unitholder would be treated as realizing an amount equal to the sum of the
cash received plus the amount of any Operating Partnership liabilities
allocable to the redeemed Units at the time of the redemption. The
determination of the amount and character of gain or loss in the event of
such a sale is discussed more fully below. See "--Tax Treatment of
Disposition of Units by a Limited Partner Generally."
If the Company does not elect to purchase Units tendered for redemption
and the Operating Partnership redeems a Unitholder's Units for cash that is
not contributed by the Company to effect the redemption, then, barring the
application of certain disguised sale rules described below, the tax
consequences would be the same as described in the previous paragraph if all
of the Unitholder's Units are redeemed. However, if the Operating
Partnership redeems less than all of the Unitholder's Units, the Unitholder
would not be permitted to recognize any loss occurring on the transaction and
would recognize taxable gain only to the extent that the cash, plus the
amount of any Operating Partnership liabilities allocable to the redeemed
Units, exceeded the Unitholder's adjusted basis in all of its Units
(including those not redeemed) immediately before the redemption.
If the Company contributes cash to the Operating Partnership to effect a
redemption, and in the unlikely event that the redemption transaction is
treated as the redemption of a Unitholder's Units by the Operating
Partnership rather than a sale of Units to the Company, the income tax
consequences to the Unitholder would be as described in the preceding
paragraph.
Even in the case of a cash redemption of Units by the Operating
Partnership that is not treated as a sale of the Units redeemed, it is
possible that the redemption could be subject to certain disguised sale
rules. Under Section 707(a)(2)(B) of the Code and the Treasury Regulations
thereunder (the "Disguised Sale Regulations"), a contribution by a partner of
property to a partnership and a transfer of money or other consideration by
the partnership to the partner (including certain reductions in the partner's
share of liabilities) may be treated as a sale, in whole or in part, of such
property by the partner to the partnership based on all of the facts and
circumstances. The Disguised Sale Regulations further provide that, in
general, where the contribution of property by the partner and the transfer
of money or other consideration by the partnership are made within two years
of each other, the transfers are presumed to be a sale of the property by the
partner to the partnership unless the facts and circumstances clearly
establish that the transfers do not constitute a sale. Accordingly, if Units
redeemed by a Unitholder had been received by the Unitholder in return for a
transfer of property to the Operating Partnership less than two years before
the redemption, it is likely that the redemption would be treated as a
disguised sale of the transferred property. In such case, the Unitholder
would be treated as though he had sold the property to the Operating
Partnership on the date of the transfer of the property and received on such
date an obligation of the Operating Partnership to transfer money or other
consideration to the Unitholder.
Tax Treatment of Disposition of Units by a Limited Partner Generally.
If a Unit is disposed of in a manner that is treated as a sale of the Unit,
the determination of gain or loss from the sale or other disposition will be
based on the difference between the amount considered realized for tax
purposes and the tax basis in such Unit. See "--Basis of Units." Upon the
sale of a Unit, the "amount realized" will be measured by the sum of the cash
and fair market value of other property (e.g., Redemption Shares) received
plus the amount of any Operating Partnership liabilities allocable to the
Units sold. To the extent that this amount realized exceeds the limited
partner's basis for the Units disposed of, such limited partner will
recognize gain. It is possible that the amount of gain recognized or event
the tax liability resulting from such gain could exceed the amount of cash
and/or the value of any other property (e.g., Redemption Shares) received
upon such disposition.
Except as described below, any gain recognized upon a sale or other
disposition of Units will be treated as gain attributable to the sale or
disposition of a capital asset (assuming the Units were held by the limited
partner of a capital asset). To the extent, however, that the amount
realized upon the sale of a Unit attributable to a limited partner's share of
"unrealized receivables" of the Operating Partnership (as defined in Section
751 of the Code) exceeds the basis attributable to those assets, such gain
will be treated as ordinary income. Unrealized receivables include, to the
extent not previously included in Operating Partnership income, any rights to
payment for services rendered or to be rendered. Unrealized receivables also
include amounts that would be subject to recapture as ordinary income of the
Operating Partnership had sold its assets at their fair market value at the
time of the transfer of a Unit, such as "depreciation recapture" under
Sections 1245 and 1250 of the Code.
Basis of Units. Generally, a limited partner's initial tax basis in his
Units is increased by (i) such limited partner's share of Operating
Partnership taxable and tax-exempt income and (ii) increases in such limited
partner's allocable share of liabilities of the Operating Partnership.
Conversely, a limited partner's basis in his Units is decreased (but not
below zero) by (A) such limited partner's share of Operating Partnership
distributions, (B) decreases in such limited partner's allocable share of
liabilities of the Operating Partnership, (C) such limited partner's share of
losses of the Operating Partnership and (D) such limited partner's share of
nondeductible expenditures of the Operating Partnership that are not
chargeable to capital.
COMPARISON OF OWNERSHIP OF UNITS AND COMMON STOCK
The information below highlights a number of significant differences
between the Operating Partnership and the Company relating to, among other
things, form of organization, permitted investments, policies and
restrictions, management structure, compensation and fees, investor rights
and Federal income taxation and compares certain legal rights associated with
the ownership of Units and Common Stock respectively. This discussion is
summary in nature and does not constitute a complete discussion of these
matters, and investors should carefully review the balance of this Prospectus
and the registration statement of which this Prospectus is a part for
additional important information about the Company.
Form of Organization and Assets Owned. The Operating Partnership is
organized as a Delaware limited partnership. Substantially all of the
Company's operations are conducted through the Operating Partnership.
The Company was organized under the laws of the State of Maryland in
September 1994. The Company maintains a general partner interest in the
Operating Partnership. As of August 1, 1997, the Company had an approximate
83.1% economic interest in the Operating Partnership, and such interest will
increase as Units are redeemed for cash or acquired by the Company.
Length of Investment. The Operating Partnership has a stated
termination date of December 31, 2093, although it may be terminated earlier
under certain circumstances. The Company has a perpetual term and intends to
continue its operations for an indefinite time period.
Purchase and Permitted Investments. The purpose of the Operating
Partnership includes the conduct of any business that may be lawfully
conducted by a limited partnership formed under Delaware law, except that the
Partnership Agreement requires the business of the Operating Partnership to
be conducted in such a manner that will permit the Company to be classified
as a REIT for Federal income tax purposes. The Operating Partnership may,
subject to the foregoing limitation, invest or enter into partnerships, joint
ventures or similar arrangements and may own interests in any other entity.
Under its Charter, the Company may engage in any lawful activity
permitted under the Maryland General Corporation Law ("MGCL"). However,
under the Partnership Agreement, the Company, as the general partner of the
Operating Partnership, may not, directly or indirectly, enter into or conduct
any business other than in connection with the ownership, acquisition and
disposition of interests in the Operating Partnership or the management of
the business thereof.
Additional Equity. The Operating Partnership is authorized to issue
Units and other partnership interests to its partners or to other persons for
such consideration and on such terms and conditions as the Company, as
general partner, in its sole discretion, may deem appropriate.
The Board of Directors of the Company may authorize the issuance of
shares of stock of any class, whether now or hereafter authorized, or
securities or rights, convertible into shares of stock, for such
consideration as the Board of Directors may deem advisable, subject to such
restrictions or limitations as may be set forth in the Company's Charter or
Bylaws. As long as the Operating Partnership is in existence, the proceeds
of all equity capital raised by the Company will be contributed to the
Operating Partnership in exchange for Units or other interests in the
Operating Partnership.
Borrowing Policies. The Operating Partnership has no restrictions on
borrowings, and the Company as general partner, has full power and authority
to cause the Operating Partnership to borrow money.
The Company is not restricted under its governing instruments from
incurring borrowings. The Company has, however, adopted a policy that
currently limits total borrowings to 50% of the total market capitalization
of the Company. See "Risk Factors--Real Estate Financing Risks." The
foregoing reflects the Company's general policy over time and is not intended
to operate in a manner that inappropriately restricts the Company's ability
to raise additional capital, including additional debt, to implement its
planned growth, to pursue attractive acquisition opportunities that may arise
or to otherwise act in a manner that the Board of Directors believes to be in
the best interests of the Company and its stockholders. The Board of
Directors, with the assistance of management of the Company, may reevaluate
from time to time its debt and other capitalization policies in light of then
current economic conditions, including the relative costs of debt and equity
capital, the market value of its Properties, growth and acquisition
opportunities, the market value of its equity securities in relation to the
Company's view of the market value of its Properties, and other factors, and
may modify its debt policy. Such modification may include increasing or
decreasing its ratio of debt to total market capitalization or substituting
another measuring standard.
Other Investment Restrictions. Other than restrictions precluding
investments by the Operating Partnership that would adversely affect the
qualification of the Company as a REIT, there are no restrictions upon the
Operating Partnership's authority to enter into certain transactions,
including, among others, making investments, lending Operating Partnerships
funds, or reinvesting the Operating Partnership's cash flow and net sale or
refinancing proceeds.
Neither the Company's Charter nor its Bylaws impose any restrictions
upon the types of investments that may be made by the Company.
Management Control. All management powers over the business and affairs
of the Operating Partnership are vested in the Company, as general partner,
and no limited partner of the Operating Partnership has any right to
participate in or exercise control or management power over the business and
affairs of the Operating Partnership. The Company may not be removed as
general partner by the limited partners with or without cause.
The Board of Directors directs the management of the Company's business
and affairs subject only to the restrictions in the Charter and the Bylaws.
The Board of Directors is classified into three classes. At each annual
meeting will be elected. The policies adopted by the Board of Directors may
be altered or eliminated without advice of the stockholders. Accordingly,
except for their vote in the elections of trustees, stockholders have no
control over the ordinary business policies of the Company.
Management Liability and Indemnification. The Partnership Agreement
generally provides that the Company, as general partner, will incur no
liability to the Operating Partnership or any limited partner for losses
sustained or liabilities incurred as a result of errors in judgment or of any
act or omission if the Company acted in good faith. In addition, the Company
is not responsible for any misconduct or negligence on the part of its agents
provided the Company appointed such agents in good faith. The Company may
consult with legal counsel, accountants, appraisers, management consultants,
investment bankers and other consultants and advisors, and any action it
takes or omits to take in reliance upon the opinion of such persons, as to
matters which the Company, reasonably believes to be within their
professional or expert competence, shall be conclusively presumed to have
been done or omitted in good faith and in accordance with such opinion. The
Partnership Agreement also provides for indemnification of the Company the
Directors and officers of the Company, and such other persons as the Company
may from time to time designate, against any and all losses, claims, damages,
liabilities, expenses, judgments, fines, settlements and other amounts
arising from any and all claims, demands, actions, suits or proceedings that
relate to the operations of the Operations Partnership in which such person
may be involved.
The MGCL permits a Maryland corporation to include in its Charter a
provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages except for liability
resulting form (a) actual receipt of an improper benefit or profit in money,
property or services or (b) active and deliberate dishonesty established by a
final judgment as being material to the cause of action. The Charter of the
company contains such a provision which eliminates such liability to the
maximum extent permitted by the MGCL.
The Bylaws of the Company obligate it, to the maximum extent permitted
by Maryland law, to indemnify and to pay or reimburse reasonable expenses in
advance of final disposition of a proceeding to (a) any present or former
director or officer who is made a party to the proceeding by reason of their
service in that capacity or (b) any individual who, while a director of the
Company and at the request of the Company, serves or has served another
corporation, real estate investment trust, partnership, joint venture, trust,
employee benefit plan or any other enterprise as a director, officer, partner
or trustee of such corporation, real estate investment trust, partnership,
joint venture, trust, employee benefit plan or other enterprise and who is
made a party to the proceeding by reason of their service in that capacity.
The Charter and Bylaws also permit the Company to indemnify and advance
expenses to any person who is served a predecessor of the Company in any of
the capacities described above and to any employee or agent of the Company or
a predecessor of the Company.
The MGCL requires a corporation (unless its Charter provides otherwise,
which the Company's charter does not) to indemnify a director or officer who
has been successful, on the merits or otherwise, in the defense of any
proceeding to which he or she is made a party by reason of their service in
that capacity The MGCL permits a corporation to indemnify its present and
former directors and officers, among others, against judgments, penalties,
fines, settlements and reasonable expenses actually incurred by them in
connection with any proceeding to which they may be made a party by reason of
their service in those or other capacities unless it is established that (a)
the act or omission of the director of officer was material to the matter
giving rise to the proceeding and (i) was committed in and bad faith or (ii)
was the result of active and deliberate dishonesty, (b) the director or
officer actually received an improper personal benefit in money, property or
services or (c) in the case of any criminal proceeding, the director or
officer had reasonable cause to believe that the act or omission was
unlawful. However, under the MGCL, a Maryland corporation may not indemnify
for an adverse judgment in a suit by or in the right of the corporation or
for a judgment of liability on the basis that personal benefit was improperly
received, unless in either case a court orders indemnification and then only
for expenses. In addition, the MGCL permits a corporation to advance
reasonable expenses to a director or officer upon the corporation's receipt
of (a) a written affirmation by the director or officer of their good faith
belief that he has met the standard of conduct necessary for indemnification
by the corporation and (b) a written statement by or on his behalf to repay
the amount paid or reimbursed by the corporation if it shall ultimately be
determined that the standard of conduct was not met.
The Company has entered into indemnification agreements with each of its
executive officers and Directors. The indemnification agreements require,
among other things, that the Company indemnify its officers and Directors to
the fullest extent permitted by law and advance to the officers and Directors
all related expenses, subject to reimbursement if it is subsequently
determined that indemnification is not permitted. Under these agreements,
the Company must also indemnify and advance all expense incurred by officers
and Directors seeking to enforce their rights under the indemnification
agreements and may cover officers and Directors under the Company's
Directors' and officers' liability insurance. Although the form of
indemnification agreement offers substantially the same scope of coverage
afforded by law, it provides additional assurance to Directors and officers
that indemnification will be available because, as a contract, it cannot be
modified unilaterally in the future by the Board of Directors or the
stockholders to eliminate the rights it provides. It is the position of the
SEC that indemnification of directors and officers for liabilities under the
Securities Act is against public policy and unenforceable pursuant to Section
14 of the Securities Act.
Anti-takeover Provisions. Except in limited circumstances, the Company,
as general partner, has exclusive management power over the business and
affairs of the Operating Partnership. The Company may not be removed as
general partner by the limited partners with or without cause.
The Charter and Bylaws of the Company and Maryland law contain a number
of provisions that may have the effect of delaying, deferring or preventing
an unsolicited proposal for the acquisition of the Company or the removal of
incumbent management.
Voting Rights. Under the Partnership Agreement, the limited partners do
not have voting rights relating to the operation and management of the
Operating Partnership except in connection with matters, as described more
fully below, involving certain amendments to the Partnership Agreement,
dissolution of the Operating Partnership and the sale or exchange of all or
substantially all of the Operating Partnership's assets, including mergers or
other combinations.
Stockholders of the Company have the right to vote, among other things,
on a merger, sale of substantially all of the assets of the Company,
amendments to the Charter and dissolution of the Company. The business and
affairs of the Company are managed under the direction of the Board of
Directors, consisting of three classes having staggered terms of office.
Each class is to be elected by the stockholders at annual meetings of the
Company. Each share of Common Stock has one vote, and the Charter permits
the Board of Directors to classify and issue Preferred Stock in one or more
series having voting power which may differ from that of the Common Stock.
Amendment of the Partnership Agreement or the Company's Charter.
Amendments to the Partnership Agreement may be proposed by the Company, as
general partner, or by limited partners holding 20% or more of the
partnership interests and generally require approval of limited partners
(including the Company) holding a majority of the outstanding limited partner
interests. The Company may make certain amendments to the Partnership
Agreement without the consent of Limited Partners. Certain amendments that
would, among other things, convert a limited partner's interest into a
general partner's interest, modify the limited liability of any limited
partner, alter the interest of any limited partner in profits, losses or
distributions, alter or modify the redemption right described herein, or
cause the termination of the Operating Partnership at a time inconsistent
with the terms of the Partnership Agreement must be approved by the Company,
as general partner, and each limited partner that would be adversely affected
by any such amendment.
Amendments to the Company's Charter must be approved by affirmative vote
of the holders of not less than two-thirds of all votes entitled to be cast
on the matter.
Vote Required to Dissolve the Operating Partnership or the Company.
Under Delaware law, the Operating Partnership may be dissolved, other than in
accordance with the terms of the Partnership Agreement, only upon the
unanimous vote of the limited partners. Under the MGCL, dissolution of the
Company must be approved by the affirmative vote of two-thirds of all the
votes entitled to be cast on the matter.
Vote Required to Sell Assets or Merge. Under the Partnership Agreement,
for the five year period following completion of the IPO (i.e., through June
2, 2000) the Operating Partnership may not sell, exchange, transfer or
otherwise dispose of all or substantially all of its assets, including by way
of merger or consolidation or other combination of the Operating Partnership,
without the consent of the limited partners (including the Company) holding
85% or more of the limited partner interests of the Operating Partnership.
Under the MGCL, with certain limited exceptions, the sale of all or
substantially all of the assets of the Company or any merger or consolidation
of the Company must be approved by the affirmative vote of two-thirds of all
the votes entitled to be cast on the matter. No approval of the stockholders
is required for the sale of less than all or substantially all of the
Company's assets.
Compensation, Fees and Distributions. The Company does not receive any
compensation for its services as general partner of the Operating
Partnership. As a partner in the Operating Partnership, however, the Company
has the same right to allocations and distributions as other partners of
Operating Partnership. In addition, the Operating Partnership will reimburse
the Company, as general partner, for all expenses incurred relating to the
ownership and operation of, or for the benefit of, the Operating Partnership.
The Directors and Officers of the Company receive compensation for their
services.
Liability of Investors. Under the Partnership Agreement and applicable
Delaware law, the liability of the limited partners for the Operating
Partnership's debts and obligations is generally limited to the amount of
their investment in the Operating Partnership.
Under Maryland law, stockholders generally are not personally liable for
the debts or obligations of the Company. See "Description of Common Stock--
General."
Nature of Investment. The Units constitute equity interests entitling
holders thereof to their pro rata share of cash distributions made to the
--- ----
limited partners of the Operating Partnership. The Company is entitled to
receive its pro rata share of distributions made by the Operating Partnership
--- ----
with respect to its interest in the Operating Partnership.
Shares of Common Stock constitute equity interests in the Company. Each
stockholder will be entitled to his pro rata share of any dividends or
--- ----
distributions paid with respect to Common Stock. The dividends payable to
the stockholders are not fixed in amount and are paid only if, when and as
authorized by the Board of Directors. In order to qualify as a REIT, the
Company must distribute at least 95% of its taxable income (excluding capital
gains), and any taxable income (including capital gains) not distributed will
be subject to corporate income tax.
Potential Dilution of Rights. The Company as general partner, is
authorized, in its sole discretion and without limited partner approval, to
cause the Operating Partnership to issue additional limited partnership
interests and other equity securities for any partnership purpose at any time
to the limited partners or to other persons on terms established by the
Company.
The Board of Directors of the Company may issue, in its discretion,
additional shares of Common Stock and has the authority to issue from the
authorized stock a variety of other equity securities of the Company with
such preferences, conversion and of the rights, voting powers, restrictions,
limitations and restrictions on ownership, limitation as to dividends and
other distribution, qualifications and terms and creditors of the redemption
as the Board of Directors may designate at the time. The issuance of
additional shares of Common Stock or other similar equity securities may
result in the dilution of interests of the stockholders.
Liquidity. Subject to certain exceptions, the Registering Stockholders
may transfer all or any portion of their Units with or without the consent of
the Company. However, the Company, as general partner, in its sole and
absolute discretion, may or may not consent to the admission as a substituted
limited partner of any transferee of such Units. If the Company does not
consent to the admission of a transferee as a substituted limited partner,
the transferee shall be considered an assignee of an economic interest in the
Operating Partnership but will not be a holder of Units for any other
purpose; accordingly, the assignee will not be permitted to vote on any
affairs or issues on which a limited partner may vote.
The Common Stock is listed on the NYSE. The breadth and strength of
this market will depend, among other things, upon the number of shares
outstanding, the Company's financial results and prospects, the general
interest in the Company's real estate investments and the Company's dividend
yield compared to that of other debt and equity securities.
REGISTRATION RIGHTS
The registration of the Redemption Shares pursuant to this Registration
Statement of which this Prospectus is a part will discharge the Company's
obligations with respect to such Redemption Shares under the terms of
registration rights agreements (the "Registration Rights Agreements")with
each of the holders of Outstanding OP Units and the Original Shares (the
"Registering Stockholders"), which the Company entered into in connection
with the issuance of such securities. The following summary does not purport
to be complete and is qualified in its entirety by reference to the
Registration Rights Agreements.
Under each Registration Rights Agreement, at any time after June 2, 1997
until the date on which all the Redemption Shares issued to the respective
Registering Stockholder have become eligible for sale pursuant to Rule 144(k)
promulgated under the Securities Act (or, in the case of Redemption Shares
issued to holders of Outstanding OP Units issued in connection with the
Formation Transactions, the earlier of (i) such date and (ii) the tenth
anniversary of the closing of the IPO (i.e., June 2, 2005)), such Registering
Stockholder may request that the Company cause to be filed a "shelf
registration statement" (a "Shelf Registration") covering the Redemption
Shares; provided, however, that such Registering Stockholder may not make
-------- -------
such a request with respect to Redemption Shares (A) disposed of under an
effective Shelf Registration relating thereto, (B) sold pursuant to Rule 144
under the Securities Act or (C) eligible for sale pursuant to Rule 144 under
the Securities Act. Each Registration Rights Agreement requires the Company
to use reasonable efforts to keep such Shelf Registration effective until the
earliest of (a) the date on which the respective Registering Stockholder no
longer holds any Redemption Shares registered under such Shelf Registration,
(b) the date on which the Redemption Shares may be sold by such Registering
Stockholder pursuant to Rule 144(k) promulgated under the Securities Act or
(c) the date that is six months from the effective date of such Shelf
Registration. As long as the Registration Statement of which this Prospectus
is a part remains effective, the Redemption Shares held by the respective
Registering Stockholder when issued by the Company pursuant to this
Prospectus will no longer be entitled to the benefits of the applicable
Registration Rights Agreement.
Pursuant to each Registration Rights Agreement, the Company has agreed
to pay all expenses incurred in the registration of the Redemption Shares
(other than underwriting discounts, commissions and transfer taxes
thereunder). The Company also has agreed to indemnify the respective
Registering Stockholder under each Registration Rights Agreement and its
officers, directors and other affiliated persons and any person who controls
the respective Registering Stockholder against any and all losses, claims,
damages and expenses arising under the securities laws in connection with the
Registration Statement or this Prospectus, subject to certain limitations.
In addition, each Registering Stockholder has agreed to indemnify the Company
and its Directors, officers and any person who controls the Company against
all losses, claims, damages and expenses arising under the securities laws
insofar as such loss, claim, damage or expense relates to written information
furnished to the Company by such Registering Stockholder for use in this
Prospectus or an amendment or supplement hereto or in the Registration
Statement of which this Prospectus is a part or the failure by such
Registering Stockholder to deliver or cause to be delivered this Prospectus
or any amendment or supplement hereto to any purchaser from such Registering
Stockholder of shares covered by the Registration Statement.
SELLING STOCKHOLDERS
The Selling Stockholders are comprised of (i) the holders of Original
Shares issued in connection with the Formation Transactions and (ii) those
persons who receive Redemption Shares upon the redemption of Outstanding OP
Units and who may be deemed affiliates of the Company. Resales of Redemption
Shares issued pursuant to this Prospectus by persons who are not affiliates
of the Company will not be restricted under the Securities Act. Holders of
Outstanding OP Units who are not affiliates of the Company are therefore not
included herein as Selling Stockholders.
The following table provides the name of each Selling Stockholder, the
number of Common Shares owned by each Selling Stockholder (including the
number of Redemption Shares which may be acquired by each Selling Stockholder
upon redemption of Outstanding OP Units and the number of Original Shares, if
any, owned by each Selling Stockholder).
The Company has been informed that none of the Selling Stockholders has
the current intention to redeem any Outstanding OP Units or to sell any
Registered Shares.
NUMBER OF SHARES BENEFICIALLY
NAME OWNED AND OFFERED HEREBY
Donald J. Rechler 393,826 /(1)/
Roger M. Rechler 388,576 /(1)/
Scott H. Rechler 210,352 /(2)/
Mitchell D. Rechler 230,576 /(3)/
Gregg A. Rechler 210,352 /(2)/
Mark V. Rechler 212,352 /(2)/
The Glenn Michael Rechler Trust 32,672 /(4)/
The Todd Rechler Trust 32,672 /(4)/
Melville Executive Center, Inc. 53,356
Nassau West Executive Center, Inc. 16,494
Expressway Executive Center, Inc. 16,494
Hauppauge Executive Center, Inc. 20,120
Atrium Executive Center, Inc. 16,494
Vanderbilt Industrial Park, Inc. 78,524
Wildoro Associates 354,418
The Scott Rechler Trust 18,672
The Mitchell Dean Rechler Trust 18,672
The Mark Victor Rechler Trust 18,672
The Gregg Rechler Trust 18,672
HMCC Associates 937,792
Reckom, Inc. 10,662
Reckson Associates 1,239,926
Vanderbilt Generation, L.P. 208,294
J. Michael Maturo 40,988
Tarrytown Corporate Center 15,600
Tarrytown Corporate Center IV, L.P. 23,598
Tarrytown Corporate Center II 219,840
Colonel Realties 231,998
Church Street Associates 26,978
Halpern Enterprises, Inc. 25,900
Halpern Building Corporation 66,596
JAH Realties, L.P. 59,922
F.D. Rich III 8,000
Gresco Partners 3,142
Glenn Michael Rechler 24,000
Todd Rechler 24,000
Jon L. Halpern 2,000
Total 5,511,202
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/(1)/ Includes 348,000 Original Shares.
/(2)/ Includes 16,000 Original Shares.
/(3)/ Includes 28,000 Original Shares.
/(4)/ Includes 14,000 Original Shares.
DESCRIPTION OF COMMON STOCK
GENERAL
The Company's Charter provides that the Company may issue up to 100
million shares of Common Stock, $.01 par value per share. Each outstanding
share of Common Stock will entitle the holder to one vote on all matters
presented to stockholders for a vote and cumulative voting is not permitted.
Holders of the Common Stock do not have preemptive rights. On September 15,
1997, there were 34,489,380 shares of Common Stock outstanding.
All shares of Common Stock offered hereby have been duly authorized, and
will be fully paid and nonassessable. Subject to the preferential rights of
any other shares or series of stock and to the provisions of the Charter
regarding Excess Stock (as defined under "Restrictions on Ownership of
Capital Stock"), holders of shares of Common Stock are entitled to receive
dividends on such stock if, as and when authorized and declared by the Board
of Directors of the Company out of assets legally available therefor and to
share ratably in the assets of the Company legally available for distribution
to its stockholders in the event of its liquidation, dissolution or winding
up after payment of or adequate provision for all known debts and liabilities
of the Company.
Subject to the provisions of the Charter regarding Excess Stock, each
outstanding share of Common Stock entitles the holder to one vote on all
matters submitted to a vote of stockholders, including the election of
directors, and, except as provided with respect to any other class or series
of stock, the holders of such shares will possess the exclusive voting power.
There is no cumulative voting in the election of directors, which means that
the holders of a majority of the outstanding shares of Common Stock can elect
all of the directors then standing for election and the holders of the
remaining shares will not be able to elect any directors.
Holders of shares of Common Stock have no preference, conversion,
exchange, sinking fund, redemption or appraisal rights and have no preemptive
rights to subscribe for any securities of the Company. Subject to the
provisions of the Charter regarding Excess Stock, shares of Common Stock will
have equal dividend, liquidation and other rights.
CERTAIN PROVISIONS OF THE COMPANY'S CHARTER
Under the MGCL, a Maryland corporation generally cannot dissolve, amend
its Charter, merge, sell all or substantially all of its assets, engage in a
share exchange or engage in similar transactions outside the ordinary course
of business unless approved by the affirmative vote of stockholders holding
at least two-thirds of the shares entitled to vote on the matter unless a
lesser percentage (but not less than a majority of all of the votes entitled
to be cast on the matter) is set forth in the corporation's Charter. The
Company's Charter does not provide for a lesser percentage in such
situations. In addition, the Operating Partnership Agreement provides that
for the five-year period following the completion of the IPO (i.e. through
June 2, 2000), the Operating Partnership may not sell, transfer or otherwise
dispose of all or substantially all of its assets or engage in any other
similar transaction (regardless of the form of such transaction) without the
consent of the holders of 85% of all outstanding Units.
The Company's Charter authorizes the Board of Directors to reclassify
any unissued shares of Common Stock into other classes or series of classes
of stock and to establish the number of shares in each class or series and to
set the preferences, conversion and other rights, voting powers,
restrictions, limitations and restrictions on ownership, limitations as to
dividends or other distributions, qualifications and terms or conditions of
redemption for each such class or series.
The Company's Board of Directors is divided into three classes of
directors, each class constituting approximately one-third of the total
number of directors, with the classes serving staggered terms. At each
annual meeting of stockholders, the class of directors to be elected at such
meeting will be elected for a three-year term and the directors in the other
two classes will continue in office. The Company believes that classified
directors will help to assure the continuity and stability of the Board of
Directors and the Company's business strategies and policies as determined by
the Board. The use of a staggered board may delay or defer a change in
control of the Company or removal of incumbent management.
RESTRICTIONS ON OWNERSHIP
For the Company to qualify as a REIT under the Code, not more than 50%
in value of its outstanding Common Stock may be owned, directly or
indirectly, by five or fewer individuals (as defined in the Code) during the
last half of a taxable year and the Common Stock must be beneficially owned
by 100 or more persons during at least 335 days of a taxable year of 12
months (or during a proportionate part of a shorter taxable year). To
satisfy the above ownership requirements and certain other requirements for
qualification as a REIT, the Board of Directors has adopted, and the
stockholders prior to the IPO approved, a provision in the Charter
restricting the ownership or acquisition of shares of Common Stock. See
"Restrictions on Ownership of Capital Stock."
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is American Stock
Transfer & Trust Company.
RESTRICTIONS ON OWNERSHIP OF CAPITAL STOCK
EXCESS STOCK
The Charter provides that the Company may issue up to 75 million shares
of excess stock, par value $.01 per share ("Excess Stock"). For a
description of Excess Stock, see "--Restrictions on Ownership" below.
RESTRICTIONS ON OWNERSHIP
For the Company to qualify as a REIT under the Code, among other things,
not more than 50% in value of its outstanding capital stock may be owned,
directly or indirectly, by five or fewer individuals (defined in the Code to
include certain entities) during the last half of a taxable year (other than
the first year) (the "Five or Fewer Requirement"), and such shares of capital
stock must be beneficially owned by 100 or more persons during at least 335
days of a taxable year of 12 months (other than the first year) or during a
proportionate part of a shorter taxable year. Pursuant to the Code, Common
Stock held by certain types of entities, such as pension trusts qualifying
under Section 401(a) of the Code, United States investment companies
registered under the Investment Company Act of 1940, partnerships, trusts and
corporations, will be attributed to the beneficial owners of such entities
for purposes of the Five or Fewer Requirement (i.e., the beneficial owners of
such entities will be counted as shareholders of the Company).
In order to protect the Company against the risk of losing its status as
a REIT due to a concentration of ownership among its stockholders, the
Charter, subject to certain exceptions, provides that no stockholder may own,
or be deemed to own by virtue of the attribution provisions of the Code, more
than 9.0% (the "Ownership Limit") of the lesser of the aggregate number or
value of the Company's outstanding shares of Common Stock. In the event the
Company issues Preferred Stock, it may, in the Designating Amendment,
determine a limit on the ownership of such stock. Any direct or indirect
ownership of shares of stock in excess of the Ownership Limit or that would
result in the disqualification of the Company as a REIT, including any
transfer that results in shares of capital stock being owned by fewer than
100 persons or results in the Company being "closely held" within the meaning
of Section 856(h) of the Code, shall be null and void, and the intended
transferee will acquire no rights to the shares of capital stock. The
foregoing restrictions on transferability and ownership will not apply if the
Board of Directors determines that it is no longer in the best interests of
the Company to attempt to qualify, or to continue to qualify, as a REIT. The
Board of Directors may, in its sole discretion, waive the Ownership Limit if
evidence satisfactory to the Board of Directors and the Company's tax counsel
is presented that the changes in ownership will not then or in the future
jeopardize the Company's REIT status and the Board of Directors otherwise
decides that such action is in the best interest of the Company.
Shares of capital stock owned, or deemed to be owned, or transferred to
a stockholder in excess of the Ownership Limit will automatically be
converted into shares of Excess Stock that will be transferred, by operation
of law, to the trustee of a trust for the exclusive benefit of one or more
charitable organizations described in Section 170(b)(1)(A) and 170(c) of the
Code (the "Charitable Beneficiary"). The trustee of the trust will be deemed
to own the Excess Stock for the benefit of the Charitable Beneficiary on the
date of the violative transfer to the original transferee-stockholder. Any
dividend or distribution paid to the original transferee-stockholder of
Excess Stock prior to the discovery by the Company that capital stock has
been transferred in violation of the provisions of the Company's Charter
shall be repaid to the trustee upon demand. Any dividend or distribution
authorized and declared but unpaid shall be rescinded as void ab initio with
respect to the original transferee-stockholder and shall instead be paid to
the trustee of the trust for the benefit of the Charitable Beneficiary. Any
vote cast by an original transferee-stockholder of shares of capital stock
constituting Excess Stock prior to the discovery by the Company that shares
of capital stock have been transferred in violation of the provisions of the
Company's Charter shall be rescinded as void ab initio. While the Excess
Stock is held in trust, the original transferee-stockholder will be deemed to
have given an irrevocable proxy to the trustee to vote the capital stock for
the benefit of the Charitable Beneficiary. The trustee of the trust may
transfer the interest in the trust representing the Excess Stock to any
person whose ownership of the shares of capital stock converted into such
Excess Stock would be permitted under the Ownership Limit. If such transfer
is made, the interest of the Charitable Beneficiary shall terminate and the
proceeds of the sale shall be payable to the original transferee-stockholder
and to the Charitable Beneficiary as described herein. The original
transferee-stockholder shall receive the lesser of (i) the price paid by the
original transferee-stockholder for the shares of capital stock that were
converted into Excess Stock or, if the original transferee-stockholder did
not give value for such shares (e.g., the stock was received through a gift,
devise or other transaction), the average closing price for the class of
shares from which such shares of capital stock were converted for the ten
trading days immediately preceding such sale or gift, and (ii) the price
received by the trustee from the sale or other disposition of the Excess
Stock held in trust. The trustee may reduce the amount payable to the
original transferee-stockholder by the amount of dividends and distributions
relating to the shares of Excess Stock which have been paid to the original
transferee-stockholder and are owed by the original transferee-stockholder to
the trustee. Any proceeds in excess of the amount payable to the original
transferee-stockholder shall be paid by the trustee to the Charitable
Beneficiary. Any liquidation distributions relating to Excess Stock shall be
distributed in the same manner as proceeds of a sale of Excess Stock. If the
foregoing transfer restrictions are determined to be void or invalid by
virtue of any legal decision, statute, rule or regulations, then the original
transferee-stockholder of any shares of Excess Stock may be deemed, at the
option of the Company, to have acted as an agent on behalf of the Company in
acquiring the shares of Excess Stock and to hold the shares of Excess Stock
on behalf of the Company.
In addition, the Company will have the right, for a period of 90 days
during the time any shares of Excess Stock are held in trust, to purchase all
or any portion of the shares of Excess Stock at the lesser of (i) the price
initially paid for such shares by the original transferee-stockholder, or if
the original transferee-stockholder did not give value for such shares (e.g.,
the shares were received through a gift, devise or other transaction), the
average closing price for the class of stock from which such shares of Excess
Stock were converted for the ten trading days immediately preceding such sale
or gift, and (ii) the average closing price for the class of stock from which
such shares of Excess Stock were converted for the ten trading days
immediately preceding the date the Company elects to purchase such shares.
The Company may reduce the amount payable to the original transferee-
stockholder by the amount of dividends and distributions relating to the
shares of Excess Stock which have been paid to the original transferee-
stockholder and are owned by the original transferee-stockholder to the
trustee. The Company may pay the amount of such reductions to the trustee
for the benefit of the Charitable Beneficiary. The 90-day period begins on
the later date of which notice is received of the violative transfer if the
original transferee-stockholder gives notice to the Company of the transfer
or, if no such notice is given, the date the Board of Directors determines
that a violative transfer has been made.
These restrictions will not preclude settlement of transactions through
the New York Stock Exchange.
All certificates representing shares of stock will bear a legend
referring to the restrictions described above.
Each stockholder shall upon demand be required to disclose to the
Company in writing any information with respect to the direct, indirect and
constructive ownership of capital stock of the Company as the Board of
Directors deems necessary to comply with the provisions of the Code
applicable to REITs, to comply with the requirements of any taxing authority
or governmental agency or to determine any such compliance.
The Ownership Limit may have the effect of delaying, deferring or
preventing a change in control of the Company unless the Board of Directors
determines that maintenance of REIT status is no longer in the best interest
of the Company.
FEDERAL INCOME TAX CONSIDERATIONS
The Company believes it has operated, and the Company intends to
continue to operate, in such a manner as to qualify as a REIT under the Code,
but no assurance can be given that it will at all times so qualify.
The provisions of the Code pertaining to REITs are highly technical and
complex. The following is a brief and general summary of certain provisions
that currently govern the federal income tax treatment of the Company and its
stockholders. For the particular provisions that govern the federal income
tax treatment of the Company and its stockholders, reference is made to
Sections 856 through 860 of the Code and the regulations thereunder. The
following summary is qualified in its entirety by such reference.
Under the Code, if certain requirements are met in a taxable year, a
REIT generally will not be subject to federal income tax with respect to
income that it distributes to its stockholders. If the Company fails to
qualify during any taxable year as a REIT, unless certain relief provisions
are available, it will be subject to tax (including any applicable
alternative minimum tax) on its taxable income at regular corporate rates,
which could have a material adverse effect upon its stockholders.
In any year in which the Company qualifies to be taxed as a REIT,
distributions made to its stockholders out of current or accumulated earnings
and profits will be taxed to stockholders as ordinary income except that
distributions of net capital gains designated by the Company as capital gain
dividends will be taxed as long-term capital gain income to the stockholders.
To the extent that distributions exceed current or accumulated earnings and
profits, they will constitute a return of capital, rather than dividend or
capital gain income, and will reduce the basis for the stockholder's Common
Stock or Preferred Stock, with respect to which the distribution is paid or,
to the extent that they exceed such basis, will be taxed in the same manner
as gain from the sale of that Common Stock or Preferred Stock.
Unitholders are urged to consult their own tax advisors with respect to
the appropriateness of an investment in the Redemption Shares registered
hereby and with respect to the tax consequences arising under federal law and
the laws of any state, municipality or other taxing jurisdiction, including
tax consequences resulting from such Unitholder's own tax characteristics.
In particular, foreign investors should consult their own tax advisors
concerning the tax consequences of an investment in the Company, including
the possibility of United States income tax withholding on Company
distributions.
PLAN OF DISTRIBUTION
This Prospectus relates to (i) the possible issuance by the Company of
up to 6,974,810 Redemption Shares of the Company if and to the extent that
the Company elects to issue such Redemption Shares to holders of up to
6,974,810 Outstanding OP Units, upon the tender of such Outstanding OP Units
for redemption; (ii) the offer and sale from time to time of up to 800,000
Original Shares by the holders thereof; and (iii) the offer and sale from
time to time of any Redemption Shares that may be issued to and held by
persons who may be affiliates of the Company. The Original Shares and the
Outstanding OP Units were issued in connection with the Initial Transactions
or subsequent transactions involving property transfers to the Operating
Partnership and the hiring of two officers of the Company. The Company has
registered the issuance of the Redemption Shares and the offer and sale of
Redemption Shares and Original Shares by the Selling Stockholders to permit
the holders thereof to sell such shares without restriction in the open
market or otherwise, but the registration of the Registered Shares does not
necessarily mean that any of the Registered Shares will be issued by the
Company (with respect to the Redemption Shares) or be offered or sold by the
Selling Stockholders.
The Company will not receive any proceeds from the offering by the
Selling Stockholders.
The distribution of Registered Shares may be affected from time to time
in one or more underwritten transactions at a fixed price or prices, which
may be changed, or at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. Any such
underwritten offering may be on a "best efforts" or a "firm commitment"
basis. In connection with any such underwritten offering, underwriters or
agents may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholders or from purchasers of Registered
Shares for whom they may act as agents. Underwriters may sell Registered
Shares to or through dealers, and such dealers may receive compensation in
the form of discounts, concessions or commissions from the underwriters
and/or commissions from the purchasers for whom they may act as agents.
Under agreements that may be entered into by the Company, underwriters,
dealers and agents who participate in the distribution of Registered Shares
may be entitled to indemnification by the Company against certain
liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments which such underwriters, dealers or
agents may be required to make in respect thereof.
The Selling Stockholder and any underwriters, dealers or agents that
participate in the distribution of Registered Shares may be deemed to be
"underwriters" within the meaning of the Securities Act, and any profit on
the sale of Registered Shares by them and any discounts, commissions or
concessions received by any such underwriters, dealers or agents might be
deemed to be underwriting discounts and commissions under the Securities Act.
At a time a particular offer of Registered Shares is made, a Prospectus
Supplement, if required, will be distributed that will set forth the name and
names of any underwriters, dealers or agents and any discounts, commissions
and other terms constituting compensation from the Selling Stockholders and
any other required information.
The sale of the Registered Shares by the Selling Stockholder may also be
affected from time to time by selling Registered Shares directly to
purchasers or to or through broker-dealers. In connection with any such
sale, any such broker-dealer may act as agent for the Selling Stockholder or
may purchase from the Selling Stockholder all or a portion of the Registered
Shares as principal, and may be made pursuant to any of the methods described
below. Such sales may be made on the NYSE or other exchanges on which the
Common Stock is then traded, in the over-the-counter market, in negotiated
transactions or otherwise at prices and at terms then prevailing or at prices
related to the then-current market prices or at prices otherwise negotiated.
The Registered Shares may also be sold in one or more of the following
transactions: (a) block transactions in which a broker-dealer may sell all
or a portion of such shares as agent but may position and resell all or a
portion of the block as principal to facilitate the transaction; (b)
purchases by any such broker-dealer as principal and resale by such broker-
dealer for its own account pursuant to a Prospectus Supplement; (c) a special
offering, an exchange distribution or a secondary distribution in accordance
with applicable NYSE or other stock exchange rules; (d) ordinary brokerage
transactions and transactions in which any such broker-dealer solicits
purchasers; (e) sales "at the market" to or through a market maker or into an
existing trading market, on an exchange or otherwise, for such shares; and
(f) sales in other ways not involving market makers or established trading
markets, including direct sales to purchasers. In affecting sales, broker-
dealers engaged by the Selling Stockholders may arrange for other broker-
dealers to participate. Broker-dealers will receive commissions or other
compensation from the Selling Stockholder in amounts to be negotiated
immediately prior to the sale that will not exceed those customary in the
types of transactions involved. Broker-dealers may also receive compensation
from purchasers of the Registered Shares which is not expected to exceed that
customary in the types of transactions involved.
In order to comply with the securities laws of certain states, if
applicable, the Registered Shares may be sold only through registered or
licensed brokers or dealers. In addition, in certain states, the Registered
Shares may not be sold unless they have been registered or qualified for sale
in such state or an exemption from such registration or qualification
requirement is available and is complied with.
The Company may from time to time issue up to 6,974,810 Redemption
Shares upon the acquisition of an equivalent number of the Outstanding OP
Units tendered for redemption. The Company will acquire Outstanding OP Units
for Redemption Shares that the Company issues in connection with these
acquisitions. Consequently, with each redemption, the Company's interest in
the Operating Partnership will increase.
All expenses incident to the offering and sale of Registered Shares,
other than commissions, discounts and fees of underwriters, broker-dealers or
agents, shall be paid by the Company. The Company has agreed to indemnify
the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act. See
"Registration Rights."
LEGAL MATTERS
The legality of the Common Stock offered hereby and certain legal
matters described under "Federal Income Tax Considerations" will be passed
upon for the Company by Brown & Wood LLP, New York, New York. Brown & Wood
LLP may rely on Ballard Spahr Andrews & Ingersoll, Baltimore, Maryland, as to
certain matters of Maryland law.
EXPERTS
The consolidated balance sheet of Reckson Associates Realty Corp. as of
December 31, 1996 and December 31, 1995, and the related consolidated
statements of operations, stockholders' equity and cash flows for the year
ended December 31, 1996 and for the period from June 3, 1995 to December 31,
1995 and the related combined statements of operations, owners' deficit and
cash flows of the Reckson Group for the period from January 1, 1995 to June
2, 1995 and for the year ended December 31, 1994 appearing in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996; the combined
statement of revenues and certain expenses of the Westchester Properties (as
defined therein) for the year ended December 31, 1995, appearing in the
Company's Form 8-K/A, dated March 27, 1996; the combined statement of
revenues and certain expenses of Landmark Square Properties (as defined
therein) for the year ended December 31, 1995 and combined statements of
revenues and certain expenses of Certain Option Properties (as defined
therein), for the years ended December 31, 1995, 1994 and 1993 appearing in
the Company's Form 8-K, dated October 1, 1996; and the combined statement of
revenues and certain expenses of the New Jersey Portfolio (as defined
therein) for the year ended December 31, 1996, the combined statement of
revenues and certain expenses for the Hauppauge Portfolio (as defined
therein) for the year ended December 31, 1996 and the statement of revenues
and certain expenses of the Uniondale Office Property (as defined therein),
for the year ended December 31, 1996, appearing in the Company's Form 8-K,
dated February 18, 1997; the statement of revenues and certain expenses of
710 Bridgeport Avenue (as defined therein), for the year ended December 31,
1996 and the statement of revenues and certain expenses of the Shorthills
Office Center (as defined therein), for the year ended December 31, 1996
appearing in the Company's Form 8-K, dated June 12, 1997; and the statement
of revenues and certain expenses of Garden City Plaza for the year ended
December 31, 1996, appearing in the Company's Form 8-K dated September 9,
1997, have in each case been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon, included therein and
incorporated herein by reference. Such consolidated and combined financial
statements are incorporated herein by reference in reliance upon such
reports given upon the authority of such firm as experts in accounting and
auditing.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following sets forth the estimated fees and expenses in connection
with the issuance and distribution of the Registrant's securities being
registered hereby, other than underwriting discounts and commissions, all of
which will be borne by the Registrant:
Securities and Exchange Commission registration fee . . . . . . $51,685
Printing and duplicating expenses . . . . . . . . . . . . . . . . 2,000
Legal fees and expenses . . . . . . . . . . . . . . . . . . . . 20,000
Blue Sky fees and expenses . . . . . . . . . . . . . . . . . . . . 2,000
Miscellaneous expenses . . . . . . . . . . . . . . . . . . . . . 4,315
------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . $80,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Maryland General Corporation Law, as amended from time to time (the
"MGCL"), permits a Maryland corporation to include in its Charter a provision
limiting the liability of its directors and officers to the corporation and
its stockholders for money damages except for liability resulting from (a)
actual receipt of an improper benefit or profit in money, property or
services or (b) active and deliberate dishonesty established by a final
judgment as being material to the cause of action. The Charter of the
Company contains such a provision which eliminates such liability to the
maximum extent permitted by Maryland law.
The Charter of the Company authorizes the Company, to the maximum extent
permitted by Maryland law, to obligate itself to indemnify and to pay or
reimburse reasonable expenses in advance of final disposition of a proceeding
to (a) any present or former director or officer or (b) any individual who,
while a director of the Company and at the request of the Company, serves or
has served another corporation, partnership, joint venture, trust, employee
benefit plan or any other enterprise as a director, officer, partner or
trustee of such corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise. The Bylaws of the Company obligate it, to
the maximum extent permitted by Maryland law, to indemnify and to pay or
reimburse reasonable expenses in advance of final disposition of a proceeding
to (a) any present or former director or officer who is made a party to the
proceeding by reason of his service in that capacity or (b) any individual
who, while a director of the Company and at the request of the Company,
serves or has served another corporation, partnership, joint venture, trust,
employee benefit plan or any other enterprise as a director, officer, partner
or trustee of such corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise and who is made a party to the proceeding by
reason of his service in that capacity. The Charter and Bylaws also permit
the Company to indemnify and advance expenses to any person who served a
predecessor of the Company in any of the capacities described above and to
any employee or agent of the Company or a predecessor of the Company.
The MGCL requires a corporation (unless its charter provides otherwise,
which the Charter of the Company does not) to indemnify a director or officer
who has been successful, on the merits or otherwise, in the defense of any
proceeding to which he is made a party by reason of their service in that
capacity. The MGCL permits a corporation to indemnify its present and former
directors and officers, among others, against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by them in connection
with any proceeding to which they may be made a party by reason of their
service in those or other capacities unless it is established that (a) the
act or omission of the director or officer was material to the matter giving
rise to the proceeding and (i) was committed in bad faith or (ii) was the
result of active and deliberate dishonesty, (b) the director or officer
actually received an improper personal benefit in money, property or services
or (c) in the case of any criminal proceeding, the director or officer had
reasonable cause to believe that the act or omission was unlawful. However,
under the MGCL, a Maryland corporation may not indemnify for an adverse
judgment in a suit by or in the right of the corporation or for a judgment of
liability on the basis that personal benefit was improperly received, unless
in either case a court orders indemnification and then only for expenses. In
addition, the MGCL permits a corporation to advance reasonable expenses upon
the corporation's receipt of (a) a written affirmation by the director or
officer of his good faith belief that he has met the standard of conduct
necessary for indemnification by the Company and (b) a written statement by
or on his behalf to repay the amount paid or reimbursed by the corporation if
it shall ultimately be determined that the standard of conduct was not met.
The Company has entered into indemnification agreements with each of its
executive officers and directors. The indemnification agreements require,
among other matters, that the Company indemnify its executive officers and
directors to the fullest extent permitted by law and advance to the executive
officers and directors all related expenses, subject to reimbursement if it
is subsequently determined that indemnification is not permitted. Under
these agreements, the Company must also indemnify and advance all expenses
incurred by executive officers and directors seeking to enforce their rights
under the indemnification agreements and may cover executive officers and
directors under the Company's directors' and officers' liability insurance.
Although indemnification agreements offer substantially the same scope of
coverage afforded the Bylaws, they provide greater assurance to directors and
executive officers that indemnification will be available, because, as
contracts, they cannot be modified unilaterally in the future by the Board of
Directors or the stockholders to eliminate the rights they provide.
ITEM 16. EXHIBITS.
4.1 -- Form of Common Stock Certificate.(1)
5 -- Opinion of Brown & Wood LLP as to the legality of the Common
Stock being registered. (2)
8.1 -- Opinion of Brown & Wood LLP as to tax matters. (2)
10 - Amended and Restated Agreement of Limited Partnership of
Reckson Operating Partnership, L.P., dated as of June 2, 1995
and as amended.
23.1 -- Consent of Brown & Wood LLP (included in Exhibit 5).(2)
23.2 -- Consent of Ernst & Young LLP.
24 -- Power of attorney (2)
_______________
(1) Previously filed as an exhibit to Registration Statement on Form S-11
(No. 33-84324) and incorporated herein by reference.
(2) Previously filed.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to the Registration Statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement.
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply
if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or 15(d) of the Exchange Act that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding ) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) under the Securities Act shall be deemed to be part of
this Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Reckson
Associates Realty Corp. certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Township of Huntington, State
of New York, on September 16, 1997.
RECKSON ASSOCIATES REALTY CORP.
By: /s/ Donald J. Rechler
-------------------------------------
Donald J. Rechler
Chairman
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
Chairman of the Board, Chief Executive
/s/ Donald J. Rechler Officer and Director (Principal Executive September 16, 1997
Donald J. Rechler Officer)
/s/ Scott H. Rechler President, Chief Operating Officer and September 16, 1997
Scott H. Rechler Director
Executive Vice President, Treasurer and
J. Michael Maturo* Chief Financial Officer (Principal
J. Michael Maturo Financial Officer and Principal
Accounting Officer)
Roger M. Rechler* Vice-Chairman of the Board and Director
Roger M. Rechler
Mitchell D. Rechler* Executive Vice President and Director
Mitchell D. Rechler
Harvey R. Blau* Director
Harvey R. Blau
Leonard Feinstein* Director
Leonard Feinstein
Director
Jon L. Halpern
Herve A. Kevenides* Director
Herve A. Kevenides
John V.N. Klein* Director
John V.N. Klein
Director
Lewis S. Ranieri
Conrad D. Stephenson* Director
Conrad D. Stephenson
*By: /s/ Scott H. Rechler
----------------------
Scott H. Rechler September 16, 1997
Attorney-in-fact
</TABLE>
EXHIBIT INDEX
EXHIBITS DESCRIPTION PAGE
4.1 -- Form of Common Stock Certificate.(1)
5 -- Opinion of Brown & Wood LLP as to the legality of the
Common Stock being registered. (2)
8.1 -- Opinion of Brown & Wood LLP as to tax matters. (2)
10 -- Amended and Restated Agreement of Limited Partnership
of Reckson Operating, L.P. dated as of June 2, 1995,
and as amended.
23.1 -- Consent of Brown & Wood LLP (included in Exhibit 5).(2)
23.2 -- Consent of Ernst & Young LLP.
24 -- Power of attorney. (2)
_________________
(1) Previously filed as an exhibit to Registration Statement on Form S-11
(No. 33-84324) and incorporated herein by reference.
(2) Previously filed.
EXHIBIT 10
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
RECKSON OPERATING PARTNERSHIP, L.P.
June 2, 1995
(amended on
December 6, 1995)
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE 1 DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2 ORGANIZATIONAL MATTERS . . . . . . . . . . . . . . . . . . . . 14
Section 2.1. Continuation . . . . . . . . . . . . . . . . . . . . . 14
Section 2.2. Name . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.3. Registered Office and Agent: Principal Office . . . . 15
Section 2.4. Power of Attorney . . . . . . . . . . . . . . . . . . 15
Section 2.5. Term . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.6. Admission of Limited Partners . . . . . . . . . . . . 17
ARTICLE 3 PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.1. Purpose and Business . . . . . . . . . . . . . . . . . 17
Section 3.2. Powers . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 4 CAPITAL CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . 18
Section 4.1. Capital Contributions of the Partners . . . . . . . . 18
Section 4.2. Issuances of Additional Partnership Interests . . . . 19
Section 4.3. Contribution of Proceeds of Issuance of REIT
Shares . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.4. Preemptive Rights . . . . . . . . . . . . . . . . . . 21
ARTICLE 5 DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.1. Requirement and Characterization of
Distributions . . . . . . . . . . . . . . . . . . . . 21
Section 5.2. Amounts Withheld . . . . . . . . . . . . . . . . . . . 22
Section 5.3. Distributions Upon Liquidation . . . . . . . . . . . . 22
Section 5.4. Restricted Distributions . . . . . . . . . . . . . . . 22
ARTICLE 6 ALLOCATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 6.1. Allocations For Capital Account Purposes . . . . . . . 22
ARTICLE 7 MANAGEMENT AND OPERATIONS OF BUSINESS . . . . . . . . . . . . . 23
Section 7.1. Management . . . . . . . . . . . . . . . . . . . . . . 23
Section 7.2. Certificate of Limited Partnership . . . . . . . . . . 28
Section 7.3. Restrictions on General Partner Authority . . . . . . 29
Section 7.4. Reimbursement of the General Partner and
the Company . . . . . . . . . . . . . . . . . . . . . 29
Section 7.5. Outside Activities of the General Partner . . . . . . 31
Section 7.6. Contracts with Affiliates . . . . . . . . . . . . . . 31
Section 7.7. Indemnification . . . . . . . . . . . . . . . . . . . 32
Section 7.8. Liability of the General Partner . . . . . . . . . . . 34
Section 7.9. Other Matters Concerning the General Partner . . . . . 35
Section 7.10. Title to Partnership Assets . . . . . . . . . . . . . 36
Section 7.11. Reliance by Third Parties . . . . . . . . . . . . . . 36
ARTICLE 8 RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS . . . . . . . . . . 37
Section 8.1. Limitation of Liability . . . . . . . . . . . . . . . 37
Section 8.2. Management of Business . . . . . . . . . . . . . . . . 37
Section 8.3. Outside Activities of Limited Partners . . . . . . . . 38
Section 8.4. Return of Capital . . . . . . . . . . . . . . . . . . 38
Section 8.5. Rights of Limited Partners Relating to the
Partnership . . . . . . . . . . . . . . . . . . . . . 38
Section 8.6. Redemption Right . . . . . . . . . . . . . . . . . . . 39
ARTICLE 9 BOOKS, RECORDS, ACCOUNTING AND REPORTS . . . . . . . . . . . . 41
Section 9.1. Records and Accounting . . . . . . . . . . . . . . . . 41
Section 9.2. Fiscal Year . . . . . . . . . . . . . . . . . . . . . 42
Section 9.3. Reports . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 10 TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . 42
Section 10.1. Preparation of Tax Returns . . . . . . . . . . . . . 42
Section 10.2. Tax Elections . . . . . . . . . . . . . . . . . . . . 43
Section 10.3. Tax Matters Partner . . . . . . . . . . . . . . . . . 43
Section 10.4. Organizational Expenses . . . . . . . . . . . . . . . 45
Section 10.5. Withholding . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 11 TRANSFERS AND WITHDRAWALS . . . . . . . . . . . . . . . . 46
Section 11.1. Transfer . . . . . . . . . . . . . . . . . . . . . . 46
Section 11.2. Transfer of the Company's General Partner
Interest and Limited Partner Interest . . . . . . . . 47
Section 11.3. Limited Partners' Rights to Transfer . . . . . . . . 47
Section 11.4. Substituted Limited Partners . . . . . . . . . . . . 49
Section 11.5. Assignees . . . . . . . . . . . . . . . . . . . . . . 49
Section 11.6. General Provisions . . . . . . . . . . . . . . . . . 50
ARTICLE 12 ADMISSION OF PARTNERS . . . . . . . . . . . . . . . . . . 51
Section 12.1. Admission of Successor General Partner . . . . . . . 51
Section 12.2. Admission of Additional Limited Partners . . . . . . 51
Section 12.3. Amendment of Agreement and Certificate of
Limited Partnership . . . . . . . . . . . . . . . . . 52
ARTICLE 13 DISSOLUTION, LIQUIDATION AND TERMINATION . . . . . . . . . 53
Section 13.1. Dissolution . . . . . . . . . . . . . . . . . . . . . 53
Section 13.2. Winding Up . . . . . . . . . . . . . . . . . . . . . 54
Section 13.3. Compliance with Timing Requirements of
Regulations . . . . . . . . . . . . . . . . . . . . . 56
Section 13.4. Deemed Distribution and Recontribution . . . . . . . 56
Section 13.5. Rights of Limited Partners . . . . . . . . . . . . . 57
Section 13.6. Notice of Dissolution . . . . . . . . . . . . . . . . 57
Section 13.7. Termination of Partnership and Cancellation
of Certificate of Limited Partnership . . . . . . . . 57
Section 13.8. Reasonable Time for Winding-Up . . . . . . . . . . . 57
Section 13.9. Waiver of Partition . . . . . . . . . . . . . . . . . 57
ARTICLE 14 AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS . . . . . . . 58
Section 14.1. Amendment of Partnership Agreement . . . . . . . . . 58
Section 14.2. Meetings of the Partners . . . . . . . . . . . . . . 59
ARTICLE 15 GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . 61
Section 15.1. Addresses and Notice . . . . . . . . . . . . . . . . 61
Section 15.2. Titles and Captions . . . . . . . . . . . . . . . . . 61
Section 15.3. Pronouns and Plurals . . . . . . . . . . . . . . . . 61
Section 15.4. Further Action . . . . . . . . . . . . . . . . . . . 61
Section 15.5. Binding Effect . . . . . . . . . . . . . . . . . . . 61
Section 15.6. Creditors . . . . . . . . . . . . . . . . . . . . . . 61
Section 15.7. Waiver . . . . . . . . . . . . . . . . . . . . . . . 62
Section 15.8. Counterparts . . . . . . . . . . . . . . . . . . . . 62
Section 15.9. Applicable Law . . . . . . . . . . . . . . . . . . . 62
Section 15.10. Invalidity of Provisions . . . . . . . . . . . . . . 62
Section 15.11. Entire Agreement . . . . . . . . . . . . . . . . . . 62
EXHIBITS
- --------
Exhibit A - Partners Contributions and Partnership Interests
Exhibit B - Capital Account Maintenance
Exhibit C - Special Allocation Rules
Exhibit D - Notice of Redemption
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
RECKSON OPERATING PARTNERSHIP, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF RECKSON
OPERATING PARTNERSHIP, L.P. (this "Agreement"), dated as of June 2, 1995, is
entered into by and among Reckson Associates Realty Corp., a Maryland
Corporation (the "Company"), and the Persons (as defined below) whose names
are set forth on Exhibit A as attached hereto (as it may be amended from time
to time).
WHEREAS, the Company and the Persons whose names are set forth on
Exhibit A, as attached hereto, desire to enter into this Amended and Restated
Agreement of Limited Partnership of Reckson Operating Partnership, L.P. (the
"Partnership"); and
WHEREAS, the Company and the Persons whose names are set forth on
Exhibit A, as attached hereto, will make certain capital contributions to the
Partnership;
NOW THEREFORE, in consideration of the mutual covenants herein
contained, and other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE 1
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, 6
---
Del. C. Section17-101, et seq., 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 12.2 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 taxable 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 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 taxable 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 of any Person referred to in clauses (i), (ii), and (iii) above.
"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. The aggregate Agreed Value of the Contributed Property
contributed or deemed contributed by each Partner as of the date hereof is as
set forth in Exhibit A.
"Agreement" means this Amended and Restated Agreement of Limited
---------
Partnership of the Partnership, as it may be amended, supplemented or
restated from time to time.
"Articles of Incorporation" means the Articles of Incorporation of
-------------------------
the Company filed in the State of Maryland on September 13, 1994, as amended
and 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 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,
(i) the sum of:
(a) the Partnership's Net Income or Net Loss (as the case may be)
for such period (without regard to adjustments resulting from
allocations described in Sections 1.A through 1.E of Exhibit C);
---------
(b) Depreciation and all other noncash charges deducted in
determining Net Income or Net Loss for such period;
(c) the amount of any reduction in the reserves of the Partnership
referred to in clause (ii)(f) below (including, without limitation,
reductions resulting because the General Partner determines such amounts
are no longer necessary);
(d) the excess of proceeds from the sale, exchange, disposition,
or refinancing of Partnership property for such period over the gain
recognized from such sale, exchange, disposition, or refinancing during
such period (excluding Terminating Capital Transactions); and
(e) all other cash received by the Partnership for such period
that was not included in determining Net Income or Net Loss for such
period; less
(ii) the sum of:
(a) all principal debt payments made by the Partnership during
such period;
(b) capital expenditures made by the Partnership during such
period;
(c) investments made by the Partnership during such period in any
entity (including loans made thereto) to the extent that such investments
are not otherwise described in clause (ii)(a) or (ii)(b);
(d) all other expenditures and payments not deducted in
determining Net Income or Net Loss for such period;
(e) any amount included in determining Net Income or Net Loss for
such period that was not received by the Partnership during such period;
(f) the amount of any increase in reserves during such period
which the General Partner determines to be necessary or appropriate in
its sole and absolute discretion; and
(g) the amount of any working capital accounts and other cash or
similar balances which the General Partner determines to be 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.
"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, 4.2, or 4.3 hereof.
"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 property charged to the
Partners' Capital Accounts following the contribution of or adjustment with
respect to such property; 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 of the
-----------
Partnership as filed in the office of the Delaware Secretary of State on
September 28, 1994, as amended from time to time in accordance with the terms
hereof and the Act.
"Code" means the Internal Revenue Code of 1986, as amended and in
----
effect from time to time, as interpreted by the applicable regulations
thereunder. 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, in such
--------------------
form as may be permitted by the Act (but excluding cash), contributed or
deemed contributed to the Partnership (including deemed contributions 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, subject to adjustment as
-----------------
follows: (i) in case the General Partner shall (A) pay or make a dividend or
other distribution on the outstanding REIT Shares in REIT Shares, (B)
subdivide or reclassify the outstanding REIT Shares into a greater number of
REIT Shares, or (C) combine or reclassify the outstanding REIT Shares into a
smaller number of REIT Shares, the Conversion Factor in effect at the opening
of business on the day following the date fixed for the determination of
shareholders entitled to receive such dividend or other distribution or
subject to such subdivision, combination or reclassification shall be
proportionately adjusted so that a holder of Partnership Units shall be
entitled to receive, upon exchange thereof, the number of REIT Shares which
the holder would have owned at the opening of business on the day following
the date fixed for such determination had such Units been exchanged
immediately prior to such determination; (ii) in case the Partnership shall
subdivide or reclassify the outstanding Partnership Units into a greater
number of Partnership Units, the Conversion Factor in effect at the opening
of business on the day following the date fixed for the determination of
Partnership Unit holders subject to such subdivision or reclassification
shall be proportionately adjusted so that a holder of Partnership Units shall
be entitled to receive, upon exchange thereof, the number of REIT Shares
which the holder would have owned at the opening of business on the day
following the date fixed for such determination had such Partnership Units
been exchanged immediately prior to such determination; (iii) in case the
General Partner (A) shall issue rights or warrants to all holders of REIT
Shares entitling them to subscribe for or purchase REIT Shares at a price per
share less than the daily market price per REIT Share (determined as
specified under the definition of "Value" set forth in this Article I) on the
date fixed for the determination of shareholders entitled to receive such
rights or warrants, (B) shall not issue similar rights or warrants to all
holders of Partnership Units entitling them to subscribe for or purchase REIT
Shares or Partnership Units at a comparable price (determined, in the case of
Partnership Units, by reference to the Conversion Factor), and (C) cannot
issue such rights or warrants to a Redeeming Partner as otherwise required by
the definition of "REIT Shares Amount" set forth in this Article I, then the
Conversion Factor in effect at the opening of business on the day following
the date fixed for such determination shall be increased by multiplying such
Conversion Factor by a fraction of which the numerator shall be the number of
REIT Shares outstanding at the close of business on the date fixed for such
determination plus the number of REIT Shares so offered for subscription or
purchase, and of which the denominator shall be the number of REIT Shares
outstanding at the close of business on the date fixed for such determination
plus the number of REIT Shares which the aggregate offering price of the
total number of REIT Shares so offered for subscription would purchase at
such daily market price per share, such increase of the Conversion Factor to
become effective immediately after the opening of business on the day
following the date fixed for such determination; and (iv) in case the General
Partner shall, by dividend or otherwise, distribute to all holders of its
common stock, (A) shares of capital stock of any class other than its
common stock, (B) evidence of its indebtedness or (C) assets (excluding any
rights or warrants referred to in clause (iii) above, any cash dividend or
distribution lawfully paid under the laws of the state of incorporation of
the General Partner, and any dividend or distribution referred to in clause
(i) above) and shall not cause a corresponding distribution to be made to all
holders of Partnership Units, the Conversion Factor shall be adjusted so that
the same shall equal the ratio determined by multiplying the Conversion
Factor in effect immediately prior to the close of business on the date fixed
for the determination of shareholders entitled to receive such distribution
by a fraction of which the numerator shall be the daily market price per REIT
Share on the date fixed for such determination, and of which the denominator
shall be such daily market price per REIT Share less the fair market value
(as determined by the Board of Directors of the General Partner, whose
determination shall be conclusive and described in a Board resolution
certified by the Secretary of the General Partner and delivered to the
holders of the Partnership Units) of the portion of the shares of capital
stock or evidences of indebtedness or assets so distributed applicable to one
REIT Share, such adjustment to become effective immediately prior to the
opening of business on the day following the date fixed for the determination
of shareholders entitled to receive such distribution.
"Depreciation" means, for each taxable 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 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.
"Effective Date" means the date of closing of the initial public
--------------
offering of REIT Shares pursuant to that certain underwriting agreements
among the Company and the underwriters named therein.
"Financing Partnership" means Reckson FS Limited Partnership, a
---------------------
Delaware limited partnership formed pursuant to an agreement of limited
partnership between the Partnership and the Financing Subsidiary, and any
successor thereto.
"Financing Subsidiary" means Reckson FS, Inc., a Delaware
--------------------
corporation, and any successor thereto.
"General Partner" means the Company, in its capacity as the general
---------------
partner of the Partnership, or any Person who becomes an additional or a
successor general partner of the Partnership.
"General Partner Interest" means a Partnership Interest held by the
------------------------
General Partner, in its capacity as general partner of the Partnership. A
General Partner Interest may be expressed as a number of Partnership Units.
"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 and such natural Person's natural or adoptive
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 him incompetent to manage his Person or his 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 or limited liability company 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 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 of or against such Partner 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 or liquidator has not been vacated or
stayed within ninety (90) days of such appointment; or (h) an appointment
referred to in clause (g) which has been stayed 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 (A) his status as the General Partner, or as a director, officer,
stockholder, partner, member, employee, representative or agent of the
General Partner or as an officer, employee, representative or agent of the
Partnership, or (B) his or its liabilities, 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 assets
subject to); 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 the Company and any other Person named as a
---------------
limited partner of the Partnership 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
of the Partnership. For purposes of this Agreement and the Act, the Limited
Partners shall constitute a single class or group of limited partners.
"Limited Partner Interest" means a Partnership Interest of a Limited
------------------------
Partner in the Partnership representing a fractional part of the Partnership
Interests of all 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 may be
expressed as a number of Partnership Units.
"Liquidating Event" has the meaning set forth in Section 13.1.
-----------------
"Liquidator" has the meaning set forth in Section 13.2.
----------
"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 included in the calculation of Net Income shall be
determined in accordance with federal income tax accounting principles,
subject to the specific adjustments provided for in Exhibit B.
"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 federal income tax accounting principles, subject to the specific
adjustments provided for in Exhibit 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(1)(a),
2.B(2)(a)(1) and 2.B(2)(a)(2) (to the extent reflecting Section 2.B(1)(a)) 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 taxable 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
--------
collectively.
"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).
"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 taxable year shall be determined in accordance with the rules of
Regulations Section 1.704-2(i)(2).
"Partnership" means the limited partnership heretofore formed and
-----------
continued under the Act and 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 a Partnership Minimum Gain, for a Partnership
taxable 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 Company for a distribution to its shareholders of some of
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, 4.2
and 4.3. The number of Partnership Units outstanding and the Percentage
Interest in the Partnership represented by such Units are set forth in
Exhibit A attached hereto, as such Exhibit may be amended from time to time.
The ownership of Partnership Units shall be evidenced by such form of
certificate for units as the General Partner adopts from time to time unless
the General Partner determines that the Partnership Units shall be
uncertificated securities.
"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 an individual or a corporation, partnership, limited
------
liability company, trust, unincorporated organization, association or other
entity.
"Recapture Income" means any gain recognized by the Partnership 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 hereof.
-----------------
"Redemption Right" shall have the meaning set forth in Section 8.6
----------------
hereof.
"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 the Company, par
----------
value $.01 per share.
"REIT Shares Amount" shall mean a number of REIT Shares equal to the
------------------
product of the number of Partnership Units offered for redemption by a
Redeeming Partner, multiplied by the Conversion Factor, provided that in the
event the Company issues to all holders of REIT Shares rights, options,
warrants or convertible or exchangeable securities entitling the shareholders
to subscribe for or purchase REIT Shares, or any other securities or property
(collectively, the "rights"), and the Company can issue such rights to the
Redeeming Partner, 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.
"704(c) Value" of any Contributed Property means the fair market
------------
value of such property or other consideration at the time of contribution, as
determined by the General 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 deter-
mined 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)
Values of Contributed Properties in a single or integrated transaction among
the separate properties on a basis proportional to their respective fair
market values.
"Specified Redemption Date" means the tenth (10th) Business Day after
-------------------------
receipt by the Company of a Notice of Redemption; provided that no Specified
Redemption Date shall occur before two (2) years from the date of this
Agreement, provided further that if the Company combines its outstanding REIT
Shares, no Specified Redemption Date shall occur after the record date of
such combination of REIT Shares and prior to the effective date of such
combination.
"Subsidiary" means, with respect to any Person, any corporation,
----------
partnership, limited liability company or other entity of which a majority of
(i) the voting power of the voting equity securities; or (ii) the outstanding
equity interests, is owed, 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 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 but
shall not include any contribution of assets to the Financing Partnership.
"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.
"Value" means, with respect to a REIT Share, the average of the daily
-----
market price (the "daily market price") for the ten (10) consecutive trading
days immediately preceding the Valuation Date. The daily 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 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 2
ORGANIZATIONAL MATTERS
Section 2.1. Continuation
------------
The Partners hereby continue the Partnership as a limited partnership
under and pursuant to the Act. 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.
Section 2.2. Name
----
The name of the Partnership heretofore formed and continued hereby shall
be Reckson Operating Partnership, 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 and the name and address of the registered agent for service of
process on the Partnership in the State of Delaware is The Corporation Trust
Company, Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware
19801. The principal office of the Partnership shall be 225 Broadhollow Road,
Melville, New York 11747, 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. Power of Attorney
-----------------
A. Each Limited Partner and each Assignee hereby constitutes and
appoints 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 the
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 or
plans to conduct business or own property; (b) all instruments
that the General Partner 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 the 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 11, 12 or 13 hereof or the
Capital Contribution of any Partner; and (e) all certificates,
documents and other instruments relating to the determination
of the rights, preferences and privileges of Partnership
Interest; and
(2) execute, swear to, seal, 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 14 hereof or as may be otherwise expressly provided for in
this Agreement.
B. 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 and 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 2.5. Term
----
The term of the Partnership commenced on the date that the Certificate
was filed with the Secretary of State of the State of Delaware and shall
continue until December 31, 2095, unless the Partnership is dissolved sooner
pursuant to the provisions of Article 13 or as otherwise provided by law.
Section 2.6. Admission of Limited Partners
-----------------------------
On the date hereof, and upon the execution of this Agreement or a
counterpart of this Agreement, each of the Persons identified as a limited
partner of the Partnership on Exhibit A to this Agreement (other than Scott
H. Rechler who has already been admitted as a limited partner of the
Partnership) is hereby admitted to the Partnership as a limited partner of
the Partnership.
ARTICLE 3
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 formed pursuant to the Act; provided, however,
-------- -------
that such business shall be limited to and conducted in such a manner as to
permit the Company at all times to be classified as a REIT, unless the
Company ceases to qualify as a REIT for reasons other than the conduct of the
business of the Partnership; (ii) to enter into any partnership, joint
venture or other similar arrangement to engage in any of the foregoing or to
own interests in any entity engaged in any of the foregoing; and (iii) to do
anything necessary, convenient or incidental to the foregoing. In connection
with the foregoing, and without limiting the Company's right, in its sole
discretion, to cease qualifying as a REIT, the Partners acknowledge that the
Company's current status as a REIT inures to the benefit of all of 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, and shall have,
without limitation, any and all of the powers that may be exercised on behalf
of the Partnership by the General Partner pursuant to this Agreement;
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 the Company to continue to qualify as a REIT; (ii) could subject
the Company 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 the Company or its securities, unless such
action (or inaction) shall have been specifically consented to by the General
Partner in writing.
ARTICLE 4
CAPITAL CONTRIBUTIONS
Section 4.1. Capital Contributions of the Partners
-------------------------------------
At the time of the execution of this Agreement, the Partners shall make
the Capital Contributions set forth in Exhibit A to this Agreement, which may
be adjusted upon final determination of the 704(c) Values of the assets
contributed to Partnership. At the General Partner's direction, certain
Capital Contributions may be made by way of transfers to such subsidiaries of
the Partnership as the General Partner may identify. 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, as amended to
reflect such deemed Capital Contributions. In consideration for making the
Capital Contributions set forth in Exhibit A to this Agreement, each of the
Partners shall receive from the Partnership and shall own Partnership Units
in the amounts set forth for such Partner in Exhibit A and shall 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,
additional Capital Contributions, the issuance of additional Partnership
Units (pursuant to any merger or otherwise), or similar events having an
effect on any Partner's Percentage Interest. The number of Partnership Units
held by the General Partner, in its capacity as general partner (equal to one
percent (1%) of all outstanding Partnership Units from time to time) shall be
deemed to be the General Partner Interest. Except as provided in Sections 4.2
and 10.5, the Partners shall have no obligation to make any additional
Capital Contributions or loans to the Partnership.
Section 4.2. Issuances of Additional Partnership Interests
---------------------------------------------
A. The General Partner is hereby authorized, without the need for any
vote or approval of any Partner or any other Person who may hold Partnership
Units or Partnership Interests, to cause the Partnership from time to time to
issue to the Partners (including the General Partner) or other Persons
additional Partnership Units or other Partnership Interests in one or more
classes, or one or more series of any of such classes, or otherwise with such
designations, preferences, redemption and conversion rights and relative,
participating, optional or other special rights, powers and duties, including
rights, powers and duties senior to Limited Partner 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; provided that no such
additional Partnership Units or other Partnership Interests shall be issued
to the Company, as the General Partner or a Limited Partner, unless either
(a)(1) the additional Partnership Interests are issued in connection with an
issuance of REIT Shares or other shares by the Company, which shares have
designations, preferences and other rights such that the economic interests
attributable to such shares are substantially similar to the designations,
preferences and other rights of the additional Partnership Interests issued
to the Company in accordance with this Section 4.2.A, and (2) the Company
shall make a Capital Contribution to the Partnership in an amount equal to
the proceeds raised in connection with such issuance or (b) the additional
Partnership Interests are issued to all Partners in proportion to their
respective Percentage Interests. In addition, the Company may acquire Units
from other Partners pursuant to this Agreement.
B. After the initial public offering of REIT Shares, the Company shall
not issue any additional REIT Shares (other than REIT Shares issued pursuant
to Section 8.6), or rights, options, warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase REIT Shares
(collectively "New Securities") other than to all holders of
--------------
REIT Shares unless (i) the General Partner shall cause the Partnership to
issue to the Company, Partnership Interests or rights, options, warrants or
convertible or exchangeable securities of the Partnership having
designations, preferences and other rights, all such that the economic
interests (when combined with any additional economic interests in the
Financing Partnership issued to the Financing Subsidiary contemporaneously)
are substantially similar to those of the New Securities; and (ii) the
Company contributes to the Partnership (and to the Financing Subsidiary for
contribution to the Financing Partnership) the proceeds from the issuance of
such New Securities and from the exercise of rights contained in such New
Securities. Without limiting the foregoing, the Company is expressly
authorized to issue New Securities for less than fair market value, and the
General Partner is expressly authorized to cause the Partnership to issue to
the Company corresponding Partnership Interests, so long as (x) the General
Partner concludes in good faith that such issuance is in the interests of the
Company and the Partnership (for example, and not by way of limitation, the
issuance of REIT Shares and corresponding Units pursuant to an employee stock
purchase plan providing for employee purchases of REIT Shares at a discount
from fair market value or employee stock options that have an exercise price
that is less than the fair market value of the REIT Shares, either at the
time of issuance or at the time of exercise); and (y) the Company contributes
all proceeds from such issuance and exercise to the Partnership (and to the
Financing Subsidiary for contribution to the Financing Partnership).
Section 4.3. Contribution of Proceeds of Issuance of REIT
--------------------------------------------
Shares
------
In connection with the initial public offering of REIT Shares by the
Company and any other issuance of REIT Shares or New Securities pursuant to
Section 4.2, the Company shall contribute to the Partnership (and to the
Financing Subsidiary for contribution to the Financing Partnership) any
proceeds (or a portion thereof) raised in connection with such issuance;
provided that if the proceeds actually received by the Company
- -------- ----
are less than the gross proceeds of such issuance as a result of any
underwriter's discount or other expenses paid or incurred in connection with
such issuance, then the Company shall be deemed to have made a Capital
Contribution to the Partnership (and a capital contribution to the Financing
Subsidiary for contribution to the Financing Partnership) in the amount equal
to the sum of the net proceeds of such issuance plus the amount of such
underwriter's discount and other expenses paid by the Company (which discount
and expense shall be treated as an expense for the benefit of the Partnership
in accordance with Section 7.4). In the case of employee purchases of New
Securities at a discount from fair market value, the amount of such discount
representing compensation to the employee, as determined by the General
Partner, shall be treated as an expense of the issuance of such New
Securities.
Section 4.4. 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 5
DISTRIBUTIONS
Section 5.1. Requirement and Characterization of
-----------------------------------
Distributions
-------------
The General Partner shall distribute at least quarterly an amount equal
to 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 in accordance with their
respective Percentage Interests on such Partnership Record Date; provided
that in no event may a Partner receive a distribution of Available Cash with
respect to a Partnership Unit if such Partner is entitled to receive a
distribution out of such Available Cash with respect to a REIT Share for which
such Partnership Unit has been exchanged and such distribution shall be made
to the Company. The General Partner shall take such reasonable efforts, as
determined by it in its sole and absolute discretion and consistent with the
Company's qualification as a REIT, to distribute Available Cash to the Limited
Partners so as to preclude any such distribution or portion thereof from being
treated as part of a sale of property to the Partnership by a Limited Partner
under Section 707 of the Code or the Regulations thereunder; provided that the
General Partner and the Partnership shall not have liability to a Limited
Partner under any circumstances as a result of any distribution to a Limited
Partner being so treated.
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 Partners or Assignees shall be treated as
amounts distributed to the 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 and any other cash
received or reductions in reserves made after commencement of the liquidation
of the Partnership shall be distributed to the Partners in accordance with
Section 13.2.
Section 5.4. Restricted Distributions
------------------------
Notwithstanding any provision to the contrary contained in this
Agreement, the Partnership, and the General Partner on behalf of the
Partnership, shall not make a distribution to any Partner on account of its
interest in the Partnership if such distribution would violate Section 17-607
of the Act or other applicable law.
ARTICLE 6
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. After giving effect to the special allocations set forth in Section
1 of Exhibit C attached hereto, Net Income shall be allocated (i) first, to
the General 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; and (ii) thereafter, Net Income shall be allocated to
the Partners in accordance with their respective Percentage Interests.
B. After giving effect to the special allocations set forth in Section
1 of Exhibit C attached hereto, Net Losses shall be allocated 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. 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. 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 7
MANAGEMENT AND OPERATIONS OF BUSINESS
Section 7.1. Management
----------
A. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of 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 partner-
ship under applicable law or which are granted to the General Partner under any
other provision of this Agreement, the General Partner, subject to Section
7.3 hereof, shall have full power and authority to do all things deemed
necessary, desirable or convenient 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
the Company (so long as the Company 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 stockholders in amounts
sufficient to permit the Company to maintain REIT status), the
assumption or guarantee of, or other contracting for,
indebtedness and other liabilities, the issuance of evidence
of indebtedness (including the securing of the same by deed,
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 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 (all of the foregoing
subject to any prior approval only to the extent required by
Section 7.3 hereof);
(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 Company, the Partnership or any of the
Partnership's Subsidiaries, the lending of funds to other
Persons (including, without limitation, the Subsidiaries of
the Partnership and/or the Company) 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, disposition or improvement of any real
property or improvements owed by the Partnership or any
Subsidiary of the Partnership;
(6) the negotiation, execution, delivery and performance of any
contracts, conveyances or other instruments that the General
Partner considers useful or necessary or convenient to the
conduct of the Partnership's operations or the implementation
of the General Partner's powers under this Agreement,
including contracting with contractors, developers,
consultants, accountants, legal counsel, other professional
advisors and other agents and the payment of their expenses
and compensation out of the Partnership's assets;
(7) the distribution of Partnership cash or other Partnership
assets in accordance with this Agreement;
(8) holding, managing, investing and reinvesting cash and other
assets of the Partnership;
(9) the collection and receipt of revenues and income of the
Partnership;
(10) the establishment of one or more divisions of the Partnership,
the selection and dismissal of employees of the Partnership
(including, without limitation, employees who may be
designated as officers with titles such as "president," "vice
president," "secretary" and "treasurer" of the Partnership),
and agents, outside attorneys, accountants, consultants and
contractors of the Partnership, 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;
(12) the formation of, or acquisition of an interest in, and the
contribution of property to, any further limited or general
partnerships, limited liability companies, 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 settlement,
compromise, submission to arbitration or any other form of
dispute resolution, or abandonment of, any claim, cause of
action, liability, debt or damages, due or owing to or from
the Partnership, the commencement or defense of suits, legal
proceedings, administrative proceedings, arbitration or other
forms of dispute resolution, and the representation of the
Partnership in all suits or legal proceedings, administrative
proceedings, arbitrations or other forms of dispute
resolution, the incurring of legal expense, 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);
(15) the determination of the fair market value of any Partnership
property distributed in kind using such reasonable method of
valuation as the General Partner may adopt;
(16) the exercise, directly or indirectly, through any
attorney-in-fact acting under a general or limited power of
attorney, of any right, including the
right to vote, appurtenant to any asset or investment held by
the Partnership;
(17) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of or in connection
with any Subsidiary of the Partnership or any other Person in
which the Partnership has a direct or indirect interest, or
jointly with any such Subsidiary or other Person;
(18) the exercise of any of the powers of the General Partner
enumerated in this Agreement on behalf of any Person in which
the Partnership does not have an interest pursuant to
contractual or other arrangements with such Person;
(19) the making, execution, delivery and performance of any and all
deeds, leases, notes, mortgages, deeds of trust, security
agreements, conveyances, contracts, guarantees, warranties,
indemnities, waivers, releases or legal instruments or
agreements in writing necessary, appropriate or convenient, in
the judgment of the General Partner, for the accomplishment of
any of the powers of the General Partner enumerated in this
Agreement; and
(20) the issuance of additional Partnership Units and other
partnership interests, as appropriate, in connection with
Capital Contributions by Additional Limited Partners and
additional Capital Contributions by Partners pursuant to
Article 4 hereof.
B. 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 (except as provided in Section 7.3), the Act or any applicable law,
rule or regulation, to the fullest extent permitted under the Act or other
applicable law, rule or regulation. 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. At all times from and after the date hereof, the General Partner may
cause the Partnership to establish and maintain at any and all times working
capital accounts and other cash or similar balances in such amounts as the
General Partner, in its sole and absolute discretion, deems appropriate and
reasonable from time to time.
D. 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 be liable 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 taken
pursuant to its authority under this Agreement and in accordance with the
terms of Section 7.3.
E. Notwithstanding any other provisions of this Agreement, the Act or
any applicable law, rule or regulation, the Partnership and the General
Partner on behalf of the Partnership may enter into, and execute, deliver,
acknowledge and perform, the Omnibus Option Agreement among the Partnership
and the grantors named therein; the Purchase Agreement and Pricing Agreement
with respect to the offering of shares of Common Stock of the General
Partner, among the Partnership, the General Partner and the underwriters
named therein; the Second Amended and Restated Agreement of Limited
Partnership of Omni Partners, L.P., among the Partnership, as a general
partner, and the other partners thereto; the Options to Purchase and Option
to Purchase Agreements relating to the Option Properties (as defined in the
Prospectus relating to the initial public offering of REIT Shares); the Loan
Agreement, among the Partnership, Salomon Brothers Realty Corp. and the
Collateral Agent named therein; the Guarantor Pledge Agreement, among the
Partnership, Reckson FS, Inc. and Salomon Brothers Realty Corp.; the
Supplemental Representations, Warranties and Indemnity Agreement among the
Partnership, the General Partner and the indemnitors named therein; the
Pledge and Security Agreement, among the Partnership, the General Partner and
Donald Rechler, Roger Rechler, Scott Rechler and Mitchell Rechler; the
Agreement of Lease between the Partnership and Reckson Executive Centers,
L.L.C.; the Amended and Restated Agreement of Limited Partnership of the
Financing Partnership, between the Partnership and the Financing Subsidiary;
the Limited Liability Operating Agreement of Reckson Executive Centers
L.L.C., among the Partnership and other members of such company; the Pledge
and Security Agreement, made by Reckom, Inc. and HMCC Associates, L.P. to
Odyli, Inc. and Odyssey Partners, L.P. and consented to by the Partnership
and the General Partner; and the Guaranty, made by the Partnership and the
General Partner to Odyli, Inc. and Odyssey Partners, L.P.; and any loan agree-
ments or modification thereof, any indemnity agreement, and any other agree-
ments or instruments contemplated by or referred to in any of the foregoing
documents or referred to in the prospectus with respect to the initial public
offering of the shares of common stock of the General Partner.
Section 7.2. Certificate of Limited Partnership
----------------------------------
The General Partner has filed the Certificate with the Secretary of
State of Delaware as required by the Act. 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, or the District of Columbia, in which
the Partnership may elect to do business or own property. To the extent that
such action is determined by the General Partner to be reasonable and
necessary or appropriate or convenient, the General Partner shall file
amendments to and restatements of the Certificate and do all of 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, or the District of Columbia, 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 or restatement thereof to any Limited Partner.
Section 7.3. Restrictions on General Partner Authority
-----------------------------------------
A. The General Partner may not take any action in contravention of an
express prohibition or limitation of this Agreement without the written
Consent of Limited Partners holding a majority of the Percentage Interests of
the Limited Partners (including Limited Partner Interests held by the
Company), or such other percentage of the Limited Partners as may be
specifically provided for under a provision of this Agreement.
B. Except as provided in Article 13 hereof, during the five year period
following the initial public offering of REIT shares the General Partner may
not cause the Partnership to engage in a Terminating Capital Transaction
(including by way of merger, consolidation or other combination with any
other Person), without the Consent of Limited Partners holding 85% or more of
the Percentage Interests of the Limited Partners (including Limited
Partnership Interests held by the Company). Upon expiration of such five year
period, such 85% percentage shall be reduced to 50%.
Section 7.4. Reimbursement of the General Partner and
----------------------------------------
the Company
-----------
A. Except as provided in this Section 7.4 and elsewhere in this
Agreement (including the provisions of Articles 5 and 6 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. The General Partner shall be reimbursed on a monthly basis, or such
other basis as it may determine in its sole and absolute discretion, for all
expenditures that it incurs relating to the ownership and operation of, or
for the benefit of, the Partnership; provided that the amount of any such
reimbursement shall be reduced by any interest earned by the General Partner
with respect to bank accounts or other instruments or accounts held by it on
behalf of the Partnership, and provided further than the General Partner
shall not be reimbursed for any (i) directors fees, (ii) income tax
liabilities or (iii) filing or similar fees in connection with maintaining
the General Partner's continued corporate existence that are incurred by the
General Partner, but the Partners acknowledge that all other expenses of the
General Partner are deemed to be for the benefit of the Partnership. Such
reimbursement shall be in addition to any reimbursement made as a result of
indemnification pursuant to Section 7.7 hereof. Included among the
expenditures for which the General Partner shall be entitled to reimbursement
hereunder shall be any payments of debt service made by the General Partner,
in its capacity as General Partner, as guarantor or otherwise, with respect
to indebtedness encumbering any property held by the Partnership.
C. As set forth in Section 4.3, the Company shall be treated as having
made a Capital Contribution in the amount of all expenses that it incurs and
pays relating to the Company's initial public offering of REIT Shares and any
other issuance of REIT Shares or New Securities pursuant to Section 4.2 the
proceeds from the issuance of which are contributed to the Partnership (i.e.,
excluding such issuances to the extent the proceeds thereof are contributed
to the Financing Subsidiary).
D. In the event that the Company shall elect to purchase from its
shareholders REIT Shares for the purpose of delivering such REIT Shares to
satisfy an obligation under any dividend reinvestment program adopted by the
Company, any employee stock purchase plan adopted by the Company, or any
similar obligation or arrangement undertaken by the Company in the future,
the purchase price paid by the Company for such REIT Shares and any other
expenses incurred by the Company in connection with such purchase shall be
considered expenses of the Partnership and shall be reimbursed to the
Company, subject to the condition that: (i) if such REIT Shares subsequently
are sold by the Company, the Company shall pay to the Partnership any
proceeds received by the Company for such REIT Shares (which sales proceeds
shall include the amount of dividends reinvested under any dividend
reinvestment or similar program provided that a transfer of REIT Shares for
Units pursuant to Section 8.6 would not be considered a sale for such
purposes); and (ii) if such REIT Shares are not retransferred by the Company
within 30 days after the purchase thereof, the Company, as General Partner,
shall cause the Partnership to cancel a number of Partnership Units held by
the Company, as a Limited Partner, equal to the product obtained by
multiplying the Conversion Factor by the number of such REIT Shares (in which
case such reimbursement shall be treated as a distribution in redemption of
Units held by the Company).
Section 7.5. Outside Activities of the General Partner
-----------------------------------------
The General Partner shall not directly or indirectly enter into or
conduct any business other than in connection with the ownership, acquisition
and disposition of Partnership Interests and the management of the business
of the Partnership, and such activities as are incidental thereto. The
General Partner and any Affiliates of the General Partner may acquire Limited
Partner Interests and shall be entitled to exercise all rights of a Limited
Partner relating to such Limited Partner Interests.
Section 7.6. Contracts with Affiliates
-------------------------
A. The Partnership may lend or contribute funds or other assets to its
Subsidiaries or other Persons in which it has an equity investment and such
Persons may borrow funds from the Partnership, on 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.
B. Except as provided in Section 7.5, the Partnership may transfer
assets to joint ventures, other partnerships, limited liability companies,
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 as the General Partner, in its sole and
absolute discretion, believes are advisable.
C. Except as expressly permitted by this Agreement, neither the General
Partner nor any of its Affiliates shall sell, transfer or convey any property
to, or purchase any property from, the Partnership, directly or indirectly,
except pursuant to transactions that are determined by the General Partner in
good faith to be fair and reasonable.
D. 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, stock option plans, and similar 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 Subsidiaries of the
Partnership.
E. The General Partner is expressly authorized to enter into, in the
name and on behalf of the Partnership, and without the approval of the
Limited Partners, a right of first opportunity arrangement and other conflict
avoidance agreements with various Affiliates of the Partnership and the
General Partner, on such terms as the General Partner, in its sole and
absolute discretion, believes are advisable.
Section 7.7. Indemnification
---------------
A. To the fullest extent permitted by Delaware law, the Partnership
shall indemnify each 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 or the
Company as set forth in this Agreement, in which such Indemnitee may be
involved, or is threatened to be involved, as a party or otherwise, except to
the extent such Indemnitee acted in bad faith, or with gross negligence or
willful misconduct. Without limitation, the foregoing indemnity shall extend
to any liability of any Indemnitee, pursuant to a loan guaranty 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. 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. Reasonable expenses incurred by an Indemnitee who is a party to a
proceeding shall be paid or reimbursed by the Partnership in advance of the
final disposition of the proceeding, upon receipt by the Partnership of an
undertaking by or on behalf of the Indemnitee to repay such amount if it
shall be determined that the Indemnitee is not entitled to be indemnified as
authorized in Section 7.7.A.
C. 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 Indemnities are indemnified.
D. The Partnership may, but shall not be obligated to, purchase and
maintain insurance, on behalf of the Indemnities 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 activities, regardless of whether the Partnership would have
the power to indemnify such Person against such liability under the provisions
of this Agreement.
E. For purposes of this Section 7.7, 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; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable
law shall constitute fines within the meaning of Section 7.7; and 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. 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. 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. The provisions of this Section 7.7 are for the benefit of the
Indemnities, their heirs, successors, assigns and administrators and shall
not be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 7.7 or any provision hereof
shall be prospective only and shall not in any way affect the Partnership's
liability to any Indemnitee under this Section 7.7, 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 7.8. Liability of the General Partner
--------------------------------
A. Notwithstanding anything to the contrary set forth in this
Agreement, none of the General Partner, its Affiliates, or any of their
respective officers, directors, stockholders, partners, members, employees,
representatives or agents or any officer, employee, representative or agent
of the Partnership and its Affiliates (individually, a "Covered Person" and
collectively, the "Covered Persons") shall 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 Covered Person's conduct did not constitute bad faith, gross
negligence or willful misconduct.
B. The Limited Partners expressly acknowledge that the General Partner
is acting on behalf of the Partnership and the shareholders of the Company
collectively, that the General Partner is under no obligation to consider the
separate interests of the Limited Partners (except as otherwise provided
herein) in deciding whether to cause the Partnership to take (or decline to
take) any actions, and that the General Partner shall not be liable for
monetary damages for losses sustained, liabilities incurred, or benefits not
derived by Limited Partners in connection with such decisions, provided that
the General Partner has acted in good faith.
C. 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 employees and agents. The
General Partner shall not be responsible for any misconduct or negligence on
the part of any such employee or agent appointed by the General Partner in
good faith.
D. 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 Covered Person'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.
E. To the extent that, at law or in equity, a Covered Person has duties
(including fiduciary duties) and liabilities relating thereto to the Partner-
ship or to the Partners, any Covered Person acting under this Agreement or
otherwise shall not be liable to the Partnership or to any Partner for its good
faith reliance on the provisions of this Agreement. The provisions of this
Agreement, to the extent that they restrict the duties and liabilities of a
Covered Person otherwise existing at law or in equity, are agreed by the
Partners to replace such other duties and liabilities of such Covered Person.
F. Whenever in this Agreement the General Partner is permitted or
required to make a decision (i) in its "sole discretion" or "discretion," or
under a similar grant of authority or latitude, the General Partner shall be
entitled to consider such interests and factors as it desires and may
consider its own interests, and shall have no duty or obligation to give any
consideration to any interest of or factors affecting the Partnership or the
Limited Partners, or (ii) in its "good faith" or under another express
standard, the General Partner shall act under such express standard and shall
not be subject to any other or different standards imposed by this Agreement
or by law or any other agreement contemplated herein.
Section 7.9. Other Matters Concerning the General Partner
--------------------------------------------
A. 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. The General Partner may consult with legal counsel, accountants,
appraisers, management consultants, investment bankers, architects,
engineers, environmental consultants 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 such 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. 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 duly appointed 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. Notwithstanding any other provisions of this Agreement or the Act,
any action of the General Partner on behalf of the Partnership or any decision
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 the Company to continue to
qualify as a REIT; or (ii) to avoid the Company incurring any 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. 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 in its sole and absolute discretion, 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 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 7.11. 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 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 and to enter into any contracts on behalf
of the Partnership, and 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 8
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.
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, 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
--------------------------------------
Subject to any agreements entered into pursuant to Section 7.6.E hereof
and any other agreements entered into by a Limited Partner or its Affiliates
with the Partnership or any of its Subsidiaries, any Limited Partner (other
than the Company) and any officer, director, employee, agent, trustee,
Affiliate or shareholder of any Limited Partner (other than the Company)
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 that are in direct competition with the
Partnership or that are enhanced by the activities of 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 (other than the Company) 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 its Capital
Contribution, except to the extent of distributions made pursuant to this
Agreement or upon termination of the Partnership as provided herein. Except
to the extent provided by Exhibit C hereof or as otherwise expressly provided
in this Agreement, no Limited Partner or Assignee shall have priority over
any other Limited Partner or Assignee, either as to the return of Capital
Contributions or as to profits, losses or distributions.
Section 8.5. Rights of Limited Partners Relating to the
------------------------------------------
Partnership
-----------
A. In addition to the 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 (including such copying and administrative charges as
the General Partner may establish from time to time):
(1) to obtain a copy of the most recent annual and quarterly
reports filed with the Securities and Exchange Commission by
the Company pursuant to the Securities Exchange Act of 1934;
(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. The Partnership shall notify each Limited Partner, upon request, of
the then current Conversion Factor.
C. Notwithstanding any other provision of this Section 8.5, the General
Partner may keep confidential from the Limited Partners, 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 reasonably
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 an
unaffiliated third party to keep confidential.
Section 8.6. Redemption Right
----------------
A. Subject to Sections 8.6.B and 8.6.C hereof, on or after the date two
(2) years after the closing of the initial public offering of REIT Shares by
the Company, each Limited Partner (other than the Company) shall have the
right (the "Redemption Right") to require the Partnership to
----------------
redeem on a Specified Redemption Date all or a portion of the Partnership
Units held by such Limited Partner at a redemption price per Unit equal to and
in the form of the Cash Amount to be paid by the Partnership. The Redemption
Right shall be exercised pursuant to a Notice of Redemption delivered to the
Partnership (with a copy to the Company) by the Limited Partner who is
exercising the redemption right (the "Redeeming Partner"); provided, however,
-------- -------
that the Partnership shall not be obligated to satisfy such Redemption Right
if the Company elects to purchase the Partnership Units subject to the Notice
of Redemption pursuant to Section 8.6.B. A Limited Partner may not exercise
the Redemption Right for less than one thousand (1,000) Partnership Units at
any one time 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 on or after the Specified Redemp-
tion Date. The Assignee of any Limited Partner may exercise the rights of such
Limited Partner pursuant to this Section 8.6, and such Limited Partner shall be
deemed to have assigned such rights to such Assignee and shall be bound by the
exercise of such rights by such Assignee. In connection with any exercise of
such rights by an Assignee on behalf of a Limited Partner, the Cash Amount
shall be paid by the Partnership directly to such Assignee and not to such
Limited Partner. Any Partnership Units redeemed by the Partnership pursuant
to this Section 8.6.A shall be cancelled upon such redemption.
B. Notwithstanding the provisions of Section 8.6.A, a Limited Partner
that exercises the Redemption Right shall be deemed to have offered to sell
the Partnership Units described in the Notice of Redemption to the Company,
and the Company may, in its sole and absolute discretion, elect to purchase
directly and acquire such Partnership Units by paying to the Redeeming
Partner either the Cash Amount or the REIT Shares Amount, as elected by the
Company (in its sole and absolute discretion), on the Specified Redemption
Date, whereupon the Company 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. If the Company shall
elect to exercise its right to purchase Partnership Units under this Section
8.6.B with respect to a Notice of Redemption, it shall so notify the
Redeeming Partner within five Business Days after the receipt by it of such
Notice of Redemption. Unless the Company (in its sole and absolute
discretion) shall exercise its right to purchase Partnership Units from the
Redeeming Partner pursuant to this Section 8.6.B, the Company shall not have
any obligation to the Redeeming Partner or the Partnership with respect to
the Redeeming Partner's exercise of the Redemption Right. In the event the
Company shall exercise its right to purchase Partnership Units with respect
to the exercise of a Redemption Right in the manner described in the first
sentence of this Section 8.6.B, the Partnership shall have no obligation to
pay any amount to the Redeeming Partner with respect to such Redeeming Part-
ner's exercise of such Redemption Right, and each of the Redeeming Partner, the
Partnership, and the Company shall treat the transaction between the Company
and the Redeeming Partner, for federal income tax purposes, as a sale of the
Redeeming Partner's Partnership Units to the Company. Each Redeeming Partner
agrees to execute such documents as the Company may reasonably require in
connection with the issuance of REIT Shares upon exercise of the Redemption
Right. In case of any reclassification of the REIT Shares (including, but
not limited to, any reclassification upon a consolidation or merger in which
the Company is the continuing corporation) into securities other than REIT
Shares, for purposes of this Section 8.6.B, the Company (or a Successor
General Partner) may thereafter exercise its right to purchase Partnership
Units for the kind and amount of shares of such securities receivable upon
such reclassification by a holder of the number of REIT Shares for which such
Units could be purchased pursuant to this Section immediately prior to such
reclassification.
C. Notwithstanding the provisions of Section 8.6.A and Section 8.6.B, a
Partner shall not be entitled to exercise the Redemption Right pursuant to
Section 8.6.A to the extent that the delivery of REIT Shares to such Partner
on the Specified Redemption Date by the Company pursuant to Section 8.6.B
(regardless of whether or not the Company would in fact exercise its rights
under Section 8.6.B) would be prohibited under the Articles of Incorporation
of the Company.
ARTICLE 9
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 those records and documents required to be
maintained by the Act and other books and records deemed by the General
Partner to be appropriate 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, or such other
basis as the General Partner determines to be necessary or appropriate.
Section 9.2. Fiscal Year
-----------
The fiscal year of the Partnership shall be the calendar year.
Section 9.3. Reports
-------
A. As soon as practicable, but in no event later than one hundred five
(105) days after the close of each Partnership Year, the General Partner
shall cause to be mailed to each Limited Partner as of the close of the
Partnership Year, an annual report containing financial statements of the
Partnership, or of the Company if such statements are prepared solely on a
consolidated basis with the Company, 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. As soon as practicable, but in no event later than one hundred five
(105) days after the close of each calendar quarter (except the last calendar
quarter of each year), the General Partner shall cause to be mailed to each
Limited Partner as of the last day of the calendar quarter, a report
containing unaudited financial statements of the Partnership, or of the
Company, if such statements are prepared solely on a consolidated basis with
the Company, and such other information as may be required by applicable law
or regulation, or as the General Partner determines to be appropriate.
ARTICLE 10
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. Notwithstanding the above, in making any such
tax election the General Partner may, but shall be under no obligation to,
take into account the tax consequences to the Limited Partners resulting from
any such election.
The General Partner shall make such tax elections on behalf of the
Partnership as the Limited Partners holding a majority of the Percentage
Interests of the Limited Partners (excluding Limited Partner Interests held
by the Company) request, provided that the General Partner believes that such
election is not adverse to the interests of the General Partner, including
its interest in preserving its qualification as a REIT under the Code. The
General Partner intends to elect the so-called "traditional method" of making
Section 704(c) allocations pursuant to Regulations Section 1.704-3 with
respect to property contributed as of the date hereof. The General Partner
shall have the right to seek to revoke any tax election it makes (including,
without limitation, an 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. The General Partner shall be the "tax matters partner" of the
Partnership for federal income tax purposes. Pursuant to Section 6230(e) 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, taxpayer identification
number, and profit interest of each of the Limited Partners and the
Assignees; provided, however, that such information is provided to the
Partnership by the Limited Partners and the Assignees.
B. 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 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 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 account of 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 or 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 set forth in Section 7.7 of this Agreement shall be fully applicable
to the tax matters partner in its capacity as such.
C. 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 its 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 its 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 forming 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 Sections 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. 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
Partnership as against such defaulting Limited Partner. Without limitation,
in such event the General Partner shall have the right to receive distributions
that would otherwise be distributable to such defaulting Limited Partner until
such time as such loan, together with all interest thereon, has been paid in
full, and any such distributions so received by the General Partner shall be
treated as having been distributed to the defaulting Limited Partner and imme-
diately paid by the defaulting Limited Partner to the General Partner in repay-
ment of such loan. Any amounts payable by a Limited Partner hereunder shall bear
interest at the lesser of (A) 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, or (B) the maximum
----------------------- lawful rate
of interest on such obligation, such interest to accrue 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 11
TRANSFERS AND WITHDRAWALS
Section 11.1. Transfer
--------
A. The term "transfer," when used in this Article 11 with respect to 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 Partner
Interest to another Person or by which a Limited Partner purports to assign
all or any part of its Limited Partner 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 11 does not include (i) any redemption
of Partnership Interests by the Partnership from a Limited Partner, (ii) any
acquisition of Partnership Units from a Limited Partner by the Company
pursuant to Section 8.6, (iii) any distribution of Partnership Units by a
Limited Partner to its beneficial owners or (iv) a pledge or transfer of
Partnership Units pursuant to either (1) the Pledge and Security Agreement
dated as of June 2, 1995, by and between Reckom, Inc., HMCC Associates, L.P.,
Odyli, Inc. and Odyssey Partners, L.P. or (2) the Pledge and Security
Agreement dated as of June 2, 1995 by and among the Company, the Partnership,
Donald Rechler, Roger Rechler, Scott Rechler, Mitchell Rechler, Mark Rechler,
Gregg Rechler, Vanderbilt Generations, L.P., Wildoro Associates and Reckson
Associates.
B. No Partnership Interest shall be transferred, in whole or in part,
except in accordance with the terms and conditions set forth in this Article
11. Any transfer or purported transfer of a Partnership Interest not made in
accordance with this Article 11 shall be null and void.
Section 11.2. Transfer of the Company's General Partner
-----------------------------------------
Interest and Limited Partner Interest
- ---------------------------------------------------------
The Company may not transfer any of its General Partner Interest or
withdraw as General Partner, or transfer any of its Limited Partner Interest,
unless Limited Partners holding a majority of the Percentage Interests of the
Limited Partners (other than Limited Partner Interests held by the Company)
consent to such transfer or withdrawal.
Section 11.3. Limited Partners' Rights to Transfer
------------------------------------
A. Subject to the provisions of Sections 11.3.C, 11.3.D, 11.3.E, 11.4
and 11.6, a Limited Partner (other than the Company) may transfer, with or
without the consent of the General Partner, all or any portion of its
Partnership Interest, or any of such Limited Partner's economic rights as a
Limited Partner.
B. 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 of 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. The General Partner may prohibit any transfer by a Limited Partner
of its Partnership Units if, in the opinion of legal counsel to the
Partnership, such transfer would require filing of a registration statement
under the Securities Act of 1933 or would otherwise violate any federal or
state securities laws or regulations applicable to the Partnership or the
Partnership Units.
D. No transfer by a Limited Partner of its Partnership Units 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; (ii) it is made within two years after
the consummation of the initial public offering of the Company without the
consent of the General Partner; (iii) such transfer is effectuated through an
"established securities market" or a "secondary market (or the substantial
equivalent thereof)" with the meaning of Section 7704 of the Code; (iv) such
transfer would cause the Partnership to become, with respect to any employee
benefit plan subject to Title I of ERISA, a "party-in-interest" (as defined
in Section 3(14) of ERISA) or a "disqualified person" (as defined in Section
4975(c) of the Code); (v) such transfer would, in the opinion of legal
counsel for the Partnership, cause any portion of the assets of the
Partnership to constitute assets of any employee benefit plan pursuant to
Department of Labor Regulations Section 2510.2-101; (vi) such transfer would
subject the Partnership to be regulated under the Investment Company Act of
1940, the Investment Advisors Act of 1940 or the Employee Retirement Income
Security Act of 1974, each as amended; or (vii) such Person is a member of
Reckson Executive Centers, L.L.C.; provided that this restriction shall not
apply to a transfer of Partnership Units between Limited Partners
attributable to closing adjustments made pursuant to Article V of the Omnibus
Option Agreement, dated December 15, 1994, by and among the Partnership and
the Grantors named therein.
E. No 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 redeem for the Cash 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.
F. The General Partner shall keep a register for the Partnership on
which the transfer, pledge or release of Partnership Units shall be shown and
pursuant to which entries shall be made to effect all transfers, pledges or
releases as required by Sections 8-207, 8-313(1) and 8-321 of the Uniform
Commercial Code, as amended, in effect in the States of New York and
Delaware; provided, however, that if there is any conflict between such
requirements, the provisions of the Delaware Uniform Commercial Code shall
govern. The General Partner shall (i) place proper entries in such register
clearly showing each transfer and each pledge and grant of security interest
and the transfer and assignment pursuant thereto, such entries to be endorsed
by the General Partner and (ii) maintain the register and make the register
available for inspection by all of the Partners and their pledgees at all
times during the term of this
Agreement. Nothing herein shall be deemed a consent to any pledge or
transfer otherwise prohibited under this Agreement.
Section 11.4. Substituted Limited Partners
----------------------------
A. 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. A Person shall be admitted to the Partnership as a Substituted
Limited Partner only upon the aforementioned consent of the General Partner
and the furnishing to the General Partner of (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 2.4 hereof and (ii) such other documents of the General
Partner in order to effect such Person's admission as a Substituted Limited
Partner. The admission of any Person as a Substituted 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. A transferee who has been admitted as a Substituted Limited Partner
in accordance with this Article 11 shall have all the rights and powers and
be subject to all the restrictions and liabilities of a Limited Partner under
this Agreement.
C. 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.
Section 11.5. Assignees
---------
If the General Partner, in its sole and absolute discretion, does not
consent to the admission of any permitted transferee 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 deemed to have
had assigned to it, and shall be entitled to receive distributions from the
Partnership and the share of Net Income, Net Losses, Recapture Income, and
any other items, gain, loss deduction and credit of the Partnership attribu-
table 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 of the provisions of this
Article 11 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. 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 11 or pursuant to redemption of all of
its Partnership Units, or the acquisition thereof by the Company, under
Section 8.6.
B. Any Limited Partner who shall transfer all of its Partnership Units
in a transfer permitted pursuant to this Article 11 shall cease to be a
Limited Partner upon the admission of all Assignees of such Partnership Units
as Substitute Limited Partners. Similarly, any Limited Partner who shall
transfer all of its Partnership Units pursuant to a redemption of all of its
Partnership Units, or the acquisition thereof by the Company, under Section
8.6 shall cease to be a Limited Partner.
C. Transfers pursuant to this Article 11 may only be made on the first
day of a fiscal quarter of the Partnership, unless the General Partner
otherwise agrees.
D. If any Partnership Interest is transferred or assigned during any
quarterly segment of the Partnership's fiscal year in compliance with the
provisions of this Article 11 or redeemed or transferred pursuant to Section
8.6 on any day other than the first day of a Partnership Year, then Net
Income, Net Losses, each item thereof and all other items attributable to
such interest for such Partnership Year shall be divided and allocated
between the transferor Partner and the transferee Partner 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 the transfer or assignment occurs shall be
allocated to the transferee Partner, and none of such items for the calendar
month in which a redemption occurs shall be allocated to the Redeeming Partner;
provided, however, that the General Partner may adopt such other conventions
relating to allocations in connection with transfers, assignments or redemptions
as it determines are necessary or appropriate. All distributions of Available
Cash attributable to such Partnership Unit with respect to which the Partner-
ship 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 Partner-
ship Unit shall be made to the transferee Partner.
ARTICLE 12
ADMISSION OF PARTNERS
Section 12.1. Admission of Successor General Partner
--------------------------------------
A successor to all of the 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
immediately prior to 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. In the case of such admission on any day other than the
first day of a Partnership Year, all items attributable to the General
Partner Interest for such Partnership Year shall be allocated between the
transferring General Partner and such successor as provided in Section 11.6.D
hereof.
Section 12.2. Admission of Additional Limited Partners
----------------------------------------
A. After the admission to the Partnership of the Limited Partners named
in Exhibit A attached hereto on the date hereof (other than Scott H. Rechler
who has previously been admitted as a limited partner), a Person who makes a
Capital Contribution to the Partnership in accordance with this Agreement
shall be admitted to the Partnership as an Additional Limited Partner 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 2.4 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.
B. Notwithstanding anything to the contrary in this Section 12.2, 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. 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.
C. 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 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 such item for the
calendar month in which an admission of any Additional Limited Partner occurs
shall be allocated among all of the Partners and Assignees, including such
Additional Limited Partner; provided, however, that the General Partner may
adopt such other conventions relating to allocations to Additional Limited
Partners as it determines are necessary or appropriate. 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 of 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 2.4 hereof.
ARTICLE 13
DISSOLUTION, LIQUIDATION AND TERMINATION
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 without dissolution. The
Partnership shall dissolve, and its affairs shall be wound up, only upon the
first to occur of any of the following ("Liquidating Events"):
A. the expiration of its term as provided in Section 2.5 hereof;
B. an event of withdrawal of the General Partner, as defined in the
Act, other than an event of bankruptcy as defined in the Act, unless, (i) at
the time of the occurrence of such event there is at least one remaining
general partner of the Partnership who is hereby authorized to and does carry
on the business of the Partnership, or (ii) within ninety (90) days after
such event of withdrawal not less than a majority in interest of the
remaining Partners (or such greater percentage in interest as may be required
by the Act and determined in accordance with the Act), determined, in case
the withdrawing General Partner continues as a Limited Partner, by both
excluding and including Limited Partner Interests continuing to be held by
the withdrawing General Partner, agrees in writing to continue the business
of the Partnership and to the appointment, effective as of the date of
withdrawal, of a successor General Partner;
C. from and after the date of this Agreement through December 31,
2055, an election to dissolve the Partnership made by the General Partner
with the Consent of Partners holding the requisite percentage specified in
Section 7.3B hereof of the Percentage Interests of the Limited Partners
(including Limited Partner Interests held by the Company);
D. on or after January 1, 2056, an election to dissolve the
Partnership made by the General Partner, in its sole and absolute discretion;
E. entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Act;
F. the sale of all or substantially all of the assets and properties
of the Partnership; or
G. 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 (hereinafter referred to as an "Event of Bankruptcy," and such term
as used herein is intended and shall be deemed to supersede and replace the
events of withdrawal described in Section 17-402(a)(4) and (5) of the Act),
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. 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 General Partner or such other Person being referred
to herein as 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 shares of common stock in the Company) shall be
applied and distributed in the following order:
(1) First, in satisfaction of all of the Partnership's debts and
liabilities to creditors other than the Partners (whether by
payment or the making of reasonable provision for payment
thereof);
(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 other Partners; and
(4) The balance, if any, to the General Partner and Limited
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 13.
B. 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.
C. In the discretion of the Liquidator, a pro rata portion of the
distributions that would otherwise be made to the General Partner and Limited
Partners pursuant to this Article 13 may be:
(1) 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
Partnership, and paying any contingent or unforeseen
liabilities or obligations of the Partnership or the General
Partner arising out of or in connection with the Partnership.
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 Liquidator, 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
(2) withheld or escrowed 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 or
escrowed amounts shall be distributed to the General Partner
and Limited Partners in the manner and order of priority set
forth in Section 13.2.A as soon as practicable.
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 13 to the General Partner and Limited Partners who
have positive Capital Accounts in compliance with Regulations Section
1.704-l(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.
Section 13.4. Deemed Distribution and Recontribution
--------------------------------------
Notwithstanding any other provision of this Article 13, in the event the
Partnership is "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 hereto, 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. Except as otherwise provided
in this Agreement, no Limited Partner shall have priority over any other
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 the provisions of an election or objection by one or more Partners
pursuant to 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.
Section 13.7. Termination of Partnership and Cancellation
-------------------------------------------
of Certificate of Limited Partnership
-------------------------------------
Upon the completion of the winding-up of the Partnership and liquidation
of its assets, as provided in Section 13.2 hereof, the Partnership shall be
terminated by filing a certificate of cancellation with the Secretary of
State of the State of Delaware, cancelling all qualifications of the
Partnership as a foreign limited partnership in jurisdictions other than the
State of Delaware and taking such other actions as may be necessary to
terminate the Partnership.
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 between 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.
ARTICLE 14
AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS
Section 14.1. Amendment of Partnership Agreement
----------------------------------
A. Amendments to this Agreement may be proposed by the General Partner
or by any Limited Partners (other than the Company) holding twenty percent
(20%) or more of the Partnership Interests. Following such proposal, 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 7.3.A, 7.3.B, 13.1.C, 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 Partner Interests held by the Company).
B. 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;
(3) to set forth the designations, rights (including redemption
rights that differ from those specified in Section 8.6),
powers, duties, and preferences of Partnership Units or other
Partnership Interests issued pursuant to Section 4.2.A hereof;
(4) to reflect a change that is of an inconsequential nature and
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
(5) 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 is taken.
C. Notwithstanding Section 14.1.A and 14.1.B hereof, 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 Interest; (ii) modify the limited
liability of a Limited Partner in a manner adverse to such Limited Partner;
(iii) alter rights of the Partner to receive distributions pursuant to
Article 5 or Article 13, or the allocations specified in Article 6 (except as
permitted pursuant to Section 4.2 and Section 14.1.B(3) hereof); (iv) alter
or modify the Redemption Right and REIT Shares Amount as set forth in
Sections 8.6, and the related definitions, in a manner adverse to such
Partner; (v) cause the termination of the Partnership prior to the time set
forth in Sections 2.5 or 13.1; or (vi) amend this Section 14.1.C. Further,
no amendment may alter the restrictions on the General Partner's authority
set forth in Section 7.3.B without the Consent specified in that section.
D. Notwithstanding Section 14.1.A or Section 14.1.B hereof, the
General Partner shall not amend Sections 4.2.A, 7.5, 7.6, 11.2 or 14.2
without the Consent of Limited Partners holding a majority of the Percentage
Interests of the Limited Partners, excluding Limited Partner Interests held
by the General Partner.
Section 14.2. Meetings of the Partners
------------------------
A. 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 (other than the Company) holding twenty percent (20%) or
more of the Partnership Interests. The request 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 the Partners is permitted or
required under this Agreement, such vote or Consent may be given at a meeting
of the 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 Limited Partnership Interests held by the
Company) shall control.
B. 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. 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, such revocation to be effective upon the
Partnership's receipt of written notice of such revocation from the Limited
Partner executing such proxy.
D. Each meeting of the 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. Without limitation, meetings of Partners may
be conducted in the same manner as meetings of the shareholders of the
Company and may be held at the same time, and as part of, meetings of the
shareholders of the Company.
ARTICLE 15
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 of which the Partner 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.
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
---------
Other than as expressly set forth herein with respect to the
Indemnitees, 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 of 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.
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 conflict of laws.
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. Entire Agreement
----------------
This Agreement contains the entire understanding and agreement among the
Partners with respect to the subject matter hereof and supersedes the Prior
Agreement and any other prior written or oral understandings or agreements
among them with respect thereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
GENERAL PARTNER:
Reckson Associates Realty Corp.
By: /s/ Donald J. Rechler
--------------------------------
Donald J. Rechler
President
(CORPORATE SEAL)
LIMITED PARTNERS:
By: /s/ Scott H. Rechler
-------------------------------
Scott H. Rechler
as Attorney-in-Fact for the
Limited Partners
LIMITED PARTNER SIGNATURE PAGE
The undersigned, desiring to become one of the within named Limited
Partners of Reckson Operating Partnership, L.P., hereby becomes a party to
the Amended and Restated Agreement of Limited Partnership, dated as of June
2, 1995, of Reckson Operating Partnership, L.P., by and among Reckson
Associates Realty Corp. and such Limited Partners. The undersigned agrees
that this signature page may be attached to any counterpart of said Amended
and Restated Agreement of Limited Partnership.
125 BAYLIS ROAD, L.L.C.
Signature line for Limited Partner /s/ Robert Heller
-------------------------
By: Robert Heller
Its: Manager
Address of Limited Partner 300 Executive Drive
West Orange, New Jersey 07052
Date: September 19, 1995
LIMITED PARTNER SIGNATURE PAGE
The undersigned, desiring to become one of the within named Limited
Partners of Reckson Operating Partnership, L.P., hereby becomes a party to
the Amended and Restated Agreement of Limited Partnership, dated as of June
2, 1995, and as amended on December 6, 1995, of Reckson Operating
Partnership, L.P., by and among Reckson Associates Realty Corp. and such
Limited Partners. The undersigned agrees that this signature page may be
attached to any counterpart of said Amended and Restated Agreement of Limited
Partnership.
Signature line for Limited Partner /s/ J. Michael Maturo
-------------------------
J. Michael Maturo
Address of Limited Partner c/o Reckson Associates
225 Broadhollow Road
Melville, New York 11747
Date: February 7, 1996
LIMITED PARTNER SIGNATURE PAGE
The undersigned, desiring to become one of the within named Limited
Partners of Reckson Operating Partnership, L.P., hereby becomes a party to
the Amended and Restated Agreement of Limited Partnership, dated as of June
2, 1995, and as amended on December 6, 1995, of Reckson Operating
Partnership, L.P., by and among Reckson Associates Realty Corp. and such
Limited Partners. The undersigned agrees that this signature page may be
attached to any counterpart of said Amended and Restated Agreement of Limited
Partnership.
Signature line for Limited Partner /s/ Oscar Marin
-------------------------
Oscar Marin
Address of Limited Partner c/o Reckson Associates
225 Broadhollow Road
Melville, New York 11747
Date: January 2, 1996
LIMITED PARTNER SIGNATURE PAGE
The undersigned, desiring to become one of the within named Limited
Partners of Reckson Operating Partnership, L.P., hereby becomes a party to
the Amended and Restated Agreement of Limited Partnership, dated as of June
2, 1995, and as amended on December 6, 1995, of Reckson Operating
Partnership, L.P., by and among Reckson Associates Realty Corp. and such
Limited Partners. The undersigned agrees that this signature page may be
attached to any counterpart of said Amended and Restated Agreement of Limited
Partnership.
Signature line for Limited Partner /s/ Dawn Kenney
-------------------------
Dawn Kenney
Address of Limited Partner c/o Reckson Associates
225 Broadhollow Road
Melville, New York 11747
Date: January 2, 1996
LIMITED PARTNER SIGNATURE PAGE
The undersigned, desiring to become one of the within named Limited
Partners of Reckson Operating Partnership, L.P., hereby becomes a party to
the Amended and Restated Agreement of Limited Partnership, dated as of June
2, 1995, and as amended on December 6, 1995, of Reckson Operating
Partnership, L.P., by and among Reckson Associates Realty Corp. and such
Limited Partners. The undersigned agrees that this signature page may be
attached to any counterpart of said Amended and Restated Agreement of Limited
Partnership.
Signature line for Limited Partner /s/ Gabriel Friedman
-------------------------
Gabriel Friedman
Address of Limited Partner c/o Reckson Associates
225 Broadhollow Road
Melville, New York 11747
Date: December 30, 1995
LIMITED PARTNER SIGNATURE PAGE
The undersigned, desiring to become one of the within named Limited
Partners of Reckson Operating Partnership, L.P., hereby becomes a party to
the Amended and Restated Agreement of Limited Partnership, dated as of June
2, 1995, and as amended on December 6, 1995, of Reckson Operating
Partnership, L.P., by and among Reckson Associates Realty Corp. and such
Limited Partners. The undersigned agrees that this signature page may be
attached to any counterpart of said Amended and Restated Agreement of Limited
Partnership.
Signature line for Limited Partner /s/ Carl Austin
-------------------------
Carl Austin
Address of Limited Partner Austin Corporate Properties, Inc.
1 North Lexington Avenue
White Plains, New York 10601-1712
Date: February 22, 1996
LIMITED PARTNER SIGNATURE PAGE
The undersigned, desiring to become one of the within named Limited
Partners of Reckson Operating Partnership, L.P., hereby becomes a party to
the Amended and Restated Agreement of Limited Partnership, dated as of June
2, 1995, and as amended on December 6, 1995, of Reckson Operating
Partnership, L.P., by and among Reckson Associates Realty Corp. and such
Limited Partners. The undersigned agrees that this signature page may be
attached to any counterpart of said Amended and Restated Agreement of Limited
Partnership.
TARRYTOWN CORPORATE CENTER
Signature line for Limited Partner /s/ Jon L. Halpern
-------------------------
By: Jon L. Halpern
Its: General Partner
Address of Limited Partner c/o JAH Realties, L.P.
580 White Plains Road
Tarrytown, New York 10591
Date: February 22, 1996
LIMITED PARTNER SIGNATURE PAGE
The undersigned, desiring to become one of the within named Limited
Partners of Reckson Operating Partnership, L.P., hereby becomes a party to
the Amended and Restated Agreement of Limited Partnership, dated as of June
2, 1995, and as amended on December 6, 1995, of Reckson Operating
Partnership, L.P., by and among Reckson Associates Realty Corp. and such
Limited Partners. The undersigned agrees that this signature page may be
attached to any counterpart of said Amended and Restated Agreement of Limited
Partnership.
TARRYTOWN CORPORATE CENTER IV, L.P.
By: JLH Realty Management Service, Inc.
Its General Partner
Signature line for Limited Partner /s/ Jon L. Halpern
-------------------------
By: Jon L. Halpern
Its: President
Address of Limited Partner c/o JAH Realties, L.P.
580 White Plains Road
Tarrytown, New York 10591
Date: February 22, 1996
LIMITED PARTNER SIGNATURE PAGE
The undersigned, desiring to become one of the within named Limited
Partners of Reckson Operating Partnership, L.P., hereby becomes a party to
the Amended and Restated Agreement of Limited Partnership, dated as of June
2, 1995, and as amended on December 6, 1995, of Reckson Operating
Partnership, L.P., by and among Reckson Associates Realty Corp. and such
Limited Partners. The undersigned agrees that this signature page may be
attached to any counterpart of said Amended and Restated Agreement of Limited
Partnership.
TARRYTOWN CORPORATE CENTER II
Signature line for Limited Partner /s/ Jon L. Halpern
-------------------------
By: Jon L. Halpern
Its: General Partner
Address of Limited Partner c/o JAH Realties, L.P.
580 White Plains Road
Tarrytown, New York 10591
Date: February 22, 1996
LIMITED PARTNER SIGNATURE PAGE
The undersigned, desiring to become one of the within named Limited
Partners of Reckson Operating Partnership, L.P., hereby becomes a party to
the Amended and Restated Agreement of Limited Partnership, dated as of June
2, 1995, and as amended on December 6, 1995, of Reckson Operating
Partnership, L.P., by and among Reckson Associates Realty Corp. and such
Limited Partners. The undersigned agrees that this signature page may be
attached to any counterpart of said Amended and Restated Agreement of Limited
Partnership.
COLONEL REALTIES
By: J.A.H. Realties, L.P.
Signature line for Limited Partner /s/ Jon L. Halpern
-------------------------
By: Jon L. Halpern
Its: General Partner
Address of Limited Partner c/o JAH Realties, L.P.
580 White Plains Road
Tarrytown, New York 10591
Date: February 22, 1996
LIMITED PARTNER SIGNATURE PAGE
The undersigned, desiring to become one of the within named Limited
Partners of Reckson Operating Partnership, L.P., hereby becomes a party to
the Amended and Restated Agreement of Limited Partnership, dated as of June
2, 1995, and as amended on December 6, 1995, of Reckson Operating
Partnership, L.P., by and among Reckson Associates Realty Corp. and such
Limited Partners. The undersigned agrees that this signature page may be
attached to any counterpart of said Amended and Restated Agreement of Limited
Partnership.
CHURCH STREET ASSOCIATES
By: J.A.H. Realties, L.P.
Signature line for Limited Partner /s/ Jon L. Halpern
-------------------------
By: Jon L. Halpern
Its: General Manager
Address of Limited Partner c/o JAH Realties, L.P.
580 White Plains Road
Tarrytown, New York 10591
Date: February 22, 1996
LIMITED PARTNER SIGNATURE PAGE
The undersigned, desiring to become one of the within named Limited
Partners of Reckson Operating Partnership, L.P., hereby becomes a party to
the Amended and Restated Agreement of Limited Partnership, dated as of June
2, 1995, and as amended on December 6, 1995, of Reckson Operating
Partnership, L.P., by and among Reckson Associates Realty Corp. and such
Limited Partners. The undersigned agrees that this signature page may be
attached to any counterpart of said Amended and Restated Agreement of Limited
Partnership.
HALPERN ENTERPRISES, INC.
Signature line for Limited Partner /s/ Jon L. Halpern
-------------------------
By: Jon L. Halpern
Its: President
Address of Limited Partner c/o JAH Realties, L.P.
580 White Plains Road
Tarrytown, New York 10591
Date: February 22, 1996
LIMITED PARTNER SIGNATURE PAGE
The undersigned, desiring to become one of the within named Limited
Partners of Reckson Operating Partnership, L.P., hereby becomes a party to
the Amended and Restated Agreement of Limited Partnership, dated as of June
2, 1995, and as amended on December 6, 1995, of Reckson Operating
Partnership, L.P., by and among Reckson Associates Realty Corp. and such
Limited Partners. The undersigned agrees that this signature page may be
attached to any counterpart of said Amended and Restated Agreement of Limited
Partnership.
HALPERN BUILDING CORPORATION
Signature line for Limited Partner /s/ Jon L. Halpern
-------------------------
By: Jon L. Halpern
Its: President
Address of Limited Partner c/o JAH Realties, L.P.
580 White Plains Road
Tarrytown, New York 10591
Date: February 22, 1996
LIMITED PARTNER SIGNATURE PAGE
The undersigned, desiring to become one of the within named Limited
Partners of Reckson Operating Partnership, L.P., hereby becomes a party to
the Amended and Restated Agreement of Limited Partnership, dated as of June
2, 1995, and as amended on December 6, 1995, of Reckson Operating
Partnership, L.P., by and among Reckson Associates Realty Corp. and such
Limited Partners. The undersigned agrees that this signature page may be
attached to any counterpart of said Amended and Restated Agreement of Limited
Partnership.
JAH REALTIES, L.P.
By: JLH Realty Service Management, Inc.
Its General Partner
Signature line for Limited Partner /s/ Jon L. Halpern
-------------------------
By: Jon L. Halpern
President
Address of Limited Partner c/o JAH Realties, L.P.
660 White Plains Road
Tarrytown, New York 10591
Date: April 9, 1996
Exhibit A
Partners' Contributions and Partnership Interests
<TABLE>
<CAPTION>
Name and Address Cash Agreed Value of Total Partnership Percentage
of Partner Contribution Contributed Contribution Units Interest Property
Property
<S> <C> <C> <C> <C> <C>
General Partner
Reckson Associates $333,273,463 $333,273,463 12,170,982 1% general
Realty Corp. partner
225 Broadhollow Road 76.77% limited
Melville, New York partner
11747
Limited Partners
Melville Executive $646,947 $646,947 26,678
Center, Inc.
225 Broadhollow Road
Melville, New York
11747
Nassau West Executive $200,000 $200,000 8,247
Center, Inc.
225 Broadhollow Road
Melville, New York
11747
Expressway Executive $200,000 $200,000 8,247
Center, Inc.
225 Broadhollow Road
Melville, New York
11747
Hauppauge Executive $243,963 $243,963 10,060
Center, Inc.
225 Broadhollow Road
Melville, New York
11747
Atrium Executive $200,000 $200,000 8,247
Center, Inc.
225 Broadhollow Road
Melville, New York
11747
Vanderbilt Industrial $952,113 $952,113 39,262
Park, Inc.
c/o Gross Construction
310 East Shore Road
Great Neck, New York
11023
Roger Rechler $2,593,101 $2,593,101 106,932
c/o Reckson Associates
225 Broadhollow Road
Melville, New York
11747
Donald Rechler $2,656,757 $2,656,757 109,557
c/o Reckson Associates
225 Broadhollow Road
Melville, New York
11747
Scott Rechler $2,356,521 $2,356,521 97,176
c/o Reckson Associates
225 Broadhollow Road
Melville, New York
11747
Mitchell Rechler $2,333,434 $2,333,434 96,193
c/o Reckson Associates
225 Broadhollow Road
Melville, New York
11747
Mark Rechler $2,380,771 $2,380,771 98,176
c/o Reckson Associates
225 Broadhollow Road
Melville, New York
11747
Gregg Rechler $2,356,521 $2,356,521 97,176
c/o Reckson Associates
225 Broadhollow Road
Melville, New York
11747
Wildoro Associates $4,297,318 $4,297,318 177,209
c/o Reckson Associates
225 Broadhollow Road
Melville, New York
11747
The Scott Rechler Trust $102,838 $102,838 4,241
c/o Reckson Associates
225 Broadhollow Road
Melville, New York
11747
The Mitchel Dean $102,838 $102,838 4,241
Rechler Trust
c/o Reckson Associates
225 Broadhollow Road
Melville, New York
11747
The Mark Victor Rechler $102,838 $102,838 4,241
Trust
c/o Reckson Associates
225 Broadhollow Road
Melville, New York
11747
The Gregg Rechler Trust $102,838 $102,838 4,241
c/o Reckson Associates
225 Broadhollow Road
Melville, New York
11747
The Todd Rechler Trust $74,040 $74,040 3,053
c/o Reckson Associates
225 Broadhollow Road
Melville, New York
11747
The Glenn Michael $74,040 $74,040 3,053
Rechler Trust
c/o Reckson Associates
225 Broadhollow Road
Melville, New York
11747
Walter Gross $10,209,142 $10,209,142 420,996
c/o Gross Construction
310 East Shore Road
Great Neck, New York
11023
Barbara Gross $341,045 $341,045 14,064
c/o Gross Construction
310 East Shore Road
Great Neck, New York
11023
Robert Gross $133,336 $133,336 5,498
c/o Gross Construction
310 East Shore Road
Great Neck, New York
11023
Susan Anolick $133,336 $133,336 5,498
c/o Gross Construction
310 East Shore Road
Great Neck, New York
11023
Howard Rose $6,267,677 $6,267,677 258,461
1298 Breakers West
West Palm Beach,
Florida 33411
Frank DiFazio $387,533 $387,533 15,981
c/o DiFazio Electric,
Inc.
711 Grand Boulevard
Dear Park, New York
11729
Estate of Robert $266,426 $266,426 10,987
DiFazio
c/o Frank DiFazio
711 Grand Boulevard
Deer Park, New York
11729
Triangle Properties #3 $908,761 $908,761 37,475
c/o United Realty
200 Broadhollow Road
Melville, New York
11747
Say Associates $5,821 $5,821 240
c/o United Realty
200 Broadhollow Road
Melville, New York
11747
Philip Hornick $725,901 $725,901 29,934
6320 Via Tierra
Boca Raton, Florida
33433
Edward Blumenfeld $1,680,025 $1,680,025 69,279
Blumenfeld Developments
6800 Jericho Turnpike
Syosset, New York 11791
Peter Maccarone $704,949 $704,949 29,070
North Shore Towers
270-18 North Grand
Central Parkway
Floral Park, New York
11005
Jacob Friedman $1,255,475 $1,255,475 51,772
2 East Mill Drive
Great Neck, New York
11021
HMCC Associates $11,370,728 $11,370,728 468,896
c/o Reckson Associates
225 Broadhollow Road
Melville, New York
11747
Reckom, Inc. $129,272 $129,272 5,331
c/o Reckson Associates
225 Broadhollow Road
Melville, New York
11747
Reckson Associates $9,856,391 $9,856,391 363,805
225 Broadhollow Road
Melville, New York
11747
Vanderbilt Generation, $2,525,568 $2,525,568 104,147
L.P.
c/o Reckson Associates
225 Broadhollow Road
Melville, New York
11747
Edward D'Orazio $29,762 $29,762 2,127
c/o Reckson Associates
225 Broadhollow Road
Melville, New York
11747
Kathleen Giamo $29,762 $29,762 2,127
c/o Reckson Associates
225 Broadhollow Road
Melville, New York
11747
Harry Stavro $27,337 $27,337 1,127
c/o Reckson Associates
225 Broadhollow Road
Melville, New York
11747
Muriel Klopsis $29,762 $29,762 2,127
c/o Reckson Associates
225 Broadhollow Road
Melville, New York
11747
125 Baylis Road, L.L.C. $3,192,997 $3,192,997 131,670
300 Executive Drive
West Orange, New Jersey
07052
J. Michael Maturo $496,920 $496,920 20,494
c/o Reckson Associates
225 Broadhollow Road
Melville, New York
11747
Oscar Marin $9,094 $9,094 375
c/o Reckson Associates
225 Broadhollow Road
Melville, New York
11747
Dawn Kenney $18,188 $18,188 750
c/o Reckson Associates
225 Broadhollow Road
Melville, New York
11747
Gabriel Friedman $48,500 $48,500 5,000
c/o Reckson Associates
225 Broadhollow Road
Melville, New York
11747
Carl Austin $99,975 $99,975 3,551
Austin Corporate
Properties, Inc.
1 North Lexington Avenue
White Plains, New York
10601-1712
Tarrytown Corporate $219,258 $219,258 7,800
Center
c/o JAH Realties, L.P.
660 White Plains Road
Tarrytown, New York
10591
Tarrytown Corporate $331,670 $331,670 11,799
Center IV, L.P.
c/o JAH Realties, L.P.
660 White Plains Road
Tarrytown, New York
10591
Tarrytown Corporate $3,089,851 $3,089,851 109,920
Center II
c/o JAH Realties, L.P.
660 White Plains Road
Tarrytown, New York
10591
Colonel Realties $3,260,732 $3,260,732 115,999
c/o JAH Realties, L.P.
660 White Plains Road
Tarrytown, New York
10591
Church Street $379,176 $379,176 13,489
Associates
c/o JAH Realties, L.P.
660 White Plains Road
Tarrytown, New York
10591
Halpern Enterpriese, $364,024 $364,024 12,950
Inc.
c/o JAH Realties, L.P.
660 White Plains Road
Tarrytown, New York
10591
Halpern Building $936,006 $936,006 33,298
Corporation
c/o JAH Realties, L.P.
660 White Plains Road
Tarrytown, New York
10591
JAH Realties, L.P. $846,099 $846,099 29,961
660 White Plains Road
Tarrytown, New York
10591
30 Hub Drive Associates $773,004 $773,004 20,892
225 Broadhollow Road
Melville, New York
11747
110 Bi-County $4,284,924 $4,284,924 102,022
Associates
225 Broadhollow Road
Melville, New York
11747
F.D. Rich III $175,500 $175,500 4,000
c/o Reckson Associates
Realty Corp.
225 Broadhollow Road
Melville, New York
11747
Gresco Partners $38,097 $38,097 1,571
225 Broadhollow Road
Melville, New York
11747
Glenn Rechler $291,000 $291,000 12,000
c/o Reckson Associates
Realty Corp.
225 Broadhollow Road
Melville, New York
11747
Todd Rechler $291,000 $291,000 12,000
c/o Reckson Associates
Realty Corp.
225 Broadhollow Road
Melville, New York
11747
Bruce Tucker $97,000 $97,000 4,000
________________
________________
________________
Iris Rabinwitz $36,375 $36,375 1,500
________________
________________
________________
Stanley Rabinwitz $84,875 $84,875 3,500
________________
________________
________________
Salomon Clara $24,250 $24,250 1,000
Rabinwitz Foundation
________________
________________
________________
Arnold Gerwitz $18,187 $18,187 750
________________
________________
________________
Jeffrey Gerwitz $18,187 $18,187 750
________________
________________
________________
Triangle Properties $48,500 $48,500 2,000
________________
________________
________________
Murray Feldstein $24,250 $24,250 1,000
________________
________________
________________
Andrew Feldstein $24,250 $24,250 1,000
________________
________________
________________
Andrew Lipschitz $24,250 $24,250 1,000
(Judy Stein
a/c/f Robert A. Stein
under UGMA)
________________
________________
________________
Rita Ullian $48,500 $48,500 2,000
________________
________________
________________
Jon Halpern $24,250 $24,250 1,000
Reckson Associates
Realty Corp.
225 Broadhollow Road
Melville, New York
11747
Robert Lemke $24,250 $24,250 1,000
(RSL Family
Partnership)
________________
________________
________________
Helene Kunze $24,250 $24,250 1,000
Yisa Kunze and Jill
Kunze
(joint ownership)
________________
________________
________________
Natalie Goldberg $2,425 $2,425 100
________________
________________
________________
Jason Barnett $24,250 $24,250 1,000
Reckson Associates
Realty Corp.
225 Broadhollow Road
Melville, New York
11747
Victoria Campofranco $4,850 $4,850 200
(UGMA/CT)
________________
________________
________________
Nicholas Campofranco $4,850 $4,850 200
(UGMA/CT)
________________
________________
________________
Salvatore and Alice $2,425 $2,425 100
Campofranco
________________
________________
________________
Christina Adipietro $3,031 $3,031 125
________________
________________
________________
Sabrina Adipietro $3,031 $3,031 125
________________
________________
________________
Frank and Celeste $3,637 $3,637 150
Adipietro
________________
________________
________________
Joel Cardillo $36,375 $36,375 1,500
________________
________________
________________
John Barnes $2,667 $2,667 110
________________
________________
________________
Rosemary Bird $4,850 $4,850 200
________________
________________
________________
Arnold Widder $48,500 $48,500 2,000
Reckson Associates
Realty Corp.
225 Broadhollow Road
Melville, New York
11747
Richard Conniff $24,250 $24,250 1,000
Reckson Associates
Realty Corp.
225 Broadhollow Road
Melville, New York
11747
Robert Weiner $12,125 $12,125 500
Reckson Associates
Realty Corp.
225 Broadhollow Road
Melville, New York
11747
Norman Berlin $97,000 $97,000 4,000
Reckson Associates
Realty Corp.
225 Broadhollow Road
Melville, New York
11747
Subtotal (Limited __________ __________ _________ _____
Partners $89,001,350 $89,001,350 3,487,527 22.23%
excluding Reckson
Associates Realty
Corp.)
Total $333,273,463 $89,001,350 $422,278,813 15,658,509 100.00%
</TABLE>
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
1.704-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 1.704-1(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)(1)(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.
C. Generally, a transferee (including an 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)(1)(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
Partnership Units (including such 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 Value 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 1.704-1(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- 1 (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 13 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 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 this Agreement (including this Exhibit B and
other Exhibits to this Agreement) relating to the maintenance of Capital
Accounts are intended to comply with Regulations Section 1.704-l(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 (i) 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; or (ii) the manner in which items are allocated among
the Partners for federal income tax purposes, in order to comply with such
Regulations or to comply with Section 704(c) of the Code, the General Partner
may make such modification without regard to Article 14 of the Agreement,
provided that it is not likely to have a material effect on the amounts
distributable to any Person pursuant to Article 13 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 1.704-1(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
1.704-1(b). In addition, the General Partner may adopt and employ such
methods and procedures for (i) the maintenance of book and tax capital
accounts; (ii) the determination and allocation of adjustments under Sections
704(c), 734 and 743 of the Code; (iii) the determination of Net Income, Net
Loss, taxable income, taxable loss and items thereof under this Agreement and
pursuant to the Code; (iv) the adoption of reasonable conventions and methods
for the valuation of assets and the determination of tax basis; (v) the
allocation of asset value and tax basis; and (vi) conventions for the
determination of cost recovery, depreciation and amortization deductions, as
it determines in its sole discretion are necessary or appropriate to execute
the provisions of this Agreement, to comply with federal and state tax laws,
and are in the best interest of the Partners.
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 his Capital
Contribution or his Capital Account or to receive any distribution from the
Partnership, except as provided in Articles 4, 5, 7 and 13 of the Agreement.
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
taxable year, then, subject to the exceptions set forth in Regulations
Sections 1.704-2(f)(2)-(5), 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 shall be interpreted consistently therewith. Solely for
purposes of this Section 1.A, each Partner's Adjusted Capital Account Deficit
shall be determined prior to any other allocations pursuant to Section 6.1 of
Partner Minimum Gain during such Partnership taxable 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 taxable year, then, subject to the exceptions referred to in
Regulations Section 1.704-2(i)(4), 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
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 the 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 taxable 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 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), or
1.704-1(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 taxable year) shall be specially 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 taxable year shall be allocated to the Partners in accordance
with their respective Percentage Interests. If the 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 to the numerically closest ratio for such
Partnership taxable year which would satisfy such requirements.
E. Partner Nonrecourse Deductions. Any Partner Nonrecourse
------------------------------
Deductions for any Partnership taxable 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 Section 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
1.704-1(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.
G. Curative Allocations. The allocations set forth in Section 1.A
--------------------
through 1.F of this Exhibit C (the "Regulatory Allocations") are intended to
comply with certain requirements of the Regulations under Section 704(b) of
the Code. The Regulatory Allocations may not be consistent with the manner
in which the Partners intend to divide Partnership distributions.
Accordingly, the General Partner is hereby authorized to divide other
allocations of income, gain, deduction and loss among the Partners so as to
prevent the Regulatory Allocations from distorting the manner in which
Partnership distributions will be divided among the Partners. In general,
the Partners anticipate that, if necessary, this will be accomplished by
specially allocating other items of income, gain, loss and deduction among
the Partners so that the net amount of the Regulatory Allocations and such
special allocations to each person is zero. However, the General Partner
will have discretion to accomplish this result in any reasonable manner;
provided, however, that no allocation pursuant to this Section 1.G shall
cause the Partnership to fail to comply with the requirements of Regulations
Sections 1.704-1(b)(2)(ii)(d), -2(e) or -2(i).
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 and the Regulations thereunder, to
take into account the variation between the 704(c) Value
of such property and its adjusted basis at the time of
contribution; 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
(1) first, be allocated among the Partners in a manner
consistent with the principles of Section 704(c) of the
Code and the Regulations thereunder to take into account
the Unrealized Gain or Unrealized Loss attributable to
such property and the allocations thereof pursuant to
Exhibit B; and
(2) 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
(b) any item of Residual Gain or Residual Loss attributable
to and 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.
---------
C. To the extent that the Treasury Regulations promulgated pursuant to
Section 704(c) of the Code permit the Partnership to utilize alternative
methods to eliminate the disparities between the Carrying Value of property
and its adjusted basis, the General Partner shall have the authority to elect
the method to be used by the Partnership and such election shall be binding
on all Partners.
3. No Withdrawal
-------------
No Partner shall be entitled to withdraw any part of his Capital
Contribution or his Capital Account or to receive any distribution from the
Partnership, except as provided in Articles 4, 5, 8 and 13 of the Agreement.
Exhibit D
Notice of Redemption
The undersigned Limited Partner hereby irrevocably requests Reckson
Operating Partnership, L.P., a Delaware limited partnership (the
"Partnership") to redeem ______________ Partnership Units in the Partnership
in accordance with the terms of the Amended and Restated Agreement of Limited
Partnership of the Partnership and the Redemption Right referred to therein;
and the undersigned Limited Partnership irrevocably (i) surrenders such
Partnership Units and all right, title and interest therein; and (ii) directs
that the Cash Amount or REIT Shares Amount (as determined by the General
Partner) 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
Limited Partnership Units, free and clear of the rights or interests of any
other person or entity; (b) has the full right, power, and authority to
request such redemption and surrender such Partnership Units as provided
herein; and (c) has obtained the consent or approval of all person or
entities, if any, having the right to consent or approve such redemption and
surrender of Units. The undersigned Limited Partner further agrees that, in
the event that any state or local property tax is payable as a result of the
transfer of its Partnership Units to the Partnership or the General Partner,
the undersigned Limited Partner shall assume and pay such transfer tax.
Dated: ___________________________
Name of Limited Partner: __________________________________
Please Print
__________________________________
(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 number: __________
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement and related Prospectus of Reckson Associates Realty
Corp. (the "Company") for the registration of $500,000,000 of common stock,
preferred stock, common stock warrants, and preferred stock warrants and to
the incorporation by reference therein of our report dated February 25, 1997,
except for Note 14, as to which the date is March 12, 1997, with respect to
the consolidated financial statements and schedule of the Company included in
its Annual Report (Form 10-K) for year ended December 31, 1996 and the period
June 3, 1995 to December 31, 1995 and the combined financial statements of
the Reckson Group for the period January 1, 1995 to June 2, 1995 and for the
year ended December 31, 1994, filed with the Securities and Exchange
Commission. We also consent to the incorporation by reference therein of:
(i) our report dated February 23, 1996, with respect to the combined
statement of revenues and certain expenses of the Westchester Properties for
the year ended December 31, 1995, included in the Company's Form 8-K/A filed
with the Securities and Exchange Commission on March 27, 1996, (ii) our
report dated September 20, 1996, with respect to the combined statement of
revenues and certain expenses of the Landmark Square Properties for the year
ended December 31, 1995, included in the Company's Form 8-K filed with the
Securities and Exchange Commission on October 1, 1996, (iii) our report dated
September 16, 1996, with respect to the combined statements of revenues and
certain expenses of the Certain Option Properties for the years ended
December 31, 1995, 1994 and 1993, included in the Company's Form 8-K filed
with the Securities and Exchange Commission on October 1, 1996, (iv) our
report dated February 4, 1997, with respect to the combined statement of
revenues and certain expenses of the New Jersey Portfolio for the year ended
December 31, 1996, included in the Company's Form 8-K filed with the
Securities and Exchange Commission on February 19, 1997, (v) our report dated
January 16, 1997, with respect to the statement of revenues and certain
expenses of the Uniondale Office Property for the year ended December 31,
1996, included in the Company's Form 8-K filed with the Securities and
Exchange Commission on February 19, 1997, and (vi) our report dated January
17, 1997, with respect to the combined statement of revenues and certain
expenses of the Hauppauge Portfolio for the year ended December 31, 1996,
included in the Company's Form 8-K filed with the Securities and Exchange
Commission on February 19, 1997, (vii) our report dated May 23, 1997 with
respect to the statement of revenues and certain expenses of 710 Bridgeport
Avenue for the year ended December 31, 1996, included in the Company's Form
8-K filed with the Securities and Exchange Commission on June 12, 1997,
(viii) our report dated May 16, 1997 with respect to the statement of
revenues and certain expenses of the Shorthills Office Center for the year
ended December 31, 1996, included in the Company's Form 8-K filed with the
Securities and Exchange Commission on June 12, 1997, and (ix) our report
dated July 22, 1997 with respect to the statement of revenues and certain
expenses of Garden City Plaza for the year ended December 31, 1996, included
in the Company's Form 8-K filed with the Securities and Exchange Commission
on September 16, 1997.
/s/ Ernst & Young LLP
New York, New York
September __, 1997
