UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
Commission file number: 1-13762
RECKSON ASSOCIATES REALTY CORP.
(Exact name of registrant as specified in its charter)
Maryland 11-3233650
(State other jurisdiction of incorporation (IRS. Employer
of organization) Identification Number)
225 Broadhollow Road, Melville, NY 11747
(Address of principal executive office) (zip code)
(516) 694-6900
(Registrant's telephone number including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of Each Exchange on Which Registered
------------------- -----------------------------------------
Common Stock, $.01 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K, or any
amendment to this Form 10-K.
Yes No X
The aggregate market value of the shares of common stock held by
non-affiliates was approximately $926,000,000 based on the closing price on the
New York Stock Exchange for such shares on March 20,1998.
The number of the Registrant's shares of common stock outstanding was
38,632,335 as of March 20,1998.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement for the Annual Shareholder's
Meeting to be held May 21, 1998 are incorporated by reference into Part III.
<PAGE>
TABLE OF CONTENTS
Item No.
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Part I
1. Business . . . . . . . . ... . . . . . . . . . . . . . . . . . .
2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . .
4. Submission of Matters to a Vote of Security-Holders. . . . . . .
Part II
5. Market for Registrant's Common Equity and Related Stockholder Matters
6. Selected Financial Data. . . . . . . . . . . . . . . . . . . . .
7. Management's Discussion and Analysis of Financial Condition and Results
of Operations. ... . . . . . . . . . . . . . . . . . . . . . . .
8. Financial Statements and Supplemental Data . . . . . . . . . . .
9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure. . . . . . . . . . . . . . . . . . . . . . . . .
Part III
10. Directors and Executive Officers of the Registrant . . . . . . .
11. Executive Compensation . . . . . . . . . . . . . . . . . . . . .
12. Security Ownership of Certain Beneficial Owners and Management .
13. Certain Relationships and Related Transactions . . . . . . . . .
Part IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
<PAGE>
Part I
Item 1. Business
General
Reckson Associates Realty Corp. was incorporated in September 1994 and
commenced operations effective with the completion of its initial public
offering (the "IPO") on June 2, 1995. Reckson Associates Realty Corp., together
with Reckson Operating Partnership, L.P. (the "Operating Partnership"), and
their affiliates (collectively, the "Company") 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 40 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 operators of Class A suburban
office properties and industrial properties in the New York City tri-state area
(the "Tri-State Area"). The Company operates as a fully-integrated, self-
administered and self-managed Real Estate Investment Trust ("REIT"). As of
December 31, 1997, the Company owned 155 properties (the "Properties")
(including three joint venture properties) encompassing approximately 13.6
million rentable square feet, all of which are managed by the Company. The
Properties consist of 58 Class A suburban office properties (the "Office
Properties") encompassing approximately 7.6 million square feet, 95 industrial
properties (the "Industrial Properties") encompassing approximately 6.0 million
square feet and two 10,000 square foot retail properties. In addition, as of
December 31, 1997 the Company had invested approximately $72.5 million in
certain mortgage indebtedness encumbering five Class A office properties
encompassing approximately 927,000 square feet, a 400 acre parcel of land and a
586,000 square foot industrial property in New Jersey (the "Mortgage Note
Investments"). As of December 31, 1997, the Company also owned or had
contracted to acquire approximately 847 acres of land in 17 separate parcels
that may present future development opportunities.
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 eight 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 developed by Reckson.
All of the Company's interests in the Properties, the Mortgage Note
Investments and land are held directly or indirectly by, and substantially all
of its operations relating to the Properties are conducted through, the
Operating Partnership. The Company controls the Operating Partnership as the
sole general partner and as of December 31, 1997, owned approximately 84% of the
Operating Partnership's outstanding units of limited partnership ("Units").
The Company seeks to maintain cash reserves for normal repairs,
replacements, improvements, working capital and other contingencies. The
Operating Partnership has established an unsecured credit facility (the
"Unsecured Credit Facility") with a maximum borrowing amount of $250 million
scheduled to mature on April 30, 2000. The Unsecured Credit Facility requires
the Company to comply with a number of financial and other covenants on an
ongoing basis and, under certain circumstances, may be extended by the Operating
Partnership for a period of one year.
In April 1996, the Company completed a public offering of 3,000,000 shares
(pre-split) of Common Stock at a price of $30.50 per share (pre-split) (the
"April 1996 Offering"). In October 1996, the Company completed a public
offering of 1,725,000 shares (pre-split) of Common Stock at a price of $35.50
per share (pre-split) (the "October 1996 Offering"). Net proceeds to the
Company of approximately $86 million from the April 1996 offering and
approximately $60 million from the October 1996 offering were used to make
acquisitions of Properties and to re-pay borrowings.
In March 1997, the Company completed a public offering and sold 4,945,000
common shares (pre-split) at a price of $45.25 (pre-split) (including 645,000
common shares related to the exercise of the underwriter over allotment option)
(the "March 1997 Offering"). In December 1997, the Company completed a public
offering and sold 3,081,777 common shares at a price of $26 per share (the
"December 1997 Offering"). In February 1998, the Company completed a public
stock offering and sold 791,152 common shares at a price of $25.44 per share.
Net proceeds to the Company of approximately $212 million from the March 1997
Offering, $80 million from the December 1997 Offering and $19 million from the
February 1998 Offering were used to make acquisitions of Properties and to
re-pay borrowings.
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.
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 December 31, 1997, the Company had approximately 210 employees.
Recent Developments
Acquisition and Sales Activity.
Set forth below is a brief description of the Company's major acquisition
activity during 1997. All of these Properties are located in the Tri-State
Area.
During 1997, the Company acquired or contracted to acquire approximately
$431 million of Class A suburban office and industrial properties encompassing
approximately 4.9 million square feet located in the Tri-State Area. In
addition, the Company acquired approximately 335 acres of land for an aggregate
purchase price of approximately $24.2 million.
In that regard, during 1997, the Company acquired five Class A suburban
Office Properties and 15 Industrial Properties encompassing approximately
881,000 and 968,000 square feet respectively, located on Long Island.
During 1997, the Company acquired eight office properties encompassing
approximately 830,000 square feet and three industrial properties encompassing
approximately 163,000 square feet in Westchester for an aggregate purchase price
of approximately $117 million. In addition, the Company acquired approximately
32 acres of land for a purchase price of approximately $8 million.
During 1997, the Company acquired one industrial property encompassing
approximately 452,000 square feet in Connecticut for a purchase price of
approximately $27 million.
During 1997, the Company acquired 13 office properties encompassing
approximately 1.5 million square feet and one industrial property encompassing
approximately 128,000 square feet in New Jersey for an aggregate purchase price
of approximately $156 million. Included in these acquisitions is the New Jersey
Portfolio acquisition as described below. In addition, the Company acquired
approximately 303 acres of land for an aggregate purchase price of approximately
$16.2 million.
In October 1997, the Company entered into an agreement to invest $150
million in the Morris Companies, a New Jersey developer and owner of "Big Box"
warehouse facilities. The Morris Companies' properties include twenty-three
industrial buildings encompassing approximately 4.0 million square feet. The
Company's investment will be used to acquire a controlling interest in Reckson
Morris Operating Partnership, L.P. ("RMI"). In connection with the transaction
the Morris Companies will contribute 100% of their interests in certain
industrial properties to RMI in exchange for operating partnership units in RMI.
on January 6, 1998, the Company made its initial investment into RMI of
approximately $65 million. In addition, at December 31, 1997, the Company had
advanced approximately $12 million to the Morris Companies primarily to fund
certain construction costs related to development properties to be contributed
to RMI.
In October 1997, the Company sold 671 Old Willets Path in Hauppauge, New
York for approximately $725,000 and recorded a gain on the sale of $672,000.
In addition, during 1997, the Company invested approximately $29 million in
certain mortgage indebtedness encumbering one Class A office building on Long
Island encompassing approximately 177,000 square feet, a 400 acre parcel of land
located in New Jersey and a 586,000 square foot industrial property located in
New Jersey. In addition, on March 13, 1997 the Company loaned approximately $17
million to its minority partner in Omni, its flagship Long Island office
building, and effectively increased its economic interest in the property owning
partnership.
Set forth below is a brief description of the Company's major acquisition
activity during 1996. All of these Properties are located in the Tri-State Area.
During 1996 the Company's emphasis focused on "Anchor Acquisitions" in suburban
office parks (i.e., an acquisition of a portfolio of properties in a prime
location that provides the Company with a critical mass sufficient to create
operating efficiencies).
New Jersey Portfolio Acquisition. In December 1996, The Company entered
into contract to acquire five Class A office buildings (the "New Jersey
Portfolio") encompassing approximately 500,000 square feet from certain
entities/associates with Robert Heller a New Jersey Developer for approximately
$56.9 million. These properties were acquired during 1997. Four of the
properties are located in the Executive Hill Office Park a 32 acre office park
that contains four buildings with approximately 392,000 square feet and is
located in West Orange, New Jersey, adjacent to route 280, a major interstate
highway. Executive Hill was developed between 1971 and 1984 by various entities
associated with Robert Heller. One of the properties in the office park, 10
Rooney Circle, was a vacant 70,000 square foot building at acquisition that has
undergone a complete renovation including the reskinning of its facade in
granite, installation of two new lobbies and development of a new entranceway.
The property is now fully leased to two tenants. Tenants at Executive Hill
include Chase Manhattan Bank, International Business Machines, Computer Science
Corporation, and State Farm Insurance Company. In connection with this
acquisition, the Company established its Northern New Jersey Division and named
Mark Schaevitz as its Managing Director. Mr. Schaevitz, who acted as Chief
Operating Officer over Mr. Heller's real estate operations for the prior 15
years, joined The Company along with certain key members of his management team
to lead the Company's efforts in Northern New Jersey. The acquisition of the
New Jersey Portfolio, the establishment of the Northern New Jersey Division and
retention of Mr. Schaevitz, and his management team are consistent with the
Company's strategy of developing a local presence in the key suburban markets in
the Tri-State Area through Anchor Acquisitions.
The Landmark Square Acquisition. In October 1996, The Company acquired
Landmark Square, a seven acre office complex containing six buildings and
encompassing 800,000 square feet located in Stamford Connecticut from the
Metropolitan Life Insurance Company("Met Life") for approximately $77 million.
The Company financed the acquisition with a $50 million first mortgage loan from
Met Life which bears interest at a fixed rate of 8.02% and has a ten year term
and proceeds from the October 1996 Offering. Landmark Square was constructed as
part of and is the focal point of a major revitalization development program by
the F.D.Rich Company in the 1970's and 1980's. Met Life obtained title to the
property as a result of a foreclosure of their property mortgage. An affiliate
of The F.D. Rich Company continued to manage Landmark Square until the time it
was purchased by the Company. Landmark Square, contiguous to Stamford Town
Center, a 900,000 square foot upscale shopping mall, offers such amenities as a
full service athletic facility and the Landmark Club, one of Stamford's premier
dining clubs. The Company has commenced an approximately $12.0 million, five
year capital improvement and repositioning program at the complex. Tenants at
Landmark Square include Guiness PLC/United Distillers, Crown Theatre, McKinsey &
Co. and Fleet Bank. In connection with the acquisition of Landmark Square the
Company established its Southern Connecticut Division and named F.D. ("Rick")
Rich III, Managing Director of that division and a Senior Vice President of the
Company . Mr. Rich has over 20 years experience in all facets of real estate
development and operations including operating Landmark Square for the last ten
years. The Landmark Square acquisition, the establishment of the Southern
Connecticut Division and employing Mr. Rich as well as his operations team is
consistent with the Company's strategy of making Anchor Acquisitions in new
markets and in establishing a local presence in each of the key suburban markets
in the Tri-State Area.
The Westchester Acquisition. During 1996, the Company acquired seven Class
A suburban office properties and a 60% joint venture interest in an eighth Class
A suburban office property (collectively, the "Westchester Properties")
encompassing an aggregate of approximately 935,000 square feet located in
Westchester County, New York, and associated management and construction
operations, from affiliates of Halpern Enterprises ("Halpern") for an aggregate
maximum purchase price of approximately $79 million (the "Westchester
Acquisition").
On February 22, 1996, six of the Westchester Properties encompassing
approximately 505,000 square feet (505, 560 and 580 White Plains Road,
Tarrytown, New York; 235 and 245 Main Street, White Plains, New York and 2
Church Street, Ossining, New York), together with the aforementioned management
and construction operations, were acquired by the Company for an aggregate
maximum purchase price of approximately $48.7 million. The purchase price was
funded by $29.0 million of borrowings under the Company's credit facility, the
assumption of $9.4 million of mortgage debt and the issuance of 307,606 (pre-
split) units of limited partnership of the Operating Partnership ("Units"). In
accordance with the terms of the purchase contract, each Unit was valued at
$28.11 (pre-split).
On April 9,1996 The Company acquired the seventh Westchester Property (660
White Plains Road, Tarrytown, New York) and the 60% joint venture interest in
the eighth Westchester Property (520 White Plains Road, Tarrytown, New York) the
purchase of interests in these two properties aggregated approximately $31
million.
The Westchester Acquisition was consistent with the Company's strategy of
developing a local presence in the key suburban markets in the Tri-State Area
through Anchor Acquisitions. The Westchester Acquisition afforded the Company
the opportunity to enter the Westchester market by acquiring a large portfolio
of well-located Class A office properties. In addition, five of the Westchester
Properties are located in the Tarrytown Corporate Center, one of Westchester's
largest office parks containing more than 1.2 million square feet of office
space and a 444-room Marriott Hotel. Completed in 1972, Tarrytown Corporate
Center was the first office development undertaken in the Route 119 corridor in
Westchester County, an area that has developed into a prime commercial location.
Major tenants at the Center include Citibank, Ford Motor Credit, U.S. Philips,
Xerox and the Ciba-Geigy Corporation (which maintains its corporate headquarters
at the Center). Designed by the award-winning architectural firm of Warshauer,
Mellusi, and Warshauer, Tarrytown Corporate Center includes seven office
buildings encompassing approximately 991,000 square feet, of which the company
has acquired six of such buildings encompassing approximately 876,000 square
feet. Finally, as part of the Westchester Acquisition, the Company acquired the
Halpern organization's in-house expertise in management, leasing and
construction. The Halpern organization, which was in existence for over 25
years, was a full service commercial real estate company and one of
Westchester's largest owners and operators of office properties. Acquisition of
the Halpern organization enabled the Company to establish a significant local
presence which management believes is essential to the successful operation of
commercial real estate.
Eleven Industrial Properties acquired by the Company during 1996 are single
story properties encompassing an aggregate of approximately 856,000 square feet.
As of December 31, 1997, nine of these properties were 100% leased to single
tenants, one of these properties is 100% leased to two tenants and one of these
properties is 66% leased to a single tenant with a lease pending for the
remaining portion.
Leasing Activity
During the year ended December 31, 1997, the Company leased 548,992 square
feet at the Office Properties at an average effective rent (i.e., base rent
adjusted on a straight-line basis for free rent periods, tenant improvements and
leasing commissions) of $19.95 per square foot and 790,359 square feet at the
Industrial Properties at an average effective rent of $6.37 per square foot.
Included in this leasing data is 197,239 square feet at the Long Island Office
Properties at an average effective rent of $22.69; 179,061 square feet at the
Westchester Office Properties at an average effective rent of $17.42; 123,501
square feet at the Connecticut Office Properties at an average effective rent of
$20.23; and 49,191 square feet at the New Jersey Office Properties at an average
effective rent of $17.43. Also included in this leasing data is 698,359 square
feet at the Long Island Industrial Properties at an average effective rent of
$6.08 and 92,000 square feet at the Westchester Industrial Properties at an
average effective rent of $8.54.
Financing Activities
The Unsecured Credit Facility. On April 30, 1997, the Company obtained a
three-year $250 million unsecured credit facility from a bank group arranged by
Chase Manhattan Bank and Union Bank of Switzerland (the "Unsecured Credit
Facility"). The Company's ability to borrow thereunder 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 rations, a minimum equity value and a maximum dividend payout
ratio. In addition, borrowings under the Unsecured Credit Facility bear
interest at a floating rate equal to one, two, three or six months LIBOR (at the
Company's election) plus a spread ranging from 1.125% to 1.50%, based on the
Company's leverage ratio. The Unsecured Credit Facility replaced the Company's
$150 million secured credit facility. The Company utilizes the Unsecured Credit
Facility primarily to finance the acquisitions of properties and other real
estate investments, fund its development activities and for working capital
purposes. At December 31, 1997, the Company had availability under the
Unsecured Credit Facility to borrow an additional $35.75 million (net of $4.0
million of outstanding undrawn letters of credit).
On January 2, 1998, the Company obtained a $200 million unsecured credit
facility (the "Bridge Facility") which matures on April 1, 1998. The Bridge
Facility was provided by the two lead members of the Unsecured Credit Facility
bank group and serves as interim financing while the Company seeks to expand the
availability under the Unsecured Credit Facility.
Other Financing Activities. During August 1997, the Company refinanced
approximately $43 million of mortgage debt on its Omni office property with a
$58 million fixed rate mortgage loan. The loan which matures on September 1,
2007 has a fixed rate of 7.72%.
On August 28, 1997, the Company sold $150 million of 7.2% senior unsecured
notes due August 2007. The net proceeds of these notes were used to repay
borrowings under the Unsecured Credit Facility and for acquisitions of
properties.
Stock Split
On February 12, 1997, the Board of Directors of the Company declared a two-
for-one stock split, effected as a stock dividend distributable on April 15,
1997 to stockholders of record on April 4, 1997.
Stock Offerings
On March 12, 1997, the Company sold 4,945,000 shares (pre-split) (including
645,000 common shares related to the exercise of the underwriters over allotment
option) of the Company's common stock at $45.25 per share (pre-split) for an
aggregate consideration of approximately $224 million before deducting offering
expenses.
On December 5, 1997, the Company sold 3,081,177 shares of the Company's
common stock at $26.00 per share for an aggregate consideration of approximately
$80 million before deducting offering expenses.
On February 18, 1998, the Company sold 791,152 shares of the Company's
common stock at $25.44 per share for an aggregate consideration of approximately
$20 million before deducting offering expenses.
Corporate Strategies and Growth Opportunities
The Company's primary business objectives are to maximize current return to
stockholders through increases in distributable cash flow per share and to
increase stockholders' long-term total return through the appreciation in value
of its Common Stock. The Company plans to achieve these objectives by continuing
Reckson's corporate strategies and capitalizing on the internal and external
growth opportunities described below.
Corporate Strategies. Management believes that throughout its 40-year
operating history, Reckson has created value in its properties through a variety
of market cycles by implementing the operating strategies described below. These
operating strategies include the implementation of (I) a multidisciplinary
leasing approach that involves architectural design and construction personnel
as well as leasing professionals, (ii) innovative property marketing programs
such as the Executive Center business, which was established by Reckson to
provide "incubation space" for start-up companies as well as office space for
satellite offices of larger companies, (iii) a comprehensive tenant service
program and property amenities designed to maximize tenant satisfaction and
retention, (iv) cost control management and systems that take advantage of
economies of scale that arise from Reckson's market position and efficiencies
attributable to the state-of-the-art energy control system at many of the Office
Properties and (v) an acquisition and development strategy that is continuously
adjusted in light of anticipated changes in market conditions and that seeks to
capitalize on management's multidisciplinary expertise and market knowledge to
modify, upgrade and reposition a property in its market place in order to
maximize value.
The Company also intends to adhere to a policy of maintaining a Debt Ratio
(defined as the total debt of the Company as a percentage of the market value of
outstanding shares of Common Stock and Units) of less than 50%. As of December
31, 1997, the Company's Debt Ratio was approximately 31.6%. This calculation is
net of minority partners' 40% interest in Omni's debt and including the
Company's share of unconsolidated joint venture debt. This Debt Ratio is
intended to provide the Company with financial flexibility to select the optimal
source of capital (whether debt or equity) with which to finance external
growth.
Growth Opportunities. The Company intends to achieve its primary business
objectives by applying its corporate strategies to the internal and external
growth opportunities described below.
Internal Growth. As the Long Island, Westchester, New Jersey and Southern
Connecticut suburban office and industrial markets continue to improve,
management believes the Company is well positioned to benefit from rental
revenue growth through: (i) contractual annual compounding 4% Base Rent (i.e.,
gross rent excluding tenant payments on account of real estate tax, operating
expense escalations and base electrical charges) increases on approximately 85%
of existing leases at the Long Island Properties; (ii) periodic contractual
increases in Base Rent on existing leases at the Westchester Properties, the New
Jersey Properties and the Southern Connecticut Properties; and (iii) the
potential for increases to Base Rents as leases expire as a result of continuing
tightening of the office and industrial markets with limited new supply.
External Growth. The Company seeks to acquire multi-tenant suburban Class
A office and industrial properties located in the Tri-State Area. Management
believes that the Tri-State Area presents opportunities to acquire or invest in
properties at attractive yields. The Company believes that its (i) capital
structure, in particular its Unsecured Credit Facility providing for a maximum
borrowing amount of up to $250 million, (ii) ability to acquire a property for
Units of the Operating Partnership and thereby defer the seller's income tax on
gain, (iii) operating economies of scale, (iv) relationships with financial
institutions and private real estate owners, and (v) fully integrated operations
in four regional Divisions, will enhance the Company's ability to identify and
capitalize on acquisition opportunities. The Company also intends to selectively
develop new Class A suburban office and industrial properties and to continue to
redevelop existing office and industrial properties as these opportunities
arise. In the near future the Company will concentrate its development
activities on industrial and Class A suburban office properties within it's Tri-
State Area markets.
In October 1997, the Company entered into an agreement to invest $150
million in the Morris Companies, a New Jersey developer and owner of "Big Box"
warehouse facilities. The Morris Companies' properties include 23 industrial
buildings encompassing approximately 4.0 million square feet. The Company's
investment will be used to acquire a controlling interest in Reckson Morris
Operating Partnership, L.P. ("RMI"). In connection with the transaction the
Morris Companies will contribute 100% of their interests in certain industrial
properties to RMI in exchange for operating partnership units in RMI. On
January 6, 1998, the Company acquired an approximate 70% interest in RMI for
approximately $65 million. In addition, at December 31, 1997, the Company had
advanced approximately $12 million to the Morris Companies primarily to fund
certain construction costs related to development properties to be contributed
to RMI.
During 1997, the Company formed Reckson Service Industries, Inc. ("RSI) and
Reckson Strategic Venture Partners, LLC ("RSVP"). RSI will serve as the
managing member of RSVP. RSI will invest in operating companies that generally
will provide commercial services to properties owned by the Company and its
tenants and third parties. Since RSI will not be making REIT qualifying
investments, its shares will be distributed to the Company's shareholders and
trade as a separate public company. RSVP was formed to provide the Company with
a "research and development" vehicle to invest in alternative real estate
sectors. RSVP will invest primarily in real estate and real estate related
operating companies generally outside of the Company's core office and
industrial focus. RSVP's strategy is to identify and acquire interests in
established entrepreneurial enterprises with experienced management teams in
market sectors which are in the early stages of their growth cycle or offer
unique circumstances for attractive investments as well as a platform for future
investments. The research and development vehicle will enable the Company to
minimize its investment risks during the early stages of an investment. The
vehicle permits the Company to monitor the long-term potential for each
investment. As later stage capital is required, the Company will determine the
prudence of additional investment and the potential for incorporating it as a
core business line. To facilitate investments by RSVP, the Company has
committed $100 million of initial capital. In addition, RSVP has obtained a
$200 million preferred equity facility from Paine Webber Real Estate Securities
(PWRES") and a PWRES/George Soros sponsored fund. At December 31, 1997, the
Company had made investments in or loans to RSI and RSVP aggregating
approximately $4.3 million and $7.4 million, respectively.
Environmental Matters
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 audit 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 1 in April
1992). These environmental audits have not revealed any environmental liability
that would have a material adverse effect on the Company's business.
Item 2. Properties
General
As of December 31, 1997, the Company owned 155 properties (including three
joint venture properties) encompassing approximately 13.6 million square feet.
These properties consist of 58 Class A suburban office properties encompassing
approximately 7.6 million square feet, 95 industrial properties encompassing
approximately 6.0 million rentable square feet and two free-standing 10,000
square foot retail properties. The rentable square feet of each property has
been determined for these purposes based on the aggregate leased square footage
specified in currently effective leases and, with respect to vacant space,
management's estimate. In addition, as of December 31, 1997, the Company owned
or had contracted to acquire approximately 847 acres of land in 17 separate
parcels that may present future development opportunities.
Reckson has historically emphasized the development of large scale office
and industrial parks and approximately 66% of the Office Properties and 58% of
the Industrial Properties are located in such parks (measured by rentable square
footage). The Company believes that owning properties in planned office and
industrial parks provides certain strategic advantages, including the following:
(i) certain tenants prefer being located in a park with other high quality
companies to enhance their corporate image, (ii) parks afford tenants certain
aesthetic amenities such as a common landscaping plan, standardization of
signage and common dining and recreational facilities, (iii) tenants may expand
(or contract) their business within a park, enabling them to centralize business
functions and (iv) a park provides tenants with access to other tenants and may
facilitate business relationships between tenants.
Also, as of December 31, 1997, the Company had invested approximately $72.5
million in certain mortgage indebtedness encumbering five Class A office
properties on Long Island, one 586,000 square foot industrial property in New
Jersey and a 400 acre parcel of land. In addition, on March 13, 1997 the
Company loaned approximately $17 million to its minority partner in Omni, its
flagship Long Island office building, and effectively increased its economic
interest in the property owning partnership.
Set forth below is a summary of certain information relating to the
Properties, categorized by office and industrial parks, as of December 31, 1997.
Office Properties
General. As of December 31, 1997, the Company owned or had an interest in
58 Class A suburban office properties that encompass approximately 7.6 million
rentable square feet. As of December 31, 1997, these office properties were
approximately 92% leased to 696 tenants.
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 and achieve among the highest rent,
occupancy and tenant retention rates within their sub-markets. Thirty-seven of
the 58 office properties are located in the following eight planned office
parks: the 23 acre North Shore Atrium, the 32 acre Huntington Melville Corporate
Center, the 50 acre Nassau West Corporate Center, the 29 acre Tarrytown
Corporate Center, the seven acre Landmark Square, the 32 acre Executive Hill
Office Park the 76 acre Royal Executive Park and the 11 acre University Square.
The buildings in these office parks offer a full array of amenities including
health clubs, racquetball courts, sun decks, restaurants, computer controlled
HVAC access systems and conference centers. Management believes that the
location, quality of construction and amenities as well as Reckson's reputation
for providing a high level of tenant service have enabled Reckson to attract and
retain a national tenant base. The office tenants include national service
companies, such as "Big Six" accounting firms, securities brokerage houses,
insurance companies and health care providers.
The Long Island Office Properties are leased to national tenants, as well
as to local tenants. Leases on the Office Properties are typically written for
terms ranging from five to ten years and require (i) payment of a fixed gross
rental amount that excludes payments on account of real estate tax, operating
expense escalations and base electrical charges ("Base Rent"), (ii) payment of a
base electrical charge, (iii) payment of real estate tax escalations over a base
year, (iv) payment of compounded annual increases to Base Rent in lieu of
operating expense escalations (which the Company believes have historically
exceeded the annual increase in actual operating expenses), (v) payment of
overtime HVAC and electric and (vi) payment of electric escalations over a base
year. In virtually all leases, the landlord is responsible for structural
repairs. Renewal provisions typically provide for renewal rates at market rates
or a percentage thereof, provided that such rates are not less than the most
recent renewal rates.
The Westchester Properties, the Southern Connecticut Properties and the New
Jersey Properties are also leased to national tenants, as well as to local
tenants. Leases are typically for terms ranging from five to ten years and
require (i) payment of Base Rent, (ii) payment of a base electrical charge,
(iii) payment of real estate tax escalations over a base year, (iv) payment of
periodic fixed increases in Base Rent, (v) payment of operating expense
escalations over a base year, and (vi) payment of electric escalations over a
base year. In virtually all leases, the landlord is responsible for structural
repairs. Renewal provisions typically provide for renewal rates at market rate
or a percentage thereof, provided that such rates are not less than the most
recent renewal rates.
<TABLE>
The following table sets forth certain information as of December 31, 1997
for each of the Office Properties.
<CAPTION>
Ownership
Interest
(Ground
Company's Lease Land Number
Percentage Expiration Year Area of
Property Ownership Date) <F1> Constructed (Acres) Floors
- ------------------------------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Office Properties:
Huntington Melville Corporate Center,
Melville, NY
Leasehold
395 North Service Rd 100% (2081) 1988 7.5 4
200 Broadhollow Rd. 100% Fee 1981 4.6 4
48 South Service Rd. 100% Fee 1986 7.3 4
35 Pinelawn Rd 100% Fee 1980 6.0 2
275 Broadhollow Rd 100% Fee 1970 5.8 4
1305 Old Walt Whitman Rd <F3> 100% Fee 1950 18.1 3
-----------
Total-Huntington Melville
Corporate Center <F4> 49.3
===========
North Shore Atrium,
Syosset, NY
6800 Jericho Turnpike
(North Shore Atrium I) 100% Fee 1977 13.0 2
6900 Jericho Turnpike
(North Shore Atrium II) 100% Fee 1982 5.0 4
-----------
Total-North Shore Atrium 18.0
===========
Nassau West Corporate Center,
Mitchel Field, NY
50 Charles Lindbergh Blvd. Leasehold
(Nassau West Corporate Center II) 100% (2082) 1984 9.1 6
60 Charles Lindbergh Blvd. Leasehold
(Nassau West Corporate Center I) 100% (2082) 1989 7.8 2
Leasehold
333 Earl Ovington Blvd. (The Omni) 60% (2088) 1991 30.6 10
Leasehold
90 Merrick Rd. 100% (2084) 1985 13.2 9
-----------
Total-Nassau West Corporate Center 60.7
===========
Tarrytown Corp. Center
Tarrytown, NY
505 White Plains Road 100% Fee 1974 1.4 2
520 White Plains Road 60% Fee<F6> 1981 6.8 6
555 White Plains Road 100% Fee 1972 4.2 5
560 White Plains Road 100% Fee 1980 4.2 6
580 White Plains Road 100% Fee 1977 6.1 6
660 White Plains Road 100% Fee 1983 10.9 6
-----------
Total-Tarrytown Corporate Center 33.4
===========
Royal Executive Park,
Rye Brook, NY
1 International Dr. 100% Fee 1983 N/A 3
2 International Dr. 100% Fee 1983 N/A 3
3 International Dr. 100% Fee 1983 N/A 3
4 International Dr. 100% Fee 1986 N/A 3
5 International Dr. 100% Fee 1986 N/A 3
6 International Dr. 100% Fee 1986 N/A 3
-----------
Total- Royal Executive Park 44.4
===========
Landmark Square,
Stamford, CT
One Landmark Square 100% Fee 1973 N/A 22
Two Landmark Square 100% Fee 1976 N/A 3
Three Landmark Square 100% Fee 1978 N/A 6
Four Landmark Square 100% Fee 1977 N/A 5
Five Landmark Square 100% Fee 1976 N/A 3
Six Landmark Square 100% Fee 1984 N/A 10
-----------
Total - Landmark Square 7.2
===========
Stand-alone Long Island
Office Properties
400 Garden City Plaza
Garden City, NY 100% Fee 1989 5.7 5
88 Duryea Rd.
Melville, NY 100% Fee 1986 1.5 2
310 East Shore Rd.
Great Neck, NY 100% Fee 1981 1.5 4
333 East Shore Rd. Leasehold
Great Neck, NY 100% (2030) 1976 1.5 2
520 Broadhollow Rd.
Melville, NY 100% Fee 1978 7.0 1
1660 Walt Whitman Rd.
Melville, NY 100% Fee 1980 6.5 1
125 Baylis Rd.
Melville, NY 100% Fee 1980 8.2 2
150 Motor Parkway,
Hauppauge, NY 100% Fee 1984 11.3 4
-----------
Total-Stand-alone Long Island
Office Properties 43.2
===========
Stand-alone Westchester
Office Properties
155 White Plains Road,
Tarrytown, NY 100% Fee 1963 13.2 2
235 Main Street,
White Plains, NY 100% Fee 1974<F5> 0.4 6
245 Main Street,
White Plains, NY 100% Fee 1983 0.4 6
2 Church Street,
Ossining, NY 100% Fee 1979 1.1 2
120 White Plains Rd.,
Tarrytown, NY 100% Fee 1984 9.7 6
80 Grasslands
Elmsford, NY 100% Fee 1989 4.9 3
360 Hamilton Avenue,
White Plains, NY <F3> 50% Fee 1977 1.5 12
-----------
Total Stand-alone Westchester
Office Properties<F4> 31.2
===========
Executive Hill Office Park
West Orange, NJ
100 Executive Drive 100% Fee 1978 10.1 3
200 Executive Drive 100% Fee 1980 8.2 4
300 Executive Drive 100% Fee 1984 8.7 4
10 Rooney Circle 100% Fee 1971 5.2 3
-----------
Total-Executive Hill Office Park 32.2
===========
University Square,
Princeton, NJ
100 Campus Dr. 100% Fee 1987 N/A 1
104 Campus Dr. 100% Fee 1987 N/A 1
115 Campus Dr. 100% Fee 1987 N/A 1
-----------
Total University Square 11.0
===========
Stand-alone New Jersey Properties
1 Paragon Drive
Montvale, NJ 100% Fee 1980 11 2
101 West John F Kennedy Pkwy,
Short Hills, NJ 100% Fee 1981 9 6
101 East John F, Kennedy Pkwy,
Short Hills, NJ 100% Fee 1981 6 4
One Eagle Rock,
Hanover, NJ 100% Fee 1986 10.4 3
3 University Plaza,
Hackensack, NJ 100% Fee 1985 10.6 6
1255 Broad Street,
Clifton, NJ<F3> 100% Fee 1968 11.1 2
-----------
Total Stand-alone New Jersey
Properties <F4> 58.1
===========
Total-Office Properties <F4> 388.7
===========
<FN>
See next table for footnotes.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Annual Number
Rentable Annual Base Rent of
Square Percent Base Rent Per Leased Tenant
Property Feet Leased <F2> Sq. Ft. Leases
----------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Office Properties:
Huntington Melville Corporate Center,
Melville, NY
395 North Service Rd 187,393 100.0% $ 4,503,308 $ 24.03 6
200 Broadhollow Rd. 67,432 66.1% $ 1,011,703 $ 22.69 10
48 South Service Rd. 125,372 79.3% $ 1,917,281 $ 19.27 6
35 Pinelawn Rd 105,241 96.3% $ 1,977,718 $ 19.51 29
275 Broadhollow Rd 124,441 96.2% $ 2,489,324 $ 20.79 22
1305 Old Walt Whitman Rd <F3> 167,400 --- $ --- $ --- ---
----------- ------------- -----------
Total-Huntington Melville
Corporate Center <F4> 777,279 90.6% $ 11,899,334 $ 21.53 73
=========== ============= ===========
North Shore Atrium,
Syosset, NY
6800 Jericho Turnpike
(North Shore Atrium I) 209,028 84.5% $ 3,065,600 $ 17.36 36
6900 Jericho Turnpike
(North Shore Atrium II) 101,036 54.2% $ 1,105,410 $ 20.19 8
----------- ------------- -----------
Total-North Shore Atrium 310,064 74.6% $ 4,171,010 $ 18.03 44
=========== ============= ===========
Nassau West Corporate Center,
Mitchel Field, NY
50 Charles Lindbergh Blvd.
(Nassau West Corporate Center II) 211,845 90.1% $ 4,159,313 $ 21.78 21
60 Charles Lindbergh Blvd.
(Nassau West Corporate Center I) 186,889 100.0% $ 3,690,130 $ 19.71 8
333 Earl Ovington Blvd. (The Omni) 575,000 91.4% $ 14,878,749 $ 28.31 27
90 Merrick Rd. 221,839 72.2% $ 3,200,818 $ 19.97 20
----------- ------------- -----------
Total-Nassau West Corporate Center 1,195,573 89.0% $ 25,929,010 $ 24.37 76
=========== ============= ===========
Tarrytown Corp. Center
Tarrytown, NY
505 White Plains Road 26,468 96.2% $ 473,430 $ 18.59 18
520 White Plains Road 171,761 100.0% $ 3,192,362 $ 18.59 1
555 White Plains Road 121,585 96.8% $ 1,802,001 $ 15.31 8
560 White Plains Road 126,471 100.0% $ 2,378,519 $ 18.61 19
580 White Plains Road 170,726 97.5% $ 2,775,832 $ 16.67 23
660 White Plains Road 258,715 98.9% $ 4,802,073 $ 18.76 52
----------- ------------- -----------
Total-Tarrytown Corporate Center 875,726 98.8% $ 15,424,217 $ 17.83 121
=========== ============= ===========
Royal Executive Park,
Rye Brook, NY
1 International Dr. 90,000 100.0% $ 1,125,000 $ 12.50 1
2 International Dr. 90,000 100.0% $ 1,125,000 $ 12.50 1
3 International Dr. 91,174 93.3% $ 1,553,377 $ 18.27 5
4 International Dr. 86,694 95.6% $ 1,790,042 $ 21.60 9
5 International Dr. 90,000 100.0% $ 2,416,500 $ 26.85 1
6 International Dr. 94,016 98.0% $ 1,391,926 $ 15.11 7
----------- ------------- -----------
Total- Royal Executive Park 541,884 97.8% $ 9,401,845 $ 17.74 24
=========== ============= ===========
Landmark Square,
Stamford, CT
One Landmark Square 296,716 84.4% $ 5,229,935 $ 20.87 58
Two Landmark Square 39,701 81.8% $ 701,190 $ 21.58 9
Three Landmark Square 128,286 79.7% $ 2,432,326 $ 23.79 18
Four Landmark Square 104,446 96.4% $ 1,827,791 $ 18.14 18
Five Landmark Square 57,273 87.7% $ 175,000 $ 3.48 1
Six Landmark Square 171,899 94.6% $ 3,633,757 $ 22.35 8
----------- ------------- -----------
Total - Landmark Square 798,321 87.5% $ 13,999,999 $ 20.04 112
=========== ============= ===========
Stand-alone Long Island
Office Properties
400 Garden City Plaza
Garden City, NY 176,073 95.3% $ 3,491,953 $ 20.82 23
88 Duryea Rd.
Melville, NY 25,061 79.6% $ 308,404 $ 15.46 3
310 East Shore Rd.
Great Neck, NY 50,000 100.0% $ 1,148,590 $ 22.92 21
333 East Shore Rd.
Great Neck, NY 17,715 99.6% $ 434,960 $ 24.64 9
520 Broadhollow Rd.
Melville, NY 83,176 100.0% $ 1,514,193 $ 18.20 5
1660 Walt Whitman Rd.
Melville, NY 73,115 99.7% $ 1,224,483 $ 16.79 5
125 Baylis Rd.
Melville, NY 98,329 88.8% $ 1,183,658 $ 13.56 10
150 Motor Parkway,
Hauppauge, NY 191,447 70.4% $ 2,310,756 $ 17.14 19
----------- ------------- -----------
Total-Stand-alone Long Island
Office Properties 714,916 88.6% $ 11,616,997 $ 18.33 95
=========== ============= ===========
Stand-alone Westchester Properties
155 White Plains Road,
Tarrytown, NY 60,909 90.6% $ 1,021,179 $ 18.50 5
235 Main Street,
White Plains, NY 83,237 79.0% $ 1,156,248 $ 17.58 23
245 Main Street,
White Plains, NY 73,543 87.3% $ 1,298,363 $ 20.22 15
2 Church Street,
Ossining, NY 24,250 60.6% $ 214,463 $ 14.59 4
120 White Plains Rd.,
Tarrytown, NY 203,000 99.4% $ 4,388,428 $ 22.33 11
80 Grasslands
Elmsford, NY 85,104 93.4% $ 1,509,382 $ 18.99 6
360 Hamilton Avenue,
White Plains, NY <F3> 365,000 --- $ --- $ --- ---
----------- ------------- -----------
Total Stand-alone Westchester
Office Properties<F4> 895,043 90.7% $ 9,588,063 $ 20.14 64
=========== ============= ===========
Executive Hill Office Park
West Orange, NJ
100 Executive Drive 92,872 100.0% $ 1,700,804 $ 18.31 12
200 Executive Drive 102,630 88.9% $ 1,760,392 $ 19.29 16
300 Executive Drive 126,196 99.0% $ 2,532,643 $ 20.28 12
10 Rooney Circle 69,684 100.0% $ 1,406,904 $ 20.19 2
----------- ------------- -----------
Total-Executive Hill Office Park 391,382 96.8% $ 7,400,743 $ 19.53 42
=========== ============= ===========
University Square,
Princeton, NJ
100 Campus Dr. 27,350 100.0% $ 339,125 $ 12.40 2
104 Campus Dr. 70,155 100.0% $ 1,140,019 $ 16.25 1
115 Campus Dr. 33,600 100.0% $ 602,144 $ 17.92 2
----------- ------------- -----------
Total University Square 131,105 100.0% $ 2,081,288 $ 15.87 5
=========== ============= ===========
Stand-alone New Jersey Properties
1 Paragon Drive
Montvale, NJ 104,599 95.6% $ 1,138,187 $ 11.38 12
101 West John F Kennedy Pkwy,
Short Hills, NJ 185,233 100.0% $ 2,963,728 $ 16.00 1
101 East John F, Kennedy Pkwy,
Short Hills, NJ 122,841 100.0% $ 1,965,456 $ 16.00 1
One Eagle Rock,
Hanover, NJ 140,000 96.8% $ 609,525 $ 4.50 2
3 University Plaza,
Hackensack, NJ 216,403 97.9% $ 3,258,186 $ 15.37 24
1255 Broad Street,
Clifton, NJ<F3> 180,000 --- $ -- $ -- --
----------- ------------- -----------
Total Stand-alone New Jersey
Properties <F4> 949,076 98.2% $ 9,935,082 $ 13.15 40
=========== ============= ===========
Total-Office Properties <F4> 7,580,369 92.1% $121,447,588 $ 19.21 696
=========== ============= ===========
<FN>
<F1>
Ground lease expirations assume exercise of renewal options by the lessee.
<F2>
Represents Base Rent of signed leases at December 31, 1997 adjusted for
scheduled contractual increases during the 12 months ending December 31, 1998.
Total Base Rent for these purposes reflects the effect of any lease expirations
that occur during the 12-month period ending December 31, 1998. Amounts
included in rental revenue for financial reporting purposes have been
determined on a straight-line basis rather than on the basis of contractual
rent as set forth in the foregoing table.
<F3>
Property is currently under redevelopment.
<F4>
Percent leases excludes properties under development.
<F5>
Year renovated.
<F6>
The actual fee interest in 520 White Plains Road is held by the County of
Westchester Industrial Development Agency. The fee interest in 520 White
Plains Road may be acquired if the outstanding principal under certain loan
agreements and annual basic installments are prepaid in full.
</FN>
</TABLE>
Industrial Properties
General. As of December 31, 1997, the Company owned or had an interest in 95
Industrial Properties that encompass approximately 6.0 million rentable square
feet. All but six of the Industrial Properties are located on Long Island. As
of December 31, 1997, the Industrial Properties were approximately 94% leased
to 230 tenants. Many of the Industrial Properties have been constructed with
high ceiling heights (i.e., above 18 feet), upscale office building facades,
parking in excess of zoning requirements, drive-in and/or loading dock
facilities, and other features which permit them to be leased for industrial
and/or office purposes.
The Industrial Properties are leased to national tenants as well as to local
companies. These tenants utilize the Industrial Properties for distribution,
warehousing, research and development and light manufacturing/assembly
activities. Leases on the Industrial Properties are typically written for terms
ranging from three to seven years and require (i) payment of a Base Rent, (ii)
payments of real estate tax escalations over a base year, (iii) payments of
compounded annual increases to Base Rent and (iv) reimbursement of all
operating expenses. Electric costs are borne and paid directly by the tenant.
Certain leases are "triple net" (i.e., the tenant is required to pay in
addition to annual Base Rent, all operating expenses and real estate taxes). In
virtually all leases, the landlord is responsible for structural repairs.
Renewal provisions typically provide for renewal rents at market rates,
provided that such rates are not less than the most recent rental rates.
Approximately 58% of the Industrial Properties measured by square footage,
are located in three large scale planned industrial parks that were developed
by Reckson. They are (i) Vanderbilt Industrial Park, a 400-acre industrial
park containing 50 buildings with approximately 3.6 million square feet.(ii)
Airport International Plaza a 200-acre industrial park containing 32 buildings
with approximately 1.4 million square feet, and (iii) County Line Industrial
Center, a 28-acre industrial park containing six buildings and approximately
one million square feet.
In addition to its industrial parks, as of December 31, 1997, the Company
owned 27 standalone Industrial Properties. As of December 31, 1997, these
Properties were approximately 94% leased to 54 tenants. Included in the 27
standalone Industrial Properties are 21 Properties located on Long Island
encompassing approximately 1.6 million square feet, of which 32% are located in
Farmingdale, 13% are located in Islip/Islandia, 13% are located in Melville and
12% are located in Hauppauge.
<TABLE>
The following table sets forth certain information as of December 31, 1997
for each of the Industrial Properties.
<CAPTION>
Ownership Percentage
Interest Office/
(Ground Research
Company's Lease Land Clearance and
Percentage Expiration Year Area Height Development
Property Ownership Date) Constructed (Acres) (Feet)<F1> Finish
-------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Industrial Properties:
Vanderbilt Industrial Park,
Hauppauge, NY
360 Vanderbilt Motor Parkway 100% Fee 1967 4.2 16 62%
410 Vanderbilt Motor Parkway 100% Fee 1965 3.0 15 7%
595 Old Willets Path 100% Fee 1968 3.5 14 14%
611 Old Willets Path 100% Fee 1963 3.0 14 11%
631/641 Old Willets Path 100% Fee 1965 1.9 14 31%
651/661 Old Willets Path 100% Fee 1966 2.0 14 45%
681 Old Willets Path 100% Fee 1961 1.3 14 10%
740 Old Willets Path 100% Fee 1965 3.5 14 5%
325 Rabro Dr. 100% Fee 1967 2.7 14 10%
250 Kennedy Dr. 100% Fee 1979 7.0 16 9%
90 Plant Ave. 100% Fee 1972 4.3 16 13%
110 Plant Ave. 100% Fee 1974 6.8 18 8%
55 Engineers Rd. 100% Fee 1968 3.0 18 8%
65 Engineers Rd. 100% Fee 1969 1.8 22 10%
85 Engineers Rd. 100% Fee 1968 2.3 18 5%
100 Engineers Rd. 100% Fee 1968 5.0 14 11%
150 Engineers Rd. 100% Fee 1969 6.8 22 11%
20 Oser Ave. 100% Fee 1979 5.0 16 18%
30 Oser Ave. 100% Fee 1978 4.4 16 21%
40 Oser Ave. 100% Fee 1974 3.1 16 33%
50 Oser Ave. 100% Fee 1975 4.1 21 15%
60 Oser Ave. 100% Fee 1975 3.3 21 19%
63 Oser Ave. 100% Fee 1974 1.2 20 9%
65 Oser Ave. 100% Fee 1975 1.2 18 10%
73 Oser Ave. 100% Fee 1974 1.2 20 15%
80 Oser Ave. 100% Fee 1974 1.1 18 25%
85 Nicon Ct. 100% Fee 1978 6.1 30 10%
90 Oser Ave. 100% Fee 1973 1.1 16 26%
104 Parkway Dr. 100% Fee 1985 1.8 15 50%
110 Ricefield Ln. 100% Fee 1980 2.0 15 25%
120 Ricefield Ln. 100% Fee 1983 2.0 15 24%
125 Ricefield Ln. 100% Fee 1973 2.0 14 20%
135 Ricefield Ln. 100% Fee 1981 2.1 15 10%
85 Adams Dr. 100% Fee 1980 1.8 15 90%
395 Oser Ave 100% Fee 1980 6.1 14 100%
Leasehold
185 Oser Ave 100% (1999) 1974 2.0 18 40%
25 Davids Dr. 100% Fee 1975 3.2 20 90%
45 Adams Ave 100% Fee 1979 2.1 18 90%
225 Oser Ave 100% Fee 1977 1.2 14 80%
180 Oser Ave 100% Fee 1978 3.4 16 35%
360 Oser Ave 100% Fee 1981 1.3 18 35%
400 Oser Ave 100% Fee 1982 9.5 16 30%
375 Oser Ave 100% Fee 1981 1.2 18 40%
425 Rabro 100% Fee 1980 4.0 16 25%
390 Motor Parkway 100% Fee 1980 10.0 14 4%
600 Old Willets Path<F3> 100% Fee 1965 4.5 14 25%
400 Moreland Road<F3> 100% Fee 1967 6.3 17 10%
--------------
Total Vanderbilt Industrial Park<F4> 160.4
==============
Airport International Plaza,
Islip, NY
20 Orville Dr. 100% Fee 1978 1.0 16 50%
25 Orville Dr. 100% Fee 1970 2.2 16 100%
50 Orville Dr. 100% Fee 1976 1.6 15 20%
65 Orville Dr. 100% Fee 1971 2.2 14 13%
70 Orville Dr. 100% Fee 1975 2.3 22 7%
80 Orville Dr. 100% Fee 1988 6.5 16 21%
85 Orville Dr. 100% Fee 1974 1.9 14 20%
95 Orville Dr. 100% Fee 1974 1.8 14 10%
110 Orville Dr. 100% Fee 1979 6.4 24 15%
180 Orville Dr. 100% Fee 1982 2.3 16 18%
1101 Lakeland Ave. 100% Fee 1983 4.9 20 8%
1385 Lakeland Ave. 100% Fee 1973 2.4 16 18%
125 Wilbur Place 100% Fee 1977 4.0 16 31%
140 Wilbur Place 100% Fee 1973 3.1 20 37%
160 Wilbur Place 100% Fee 1978 3.9 16 30%
170 Wilbur Place 100% Fee 1979 4.9 16 28%
4040 Veterans Highway 100% Fee 1972 1.0 14 100%
--------------
Total Airport International Plaza 52.4
==============
County Line Industrial Center,
Melville, NY
5 Hub Dr. 100% Fee 1979 6.9 20 20%
10 Hub Dr. 100% Fee 1975 6.6 20 15%
30 Hub Drive 100% Fee 1976 5.1 20 18%
265 Spagnoli Rd. 100% Fee 1978 6.0 20 28%
--------------
Total County Line Industrial Center 24.6
==============
Standalone Long Island
Industrial Properties
32 Windsor Pl.,
Islip, NY 100% Fee 1971 2.5 18 10%
42 Windsor Pl.,
Islip, NY 100% Fee 1972 2.4 18 8%
208 Blydenburgh Rd.,
Islandia, NY 100% Fee 1969 2.4 14 17%
210 Blydenburgh Rd.,
Islandia, NY 100% Fee 1969 1.2 14 16%
71 Hoffman Ln.,
Islandia, NY 100% Fee 1970 5.8 16 10%
135 Fell Ct.,
Islip, NY 100% Fee 1965 3.2 16 20%
--------------
Subtotal Islip/Islandia 17.5 --- ---
--------------
70 Schmitt Boulevard,
Farmingdale, NY 100% Fee 1975 4.4 18 10%
105 Price Parkway,
Farmingdale, NY 100% Fee 1969 12.0 26 8.5%
110 BI County Blvd.,
Farmingdale, NY 100% Fee 1984 9.5 19 45%
--------------
Subtotal Farmingdale 25.9 --- ---
--------------
70 Maxess Road,
Melville, NY 100% Fee 1969 9.3 15 38%
20 Melville Road ,
Melville, NY 100% Fee 1965 4.0 23 66%
65 Marcus Dr.,
Melville, NY 100% Fee 1968 5.0 16 50%
--------------
Subtotal Melville 18.3 --- ---
--------------
300 Motor Parkway,
Hauppauge, NY 100% Fee 1979 4.2 14 100%
1516 Motor Parkway,
Hauppauge, NY 100% Fee 1981 7.9 24 5%
--------------
Subtotal Hauppauge 12.1 --- ---
--------------
933 Motor Parkway,
Smithtown, NY 100% Fee 1973 5.6 20 26%
65 S. Service Rd. ,
Plainview, NY<F5> 100% Fee 1961 1.6 14 10%
85 S. Service Rd.,
Plainview, NY 100% Fee 1961 1.6 14 60%
19 Nicholas Drive,
Yaphank, NY <F6> 100% Fee 1989 29.6 24 5%
48 Harbor Park Dr.,
Port Washington, NY 100% Fee 1976 2.7 16 100%
110 Marcus Drive,
Huntington, NY 100% Fee 1980 6.1 20 39%
100 Andrews,
Hicksville, NY 100% Fee 1954 11.7 25 12%
--------------
Total Standalone Long Island
Industrial Properties 132.7
==============
Standalone Westchester Industrial
Properties
100 Grasslands Rd.,
Elmsford, NY 100% Fee 1964 3.6 16 100%
2 Macy Rd.,
Harrison, NY 100% Fee 1962 5.7 16 100%
500 Saw Mill Rd.,
Elmsford, NY 100% Fee 1968 7.3 22 17%
--------------
Total Standalone Westchester
Industrial Properties 16.6
==============
Standalone New Jersey Industrial
Properties
40 Cragwood Rd,
South Plainfield, NJ 100% Fee 1965 13.5 16 49%
492 River Rd,
Nutley, NJ <F3> 100% Fee 1952 17.3 13 100%
--------------
Total New Jersey Standalone
Industrial Properties<F4> 30.8
==============
Standalone Connecticut
Industrial Property
710 Bridgeport
Shelton, CT 100% Fee 1971-1979 36.1 22 30%
--------------
Total Connecticut Standalone
Industrial Property 36.1
==============
Total Industrial Properties <F4> 453.6
==============
<FN>
See footnotes in following table.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Annual Number
Rentable Annual Base Rent of
Square Percent Base Rent Per Leased Tenant
Property Feet Leased <F2><F3> Sq. Ft. Leases
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Industrial Properties:
Vanderbilt Industrial Park,
Hauppauge, NY
360 Vanderbilt Motor Parkway 54,000 100.0% $ 35,910 $ 0.67 1
410 Vanderbilt Motor Parkway 41,784 100.0% $ 192,246 $ 4.60 4
595 Old Willets Path 31,670 100.0% $ 144,433 $ 4.56 4
611 Old Willets Path 20,000 100.0% $ 137,698 $ 6.88 2
631/641 Old Willets Path 25,000 56.0% $ 91,877 $ 6.56 2
651/661 Old Willets Path 25,000 100.0% $ 141,431 $ 5.66 7
681 Old Willets Path 15,000 100.0% $ 12,594 $ 0.84 1
740 Old Willets Path 30,000 100.0% $ 29,676 $ 0.99 1
325 Rabro Dr. 35,000 100.0% $ 193,078 $ 5.44 2
250 Kennedy Dr. 127,980 100.0% $ 379,894 $ 2.97 1
90 Plant Ave. 75,000 100.0% $ 193,035 $ 2.57 3
110 Plant Ave. 125,000 100.0% $ 517,087 $ 4.14 1
55 Engineers Rd. 36,000 100.0% $ 290,916 $ 8.08 1
65 Engineers Rd. 23,000 100.0% $ 126,417 $ 5.50 1
85 Engineers Rd. 40,800 100.0% $ 198,984 $ 4.88 2
100 Engineers Rd. 88,000 100.0% $ 353,088 $ 4.01 1
150 Engineers Rd. 135,000 100.0% $ 232,505 $ 1.72 1
20 Oser Ave. 42,000 98.65% $ 323,107 $ 7.80 2
30 Oser Ave. 42,000 100.0% $ 307,347 $ 7.32 5
40 Oser Ave. 59,800 100.0% $ 310,555 $ 5.18 13
50 Oser Ave. 60,000 100.0% $ 240,000 $ 4.00 1
60 Oser Ave. 48,000 100.0% $ 192,000 $ 4.00 1
63 Oser Ave. 22,000 100.0% $ 104,676 $ 4.76 1
65 Oser Ave. 20,000 100.0% $ 113,628 $ 5.68 1
73 Oser Ave. 20,000 100.0% $ 12,951 $ 0.65 1
80 Oser Ave. 19,500 100.0% $ 62,114 $ 3.19 1
85 Nicon Ct. 104,000 100.0% $ 472,626 $ 4.54 1
90 Oser Ave. 37,500 100.0% $ 120,381 $ 3.21 1
104 Parkway Dr. 27,600 100.0% $ 91,000 $ 3.30 1
110 Ricefield Ln. 32,264 100.0% $ 149,921 $ 4.65 1
120 Ricefield Ln. 33,060 100.0% $ 160,000 $ 4.84 1
125 Ricefield Ln. 30,495 100.0% $ 187,299 $ 6.14 1
135 Ricefield Ln. 32,340 100.0% $ 193,164 $ 5.97 1
85 Adams Dr. 20,000 100.0% $ 260,000 $ 13.00 1
395 Oser Ave 50,000 100.0% $ 400,000 $ 8.00 1
185 Oser Ave 30,000 100.0% $ 13,750 $ 0.46 1
25 Davids Dr. 40,000 100.0% $ 293,495 $ 7.34 1
45 Adams Ave 28,000 100.0% $ 147,525 $ 5.27 1
225 Oser Ave 10,000 100.0% $ 66,250 $ 6.62 2
180 Oser Ave 61,868 76.2% $ 298,120 $ 6.33 9
360 Oser Ave 23,000 100.0% $ 128,800 $ 5.60 1
400 Oser Ave 164,936 76.5% $ 758,761 $ 6.02 23
375 Oser Ave 20,000 100.0% $ 137,250 $ 6.86 1
425 Rabro 65,641 100.0% $ 577,940 $ 8.80 1
390 Motor Parkway 181,155 45.5% $ 300,947 $ 3.65 2
600 Old Willets Path<F3> 69,627 --- $ --- $ --- 0
400 Moreland Road<F3> 56,875 --- $ --- $ --- ---
-------------- -------------- -------------
Total Vanderbilt Industrial Park<F4> 2,379,895 92.8% $ 9,694,476 $ 4.64 112
============== ============== =============
Airport International Plaza,
Islip, NY
20 Orville Dr. 12,852 100.0% $ 96,697 $ 7.52 1
25 Orville Dr. 32,300 100.0% $ 445,550 $ 13.24 2
50 Orville Dr. 28,000 50.0% $ 129,099 $ 9.22 1
65 Orville Dr. 32,000 100.0% $ 158,524 $ 4.95 2
70 Orville Dr. 41,508 100.0% $ 219,020 $ 5.28 2
80 Orville Dr. 92,544 100.0% $ 643,027 $ 6.95 9
85 Orville Dr. 25,000 100.0% $ 0 $ 0.00 0
95 Orville Dr. 25,000 100.0% $ 125,750 $ 5.03 1
110 Orville Dr. 110,000 100.0% $ 629,933 $ 5.73 1
180 Orville Dr. 37,612 100.0% $ 214,228 $ 5.70 2
1101 Lakeland Ave. 90,411 100.0% $ 573,999 $ 6.35 1
1385 Lakeland Ave. 35,000 100.0% $ 171,574 $ 4.90 3
125 Wilbur Place 62,686 76.2% $ 232,168 $ 4.86 10
140 Wilbur Place 48,500 100.0% $ 270,377 $ 5.57 2
160 Wilbur Place 62,710 100.0% $ 263,986 $ 4.21 6
170 Wilbur Place 72,062 96.5% $ 350,222 $ 5.03 8
4040 Veterans Highway 2,800 100.0% $ 54,061 $ 19.31 1
-------------- -------------- -------------
Total Airport International Plaza 810,985 93.2% $ 4,578,215 $ 6.06 52
============== ============== =============
County Line Industrial Center,
Melville, NY
5 Hub Dr. 88,001 100.0% $ 479,106 $ 5.44 2
10 Hub Dr. 95,546 100.0% $ 545,612 $ 5.71 5
30 Hub Drive 73,127 100.0% $ 374,454 $ 5.12 2
265 Spagnoli Rd. 85,500 100.0% $ 585,012 $ 6.84 3
-------------- -------------- -------------
Total County Line Industrial Center 342,174 100.0% $ 1,984,184 $ 5.80 12
============== ============== =============
Standalone Long Island
Industrial Properties
32 Windsor Pl.,
Islip, NY 43,000 100.0% $ 128,128 $ 2.98 1
42 Windsor Pl.,
Islip, NY 65,000 100.0% $ 221,963 $ 3.41 1
208 Blydenburgh Rd.,
Islandia, NY 24,000 100.0% $ 97,190 $ 4.05 4
210 Blydenburgh Rd.,
Islandia, NY 20,000 100.0% $ 102,183 $ 5.11 2
71 Hoffman Ln.,
Islandia, NY 30,400 100.0% $ 167,641 $ 5.51 1
135 Fell Ct.,
Islip, NY 30,000 100.0% $ 222,756 $ 7.43 1
-------------- -------------- -------------
Subtotal Islip/Islandia 212,400 100.0% $ 939,861 $ 4.43 10
-------------- -------------- -------------
70 Schmitt Boulevard,
Farmingdale, NY 76,312 100.0% $ 893,860 $ 11.71 1
105 Price Parkway,
Farmingdale, NY 297,000 100.0% $ 1,308,808 $ 4.41 1
110 BI County Blvd.,
Farmingdale, NY 147,303 88.2% $ 1,199,857 $ 9.24 13
-------------- -------------- -------------
Subtotal Farmingdale 520,615 96.7% $ 3,402,525 $ 6.76 15
-------------- -------------- -------------
70 Maxess Road,
Melville, NY 78,000 100.0% $ 622,578 $ 7.98 1
20 Melville Road ,
Melville, NY 67,922 100.0% $ 370,650 $ 5.46 1
65 Marcus Dr.,
Melville, NY 60,000 100.0% $ 546,075 $ 9.10 1
-------------- -------------- -------------
Subtotal Melville 205,922 100.0% $ 1,539,303 $ 7.48 3
-------------- -------------- -------------
300 Motor Parkway,
Hauppauge, NY 55,942 82.4% $ 750,016 $ 16.26 10
1516 Motor Parkway,
Hauppauge, NY 140,000 100.0% $ 837,200 $ 5.98 1
-------------- -------------- -------------
Subtotal Hauppauge 195,942 95.0% $ 1,587,216 $ 8.53 11
-------------- -------------- -------------
933 Motor Parkway,
Smithtown, NY 48,000 100.0% $ 321,884 $ 6.71 1
65 S. Service Rd. ,
Plainview, NY<F5> 10,000 100.0% $ 65,498 $ 6.55 1
85 S. Service Rd.,
Plainview, NY 20,000 100.0% $ 128,280 $ 6.41 2
19 Nicholas Drive,
Yaphank, NY <F6> 145,000 100.0% $ 907,726 $ 6.26 1
48 Harbor Park Dr.,
Port Washington, NY 35,000 100.0% $ 653,987 $ 18.69 1
110 Marcus Drive,
Huntington, NY 78,240 100.0% $ 596,903 $ 7.63 1
100 Andrews,
Hicksville, NY 167,500 66.1% $ 645,539 $ 5.83 1
-------------- -------------- -------------
Total Standalone Long Island
Industrial Properties 1,638,619 94.9% $ 10,788,722 $ 6.94 47
============== ============== =============
Standalone Westchester Industrial
Properties
100 Grasslands Rd.,
Elmsford, NY 45,000 36.1% $ 82,999 $ 5.10 1
2 Macy Rd.,
Harrison, NY 26,000 100.0% $ 422,500 $ 16.25 1
500 Saw Mill Rd.,
Elmsford, NY 92,000 100.0% $ 772,800 $ 8.40 1
-------------- -------------- -------------
Total Standalone Westchester
Industrial Properties 163,000 82.4% $ 1,278,299 $ 9.52 3
============== ============== =============
Standalone New Jersey Industrial
Properties
40 Cragwood Rd,
South Plainfield, NJ 135,000 74.0% $ 1,242,514 $ 12.43 2
492 River Rd,
Nutley, NJ <F3> 128,000 --- $ --- $ --- ---
-------------- -------------- -------------
Total New Jersey Standalone
Industrial Properties<F4> 263,000 74.0% $ 1,242,514 $ 12.43 2
============== ============== =============
Standalone Connecticut
Industrial Property
710 Bridgeport
Shelton, CT 452,414 100.0% $ 2,849,007 $ 6.30 2
-------------- -------------- -------------
Total Connecticut Standalone
Industrial Property 452,414 100.0% $ 2,849,007 $ 6.30 2
============== ============== =============
Total Industrial Properties <F4> 6,050,087 93.7% $ 32,415,417 $ 5.97 230
============== ============== =============
<FN>
<F1>
Calculated as the difference from the lowest beam to floor.
<F2>
Represents Base Rent of signed leases at December 31, 1997 adjusted for
scheduled contractual increases during the 12 months ending December 31, 1998.
Total Base Rent for these purposes reflects the effect of any lease expirations
that occur during the 12 month period ending December 31, 1998. Amounts
included in rental revenue for financial reporting purposes have been
determined on a straight-line basis rather than on the basis of contractual
rent as set forth in the foregoing table.
<F3>
Property under redevelopment.
<F4>
Percent leased excludes properties under redevelopment.
<F5>
A tenant has been granted an option exercisable after April 30, 1997 and
prior to October 31, 2002 to purchase this property for $600,000.
<F6>
The actual fee interest in 19 Nicholas Drive is currently held by the
Town of Brookhaven Industrial Development Agency. The Company may acquire such
fee interest by making a nominal payment to the Town of Brookhaven Industrial
Development Agency.
</FN>
</TABLE>
Retail Properties
As of December 31, 1997, the Company owned two free-standing 10,000 square
foot retail properties. The retail properties which are located in Great
Neck, New York and Huntington, New York were 100% leased as of December 31,
1997.
Developments in Progress
As of December 31, 1997, the Company owned or had under contract
approximately 847 acres of land in 17 separate parcels, 10 of which are located
in Long Island, 2 of which are located in Westchester and 5 of which are
located in New Jersey. The parcels have been zoned for potential industrial
and retail development. The Company plans to seek development opportunities as
market conditions permit. The Company had invested approximately $29.3 million
in land costs and approximately $25.2 million in additional development costs
at December 31, 1997.
Historical Non-Incremental Revenue-Generating Capital Expenditures, Tenant
Improvement Costs and Leasing Commissions
The following table sets forth annual and per square foot recurring, non-
incremental revenue-generating capital expenditures and non-incremental
revenue-generating tenant improvement costs and leasing commissions incurred by
the Company to retain revenues attributable to existing leased space for the
period 1993 through 1997 for the Office Properties and the Industrial
Properties. As noted, revenue-generating tenant improvement costs and leasing
commissions are excluded from the table set forth immediately below. The
historical capital expenditures, tenant improvement costs and leasing
commissions set forth below are not necessarily indicative of future recurring,
non-incremental revenue-generating capital expenditures or non-incremental
revenue-generating tenant improvement costs and leasing commissions.
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Capital Expenditures
Long Island Office Properties
Total $ 227,996 $ 158,340 $ 364,545 $ 379,026 $ 1,108,675
Per square foot 0.15 0.1 0.19 0.13 0.22
Industrial Properties
Total $ 276,052 $ 524,369 $ 290,457 $ 670,751 $ 733,233
Per square foot 0.09 0.18 0.08 0.18 0.15
Non-Incremental Revenue-Generating Tenant
Improvement Costs and Leasing Commissions
Long Island Office Properties
Annual Tenant Improvement Costs $ 406,602 $ 902,312 $ 452,057 $ 523,574 $ 784,044
Per square foot improved 1.93 5.13 4.44 4.28 7.00
Annual Leasing Commissions 670,736 341,253 144,925 119,047 415,822
Per square foot leased 3.18 1.94 1.42 0.97 4.83
Total per square foot $ 5.11 $ 7.07 $ 5.86 $ 5.25 $ 11.83
Westchester Office Properties
Annual Tenant Improvement Costs N/A N/A N/A $ 834,764 $ 1,211,665
Per square foot improved N/A N/A N/A 6.33 8.90
Annual Leasing Commissions N/A N/A N/A 264,388 366,257
Per square foot leased N/A N/A N/A 2.00 2.69
Total per square foot N/A N/A N/A $ 8.33 $ 11.59
Landmark Square
Annual Tenant Improvement Costs N/A N/A N/A $ 58,000 $ 1,022,421
Per square foot improved N/A N/A N/A 12.45 13.39
Annual Leasing Commissions N/A N/A N/A 0 256,615
Per square foot leased N/A N/A N/A 0.00 3.36
Total per square foot N/A N/A N/A $ 12.45 $ 16.75
Industrial Properties
Annual Tenant Improvement Costs $ 186,761 $ 585,891 $ 210,496 $ 380,334 $ 230,466
Per square foot improved 0.33 0.88 0.90 0.72 0.55
Annual Leasing Commissions 278,905 176,040 107,351 436,213 81,013
Per square foot leased 0.49 0.27 0.46 0.82 0.19
Total per square foot $ 0.82 $ 1.15 $ 1.36 $ 1.54 $ 0.74
</TABLE>
The Option Properties
Six properties owned by Reckson (the "Reckson Option Properties") and four
properties in which Reckson owns a non-controlling minority interest (the
"Other Option Properties") and, together with the Reckson Option Properties,
the ("Option Properties") were not contributed to the Operating Partnership
upon completion of the IPO. However, the Operating Partnership was granted 10
year options to acquire interests in the Option Properties under the terms and
conditions described below. As of the date hereof, the Company had acquired or
contracted to acquire all but two of the Reckson Option Properties.
The two remaining Reckson Option Properties are comprised of 225
Broadhollow Road, Melville, New York, a 185,889 square foot suburban Class A
office property located in the Huntington Melville Corporate Center, and, 593
Acorn Street, Babylon, New York, a 39,551 square foot stand alone industrial
property both of which are managed by the Company.
The Operating Partnership has been granted options, exercisable over a 10
year period that commenced upon closing of the IPO, to acquire each of the
Reckson Option Properties and Reckson's ownership interest in the Other Option
Properties at a purchase price equal to the lesser of (i) a fixed price (the
"Fixed Price") and (ii) the Net Operating Income attributable to such Option
Property during the 12 month period preceding exercise of the option by the
Operating Partnership (multiplied by Reckson's percentage ownership interest in
the case of the Other Option Properties) divided by a capitalization rate of
11.5%; provided that, in no event shall the purchase price be less than the
outstanding balance of the mortgage debt encumbering the Option Property
(multiplied by Reckson's percentage ownership interest in the case of the Other
Option Properties) on the acquisition date. Net Operating Income is defined
generally for these purposes as gross income minus annual operating costs. The
portion of the purchase price not required to repay mortgage debt and other
transaction costs incurred in connection with the sale of such Option Property
shall be payable in Units. The fixed prices for 225 Broadhollow Road and 593
Acorn Street is $21,242,000 and $878,100, respectively.
The Reckson partnerships that currently own the Reckson Option Properties
may sell any of these properties to a party other than the Operating
Partnership, provided that the selling entity provides the Company with 30-days
advance notice of such sale. Upon receiving such notice, the Company may then
elect to exercise the option to acquire the Reckson Option Property and, if it
so chooses, sell the property to such party.
In addition to the foregoing, in the event a sale of any Option Property
to a third party is consummated, the Operating Partnership will receive
"Reckson's Net After Tax Profit" from such sale. Reckson's Net After Tax Profit
is defined generally for such purposes as the product of (i) Reckson's
percentage ownership interest in the Option Property (100% in the case of
Reckson Option Properties) multiplied by (ii) the excess of the gross sales
price over the total of any outstanding mortgage or other encumbrance, the
federal income tax payable by the partners as a result of the sale, as well as
other transaction costs incurred in connection with the sale of such Option
Property, including transfer taxes, closing adjustments, brokerage commissions,
legal fees and accounting fees.
The terms of the options granted to the Operating Partnership with respect
to the Option Properties have not been based on appraisals and are not the
product of an arm's-length negotiation since members of the Rechler family
maintain an ownership interest in such Option Properties. However, management
believes that such terms are fair to the Company and a determination by the
Operating Partnership to exercise an option to acquire an interest in any
Option Property shall be subject to the approval of the Independent Directors
and, with respect to interests in the Other Option Properties, the approval of
Reckson's partners.
Mortgage Indebtedness
<TABLE>
The following table sets forth certain information regarding the mortgage
debt of the Company, as of December 31, 1997.
<CAPTION>
Principal
Amount Interest Maturity Amortization
Property Outstanding Rate Date Schedule
============== ========== ========== ==============
<S> <C> <C> <C> <C>
6800 Jericho Turnpike (North Shore Atrium I) $ 15,001,000 7 1/4% 6/10/00 ---
6900 Jericho Turnpike (North Shore Atrium II) $ 5,279,000 7 1/4% 6/10/00 ---
200 Broadhollow Rd. $ 6,649,000 7 3/4% 6/02/02 <F3>
395 North Service Road $ 9,917,000 6.82% 6/02/00 25 year
50 Charles Lindbergh Blvd. $ 15,479,000 7 1/4% 7/10/01 ---
333 Earl Ovington Blvd. (The Omni) <F1> $ 57,839,000 7.72 % 08/14/07 25 year
310 East Shore Rd. $ 2,322,000 8% 7/01/02 ---
80 Orville Dr. $ 2,616,000 7 1/2% <F2> 2/01/04 ---
70 Maxess Road $ 1,863,000 8 3/4% 12/21/00 20 year
70 Schmitt Boulevard $ 425,000 9 1/4% 8/01/99 <F4>
580 White Plains Road $ 8,811,000 7 3/8% 9/01/00 25 year
Landmark Square $ 49,291,000 8.02% 10/07/06 25 year
110 Bi-County Blvd. $ 4,531,000 9 1/8% 11/30/12 20 year
--------------
Total $ 180,023,000
==============
<FN>
<F1>
The Company has a 60% general partnership interest in the Omni
Partnership. The Company's proportionate share of the aggregate principal
amount of the mortgage debt on the Omni is $34.7 million.
<F2>
Interest rate increases to 10.1% after the first five years of the loan.
<F3>
Interest only during years one through three. Thereafter, the Company will
pay equal monthly installments of principal and interest with amortization
based on a 30 year schedule.
<F4>
Scheduled principal payments of $25,000 per month for the period September
1997 to August 1998. Principal payments of $18,750 per month for the period
September 1998 to August 1999.
</FN>
</TABLE>
Item 3. Legal Proceedings
The Company is not presently subject to any material litigation nor, to
the Company's knowledge, is any litigation threatened against the Company,
other than routine actions for negligence or other claims and administrative
proceedings arising in the ordinary course of business, some of which are
expected to be covered by liability insurance and all of which collectively are
not expected to have a material adverse effect on the liquidity, results of
operations or business or financial condition of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of stockholders during the fourth
quarter of the year ended December 31, 1997.
Part II
Item 5. Market For Registrant's Common Equity and Related Stockholder
matters
The Company's common stock began trading on the New York Stock Exchange
("NYSE") on May 25, 1995, under the symbol "RA". The following table sets
forth the quarterly high and low closing sales prices per share of the common
stock reported on the NYSE and the distributions paid by the Company for each
respective quarter.
<TABLE>
<CAPTION>
High <F4> Low <F4> Distribution <F4>
-------------- -------------- --------------
<S> <C> <C> <C>
June 30, 1995 (from June 2, 1995) $12.313 $12.000 $0.0900 <F1>
September 30, 1995 $13.938 $12.250 $0.2891
December 31, 1995 $14.750 $12.938 $0.2891
March 31, 1996 $16.125 $14.563 $0.2891
June 30, 1996 $16.500 $14.625 $0.3000 <F2>
September 30, 1996 $18.563 $15.500 $0.3000
December 31, 1996 $21.338 $17.625 $0.3000
March 31, 1997 $23.563 $20.438 $0.3000
June 30, 1997 $23.000 $20.875 $0.3000
September 30, 1997 $27.000 $22.375 $0.3125 <F3>
December 31, 1997 $28.750 $24.063 $0.3125
<FN>
<F1>
The Company paid a distribution of $.09 per share of common stock on July 14,
1995, for the period June 2, 1995 (the closing date of the IPO) through June 30,
1995, which is approximately equivalent to a quarterly distribution of $.2891
and annual distribution of $1.154 per share of Common Stock.
<F2>
Commencing with the distribution for the quarter ended June 30, 1996, the Board
of Directors of the Company increasedthe quarterly distribution to $.30 per
share, which is equivalent to an annual distribution of $1.20 per share.
<F3>
Commencing with the distribution for the quarter ended June 30, 1997, the Board
of Directors of the Company increased the quarterly distribution to $.3125 per
share, which is equivalent to an annual distribution of $1.25 per share.
<F4>
Historical amounts adjusted to reflect a two-for-one stock split effective
April 15, 1997.
</FN>
</TABLE>
On September 21, 1994, prior to completion of the IPO, the Company was
capitalized with the issuance to each of Donald Rechler and Roger Rechler of 50
shares (pre-split) of common stock for a purchase price of $10.00 per
share(pre-split). In addition, on June 2, 1995 (the closing date of the IPO),
the Company completed a concurrent offering of 400,000 shares (pre-split) of
common stock to members of the Rechler family at the initial public offering
price of $24.25 per share (pre-split). The Company issued these shares in
reliance on an exception from registration under Section 4(2) of the Securities
Act of 1933.
<TABLE>
Item 6. Selected Financial Data
<CAPTION>
Reckson
Reckson Reckson Associates Reckson
Associates Associates Realty Corp. Group for the Reckson
Realty Corp. Realty Corp. for the Period Period Group for the
Year Ended Year Ended June 3, 1995 to January 1, Year Ended
December 31, December 31, December 31, 1995 to June December 31,
1997 1996 1995 <F1> 2, 1995 <F1> 1994 1993
------------ ------------ -------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Operating Data:
Revenues $ 153,395 $ 96,141 $ $38,455 $ 20,889 $ 56,931 $ 60,347
Total expenses 107,905 70,951 27,901 20,695 55,685 67,580
Income (loss before minority interests
and extraordinary items 45,490 25,190 10,554 194 1,246 (7,233)
Minority interests 8,624 6,768 3,067 --- --- ---
Extraordinary items - gain (loss)
(net of minority interests' share) (2,230) (895) (4,234) --- 4,434 41,190
Net income 34,636 17,527 3,253 194 5,680 33,957
Per Share Data:
Basic: <F2>
Income before extraordinary items $ 1.13 $ 0.92 $ 0.51 --- --- ---
Extraordinary items (loss) (0.07) (0.04) (0.29) --- --- ---
Net income 1.06 0.88 0.22 --- --- ---
Diluted: <F2a>
Income before extraordinary items $ 1.11 $ 0.91 $ 0.51 --- --- ---
Extraordinary items-(loss) (.07) (.04) (.29) --- --- ---
Diluted net income 1.04 .87 .22 --- --- ---
Balance Sheet Data: (period end)
Real estate, before accumulated
depreciation $ 1,015,282 $ 519,504 $ 290,712 --- $ 162,192 ---
Total assets 1,113,257 543,758 242,728 --- 132,035 ---
Mortgage notes payable 180,023 161,513 98,126 --- 180,286 ---
Credit Facility 210,250 108,500 40,000 --- --- ---
Senior Unsecured notes 150,000 --- --- --- --- ---
Market value of equity <F3> 1,141,592 653,606 303,943 --- --- ---
Total market capitalization including
debt <F3> and <F4> 1,668,800 921,423 426,798 --- --- ---
Other Data:
Funds from operations <F5> $ 69,548 $ 41,133 $ 17,246 --- --- ---
Total square feet (at end of period) 13,645 8,800 5,430 4,529 4,529 4,529
Number of properties (at end of period) 155 110 81 72 72 72
<FN>
<F1>
Represents certain financial information on a consolidated historical basis for
Reckson Associates Realty Corp., and on a combined historical basis for the
Reckson Group.
<F2>
Based on 32,727,000, 19,928,000 and 14,678,000 weighted average shares of
common stock outstanding for the years ended December 31, 1997, 1996 and for
the period June 3, 1995 to December 31, 1995, respectively.
<F2a>
Based on 33,260,000, 20,190,000 and 14,725,000 weighted average shares of
common stock outstanding for the years ended December 31, 1997, 1996 and for
the period June 3, 1995 to December 31, 1995, respectively.
<F3>
Based on the market value of 44,988,846, 31,119,364 and 20,690,448 shares of
common stock and operating partnership units at December 31, 1997, 1996 and
1995, respectively (based on a share price of $25.38, $ 21.13 and $14.69 at
December 31, 1997, 1996 and 1995, respectively).
<F4>
Debt amount is net of minority partners' proportionate share of Omni debt plus
the Company's share of joint venture debt.
<F5>
See "Management's Discussion and Analysis" for a discussion of funds from
operations.
<F6>
The earnings per share amounts prior to 1997 have been restated as required to
comply with Statement of Financial Accounting Standards No. 128, Earnings Per
Share. For further discussion of earnings per share and the impact of
Statement No. 128, see the notes to the consolidated financial statements.
</FN>
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion should be read in conjunction with the historical
financial statements of Reckson Associates Realty Corp. (the "Company") and the
combined financial statements of the Reckson Group and related notes.
Overview and Background
The Reckson Group, the predecessor to the Company (the "Predecessor"), was
engaged in the ownership, management, operation, leasing and development of
commercial real estate properties, principally office and industrial buildings,
and also owned certain undeveloped land located primarily on Long Island, New
York. On June 2, 1995, following completion of the Initial Public Offering (the
"IPO") and the related formation transactions, the Company owned or had an
interest in 72 properties (including one joint venture property) and succeeded
to the Reckson Group's real estate business.
The Company owns all of the interests in its real estate properties
through Reckson Operating Partnership, L.P. (the "Operating Partnership") or
Reckson FS Limited Partnership. At December 31, 1997, the Company owned 155
properties (the "Properties"), (including three joint venture properties)
encompassing approximately 13.6 million square feet. The Properties include 58
suburban office properties containing approximately 7.6 million square feet, 95
industrial properties containing approximately 6.0 million square feet and two
retail properties containing 20,000 square feet.
Since the IPO, the Company has acquired or contracted to acquire
approximately $804 million of Class A suburban office and industrial properties
encompassing approximately 10.7 million square feet located in the New York
City Tri-State Area of Long Island, Westchester, Southern Connecticut and
Northern New Jersey. In that regard, the Company has acquired 13 office
Properties and 32 industrial Properties encompassing approximately 2.1 and 2.5
million square feet, respectively, located on Long Island for an aggregate
purchase price of approximately $302 million. In February 1996, the Company
established its Westchester Division with the acquisition of an eight building
935,000 square foot Class A office portfolio and associated management and
construction operations for an aggregate purchase price of approximately $79
million. Since its initial investment in Westchester the Company has acquired
11 office properties encompassing approximately 1.4 million square feet and
three industrial properties encompassing approximately 163,000 square feet for
an aggregate purchase price of approximately $130.9 million. In October 1996,
the Company established its Southern Connecticut Division with the purchase of
Landmark Square, a six building office complex encompassing approximately
800,000 square feet located in Stamford, Connecticut for an aggregate purchase
price of approximately $77 million. Since its initial investment in Southern
Connecticut the Company has acquired one industrial property encompassing
452,414 square feet for a purchase price of approximately $27.0 million. In
May 1997, the Company acquired five Class A suburban office properties
encompassing approximately 496,000 square feet located in Northern New Jersey
for an aggregate purchase price of approximately $56.9 million and, in
connection with this acquisition, established its Northern New Jersey Division.
Since its initial investment in Northern New Jersey the Company has acquired
eight office properties encompassing approximately 976,000 square feet and six
industrial properties encompassing approximately 903,000 square feet for an
aggregate purchase price of approximately $131.3 million. Additionally, the
Company has invested approximately $31.5 million for approximately 74 acres of
land located in Long Island, 32 acres of land located in Westchester and 268
acres of land located in New Jersey which allows for approximately 3.5 million
square feet of future development opportunities. In addition, the Company has
invested approximately $72.5 million in certain mortgage indebtedness
encumbering five Class A office properties on Long Island encompassing
approximately 927,000 square feet, a 400 acre parcel of land and a 586,000
square foot industrial property in New Jersey. In October 1997, the Company
entered into an agreement to invest $150 million in the Morris Companies, a
New Jersey developer and owner of "Big Box" warehouse facilities. The Morris
Companies' properties include 23 industrial buildings encompassing
approximately 4.0 million square feet. The Company's investment will be used
to acquire a controlling interest in Reckson Morris Operating Partnership, L.P.
("RMI"). In connection with the transaction the Morris Companies will
contribute 100% of their interests in certain industrial properties to RMI in
exchange for operating partnership units in RMI. On January 6, 1998, the
Company acquired an approximate 70% interest in RMI for approximately $65
million. In addition, at December 31, 1997, the Company had advanced
approximately $12 million to the Morris Companies primarily to fund certain
construction costs related to development properties to be contributed to RMI.
During 1997, the Company formed Reckson Service Industries, Inc. ("RSI")
and Reckson Strategic Venture Partners, LLC ("RSVP"). RSI will serve as the
managing member of RSVP. RSI will invest in operating companies that generally
will provide commercial services to properties owned by the Company and its
tenants and third parties. Since RSI will not be making REIT qualifying
investments, its shares will be distributed to the Company's shareholders and
trade as a separate public company. RSVP was formed to provide the Company
with a "research and development" vehicle to invest in alternative real estate
sectors. RSVP will invest primarily in real estate and real estate related
operating companies generally outside of the Company's core office and
industrial focus. RSVP's strategy is to identify and acquire interests in
established entrepreneurial enterprises with experienced management teams in
market sectors which are in the early stages of their growth cycle or offer
unique circumstances for attractive investments as well as a platform for
future investments. The research and development vehicle will enable the
Company to minimize its investment risks during the early stages of an
investment. The vehicle permits the Company to monitor the long-term potential
for each investment. As later stage capital is required, the Company will
determine the prudence of additional investment and the potential for
incorporating it as a core business line. Following the spin off of RSI the
Company will make investments with RSVP on a joint venture basis. To
facilitate investment by RSVP, the Company has committed $100 million of
initial capital. In addition, RSVP has obtained a $200 million preferred
equity facility from Paine Webber Real Estate Securities ("PWRES") and a
PWRES/George Soros sponsored fund has agreed in principal to join the
investment. At December 31, 1997, the Company had made investments in or
loans to RSI and RSVP aggregating approximately $4.3 million and $7.4 million,
respectively.
The market capitalization of the Company, based on the market value of the
44,988,846 issued and outstanding shares of Common Stock and Operating
Partnership Units ("Units") (based on a share price of $25.38 as of December
31, 1997) and the $527 million (net of minority partners' 40% interest in debt
encumbering the Omni and including the Company's share of joint venture debt)
of debt outstanding at December 31, 1997, was approximately $1.7 billion. As a
result, the Company's total debt to market capitalization ratio at December 31,
1997 equaled 31.6%.
Results of Operations
For discussion purposes, the results of operations for the year ended
December 31, 1995 combine the operating results of the Predecessor (excluding
results of properties not transferred to the Company) for the period January 1,
1995 to June 2, 1995.
The Company's total revenues increased by $57.3 million or 60% from 1996
to 1997 and $36.8 million or 62% from 1995 to 1996. The growth in total
revenues is substantially attributable to the Company's acquisition of 46
properties comprising approximately 4.9 million square feet in 1997 and 29
properties comprising approximately 3.3 million square feet in 1996 and nine
properties comprising approximately 900,000 square feet in 1995. Property
operating revenues, which include base rents and tenant escalations and
reimbursements ("Property Operating Revenues") increased by $51 million or 55%
from 1996 to 1997 and by $35.6 million or 62% from 1995 to 1996. The 1997
increase in Property Operating Revenues is comprised of $2.1 million
attributable to increases in rental rates and changes in occupancies and $48.9
million attributable to acquisitions of properties. The 1996 increase in
Property Operating Revenues is comprised of $6.6 million attributable to
increases in rental rates and changes in occupancies and $29 million
attributable to acquisitions of properties. The remaining balance of the
increase in total revenues in 1997 is primarily attributable to interest income
on the Company's investments in mortgage notes and notes receivable. The
increase from 1996 to 1997 was offset by a decrease in the equity in earnings
of service companies as a result of the management and construction companies
focusing most of their resources on the Company's core portfolio and
redevelopment opportunities rather than third party services. The Company's
base rent was increased by the impact of the straight-line rent adjustment by
$4.5 million in 1997, $3.8 million in 1996 and $2.8 million in 1995.
Property operating expenses, real estate taxes and ground rents ("Property
Expenses") increased by $16.8 million from 1996 to 1997 and by $12.9 million
from 1995 to 1996. These increases are primarily due to the acquisition of
properties. Gross operating margins (defined as Property Operating Revenues
less Property Expenses, taken as a percentage of Property Operating Revenues)
for 1997, 1996 and 1995 were 64.7%, 63.4% and 63.2%, respectively. The
increases in gross operating margins reflects increases realized in rental
rates, the Company's ability to realize certain operating efficiencies as a
result of operating a larger portfolio of properties with concentrations of
properties in office and industrial parks or in its established sub-markets,
and to a lesser extent increased ownership of net leased properties.
Marketing, general and administrative expenses were $8.3 million in 1997,
$5.9 million in 1996 and $3.7 million in 1995. The increase in marketing,
general and administrative expenses is due to the increased costs of managing
the acquisition properties, the cost of opening and maintaining the Company's
Westchester, Southern Connecticut and Northern New Jersey divisions and the
increase in corporate management and administrative costs associated with the
growth of the Company. Marketing, general and administrative expenses as a
percentage of total revenues were 5.4% in 1997, 6.1% in 1996 and 6.3% in 1995.
Interest expense was $21.6 million in 1997, $13.3 million in 1996 and
$12.9 million in 1995. The increase of $8.3 million from 1996 to 1997 is
attributable to an increase in mortgage debt including a $50 million mortgage
note incurred in connection with the acquisition of Landmark Square in October
1996, the refinancing of Omni in the amount of $58 million in August 1997,
increased interest cost attributable to an increased average balance on the
Company's credit facilities and interest on the Company's $150 million of
senior unsecured notes (the "Senior Unsecured Notes"). The weighted average
balance outstanding on the Company's credit facilities was $103.2 million for
1997, $71.2 million for 1996 and $24.8 million for the period from June 3, 1995
to December 31, 1995.
Included in amortization expense is amortized finance costs of $.80
million in 1997, $.53 million in 1996 and $.52 million for the period June 3,
1995 to December 31, 1995. The increase of $.27 million from 1996 to 1997 was
the result of the amortization of financing costs associated with the Unsecured
Credit Facility, the Landmark Square mortgage, the Omni refinanced mortgage and
the Senior Unsecured Notes.
Extraordinary items, net of minority interest resulted in a $2.2 million
loss in 1997, a $.9 million loss in 1996 and a $4.2 million loss for the period
June 3, 1995 to December 31, 1995. In 1997, the extraordinary items, net of
minority interest, was attributable to the write off of certain deferred loan
costs incurred in connection with the Company's secured credit facility which
was terminated in April 1997. In 1996, the extraordinary item, net of minority
interest, was attributable to the write-off of certain deferred loan costs
incurred in connection with the secured credit facility which was substantially
modified and restated in February 1996.
Liquidity and Capital Resources
Summary of Cash Flows
Net cash provided by operating activities totaled $70.6 million in 1997,
$39.4 million in 1996 and $18.6 million in 1995. Increases for each year were
primarily attributable to the growth in cash flow provided by the acquisition
of properties and to a lesser extent from interest income from mortgage notes
and notes receivable.
Net cash used by investing activities totaled $547 million in 1997, $273.7
million in 1996 and $79.0 million in 1995. Cash used in investing activities
related primarily to investments in real estate properties including
development costs and investments in mortgage notes and notes receivable.
Net cash provided by financing activities totaled $485.4 million in 1997,
$240 million in 1996 and $63.2 million in 1995. Cash provided by financing
activities during 1997 and 1996 was primarily attributable to proceeds from
public stock offerings and draws on the Company's credit facilities and
additionally in 1997 proceeds from the issuance of Senior Unsecured Notes.
Investing Activities
During 1997, the Company acquired (i) on Long Island, five office
properties encompassing an aggregate of approximately 881,000 square feet for
approximately $87.5 million and 15 industrial properties encompassing
approximately 968,000 square feet for approximately $43.5 million; (ii) in
Westchester, eight office properties encompassing approximately 830,000 square
feet for approximately $109.4 million and three industrial properties
encompassing approximately 163,000 square feet for approximately $8.0 million;
(iii) in Connecticut, one industrial property encompassing 452,000 square feet
for approximately $27.0 million and (iv) in Northern New Jersey, five Class A
office properties including Executive Hill Office Park encompassing
approximately 496,000 square feet for approximately $56.9 million.
Additionally, in New Jersey the Company acquired eight office properties
encompassing approximately 1.5 million square feet for $153 million and one
industrial property encompassing approximately 128,000 square feet for $2.8
million. During 1997, the Company invested $29 million in mortgage notes
receivable encumbering one Class A office property, one industrial property and
a 400 acre parcel of land. In addition, on March 13, 1997, the Company loaned
$17 million to its minority partner in Omni, its flagship Long Island office
property, and effectively increased its economic interest in the property
owning partnership.
Financing Activities
On January 7, 1997, the Operating Partnership issued 101,902 (pre split)
Units in connection with the acquisition of 110 Bi-County Boulevard, a 147,281
square foot office property located in Farmingdale, New York.
On March 12, 1997, the Company completed a public stock offering and sold
4,945,000 common shares at a price of $45.25 (pre-split) (including 645,000
common shares related to the exercise of the underwriters over allotment
option). Net proceeds to the Company were approximately $212 million. The net
proceeds of the offering were used to acquire properties and to repay credit
facility borrowings.
On April 30, 1997, the Company repaid and replaced borrowings under its
existing $150 million secured credit facility with proceeds from the $250
million unsecured credit facility.
During August 1997, the Company refinanced approximately $43 million of
mortgage debt on its Omni office property with a $58 million fixed rate
mortgage loan. The loan which matures on September 1, 2007 has a fixed rate of
interest of 7.72%.
On August 28, 1997, the Company sold $150 million of 7.2% Senior Unsecured
Notes due August 2007. The net proceeds of the Senior Unsecured Notes were
used to repay borrowings under the unsecured credit facility and for
acquisitions of properties.
On December 5, 1997, the Company completed a public stock offering and
sold 3,081,177 common shares at a price of $26 per share. Net proceeds from
the offering were approximately $79.7 million. Net proceeds from the offering
were used to acquire properties and to repay borrowings under the unsecured
credit facility.
During 1997, the Company paid dividends of $1.54 per share (representing
dividends for five quarters).
On February 18, 1998, the Company completed a public stock offering and
sold 791,152 common shares at a price of $25.44 per share. Net proceeds from
the offering were approximately $19.1 million and were used to fund
acquisitions of properties and repay borrowings under the unsecured credit
facilities.
Capitalization
The Company's indebtedness at December 31, 1997 totaled $527 million (net
of the minority partners' 40% interest in Omni's debt and including the
Company's share of joint venture debt of approximately $13 million) and was
comprised of $210.3 million outstanding under the Unsecured Credit Facility,
$150 million of Senior Unsecured Notes and $167 million of mortgage
indebtedness with an average interest rate of approximately 7.71% and an
average maturity of approximately 7.1 years. Based on the Company's total
market capitalization of approximately $1.70 billion at December 31, 1997,
(calculated at a $25.38 stock price at December 31, 1997 and assuming the
conversion of the 7,218,688 Units and $527 million of debt) the Company's debt
represented 31.6% of its total market capitalization.
On April 30, 1997, the Company obtained a three-year $250 million
unsecured credit facility from a bank group led by Chase Manhattan Bank and
Union Bank of Switzerland (the "Unsecured Credit Facility"). The Company's
ability to borrow thereunder 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 Unsecured 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 1.50%, based on the Company's leverage ratio.
The Unsecured Credit Facility replaced the Company's $150 million secured
credit facility. The Company utilizes the Unsecured Credit Facility primarily
to finance the acquisitions of properties and other real estate investments,
fund its development activities and for working capital purposes. At December
31, 1997, the Company had availability under the Unsecured Credit Facility to
borrow an additional $35.75 million (net of $4.0 million of outstanding undrawn
letters of credit).
On January 2, 1998, the Company obtained a $200 million unsecured credit
facility (the "Bridge Facility") which matures on April 1, 1998. The Bridge
Facility was provided by the two lead members of the Unsecured Credit Facility
bank group and serves as interim financing while the Company seeks to expand
the availability under the Unsecured Credit Facility.
Historically, rental revenue has been the principal source of funds to pay
operating expenses, debt service and capital expenditures, excluding non-
recurring capital expenditures of the Company. In addition, construction,
management, maintenance, leasing and property management fees have provided
sources of cash flow. The Company expects to meet its short term liquidity
requirements generally through its net cash provided by operating activities
along with the Unsecured Credit Facility previously discussed. The Company
expects to meet certain of its financing requirements through long-term secured
and unsecured borrowings and the issuance of debt securities and additional
equity securities of the Company. The Company will refinance existing mortgage
indebtedness or indebtedness under the Unsecured Credit Facility at maturity or
retire such debt through the issuance of additional debt securities or
additional equity securities. The Company anticipates that the current balance
of cash and cash equivalents and cash flows from operating activities, together
with cash available from borrowings and equity offerings, will be adequate to
meet the capital and liquidity requirements of the Company in both the short
and long-term.
In connection with the acquisition of Landmark Square, the Company plans
to incur approximately $12 million of capital improvements to refit the
building to portfolio standards. At December 31, 1997, approximately $3.7
million had been incurred in connection with the refit of this building.
In order to qualify as a REIT for federal income tax purposes, the Company
is required to make distributions to its stockholders of at least 95% of REIT
taxable income. The Company expects to use its cash flow from operating
activities for distributions to stockholders and for payment of expenditures.
The Company intends to invest amounts accumulated for distribution in short-
term investments.
Inflation
Certain office leases provide for fixed base rent increases or indexed
escalations. In addition, certain office leases provide for separate
escalations of real estate taxes and electric costs over a base amount. The
industrial leases also generally provide for fixed base rent increases, direct
pass through of certain operating expenses and separate real estate tax
escalation over a base amount. The Company believes that inflationary increases
in expenses will generally be offset by contractual rent increases and expense
escalations described above.
The Unsecured Credit Facility bears interest at a variable rate, which
will be influenced by changes in short-term interest rates, and is sensitive to
inflation.
Impact of Year 2000
Some of the Company's older computer programs were written using two
digits rather than four to define the applicable year. As a result, those
computer programs have time-sensitive software that recognizes a date using
"00" as the year 1900 rather than the year 2000. This could cause a system
failure or miscalculation causing disruptions of operations, including, among
other things, a temporary inability to process transactions, or engage in
similar normal business activities.
The Company has completed as assessment to modify or replace portions of
its software so that its computer systems will function properly with respect
to dates in the year 2000 and thereafter. Currently, the entire property
management system is year 2000 compliant and has been thoroughly tested. Since
the Company's accounting software is maintained and supported by a third party,
the total year 2000 project cost is estimated to be minimal.
The project is estimated to be completed not later than September 30,
1998, which is prior to any anticipated impact on its operating systems.
Additionally, the Company has received assurances from its contractors that all
of the Company's building management and mechanical systems are currently year
2000 compliant or will be made compliant prior to any impact on those systems.
The Company believes that with modifications to existing software and
conversions to new software, the year 2000 Issue will not pose significant
operational problems for its computer systems. However, if such modifications
and conversions are not made, or are not completed timely, the year 2000 Issue
could have a material impact on the operations of the Company.
The costs of the project and the date on which the Company believes it
will complete the year 2000 modifications are based on management's best
estimates, which were derived utilizing numerous assumptions of future events,
including the continued availability of certain resources and other factors.
However, there can be no guarantee that these estimates will be achieved and
actual results could differ materially from those anticipated. Specific
factors that might cause such material differences include, but are not limited
to, the availability and costs of personnel trained in this area, the ability
to locate and correct all relevant computer codes, and similar uncertainties.
Funds From Operations
Management believes that funds from operations ("FFO") is an appropriate
measure of performance of an equity REIT. FFO is defined by the National
Association of Real Estate Investment Trusts (NAREIT) as net income or loss,
excluding gains or losses from debt restructurings and sales of properties,
plus depreciation and amortization, and after adjustments for unconsolidated
partnerships and joint ventures. FFO does not represent cash generated from
operating activities in accordance with generally accepted accounting
principles and is not indicative of cash available to fund cash needs. FFO
should not be considered as an alternative to net income as an indicator of the
Company's operating performance or as an alternative to cash flow as a measure
of liquidity. (See Selected Financial Data). In March 1995, NAREIT issued a
"White Paper" analysis to address certain interpretive issues under its
definition of FFO. The White Paper provides that amortization of deferred
financing costs and depreciation of non-rental real estate assets are no longer
to be added back to net income to arrive ad FFO.
Since all companies and analysts do not calculate FFO in a similar
fashion, the Company's calculation of FFO presented herein may not be
comparable to similarly titled measures as reported by other companies.
<TABLE>
The following table presents the Company's FFO calculation (in thousands):
<CAPTION>
Pro forma
Year Year June 3, Year <F1>
Ended Ended 1995 to Ended
December December December December
31, 1997 31 1996 31, 1995 31, 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Income before limited partners' interest in
Operating Partnership and Extraordinary items $ 44,683 $ 24,382 $ 10,370 $ 17,331
Less:
Extraordinary loss, net of limited partners' interest
in Operating Partnership of $578, $364 and $1,788,
respectively 2,230 895 4,234 4,234
Limited Partners' minority interest in
Operating Partnership 7,817 5,960 2,883 4,719
-------------- -------------- -------------- --------------
Net Income 34,636 17,527 3,253 8,378
Adjustment for Funds From Operations
Add:
Limited Partners' minority interest in
Operating Partnership 7,817 5,960 2,883 4,719
Depreciation and Amortization 26,834 17,429 7,233 12,369
Minority interests in consolidated partnership 807 808 184 445
Extraordinary loss, net of limited partners' interest in
Operating Partnership of $578, $364 and
$1,788 respectively 2,230 895 4,234 4,234
Less:
Gain on sale of property 672 --- --- ---
Amount distributed to minority partners in
consolidated partnership 2,104 1,486 541 1,015
-------------- -------------- -------------- --------------
Funds From Operations (FFO) $ 69,548 $ 41,133 $ 17,246 $ 29,130
============== ============== ============== ==============
Weighted Average Shares/Units Outstanding <F2> 39,743 26,431 20,326 20,690
============== ============== ============== ==============
<FN>
<F1>
Pro Forma amounts have been prepared as if the IPO and the formation
transactions occurred on January 1, 1995.
<F2>
Assumes conversion of limited partnership units of the Operating Partnership.
</FN>
</TABLE>
Item 8. Financial Statements and Supplemental Data
The response to this item is included in a separate section of this Form
10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
Part III
Item 10. Directors and Executive Officers of the Registrant
The information contained in the section captioned "Proposal I: Election
of Directors" of the Company's definitive proxy statement for the 1998 annual
meeting of stockholders is incorporated herein by reference.
Item 11. Executive Compensation
The information contained in the section captioned "Executive
Compensation" of the Company's definitive proxy statement for the 1998 annual
meeting of stockholders is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information contained in the section captioned "Principal and
Management Stockholders" of the Company's definitive proxy statement for the
1998 annual meeting of stockholders is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
The information contained in the section captioned "Certain Relationships
and Related Transactions" of the Company's definitive proxy statement for the
1998 annual meeting of the stockholders is incorporated herein by reference.
Part IV
Item 14. Financial Statements and Schedules, Exhibits and Reports on Form 8-K
(a)(1 and 2) Financial Statements and Schedules
The following consolidated financial information is included as a separate
section of this annual report on Form 10-K:
Reckson Associates Realty Corp. and the Reckson Group
Report of Independent Auditors ..............................................
Consolidated Balance Sheets as of December 31, 1997 and December 31, 1996....
Consolidated Statements of Income for the years ended December 31, 1997, 1996
and for the period from June 3, 1995 to December 31, 1995 and the Combined
Statement of Income for the period January 1, 1995 to June 2, 1995...........
Consolidated Statements of Stockholders' Equity for the years ended December
31, 1997, 1996 and for the period from June 3, 1995 to December 31, 1995 and
the Combined Statement of Owners' (Deficit) for the period from January 1,
1995 to June 2, 1995.........................................................
Consolidated Statements of Cash Flows for the years ended December 31, 1997,
1996 and for the period from June 3, 1995 to December 31, 1995 and the
Combined Statement of Cash Flows for the period January 1, 1995 to June 2,
1995.........................................................................
Notes to Financial Statements ...............................................
Schedule III Real Estate and Accumulated Depreciation........................
All other schedules are omitted since the required information is not
present in amounts sufficient to require submission of the schedule or because
the information required is included in the financial statements and notes
thereto.
(3) Exhibit Index
Exhibit
Number Description
- ------- --------------
3.1* Articles of Incorporation of Registrant
3.2** By-Laws of Registrant
3.3** Amended and Restated Articles of Incorporation
4.1* Specimen Share Certificate
10.1** Amended and Restated Agreement of Limited Partnership of Reckson
Operating Partnership, L.P.
10.2 Third Amended and Restated Agreement of Limited Partnership of Omni
Partners, L.P.
10.3** Employment and Non-Competition Agreement between Registrant and
Donald Rechler
10.4** Employment and Non-Competition Agreement between Registrant and
Scott Rechler
10.5** Employment and Non-Competition Agreement between Registrant and
Mitchell Rechler
10.6** Employment and Non-Competition Agreement between Registrant and
Gregg Rechler
10.7** Non-Competition Agreement between Registrant and Roger Rechler
10.8** Employment and Non-Competition Agreement between Registrant and
J. Michael Maturo
10.9** Purchase Option Agreements relating to the Reckson Option Properties
10.10** Purchase Option Agreements relating to the Other Option Properties
10.11*** Amended 1995 Stock Option Plan
10.12**** Registrant's Unsecured Credit Facility
10.13*** 1996 Employee Stock Option Plan
10.14** Executive Center Leases
10.15* Ground Leases for certain of the Properties
10.16** Amended and Restated Agreement of Limited Partnership of Reckson
FS Limited Partnership
10.17** Indemnity Agreement relating to 100 Oser Avenue
10.18** Contribution Agreement by and among Registrant, Reckson Operating
Partnership, L.P. and Tarrytown Corporate Center, Tarrytown
Corporate Center IV, L.P., Tarrytown Corporate Center II, Crest
Realties, 2 Church Street Associates, JAH Realties, and Jon
Halpern
10.19 Amended and Restated 1997 Stock Option Plan
10.20 1998 Stock Option Plan
10.21 Amended and Restated Agreement of Limited Partnership of Reckson
Morris Operating Partnership, L.P.
10.22 Registrant's Unsecured Bridge Facility
10.23 Note Purchase Agreement for the Senior Unsecured Notes
10.24 Severance Agreement between Registrant and Donald Rechler
10.25 Severance Agreement between Registrant and Scott Rechler
10.26 Severance Agreement between Registrant and Mitchell Rechler
10.27 Severance Agreement between Registrant and Gregg Rechler
10.28 Severance Agreement between Registrant and Roger Rechler
10.29 Severance Agreement between Registrant and J. Michael Maturo
12.1 Statement of Ratios of Earnings to Fixed Charges
21.1 Statement of Subsidiaries
23.0 Consent of Independent Auditors
24.1 Powers of Attorney (included in Part IV of this Form 10-K)
27.0 Financial Data Schedule
27.1 Restated Financial Data Schedule for the 6 months ended June 30,
1996 reflecting the effect of FASB #128, Earnings Per Share.
27.2 Restated Financial Data Schedule for the 9 months ended September
30, 1996 reflecting the effect of FASB #128, Earnings Per Share.
27.3 Restated Financial Data Schedule for the year ended December 31,
1996 reflecting the effect of FASB #128, Earnings Per Share.
27.4 Restated Financial Data Schedule for the 3 months ended March 31,
1997 reflecting the effect of FASB #128, Earnings Per Share.
27.5 Restated Financial Data Schedule for the 6 months ended June 30,
1997 reflecting the effect of FASB #128, Earnings Per Share.
27.6 Restated Financial Data Schedule for the 9 months ended September
30, 1997 reflecting the effect of FASB #128, Earnings Per Share.
* Previously filed as an exhibit to Registration Statement on Form S-11
(No. 33-84324) and incorporated herein by reference.
** Previously filed as an exhibit to Registration Statement on Form S-11
(No. 333-1280) and incorporated herein by reference.
*** Previously filed as an exhibit to the Company's Form 8-K report filed
with the SEC on November 25, 1996 and incorporated herein by reference.
**** Previously filed as an exhibit to the Company's Form 8-K report filed
with the SEC on May 15, 1997 and incorporated herein by reference.
(b) Reports on Form 8-K
On September 9, 1997 the Company filed a report on Form 8-K relating to
the acquisition of 400 Garden City Plaza, Garden City, New York.
On October 21, 1997, the Company filed a report on Form 8-K announcing
its contract to invest $150,000,000 and acquire a controlling interest in
the Morris Companies.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized on March 24, 1998.
Reckson Associates Realty Corp.
By: /s/ Donald J. Rechler
(Donald J. Rechler)
Chairman of the Board, and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that we, the undersigned officers and
directors of Reckson Associates Realty Corp., hereby severally constitute Scott
H. Rechler, Mitchell D. Rechler and J. Michael Maturo, and each of them singly,
our true and lawful attorneys with full power to them, and each of them singly,
to sign for us and in our names in the capacities indicated below, the Form 10-
K filed herewith and any and all amendments to said Form 10-K, and generally to
do all such things in our names and in our capacities as officers and directors
to enable Reckson Associates Realty Corp. to comply with the provisions of the
Securities Exchange Act of 1934, and all requirements of the Securities and
Exchange Commission, hereby ratifying and confirming our signatures as they may
be signed by our said attorneys, or any of them, to said Form 10-K and any and
all amendments thereto.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Name Title Date
/s/ Donald J. Rechler Chairman of the Board, Chief Executive
- ------------------------ Officer and Director (principal executive
(Donald J. Rechler) officer) March 24, 1998
/s/ Scott Rechler President Chief Operating Officer
- ------------------------ and Director
(Scott Rechler) March 24, 1998
/s/ Roger M. Rechler Vice Chairman of the Board and
- ------------------------ Director
(Roger M. Rechler) March 24, 1998
/s/ J. Michael Maturo Executive Vice President, Treasurer
- ------------------------ and Chief Financial Officer (principal
(J. Michael Maturo) financial officer and principal March 24, 1998
accounting officer)
/s/ Mitchell D. Rechler Executive Vice President and
- ------------------------ Director
(Mitchell D. Rechler) March 24, 1998
/s/ Harvey R. Blau Director
- ------------------------
(Harvey R. Blau) March 24, 1998
/s/ Leonard Feinstein Director
- ------------------------
(Leonard Feinstein) March 24, 1998
/s/ John V.N. Klein Director
- ------------------------
(John V.N. Klein) March 24, 1998
/s/ Conrad Stephenson Director
- ------------------------
(Conrad Stephenson) March 24, 1998
/s/ Herve A. Kevenides Director
- ------------------------
(Herve A. Kevenides) March 24, 1998
/s/ Jon L. Halpern Director
- ------------------------
(Jon L. Halpern) March 24, 1998
/s/ Lewis S. Ranieri Director
- ------------------------
(Lewis S. Ranieri) March 24, 1998
Report of Independent Auditors
Board of Directors and Stockholders
Reckson Associates Realty Corp.
We have audited the accompanying consolidated balance sheets of Reckson
Associates Realty Corp. as of December 31, 1997 and 1996, and the related
consolidated statements of income, stockholders' equity, and cash flows for the
years then ended and for the period from June 3, 1995 (commencement of
operations) to December 31, 1995 and the related combined statements of income,
owners' (deficit) and cash flows for the period January 1, 1995 to June 2, 1995
of the Reckson Group. We have also audited the financial statement schedule
listed in the index at item 14(a). These financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Reckson
Associates Realty Corp. at December 31, 1997 and 1996, and the consolidated
results of operations and cash flows for the years then ended and for the
period June 3, 1995 (commencement of operations) to December 31, 1995 and the
combined results of operations and cash flows for the period January 1, 1995 to
June 2, 1995 of the Reckson Group in conformity with generally accepted
accounting principles. Also, in our opinion, the financial statement schedule
referred to above, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
ERNST & YOUNG LLP
New York, New York
February 13, 1998,
except for Note 14 as
to which the date is February 18, 1998.
<TABLE>
Reckson Associates Realty Corp.
Consolidated Balance Sheets
(in thousands, except share amounts)
<CAPTION>
December 31,
1997 1996
------------- -------------
<S> <C> <C>
Assets
Commercial real estate properties, at cost
(Notes 2,3, 5, 7 and 8 )
Land $ 138,526 $ 45,259
Buildings and improvements 818,229 457,403
Developments in progress:
Land 29,309 5,637
Development costs 25,164 8,469
Furniture, fixtures and equipment 4,054 2,736
------------- -------------
1,015,282 519,504
Less accumulated depreciation (111,068) (88,602)
------------- -------------
904,214 430,902
------------- -------------
Investments in real estate joint ventures 7,223 5,437
Investment in mortgage notes and notes
receivable (Note 8) 104,509 51,837
Cash and cash equivalents (Note 12) 21,828 12,688
Tenant receivables 4,975 1,732
Affiliate receivables (Note 7) 18,090 3,826
Deferred rent receivable 14,973 12,573
Prepaid expenses and other assets (Note 7) 13,705 6,225
Contract and land deposits and pre-acquisition costs 7,559 7,100
Deferred lease and loan costs, less accumulated
amortization of $14,844 (1997) and $12,915 (1996) 16,181 11,438
------------- -------------
Total Assets $ 1,113,257 $ 543,758
============= =============
Liabilities
Mortgage notes payable (Note 2) $ 180,023 $ 161,513
Credit facilities (Note 3) 210,250 108,500
Senior unsecured notes ( Note 4) 150,000 ---
Accrued expenses and other liabilities (Note 5) 30,987 15,868
Dividends and distributions payable 120 9,442
Affiliate payables (Note 7) 807 502
------------- -------------
Total Liabilities 572,187 295,825
------------- -------------
Minority interest in consolidated partnership 6,655 9,187
Limited Partners' minority interest in Operating
Partnership 85,750 51,879
------------- -------------
92,405 61,066
------------- -------------
Commitments and other comments
(Notes 9, 10, 12 and 14) --- ---
Stockholders' Equity (Note 6):
Preferred Stock, $.01 par value, 25,000,000 shares
authorized none issued or outstanding --- ----
Common Stock, $.01 par value, 100,000,000
shares authorized, 37,770,158 and 24,356,354,
shares issued and outstanding, respectively 378 244
Additional paid in capital 448,287 186,623
------------- -------------
Total Stockholders' Equity 448,665 186,867
------------- -------------
Total Liabilities and Stockholders' Equity $ 1,113,257 $ 543,758
============= =============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<TABLE>
Reckson Associates Realty Corp.
Consolidated Statement of Income
And Reckson Group
Combined Statements of Income
(in thousands, except share amounts)
<CAPTION>
Reckson Reckson Reckson Reckson
Associates Associates Associates Group for
Realty Corp Realty Corp Realty Corp the Period
for the Year for the Year for the Period January 1,
Ended Ended June 3, 1995 to 1995 to
December December December 31, June 2,
31, 1997 31, 1996 1995 1995
-------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Revenues (Note 10):
Base rents $ 128,778 $ 82,150 $ 32,661 $ 16,413
Tenant escalations and reimbursements 14,981 10,628 5,246 2,907
Construction revenues - net --- --- --- 432
Management revenues --- --- --- 589
Equity in earnings of service companies 55 1,031 100 ---
Equity in earnings of real estate joint ventures 459 266 --- ---
Interest income on mortgage notes and notes
receivable 5,437 --- --- ---
Investment and other income (Note 8) 3,685 2,066 448 548
-------------- -------------- --------------- --------------
Total Revenues 153,395 96,141 38,455 20,889
-------------- -------------- --------------- --------------
Expenses:
Property operating expenses 28,943 18,959 7,144 3,985
Real estate taxes 20,579 13,935 5,755 3,390
Ground rents 1,269 1,107 579 234
Marketing, general and administrative 8,292 5,949 1,859 1,858
Interest 21,585 13,331 5,331 7,622
Depreciation and amortization 27,237 17,670 7,233 3,606
-------------- -------------- --------------- --------------
Total Expenses 107,905 70,951 27,901 20,695
-------------- -------------- --------------- --------------
Income before minority interests and extraordinary
items 45,490 25,190 10,554 194
Minority partners' interest in consolidated partnership
income (807) (808) (184) ---
Limited partners' minority interest in Operating
Partnership income (7,817) (5,960) (2,883) ---
-------------- -------------- --------------- --------------
Income before extraordinary items 36,866 18,422 7,487 194
Extraordinary items (loss) on extinguishment of
debts, net of Limited Partners' minority interest in
Operating Partnership share of $578, $364 and $1,788,
respectively, (Notes 1 and 3) (2,230) (895) (4,234) ---
-------------- -------------- --------------- --------------
Net income $ 34,636 $ 17,527 $ 3,253 $ 194
-------------- -------------- --------------- --------------
Basic net income per common share:
Income before extraordinary items $ 1.13 $ 0.92 $ 0.51
Extraordinary items(loss)on extinguishment of debts (0.07) (0.04) (0.29)
-------------- -------------- ---------------
Net income per common share $ 1.06 $ 0.88 $ 0.22
-------------- -------------- ---------------
Weighted average common shares outstanding 32,727,000 19,928,000 14,678,000
-------------- -------------- ---------------
Diluted net income per common shares
(Notes 1 and 6) $ 1.04 $ 0.87 $ 0.22
============== ============== ===============
Diluted weighted average common share
outstanding (Notes 1 and 6) 33,260,000 20,190,000 14,725,000
============== ============== ===============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<TABLE>
Reckson Associates Realty Corp.
Consolidated Statement of Stockholder's Equity
And Reckson Group
Combined Statements of Owner's Equity
(in thousands)
<CAPTION>
Retained Limited
Additional Earnings Total Partners'
Common Paid in Owners'/ Stockholders' Minority
Stock Capital (Deficit) Equity Interest
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Owners' Deficit, December 31, 1994 $ --- $ --- $ (73,492) $ (73,492) $ ---
Distributions --- --- (4,399) (4,399)
Contributions --- --- 119 119
Adjustment to unrealized gain on available-for-sale
securities --- --- 95 95
Net income --- --- 194 194
------------- ------------- ------------- ------------- -------------
Owners' Deficit, June 2, 1995 --- --- (77,483) (77,483) ---
Deficit not contributed by the Owners of Reckson
Group --- --- 9,589 9,589
Deficit contributed by the Owners of Reckson Group --- (67,894) 67,894 ---
Initial public offering 75 161,936 --- 162,011
Establishment of minority interest in Operating
Partnership --- (25,651) --- (25,651) 25,651
Issuance of Operating Partnership Units --- --- --- --- 3,237
Net income --- --- 3,253 3,253 1,095
Dividends and distributions paid and payable --- (6,707) (3,253) (9,960) (3,835)
------------- ------------- ------------- ------------- -------------
Stockholders' equity, December 31, 1995 75 61,684 --- 61,759 26,148
Proceeds from pubic offerings 47 120,498 --- 120,545 24,671
Issuance of Operating Partnership Units (Note 11) --- 10,909 --- 10,909 3,135
Proceeds from exercise of employee options --- 263 --- 263 75
Two for one stock split (Note 6) 122 (122) --- --- ---
Net Income --- --- 17,527 17,527 5,596
Dividends and distributions paid and payable --- (6,609) (17,527) (24,136) (7,746)
------------- ------------- ------------- ------------- -------------
Stockholders' equity, December 31, 1996 244 186,623 --- 186,867 51,879
Two for one stock split (Note 6) 50 (50) --- --- ---
Proceeds from public offerings 80 256,564 --- 256,644 33,925
Issuance of Operating Partnership Units (Note 11) --- 9,473 --- 9,473 1,236
Proceeds from exercise of employee options 4 1,706 --- 1,710 178
Net Income --- --- 34,636 34,636 7,239
Dividends and distributions paid and payable --- (6,029) (34,636) (40,665) (8,707)
------------- ------------- ------------- ------------- -------------
Stockholder's equity, December 31, 1997 $ 378 $ 448,287 $ --- $ 448,665 $ 85,750
============= ============= ============= ============= =============
<FN>
See accompanying notes to financial statements
</FN>
</TABLE>
<TABLE>
Reckson Associates Realty Corp.
Consolidated Statement of Cash Flows
And Reckson Group
Consolidated Statements of Cash Flows
(in thousands)
<CAPTION>
Reckson Reckson Reckson
Associates Associates Associates Reckson
Realty Corp. Realty Corp. Realty Corp. Group for th
for the Year for the Year for the Period Period
Ended Ended June 3, 1995 to January
December 31, December 31, December 31, 1,1995 to Ju
1997 1996 1995 2, 1995
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 34,636 $ 17,527 $ 3,253 $ 194
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 27,237 17,670 7,233 3,606
Loss on extinguishment of debts, net of minority interest 2,230 895 4,234 ---
Minority partners' interest in consolidated partnership 807 808 184 ---
Limited Partners' minority interest in Operating Partnership 7,817 5,960 2,883 ---
Gain on sales of property and securities (672) --- --- (134)
Distribution from and share of net loss (income) from investments
in partnerships 408 191 --- (303)
Deferred rents receivable (4,500) (3,837) --- ---
Equity in undistributed earnings of service companies (55) (931) (100) ---
Equity in earnings of real estate partnerships (459) (266) --- ---
Interest income on mortgage notes and notes receivable (2,392) (870) --- ---
Deferred ground rents payable 273 244 --- ---
Changes in operating assets and liabilities:
Prepaid expenses and other assets (1,931) (608) (297) 417
Tenant and affiliate receivables (1,183) (256) (2,438) 302
Accrued expenses and other liabilities 8,427 2,895 2,071 (2,463)
------------- ------------- -------------- -------------
Net cash provided by operating activities 70,643 39,422 17,023 1,619
------------- ------------- -------------- -------------
Cash Flows from Investing Activities:
Cash from contributed net assets --- --- 629 ---
Purchases of commercial real estate properties (429,379) (181,130) (49,241) ---
Repayment of notes payable affiliates --- --- (6,000) ---
Cash paid in exchange for partnership net assets --- --- (16,075) ---
Investment in mortgage notes and notes receivable (50,282) (50,892) --- ---
Increase in contract deposits and preacquisition costs (1,303) (6,668) (810) ---
Additions to developments in progress (40,367) (8,427) (2,567) ---
Additions to commercial real estate properties (12,038) (12,441) (2,326) (814)
Payment of leasing costs (5,417) (5,028) (1,672) (125)
Investment in securities (1,756) --- --- ---
Additions to furniture, fixtures and equipment (1,159) (115) (21) (13)
Investments in and advances to real estate joint ventures (1,734) (5,832) (232) ---
Investment in service companies (4,241) (3,170) --- ---
Distributions from partnership investments --- --- --- 115
Contributions to partnership investments --- --- --- (244)
Proceeds from sales of properties and securities 725 --- --- 371
------------- ------------- -------------- -------------
Net cash (used in) provided by investing activities (546,951) (273,703) (78,315) (710)
------------- ------------- -------------- -------------
Cash Flows from Financing Activities:
Proceeds from borrowings --- 54,402 40,779 14,004
Principal payments on borrowings (1,624) (380) (151,230) (13,088)
Proceeds from issuance of bonds, net of bond issuance costs 147,420 --- --- ---
Proceeds from mortgage refinancings, net of refinancing costs 20,134 --- --- ---
Payment of loan costs and prepayment penalties (2,403) (2,525) (9,138) (268)
Advances to affiliates (20,513) (2,952) (243) (1,060)
Proceeds from credit facilities 421,000 144,500 40,000 ---
Principal payments on credit facilities (319,250) (76,000) --- ---
Proceeds from issuance of common stock, and exercise of
options net of issuance costs 299,991 145,317 162,100 ---
Payment of dividends and distribution to minority partners
in consolidated partnership (53,327) (22,546) (13,795) ---
Distributions to minority partners in operating partnership (8,707) (1,392) (541) ---
Deferred offering costs --- --- --- (400)
Distributions to Predecessor Owners --- --- --- (4,280)
Increase in security deposits payable 2,727 1,561 343 ---
------------- ------------- -------------- -------------
Net cash provided by (used in) financing activities 485,448 239,985 68,275 (5,092)
------------- ------------- -------------- -------------
Net increase (decrease) in cash and cash equivalents 9,140 5,704 6,983 (4,183)
Cash and cash equivalents at beginning of period 12,688 6,984 1 7,041
------------- ------------- -------------- -------------
Cash and cash equivalents at end of period $ 21,828 $ 12,688 $ 6,984 $ 2,858
============= ============= ============== =============
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 20,246 $ 13,261 $ 4,700 $ 8,600
============= ============= ============== =============
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
Reckson Associates Realty Corp.
and
Reckson Group
Notes to Financial Statements
1. Description of Business and Significant Accounting Policies
Description of Business
Reckson Associates Realty Corp. (the "Company") and the Reckson Group
(the "Predecessor") are engaged in the ownership, management, operation,
leasing and development of commercial real estate properties, principally
office and industrial buildings and also own certain undeveloped land
(collectively, the "Properties") located in the New York City tri-state area.
Organization and Formation of the Company
The Company was incorporated in Maryland in September 1994 and is the
successor to the operations of the Reckson Group. On June 2, 1995, the
Company completed an initial public offering of 6,120,000 shares pre
split)of $.01 par value common stock ("the Offering"). The Offering price
was $24.25 per share (pre split) resulting in gross proceeds of
$148,410,000. The Company also issued 400,000 shares (pre split) in a
concurrent offering to the Rechler family resulting in $9,700,000 of
additional proceeds. On June 28, 1995, the underwriters exercised their over
allotment option and, accordingly, the Company issued an additional 918,000
shares (pre split) of common stock and received gross proceeds of $22,261,500.
The aggregate proceeds to the Company, net of underwriters' discount, advisory
fee and offering costs were approximately $162,000,000.
The Company became the sole general partner of Reckson Operating
Partnership L.P. (the "Operating Partnership") by contributing substantially
all of the net proceeds of the Offering, in exchange for an approximate 73%
interest in the Operating Partnership. All properties acquired by the Company
are held by or through the Operating Partnership.
The Operating Partnership executed various option and purchase agreements
whereby it issued 2,758,960 units (pre split) in the Operating Partnership
("Units") to the continuing investors and assumed approximately $163,438,000
(net of the Omni mortgages) of indebtedness in exchange for interests in
certain property partnerships, fee simple and leasehold interests in properties
and development land, certain business assets of the executive center entities
and 100% of the non-voting preferred stock of the management and construction
companies.
Basis of Presentation and Summary of Significant Accounting Policies
The accompanying consolidated financial statements of Reckson Associates
Realty Corp. include the accounts of the Company and its subsidiaries. The
Company's investments in Reckson Management Group, Inc., Reckson Construction
Group, Inc., Reckson Service Industries, Inc. and Reckson Executive Centers,
L.L.C. are accounted for on the equity method. All significant intercompany
balances and transactions have been eliminated in consolidation.
The minority interests at December 31, 1997 represent approximately a 16%
limited partnership interest in the Operating Partnership and a 40% minority
partners' interest in the Omni.
The Reckson Group was not a legal entity but rather a combination of
partnerships, an "S" corporation and affiliated real estate management and
construction corporations which were under the common control of Reckson
Associates (a general partnership) and affiliated entities. All significant
intercompany transactions and balances were eliminated in combination. The
Reckson Group used the equity method of accounting for investments in less
than 50% owned entities and majority owned entities where control was
temporary.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Real Estate
Depreciation is computed utilizing the straight-line method over the
estimated useful lives of ten to thirty years for buildings and improvements
and five to ten years for furniture, fixtures and equipment. Tenant
improvements, which are included in buildings and improvements, are amortized
on a straight-line basis over the term of the related leases.
Cash Equivalents
The Company considers highly liquid investments with a maturity of three
months or less when purchased, to be cash equivalents.
Deferred Costs
Lease fees and loan costs are capitalized and amortized over the life of
the related lease or loan. The Company incurred costs related to offerings of
common stock which were charged to Stockholders' Equity.
Income Taxes
Prior to June 3, 1995 all of the Properties were owned by partnerships and
an S-corporation, whose partners and shareholders were required to include
their respective share of profits and losses in their individual tax returns.
The Company generally will not be subject to federal income taxes as long
as it qualifies as a real estate investment trust ("REIT"). A REIT will
generally not be subject to federal income taxation on that portion of income
that qualifies as REIT taxable income and to the extent that it distributes
such taxable income to its stockholders and complies with certain requirements.
As a REIT, the Company is allowed to reduce taxable income by all or a portion
of distributions to stockholders and must distribute at least 95% of its
taxable income to qualify as a REIT. As distributions have exceeded taxable
income, no federal income tax provision has been reflected in the accompanying
consolidated financial statements. State income taxes are not significant.
During 1997, the Company paid dividends of $1.54 per share (representing
dividends for five quarters) of which approximately 72% was considered ordinary
income and 28% was a return of capital for federal income tax purposes. During
1996, the Company paid dividends of $.89 per share (split adjusted and
representing dividends for three quarters) all of which was ordinary income for
federal income tax purposes.
Revenue Recognition
Minimum rental income is recognized on a straight-line basis over the term
of the lease. The excess of rents recognized over amounts contractually due are
included in deferred rents receivable on the accompanying balance sheets.
Contractually due but unpaid rents are included in tenant receivables on the
accompanying balance sheets. Certain lease agreements provide for reimbursement
of real estate taxes, insurance, common area maintenance costs and indexed
rental increases, which are recorded on an accrual basis.
The Company records interest income on investments in mortgage notes and
notes receivable on an accrual basis of accounting. The Company does not
accrue interest on impaired loans where, in the judgment of management,
collection of interest according to the contractual terms is considered
doubtful. Among the factors the Company considers in making an evaluation of
the collectibility of interest are, the status of the loan, the value of the
underlying collateral, the financial condition of the borrower and anticipated
future events. Loan discounts are amortized over the life of the real estate
using the constant interest method.
Construction Operations
Construction operations are accounted for utilizing the completed contract
method. Under this method, costs and related billings are deferred until the
contract is substantially complete. Estimated losses on uncompleted contracts
are recorded in the period that management determines that a loss may be
incurred.
Stock Options
The Company has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" (APB 25) and related
Interpretations in accounting for its employee stock options because, the
alternative fair value accounting provided for under FASB Statement No. 123,
"Accounting for Stock-Based Compensation," (FAS No. 123) requires use of option
valuation models that were not developed for use in valuing employee stock
options. Under APB 25, no compensation expense was recognized because the
exercise price of the Company's employee stock options equals the market price
of the underlying stock on the date of grant (see Note 6).
Earnings Per Share
In 1997, the Financial Accounting Standards Board issued Statement No.
128, Earnings per Share. Statement 128 replaced the calculation of primary and
fully diluted earnings per share with basic and diluted earnings per share.
Unlike primary earnings per share, basic earnings per share excludes any
dilutive effects of options, warrants and convertible securities. Diluted
earnings per share is very similar to the previously reported fully diluted
earnings per share. All earnings per share amounts for all periods have been
presented, and where appropriate, restated to conform to the Statement 128
requirements. The conversion of Units into common stock (Note 6) would not
have a significant effect on per share amounts as the Units share
proportionately with the common stock in the results of the Operating
Partnership's operations.
Reclassifications
Certain prior year amounts have been reclassified to conform to the
current year presentation.
2. Mortgage Notes Payable
At December 31, 1997, there are thirteen mortgage notes payable with an
aggregate outstanding principal amount of approximately $180 million.
Properties with an aggregate carrying value at December 31, 1997 of
approximately $225 million are pledged as collateral against the mortgage notes
payable. In addition, $59.2 million of the $180 million are recourse to the
Company. The mortgage notes bear interest at rates ranging from 6.82% to
9.25%, and mature between 1999 and 2012. The weighted average interest rate on
the outstanding mortgage notes payable at December 31, 1997 is 7.71%. Certain
of the mortgage notes payable are guaranteed by certain minority partners in
the Operating Partnership.
Scheduled principal repayments during the next five years and thereafter
are as follows (in thousands):
Year Ended December 31,
1998 $ 2,327
1999 2,368
2000 33,788
2001 2,336
2002 26,978
Thereafter 112,226
---------------
$ 180,023
===============
3. Credit Facilities
On April 30, 1997, the Company obtained a three-year $250 million
unsecured credit facility from a bank group led by Chase Manhattan Bank and
Union Bank of Switzerland (the "Unsecured Credit Facility"). The Company's
ability to borrow thereunder is subject to the satisfaction of certain
financial covenants, including 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 Unsecured 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 1.50%, based on the Company's leverage ratio. The
Unsecured Credit Facility replaced the Company's existing $150 million secured
credit facility. As a result, certain deferred loan costs incurred in
connection with the secured credit facility were written off. Such amount is
reflected as an extraordinary loss in the accompanying consolidated statement
of income.
The Company capitalized interest incurred on credit facility borrowings
to fund certain development costs in the amount of $2,351,201 and $800,434 for
the years ended December 31, 1997 and 1996, respectively.
On January 2, 1998, the Company obtained a $200 million unsecured credit
facility (the "Bridge Facility") which matures on April 1, 1998. The Bridge
Facility was provided by the two lead members of the Unsecured Credit Facility
bank group and serves as interim financing while the Company seeks to expand
the availability under the Unsecured Credit Facility.
4. Senior Unsecured Notes
On August 28, 1997, the Company sold $150 million of 10-year senior
unsecured notes in a privately placed transaction. The senior unsecured notes
were priced at par with interest at 110 basis points over the 10- year
treasury note for an all in coupon of 7.2%. Interest is payable semiannually
with principal and unpaid interest due on August 28, 2007.
5. Land Leases
The Company leases, pursuant to noncancellable operating leases, the land
on which seven of its buildings were constructed. The leases, which contain
renewal options, expire between 2018 and 2080. The leases contain provisions
for scheduled increases in the minimum rent and one of the leases additionally
provides for adjustments to rent based upon the fair market value of the
underlying land at specified intervals. Minimum ground rent is recognized on a
straight-line basis over the terms of the leases. The excess of amounts
recognized over amounts contractually due is $1,948,000 and $1,676,000 at
December 31, 1997 and 1996, respectively. These amounts are included in
accrued expenses and other liabilities on the accompanying balance sheets.
Future minimum lease commitments relating to the land leases as of December
31, 1997 are as follows (in thousands):
1998 $ $1,093
1999 1,202
2000 1,203
2001 1,212
2002 1,212
Thereafter 42,114
-------------
$ 48,036
=============
6. Stockholders' Equity
A Unit and a share of common stock have essentially the same economic
characteristics as they effectively share equally in the net income or loss
and distributions of the Operating Partnership. Beginning on the second
anniversary of the consummation of the Offering, Units may be redeemed for
cash or, at the election of the Company, for shares of common stock on a one-
for-one basis.
On February 12, 1997, the Board of Directors of the Company declared a
two for one stock split to be effected as a stock dividend distributable on
April 15, 1997 to stockholders of record on April 4, 1997.
On March 12, 1997, the Company sold 9,890,000 shares (split adjusted) of
the Company's common stock at $22.63 per share (split adjusted) for an
aggregate consideration of approximately $224 million before deducting
offering costs.
On December 5, 1997, the Company sold 3,081,177 shares of the Company's
common stock at $26.00 per share for an aggregate consideration of
approximately $80.1 million before deducting offering costs.
The Company has established the 1995, 1996 and 1997 Employee Stock Option
Plans (the "Plans") for the purpose of attracting and retaining executive
officers, directors and other key employees. As of December 31, 1997,
1,500,000, 400,000 and 3,000,000 of the Company's authorized shares have been
reserved for issuance under the 1995, 1996 and 1997 plans, respectively.
<TABLE>
The following table sets forth the outstanding options and their
corresponding exercise price per share:
<CAPTION>
Options Exercise Price Range
Granted <F1> From <F1> To <F1>
-------------- ----------- -----------
<S> <C> <C> <C>
1995 Employee Stock Option Plan 1,296,216 $ 12.13 $ 22.75
1996 Employee Stock Option Plan 70,433 $ 19.75 $ 22.75
1997 Employee Stock Option Plan 1,147,500 $ 22.75 $ 27.13
--------------
Total 2,514,149
==============
<FN>
<F1>
Prices through December 31, 1996 are split adjusted.
</FN>
</TABLE>
Options granted to new employees vest in three equal installments on the
first, second and third anniversaries of the date of the grant. Options
granted to existing employees are generally exercisable on the date of the
grant.
In addition, the independent directors of the Company have been granted
options to purchase 45,000 shares pursuant to the 1995 Employee Stock Option
Plan at exercise prices ranging from $12.13 to $22.50 per share (split
adjusted) and options to purchase 3,000 shares pursuant to the 1997 Employee
Stock Option Plan at an exercise price of $25.31 per share. The options
granted to the independent directors were exercisable on the date of the
grant.
The Company has made loans to certain executive officers to purchase
310,834 shares of common stock at market prices ranging from $22.50 per share
to $27.13 per share. The loans bear interest at the mid-term Applicable
Federal Rate and are secured by the shares purchased. Such loans including
accrued interest will be forgiven each year on the annual anniversary of the
grant date based upon a ten year amortization period with a balloon payment
due on the fifth anniversary. As of December 31, 1997, the loan balances
aggregated approximately $7,860,000 and have been included as a reduction of
additional paid in capital on the accompanying consolidated balance sheets.
During 1997 and 1996, 140,406 and 13,977, respectively of employee
options were exercised resulting in proceeds to the Company of approximately
$1,888,000 and $338,000, respectively.
During 1998, the Company established the 1998 Employee Stock Option Plan
which reserves 3,000,000 shares of the Company's authorized shares for
issuance under this plan. On January 9, 1998, 1,415,965 options were granted
at an exercise price of $25.75 per share.
Pro forma information regarding net income and earnings per share is
required by FAS No. 123, and has been determined as if the Company had
accounted for its employee stock options under the fair value method of FAS
No. 123. The fair value for these options was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted-average
assumptions for 1997, 1996 and 1995; respectively: risk-free interest rate of
5%; dividend yields of 4.7%, 7.57% and 10.22%; volatility factors of the
expected market price of the Company's common stock of .142, and a weighted-
average expected life of the option of 5 years.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in
the subjective input assumptions can materially affect the fair value
estimate, in management's opinion, the existing models do not necessarily
provide a reliable single measure of the fair value of its employee stock
options.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The
Company's pro forma information follows (in thousands except for earnings per
share information):
<TABLE>
<CAPTION>
Year Ended Year Ended June 3,1995 to
December 31, December 31, December 31,
1997 1996 1995
---------------- ---------------- ---------------
<S> <C> <C> <C>
Pro forma net income $ 34,287 $ 17,431 $ 3,226
================ ================ ===============
Basic Pro forma earnings per share $ 1.05 $ 0.88 $ 0.22
================ ================ ===============
Diluted pro forma earnings per share $ 1.03 $ 0.86 $ 0.22
================ ================ ===============
</TABLE>
A summary of the Company's stock option activity, and related information
follows:
<TABLE>
<CAPTION>
Weighted-Average
Exercise
Options Price <F1>
----------------- -----------------
<S> <C> <C>
Outstanding - June 3, 1995 --- ---
Granted 864,060 $ 12.23
Exercised --- ---
Forfeited --- ---
-----------------
Outstanding- December 31, 1995 864,060 $ 12.23
Granted 621,478 $ 16.94
Exercised (27,954) $ 12.39
Forfeited (36,370) $ 12.77
-----------------
Outstanding - December 31, 1996 1,421,214 $ 14.28
Granted 1,123,300 $ 26.67
Exercised (126,429) $ 14.94
Forfeited (10,319) $ 16.33
-----------------
Outstanding- December 31, 1997 2,407,766 $ 20.16
=================
<FN>
<F1>
Prices through December 31, 1996 are split adjusted.
</FN>
</TABLE>
The weighted average fair value of options granted for the period June 2,
1995 to December 31, 1995, for the years ended December 31, 1996 and 1997 was
$.25, $.86 and $1.47, respectively. In addition, there were 30,000 options at
a weighted average per share exercise price of $12.13, 403,564 options at a
weighted average per share exercise price of $13.95 and 1,758,534 options at a
weighted average per share exercise price of $20.16 exercisable at December
31, 1995, 1996 and 1997, respectively.
Exercise prices for options outstanding as of December 31, 1997 ranged
from $12.13 per share to $27.13 per share. The weighted-average remaining
contractual life of those options is approximately 8.81 years.
The Company made loans to certain senior officers to purchase units at
market prices ranging from $12.13 per unit to $21.94 per unit. The loans bear
interest at rates ranging between 8% to 8.5% and are secured by the units
purchased. Such loans will be forgiven ratably at each anniversary of
employment over a four to five year period. The loan balances of $325,500 and
$250,000 at December 31, 1997 and 1996, respectively have been included as a
reduction of additional paid in capital on the accompanying consolidated
balance sheets.
The following is the Company's reconciliation of the numerators and
denominators of the basic and diluted net income per weighted average common
share computations and other related disclosures required by FAS Statement 128
(in thousands except share amounts).
<TABLE>
The following table sets forth the computation of basic and diluted
earnings per share:
<CAPTION>
For the year For the year For the period
ended ended June 3,1995 to
December 31, December 31, December 31,
1997 1996 1995
--------------- --------------- ---------------
<S> <C> <C> <C>
Numerator:
Net income before extraordinary items $ $36,866 $ $18,422 $ $7,487
--------------- --------------- ---------------
Numerator for basic and diluted earnings
per share $ $36,866 $ $18,422 $ $7,487
=============== =============== ===============
Denominator:
Denominator for basic earnings per share -
weighted-average shares 32,727 19,928 14,678
Effect of dilutive securities:
Employee stock options 533 262 47
--------------- --------------- ---------------
Denominator for diluted earnings per share -
adjusted weighted-average shares and
assumed conversions 33,260 20,190 14,725
=============== =============== ===============
Basic earnings per common share:
Income before extraordinary items $ 1.13 $ 0.92 $ 0.51
Extraordinary items (.07) (.04) (.29)
--------------- --------------- ---------------
Net income per common share $ 1.06 $ 0.88 $ 0.22
=============== =============== ===============
Diluted earnings per common share:
Income before extraordinary items $ 1.11 $ 0.91 $ 0.51
Extraordinary items (.07) (.04) (.29)
--------------- --------------- ---------------
Diluted net income per common share $ 1.04 $ 0.87 $ 0.22
=============== =============== ===============
</TABLE>
7. Related Party Transactions
The Company, through its subsidiaries and affiliates, provides
management, leasing and other tenant related services to the Properties.
Certain executive officers of the Company have continuing ownership interests
in the unconsolidated service companies.
In connection with the IPO, the Company was granted options, exercisable
over a 10 year period to acquire six properties owned by the Predecessor (the
"Reckson Option Properties") and four properties in which the Predecessor owns
a non-controlling minority interest (the "Other Option Properties" and,
together with the Reckson Option Properties, the "Option Properties") at a
purchase price equal to the lesser of (i) a fixed purchase price and (ii) the
Net Operating Income, as defined, attributable to such Option Property during
the 12 month period preceding the exercise of the option divided by a
capitalization rate of 11.5%, but the purchase price shall in no case be less
than the outstanding balance of the mortgage debt encumbering the Option
Property on the acquisition date.
During 1996, the Company acquired three of the Reckson Option Properties
for an aggregate purchase price of approximately $26 million. In connection
with the purchase of such Option Properties the Company issued 271,228 Units
at prices ranging from $16.38 per unit to $18.50 per unit (split adjusted) as
partial consideration in the transactions. Such Units were issued to certain
members of management and entities whose partners included members of
management.
During 1997, the Company acquired one of the Reckson Option Properties
for a purchase price of approximately $9 million. In connection with the
purchase, the Company issued 203,804 Units at a price of $21 per unit (split
adjusted) as partial consideration in the transaction. Such Units were issued
to certain members of management and entities whose partners include members
of management.
The Company made construction loan advances to fund certain redevelopment
and leasing costs relating to one of the Other Option Properties. At December
31, 1997 and 1996, advances due the Company were approximately $4,200,000 and
$2,940,000, respectively. Such amounts bear interest at the rate of 11% per
annum and are due on demand. In January 1998, the outstanding advances
including accrued and unpaid interest was repaid in full.
During 1997, the Company formed Reckson Service Industries, Inc. ("RSI")
and Reckson Strategic Venture Partners, LLC ("RSVP"). The Operating
Partnership owns a 95% nonvoting interest in RSI. RSI will serve as the
managing member of RSVP. RSI will invest in operating companies that
generally will provide commercial services to properties owned by the Company
and its tenants and third parties. RSVP was formed to provide the Company
with a "research and development" vehicle to invest in alternative real estate
sectors. RSVP will invest primarily in real estate and real estate related
operating companies generally outside of the Company's core office and
industrial focus. RSVP's strategy is to identify and acquire interests in
established entrepreneurial enterprises with experienced management teams in
market sectors which are in the early stages of their growth cycle or offer
unique circumstances for attractive investments as well as a platform for
future growth. The Company will determine the prudence of increasing its
investment and the potential for incorporating it as a core business. At
December 31, 1997, the Operating Partnership had made investments in or loans
to RSI and RSVP aggregating approximately $4.3 million and $7.4 million,
respectively in connection with start up costs and certain initial
investments. Such amounts have been included in other assets on the
accompanying balance sheet.
8. Commercial Real Estate Investments
During the period from June 3, 1995 to December 31, 1996 the Company
acquired 22 office properties encompassing approximately 2.8 million square
feet and 16 industrial properties encompassing approximately 1.4 million
square feet for an aggregate purchase price of approximately $273 million.
During 1997, the Company acquired five office properties encompassing
approximately 881,000 square feet and 15 industrial properties encompassing
approximately 968,000 square feet on Long Island for an aggregate purchase
price of approximately $131 million.
During 1997, the Company acquired eight office properties encompassing
approximately 830,000 square feet and three industrial properties encompassing
approximately 163,000 square feet in Westchester for an aggregate purchase
price of approximately $117 million. In addition, the Company acquired
approximately 32 acres of land located in Westchester for a purchase price of
approximately $8 million.
During 1997, the Company acquired one industrial property encompassing
approximately 452,000 square feet in Connecticut for a purchase price of
approximately $27 million.
During 1997, the Company acquired 13 office properties encompassing
approximately 1.5 million square feet and one industrial property encompassing
approximately 128,000 square feet in New Jersey for an aggregate purchase
price of approximately $156 million. In addition, the Company acquired
approximately 303 acres of land located in New Jersey for an aggregate
purchase price of approximately $16.2 million.
In October 1997, the Company entered into an agreement to invest $150
million in the Morris Companies, a New Jersey developer and owner of "Big Box"
warehouse facilities. The Morris Companies' properties include twenty three
industrial buildings encompassing approximately 4.0 million square feet. The
Company's investment will be used to acquire a controlling interest in Reckson
Morris Operating Partnership, L.P. ("RMI"). In connection with the
transaction the Morris Companies will contribute 100% of their interests in
certain industrial properties to RMI in exchange for operating partnership
units in RMI. On January 6, 1998, the Company made its initial investment
into RMI of approximately $65 million. In addition, at December 31, 1997, the
Company had advanced approximately $12 million to the Morris Companies
primarily to fund certain construction costs related to development properties
to be contributed to RMI.
In October 1997, the Company sold 671 Old Willets Path in Hauppauge, New
York for approximately $725,000 and recorded a gain on the sale of $672,000.
In addition, the Company has invested approximately $72.5 million in
certain mortgage indebtedness encumbering five Class A office buildings
located on Long Island encompassing approximately 927,000 square feet, a 400
acre parcel of land located in New Jersey and, a 586,000 square foot
industrial property in New Jersey. In addition, on March 13, 1997 the Company
loaned approximately $17 million to its minority partner in Omni, its flagship
Long Island office property, and effectively increased its economic interest
in the property owning partnership.
9. Fair Value of Financial Instruments
The following disclosures of estimated fair value at December 31, 1997
were determined by management, using available market information and
appropriate valuation methodologies. Considerable judgment is necessary to
interpret market data and develop estimated fair value. The use of different
market assumptions and/or estimation methodologies may have a material effect
on the estimated fair value amounts.
Cash equivalents and variable rate debt are carried at amounts which
reasonably approximate their fair values.
Mortgage notes payable have an estimated aggregate fair value which
approximates its carrying value. Estimated fair value is based on interest
rates currently available to the Company for issuance of debt with similar
terms and remaining maturities.
10. Rental Income
The Properties are being leased to tenants under operating leases. The
minimum rental amount due under certain leases are generally either subject to
scheduled fixed increases or indexed escalations. In addition, the leases
generally also require that the tenants reimburse the Company for increases in
certain operating costs and real estate taxes above base year costs.
Included in base rents and tenant escalations and reimbursements in the
accompanying statements of operations are amounts from Reckson Executive
Centers, LLC, an equity investee, as follows (in thousands):
Tenant
Escalations and
For the Periods Base Rents Reimbursements
--------------- ---------------
Year ended December 31, 1997 $ 2,154 $ 441
Year ended December 31, 1996 $ 1,898 $ 417
June 3, 1995 to December 31, 1995 $ 1,095 $ 100
January 1, 1995 to June 2, 1995 $ 675 $ 48
Expected future minimum rents to be received over the next five years and
thereafter from leases in effect at December 31, 1997 are as follows (in
thousands):
Reckson
Executive
Centers, LLC Other Tenants Total
-------------- -------------- --------------
1998 $ 2,561 $ 156,909 $ 159,470
1999 2,634 147,473 150,107
2000 1,549 133,814 135,363
2001 787 109,767 110,554
2002 820 94,112 94,932
Thereafter 3,814 206,336 210,150
-------------- -------------- --------------
$ 12,165 $ 848,411 $ 860,576
============== ============== ==============
11. Non-Cash Investing and Financing Activities
Additional supplemental disclosures of non-cash investing and financing
activities are as follows (in thousands):
(1) During 1996, the Company purchased eight office properties located in
Westchester County and associated management and construction operations
as follows:
Cash Paid $58,533
Issuance of 677,534 Units (1) 9,527
Purchase price holdback 1,700
Mortgage assumed 9,366
--------------
Total purchase price $79,126
==============
(2) During 1996, the Company acquired three of the Reckson Option Properties
as follows:
Debt assumed and repaid $21,750
Issuance of 271,228 Units (1) 4,516
--------------
Total purchase price $26,266
==============
(3) In January 1997, the Company acquired one of the Reckson Option
Properties as follows:
Mortgage assumed $4,667
Issuance of 203,804 Units (1) 4,280
Cash paid 61
--------------
Total purchase price $9,008
==============
(4) In November 1997, the Company purchased a 181,000 square foot industrial
building located in Hauppauge, New York as follows:
Mortgage assumed and repaid $3,037
Issuance of 62,905 Units 1,578
Cash paid 10
--------------
Total purchase price $4,625
==============
(5) In December 1997, the Company purchased a 92,000 square foot industrial
building located in Elmsford, New York as follows:
Issuance of 183,469 Units $4,700
----
(1) Split adjusted
12. Commitments and Other Comments
The Company entered into employment agreements with its chairman and five
executive officers. The agreements are for terms expiring through June 1998.
The Company sponsors a defined contribution savings plan pursuant to
section 401(k) of the Internal Revenue Code. Under such plan, there are no
prior service costs. All employees are eligible to participate in the plan
after one year of service. Employer contributions are based on a discretionary
amount determined by the Company's management. During 1997 and 1996, the
Company made no contributions.
At December 31, 1996, the Company had restricted cash of $1.8 million
which collateralized an outstanding letter of credit for an equal amount.
At December 31, 1997, the Company had outstanding undrawn letters of
credit against the Unsecured Credit Facility of approximately $4 million.
13. Quarterly Financial Data (Unaudited)
The following summary represents the Company's results of operations for
each quarter during 1997 and 1996 (in thousands, except share amounts):
<TABLE>
<CAPTION>
1997
--------------- --------------- --------------- ---------------
First Quarter Second Quarter Third Quarter Fourth Quarter
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Total revenues $ 31,692 $ 36,194 $ 40,342 $ 45,167
=============== =============== =============== ===============
Income before minority interests and
extraordinary items $ 8,805 $ 11,990 $ 11,470 $ 13,225
Minority interest (2,021) (2,194) (2,061) (2,348)
Extraordinary (loss) --- (1,962) (268) ---
--------------- --------------- --------------- ---------------
Net income $ 6,784 $ 7,834 $ 9,141 $ 10,877
=============== =============== =============== ===============
Basic net income per weighted
average common share:
Income before extraordinary item $ 0.26 $ 0.29 $ 0.27 $ 0.31
Extraordinary loss --- (.06) (.01) ---
--------------- --------------- --------------- ---------------
Net income $ 0.26 $ 0.23 $ 0.26 $ 0.31
=============== =============== =============== ===============
Weighted average common shares
outstanding 26,569,162 34,298,137 34,477,050 35,445,213
=============== =============== =============== ===============
Diluted net income per common
share (Notes 1 and 6):
Income before extraordinary items $ 0.25 $ 0.28 $ 0.27 $ 0.30
Extraordinary items --- (.06) (.01) ---
--------------- --------------- --------------- ---------------
Diluted net income per common share $ 0.25 $ 0.22 $ 0.26 $ 0.30
=============== =============== =============== ===============
Diluted weighted average common
shares outstanding 27,056,018 34,801,582 35,030,464 36,032,319
=============== =============== =============== ===============
</TABLE>
<TABLE>
<CAPTION>
1996
--------------- --------------- --------------- ---------------
First Quarter Second Quarter Third Quarter Fourth Quarter
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Total revenues $ 19,065 $ 22,694 $ 24,719 $ 29,663
=============== =============== =============== ===============
Income before minority interests and
extraordinary items $ 4,902 $ 6,421 $ 6,395 $ 7,472
Minority interest (1,584) (1,730) (1,682) (1,772)
Extraordinary (loss) (895) --- --- ---
--------------- --------------- --------------- ---------------
Net income $ 2,423 $ 4,691 $ 4,713 $ 5,700
=============== =============== =============== ===============
Basic net income per weighted
average common share:
Income before extraordinary item $ 0.22 $ 0.23 $ 0.23 $ 0.24
Extraordinary loss (.06) --- --- ---
--------------- --------------- --------------- ---------------
Net income $ 0.16 $ 0.23 $ 0.23 $ 0.24
=============== =============== =============== ===============
Weighted average common shares
outstanding 14,889,612 20,349,210 20,880,474 23,541,600
=============== =============== =============== ===============
Diluted net income per common
share (Notes 1 and 6):
Income before extraordinary items $ 0.22 $ 0.23 $ 0.22 $ 0.24
Extraordinary items (.06) --- --- ---
--------------- --------------- --------------- ---------------
Diluted net income per common share $ 0.16 $ 0.23 $ 0.22 $ 0.24
=============== =============== =============== ===============
Diluted weighted average common
shares outstanding 15,049,117 20,557,479 21,173,909 23,929,975
=============== =============== =============== ===============
</TABLE>
14. Subsequent Events
On February 18, 1998 the Company sold 791,152 shares of the Company's
common stock at $25.44 per share for an aggregate consideration of
approximately $20.1 million before deducting offering expenses. Net proceeds
were used to repay borrowings under the Unsecured Credit Facility and for
property acquisitions.
<TABLE>
Reckson Associates Realty Corp.
Schedule III-Real Estate And Accumulated Depreciation
December 31, 1997
(In thousands)
<CAPTION>
Cost Capitalized Gross Amount at
Subsequent to Which Carried at
Initial Cost Acquisition Close of Period
Column A Column B Column C Column D Column E
-------------- -------------------- --------------------- ---------------------
Buildings Buildings Buildings
and and and
Encum- Improve- Improve- Improve-
Description brance Land ments Land ments Land ments Total
------------- --------- ----------- --------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Vanderbilt Industrial Park,
Hauppauge, New York
(27 buildings in an
industrial park) B $ 1,940 $ 9,955 --- $ 8,789 $ 1,940 $ 18,744 $ 20,684
Airport International Plaza,
Islip, New York
(17 buildings in an
industrial park) 2,616(c) 1,263 13,608 --- 9,670 1,263 23,278 24,541
County Line Industrial Center,
Huntington, New York
(3 buildings in an
industrial park) B 628 3,686 --- 2,438 628 6,124 6,752
32 Windsor Place,
Islip, New York B 32 321 --- 46 32 367 399
42 Windsor Place,
Islip, New York B 48 327 --- 542 48 869 917
505 Walt Whitman Rd.,
Huntington, New York B 140 42 --- 52 140 94 234
1170 Northern Blvd.,
N. Great Neck, New York B 30 99 --- 31 30 130 160
50 Charles Lindbergh Blvd.,
Mitchel Field, New York 15,479 A 12,089 --- 3,526 0 15,615 15,615
200 Broadhollow Road,
Melville, New York 6,649 338 3,354 --- 2,362 338 5,716 6,054
48 South Service Road,
Melville, New York B 1,652 10,245 --- 3,351 1,652 13,596 15,248
395 North Service Road,
Melville, New York 9,917 A 15,551 --- 6,475 0 22,026 22,026
6800 Jericho Turnpike,
Syosset, New York 15,001 582 6,566 --- 5,941 582 12,507 13,089
6900 Jericho Turnpike,
Syosset, New York 5,279 385 4,228 --- 1,674 385 5,902 6,287
300 Motor Parkway,
Hauppauge, New York B 276 1,136 --- 828 276 1,964 2,240
88 Duryea Road,
Melville, New York B 200 1,565 --- 616 200 2,181 2,381
210 Blydenburgh Road,
Islandia, New York B 11 158 --- 159 11 317 328
208 Blydenburgh Road,
Islandia, New York B 12 192 --- 145 12 337 349
71 Hoffman Lane,
Islandia, New York B 19 260 --- 172 19 432 451
933 Motor Parkway,
Smithtown, New York B 106 375 --- 361 106 736 842
65 and 85 South Service Rd
Plainview, New York B 40 218 --- 10 40 228 268
333 Earl Ovington Blvd. (Omni)
Mitchel Field, New York 57,839 A 67,221 --- 15,556 0 82,777 82,777
135 Fell Court
Islip, New York B 462 1,265 --- 48 462 1,313 1,775
40 Cragwood Road,
South Plainfield, New Jersey B 708 7,131 17 3,664 725 10,795 11,520
110 Marcus Drive,
Huntington, New York B 390 1,499 --- 13 390 1,512 1,902
333 East Shore Road,
Great Neck, New York B A 564 --- 128 0 692 692
310 East Shore Road,
Great Neck, New York 2,322 485 2,009 --- 265 485 2,274 2,759
70 Schmitt Blvd.,
Farmingdale, New York 425 727 3,408 --- 15 727 3,423 4,150
19 Nicholas Drive,
Yaphank, New York B 160 7,399 --- --- 160 7,399 7,559
1516 Motor Parkway,
Hauppauge, New York B 603 6,722 --- 13 603 6,735 7,338
125 Baylis Road,
Melville, New York B 1,601 8,626 --- 422 1,601 9,048 10,649
35 Pinelawn Road,
Melville, New York B 999 7,073 --- 1,354 999 8,427 9,426
520 Broadhollow Road
Melville, New York B 457 5,572 --- 1,404 457 6,976 7,433
1660 Walt Whitman Road,
Melville, New York B 370 5,072 --- 389 370 5,461 5,831
70 Maxess Road,
Melville, New York 1,863 708 1,859 96 3,806 804 5,665 6,469
85 Nicon Court,
Hauppauge, New York B 797 2,818 --- 54 797 2,872 3,669
104 Parkway Drive So.,
Hauppauge, New York B 54 804 --- 130 54 934 988
20 Melville Park Rd.,
Melville, New York B 391 2,650 --- 96 391 2,746 3,137
105 Price Parkway,
Hauppauge, New York B 2,030 6,327 --- 311 2,030 6,638 8,668
48 Harbor Park Drive,
Hauppauge, New York B 1,304 2,247 --- 89 1,304 2,336 3,640
125 Ricefield Lane,
Hauppauge, New York B 13 852 --- 330 13 1,182 1,195
110 Ricefield Lane,
Hauppauge, New York B 33 1,043 --- 52 33 1,095 1,128
120 Ricefield Lane,
Hauppauge, New York B 16 1,051 --- 30 16 1,081 1,097
135 Ricefield Lane,
Hauppauge, New York B 24 906 --- 473 24 1,379 1,403
30 Hub Drive,
Huntington, New York B 469 1,571 --- 246 469 1,817 2,286
60 Charles Lindbergh,
Mitchel Field, New York B A 20,800 --- 1,344 --- 22,144 22,144
155 White Plains Rd
Tarrytown, New York B 1,613 2,542 --- 595 1,613 3,137 4,750
2 Church Street,
Tarrytown, New York B 232 1,307 --- 385 232 1,692 1,924
235 Main Street,
Tarrytown, New York B 955 5,375 --- 562 955 5,937 6,892
245 Main Street,
Tarrytown, New York B 1,294 7,284 --- 790 1,294 8,074 9,368
505 White Plains Road,
Tarrytown, New York B 236 1,332 --- 163 236 1,495 1,731
555 White Plains Road,
Tarrytown, New York B 712 4,133 13 2,658 725 6,791 7,516
560 White Plains Road,
Tarrytown, New York B 1,553 8,756 --- 1,688 1,553 10,444 11,997
580 White Plains Road,
Tarrytown, New York 8,811 2,591 14,595 --- 1,347 2,591 15,942 18,533
660 White Plains Road,
Tarrytown, New York B 3,929 22,640 --- 1,738 3,929 24,378 28,307
Landmark Square,
Stamford, CT 49,291 11,603 64,466 --- 6,216 11,603 70,682 82,285
110 Bi-County Blvd.,
Farmingdale, New York 4,531 2,342 6,665 --- 124 2,342 6,789 9,131
RREEF Portfolio,
Hauppauge, New York
(10 additional buildings in
Vanderbuilt Industrial Park) B 930 20,619 --- 523 930 21,142 22,072
275 Broadhollow Road,
Melville, New York B 5,250 11,761 --- 464 5,250 12,225 17,475
One Eagle Rock,
East Hanover, New Jersey B 803 7,563 --- 21 803 7,584 8,387
710 Bridgeport Avenue,
Shelton, CT B 5,405 21,620 --- 440 5,405 22,060 27,465
101 JFK Expressway,
Short Hills, New Jersey B 7,745 43,889 --- 263 7,745 44,152 51,897
10 Rooney Circle,
West Orange, New Jersey B 1,302 4,615 --- 408 1,302 5,023 6,325
Executive Hill Office Park,
West Orange, New Jersey B 7,629 31,288 --- 410 7,629 31,698 39,327
3 University Plaza,
Hackensack, New Jersey B 7,894 11,846 --- 110 7,894 11,956 19,850
400 Garden City Plaza,
Garden City, New York B 13,986 10,127 --- 225 13,986 10,352 24,338
425 Rabro Drive,
Hauppauge, New York B 665 3,489 --- 63 665 3,552 4,217
One Paragon Drive,
Montvale, New Jersey B 2,773 9,901 --- 91 2,773 9,992 12,765
90 Merrick Avenue,
East Meadow, New York B --- 19,193 --- 332 --- 19,525 19,525
150 Motor Parkway,
Hauppauge, New York B 1,114 20,430 --- 839 1,114 21,269 22,383
390 Motor Parkway,
Hauppauge, New York B 240 4,459 --- 202 240 4,661 4,901
Royal Executive Park,
Ryebrook, New York B 18,343 55,028 --- 479 18,343 55,507 73,850
120 White Plains Road,
Tarrytown, New York B 3,355 24,605 --- --- 3,355 24,605 27,960
University Square,
Princeton, New Jersey B 8,045 8,888 --- 19 8,045 8,907 16,952
100 Andrews Road,
Hicksville, New York B 2,812 1,711 --- 5,155 2,812 6,866 9,678
2 Macy Road,
Harrison, New York B 642 2,131 --- 19 642 2,150 2,792
80-100 Grasslands,
Elmsford, New York B 1,609 6,823 --- 106 1,609 6,929 8,538
65 Marcus Drive,
Melville, New York B 295 1,966 --- 865 295 2,831 3,126
Land held for development B 29,309 --- --- --- 29,309 --- 29,309
Development in progress B 5,492 10,757 --- 8,915 5,492 19,672 25,164
Other property B --- --- --- 1,998 --- 1,998 1,998
------------- --------- ----------- --------- ----------- --------- ----------- -----------
Total 180,023 $173,201 $ 722,268 $ 126 $ 115,633 $173,327 $ 837,901 $1,011,228
<FN>
<F1>
A - These land parcels are leased (see Note 4).
<F2>
B - There are no encumbrances on these properties.
<F3>
C - The encumbrance of $2,616 is related to one property.
</FN>
</TABLE>
<TABLE>
Reckson Associates Realty Corp.
Schedule III-Real Estate And Accumulated Depreciation
December 31, 1997 (Continued)
(In thousands)
<CAPTION>
Column A Column F Column G Column H Column I
-------------- ------------- -------------- ---------------
Life on which
Accumulated Date of Date Depreciation
Description Depreciation Construction Acquired is Computed
-------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C>
Vanderbilt Industrial Park,
Hauppauge, New York
(27 buildings in an
industrial park) $ 11,432 1961-1979 1961-1979 10-30 years
Airport International Plaza,
Islip, New York
(17 buildings in an
industrial park) 12,463 1970-1988 1970-1988 10-30 years
County Line Industrial Center,
Huntington, New York
(3 buildings in an
industrial park) 3,721 1975-1979 1975-1979 10-30 years
32 Windsor Place,
Islip, New York 294 1971 1971 10-30 years
42 Windsor Place,
Islip, New York 615 1972 1972 10-30 years
505 Walt Whitman Rd.,
Huntington, New York 60 1950 1968 10-30 years
1170 Northern Blvd.,
N. Great Neck, New York 115 1947 1962 10-30 years
50 Charles Lindbergh Blvd.,
Mitchel Field, New York 7,347 1984 1984 10-30 years
200 Broadhollow Road,
Melville, New York 3,151 1981 1981 10-30 years
48 South Service Road,
Melville, New York 5,895 1986 1986 10-30 years
395 North Service Road,
Melville, New York 8,849 1988 1988 10-30 years
6800 Jericho Turnpike,
Syosset, New York 7,338 1977 1978 10-30 years
6900 Jericho Turnpike,
Syosset, New York 2,898 1982 1982 10-30 years
300 Motor Parkway,
Hauppauge, New York 1,101 1979 1979 10-30 years
88 Duryea Road,
Melville, New York 1,027 1980 1980 10-30 years
210 Blydenburgh Road,
Islandia, New York 243 1969 1969 10-30 years
208 Blydenburgh Road,
Islandia, New York 284 1969 1969 10-30 years
71 Hoffman Lane,
Islandia, New York 345 1970 1970 10-30 years
933 Motor Parkway,
Smithtown, New York 490 1973 1973 10-30 years
65 and 85 South Service Rd
Plainview, New York 221 1961 1961 10-30 years
333 Earl Ovington Blvd. (Omni)
Mitchel Field, New York 12,371 1990 1995 10-30 years
135 Fell Court
Islip, New York 238 1965 1992 10-30 years
40 Cragwood Road,
South Plainfield, New Jersey 5,957 1970 1983 10-30 years
110 Marcus Drive,
Huntington, New York 1,113 1980 1980 10-30 years
333 East Shore Road,
Great Neck, New York 430 1976 1976 10-30 years
310 East Shore Road,
Great Neck, New York 1,215 1981 1981 10-30 years
70 Schmitt Blvd.,
Farmingdale, New York 267 1965 1995 10-30 years
19 Nicholas Drive,
Yaphank, New York 597 1989 1995 10-30 years
1516 Motor Parkway,
Hauppauge, New York 560 1981 1995 10-30 years
125 Baylis Road,
Melville, New York 654 1980 1995 10-30 years
35 Pinelawn Road,
Melville, New York 701 1980 1995 10-30 years
520 Broadhollow Road
Melville, New York 736 1978 1995 10-30 years
1660 Walt Whitman Road,
Melville, New York 419 1980 1995 10-30 years
70 Maxess Road,
Melville, New York 193 1967 1995 10-30 years
85 Nicon Court,
Hauppauge, New York 191 1984 1995 10-30 years
104 Parkway Drive So.,
Hauppauge, New York 54 1985 1996 10-30 years
20 Melville Park Rd.,
Melville, New York 105 1965 1996 10-30 years
105 Price Parkway,
Hauppauge, New York 342 1969 1996 10-30 years
48 Harbor Park Drive,
Hauppauge, New York 116 1976 1996 10-30 years
125 Ricefield Lane,
Hauppauge, New York 95 1973 1996 10-30 years
110 Ricefield Lane,
Hauppauge, New York 68 1980 1996 10-30 years
120 Ricefield Lane,
Hauppauge, New York 44 1983 1996 10-30 years
135 Ricefield Lane,
Hauppauge, New York 116 1981 1996 10-30 years
30 Hub Drive,
Huntington, New York 93 1976 1996 10-30 years
60 Charles Lindbergh,
Mitchel Field, New York 1,249 1989 1996 10-30 years
155 White Plains Rd
Tarrytown, New York 133 1963 1996 10-30 years
2 Church Street,
Tarrytown, New York 94 1979 1996 10-30 years
235 Main Street,
Tarrytown, New York 374 1974 1996 10-30 years
245 Main Street,
Tarrytown, New York 507 1983 1996 10-30 years
505 White Plains Road,
Tarrytown, New York 109 1974 1996 10-30 years
555 White Plains Road,
Tarrytown, New York 588 1972 1996 10-30 years
560 White Plains Road,
Tarrytown, New York 837 1980 1996 10-30 years
580 White Plains Road,
Tarrytown, New York 1,108 1977 1996 10-30 years
660 White Plains Road,
Tarrytown, New York 1,603 1983 1996 10-30 years
Landmark Square,
Stamford, CT 2,764 1973-1984 1996 10-30 years
110 Bi-County Blvd.,
Farmingdale, New York 233 1984 1997 10-30 years
RREEF Portfolio,
Hauppauge, New York
(10 additional buildings in
Vanderbuilt Industrial Park) 570 1974-1982 1997 10-30 years
275 Broadhollow Road,
Melville, New York 300 1970 1997 10-30 years
One Eagle Rock,
East Hanover, New Jersey 179 1986 1997 10-30 years
710 Bridgeport Avenue,
Shelton, CT 506 1971-1979 1977 10-30 years
101 JFK Expressway,
Short Hills, New Jersey 978 1981 1997 10-30 years
10 Rooney Circle,
West Orange, New Jersey 119 1971 1997 10-30 years
Executive Hill Office Park,
West Orange, New Jersey 504 1978-1984 1997 10-30 years
3 University Plaza,
Hackensack, New Jersey 167 1985 1997 10-30 years
400 Garden City Plaza,
Garden City, New York 139 1989 1997 10-30 years
425 Rabro Drive,
Hauppauge, New York 49 1980 1997 10-30 years
One Paragon Drive,
Montvale, New Jersey 86 1980 1997 10-30 years
90 Merrick Avenue,
East Meadow, New York 135 1985 1997 10-30 years
150 Motor Parkway,
Hauppauge, New York 151 1984 1997 10-30 years
390 Motor Parkway,
Hauppauge, New York 32 1980 1997 10-30 years
Royal Executive Park,
Ryebrook, New York 195 1983-1986 1997 10-30 years
120 White Plains Road,
Tarrytown, New York 68 1984 1997 10-30 years
University Square,
Princeton, New Jersey 25 1987 1997 10-30 years
100 Andrews Road,
Hicksville, New York 137 1954 1996 10-30 years
2 Macy Road,
Harrison, New York 8 1962 1997 10-30 years
80-100 Grasslands,
Elmsford, New York 24 1989/1964 1997 10-30 years
65 Marcus Drive,
Melville, New York 28 1968 1996 10-30 years
Land held for development --- N/A various N/A
Development in progress ---
Other property 89
--------------
Total $ 108,652
==============
</TABLE>
The aggregate cost for Federal Income Tax purposes was approximately
$932.4 million at December 31, 1997.
<TABLE>
Reckson Associates Realty Corp.
and Reckson Group
Schedule III-Real Estate and Accumulated Depreciation (continued)
(in thousands)
The changes in real estate for each of the periods in the three years ended
December 31, 1997 are as follows:
<CAPTION>
January 1, January 1,
1997 to 1996 to June 3, 1995 January 1,
December 31, December 31, to December 1995 to June
1997 1996 31, 1995 2, 1995
-------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Real estate balance at beginning of period $ 516,768 $ 288,056 $ 216,333 $ 159,693
Improvements 37,178 15,174 3,768 814
Disposal, including write-off of fully depreciated
building improvements (154) (936) (3,174) ---
Properties not contributed to the Company --- --- --- (15,133)
Consolidation of Omni <F1> --- --- --- 70,959
Acquisitions 456,836 214,474 55,054 ---
Cash paid in exchange for properties --- --- 16,075 ---
-------------- -------------- --------------- --------------
Balance at end of period $ 1,011,228 $ 516,768 $ 288,056 $ 216,333
============== ============== =============== ==============
<FN>
<F1>
The Omni was consolidated as a result of the Company purchasing a
controlling interest as part of the Formation transactions.
</FN>
</TABLE>
The changes in accumulated depreciation, exclusive of amounts relating to
equipment, autos, furniture and fixtures, fo of the periods in the three years
ended December 31, 1997 are as follows:
<TABLE>
<CAPTION>
January 1, January 1,
1997 to 1996 to June 3, 1995 January 1,
December 31, December 31, to December 1995 to June
1997 1996 31, 1995 2,1995
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at beginning of period $ 86,344 $ 72,499 $ 69,841 $ 71,596
Depreciation for period 22,442 14,781 5,832 2,453
Disposal, including write-off of fully depreciated
building improvements (134) (936) (3,174) ---
Properties not contributed to the Company --- --- --- (7,946)
Consolidation of Omni --- --- --- 3,738
-------------- -------------- --------------- --------------
Balance at end of period $ 108,652 $ 86,344 $ 72,499 $ 69,841
============== ============== =============== ==============
</TABLE>
Exhibit Index
Exhibit
Number Description
- ------- --------------
3.1* Articles of Incorporation of Registrant
3.2** By-Laws of Registrant
3.3** Amended and Restated Articles of Incorporation
4.1* Specimen Share Certificate
10.1** Amended and Restated Agreement of Limited Partnership of Reckson
Operating Partnership, L.P.
10.2 Third Amended and Restated Agreement of Limited Partnership of Omni
Partners, L.P.
10.3** Employment and Non-Competition Agreement between Registrant and
Donald Rechler
10.4** Employment and Non-Competition Agreement between Registrant and
Scott Rechler
10.5** Employment and Non-Competition Agreement between Registrant and
Mitchell Rechler
10.6** Employment and Non-Competition Agreement between Registrant and
Gregg Rechler
10.7** Non-Competition Agreement between Registrant and Roger Rechler
10.8** Employment and Non-Competition Agreement between Registrant and
J. Michael Maturo
10.9** Purchase Option Agreements relating to the Reckson Option Properties
10.10** Purchase Option Agreements relating to the Other Option Properties
10.11*** Amended 1995 Stock Option Plan
10.12**** Registrant's Unsecured Credit Facility
10.13*** 1996 Employee Stock Option Plan
10.14** Executive Center Leases
10.15* Ground Leases for certain of the Properties
10.16** Amended and Restated Agreement of Limited Partnership of Reckson
FS Limited Partnership
10.17** Indemnity Agreement relating to 100 Oser Avenue
10.18** Contribution Agreement by and among Registrant, Reckson Operating
Partnership, L.P. and Tarrytown Corporate Center, Tarrytown
Corporate Center IV, L.P., Tarrytown Corporate Center II, Crest
Realties, 2 Church Street Associates, JAH Realties, and Jon
Halpern
10.19 Amended and Restated 1997 Stock Option Plan
10.20 1998 Stock Option Plan
10.21 Amended and Restated Agreement of Limited Partnership of Reckson
Morris Operating Partnership, L.P.
10.22 Registrant's Unsecured Bridge Facility
10.23 Note Purchase Agreement for the Senior Unsecured Notes
10.24 Severance Agreement between Registrant and Donald Rechler
10.25 Severance Agreement between Registrant and Scott Rechler
10.26 Severance Agreement between Registrant and Mitchell Rechler
10.27 Severance Agreement between Registrant and Gregg Rechler
10.28 Severance Agreement between Registrant and Roger Rechler
10.29 Severance Agreement between Registrant and J. Michael Maturo
12.1 Statement of Ratios of Earnings to Fixed Charges
21.1 Statement of Subsidiaries
23.0 Consent of Independent Auditors
24.1 Powers of Attorney (included in Part IV of this Form 10-K)
27.0 Financial Data Schedule
27.1 Restated Financial Data Schedule for the 6 months ended June 30,
1996 reflecting the effect of FASB #128, Earnings Per Share.
27.2 Restated Financial Data Schedule for the 9 months ended September
30, 1996 reflecting the effect of FASB #128, Earnings Per Share.
27.3 Restated Financial Data Schedule for the year ended December 31,
1996 reflecting the effect of FASB #128, Earnings Per Share.
27.4 Restated Financial Data Schedule for the 3 months ended March 31,
1997 reflecting the effect of FASB #128, Earnings Per Share.
27.5 Restated Financial Data Schedule for the 6 months ended June 30,
1997 reflecting the effect of FASB #128, Earnings Per Share.
27.6 Restated Financial Data Schedule for the 9 months ended September
30, 1997 reflecting the effect of FASB #128, Earnings Per Share.
* Previously filed as an exhibit to Registration Statement on Form S-11
(No. 33-84324) and incorporated herein by reference.
** Previously filed as an exhibit to Registration Statement on Form S-11
(No. 333-1280) and incorporated herein by reference.
*** Previously filed as an exhibit to the Company's Form 8-K report filed
with the SEC on November 25, 1996 and incorporated herein by reference.
**** Previously filed as an exhibit to the Company's Form 8-K report filed
with the SEC on May 15, 1997 and incorporated herein by reference.
<TABLE>
Exhibit 12.1
Reckson Associates Realty Corp.
Ratios of Earnings to Fixed Charges
The following table sets forth the Company's consolidated ratios of
earnings to fixed charges for the periods shown:
<CAPTION>
June 3, 1995 January 1, 1995 Year Ended December 31,
Year Ended Year Ended to to ------------------------
December 31, 1997 December 31, 1996 December 31, 1995 December 31, 1995 1994 1993
- ----------------- ----------------- ----------------- ----------------- ------ ------
<C> <C> <C> <C> <C> <C>
2.77x 2.72x 2.71x 0.96x<FN1> 0.97x<FN1> 0.65x<FN1>
<FN>
<FN1>
Prior to completion of the IPO on June 2, 1995, the Company's predecessors
operated in a manner as to minimize net taxable income to the owners. The
IPO and the related formation transactions permitted the Company to deleverage
its properties significantly, resulting in a significantly improved ratio of
earnings to fixed charges.
</FN>
</TABLE>
Exhibit 21.1
Reckson Associates Realty Corp.
Statement of Subsidiaries
Name State of Organization
- ------------------------------ -----------------------------
Reckson Operating Partnership, L.P. Maryland
Omni Partners, L.P. Delaware
Reckson FS Limited Parntership Delaware
Reckson Morris Industrial Trust Maryland
Exhibit 23.0
Reckson Associates Realty Corp.
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement
Form S-3 No. 333-28015 of Reckson Associates Realty Corp. of our report dated
February 14, 1998, except for Note 14, as to which the date is February 18,
1998, with respect to the consolidated financial statements and schedule of
Reckson Associates Realty Corp. included in this Annual Report Form 10-K for
the year ended December 31, 1997.
Ernst & Young
New York, New York
March 23, 1998
Exhibit 10.2
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
OMNI PARTNERS, L.P.
TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 FORMATION AND CONTINUATION . . . . . . . . . . . . . . . . . . 21
2.1. Formation and Continuation of Partnership . . . . . . . . . . . 21
2.2. Statement of Partnership . . . . . . . . . . . . . . . . . . . 21
ARTICLE 3 NAME AND PLACE OF BUSINESS; REGISTERED OFFICE. . . . . . . . . 21
3.1. Name, Place of Business and Office . . . . . . . . . . . . . . 21
3.2. Registered Office and Registered Agent . . . . . . . . . . . . 21
ARTICLE 4 PURPOSES . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 5 TERM . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.1. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.2. No Termination, etc . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 6 PERCENTAGE INTERESTS; CAPITAL CONTRIBUTIONS; TI
RESERVE; CAPITAL ACCOUNTS . . . . . . . . . . . . . . . . 23
6.1. Initial Contribution of Reckom, HMCC, Odyli and Odyssey . . . . 23
6.2. Percentage Interests . . . . . . . . . . . . . . . . . . . . . 23
6.3. TI Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.4. Loans/Additional Contributions. . . . . . . . . . . . . . . . . 24
6.5. Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . 26
6.6. Limited Partner's Liability . . . . . . . . . . . . . . . . . . 28
6.7. Additional Definitions Relating to Allocations . . . . . . . . 28
ARTICLE 7 TAX MATTERS; ALLOCATION OF PROFITS AND LOSSES . . . . . . . . . 29
7.1. Allocations of Profits and Losses . . . . . . . . . . . . . . . 29
7.2. Tax Allocations . . . . . . . . . . . . . . . . . . . . . . . . 30
7.3. Special Allocations. . . . . . . . . . . . . . . . . . . . . . 30
7.5. Other Tax Matters . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 8 DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.1. Distributions of Net Ordinary Cash Flow and Net Extraordinary
Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.2. Liquidating Distributions . . . . . . . . . . . . . . . . . . . 38
8.3. No Restoration of Funds . . . . . . . . . . . . . . . . . . . . 38
8.4. Limitation on Distributions . . . . . . . . . . . . . . . . . . 38
8.5. Claims Paid Under Title Insurance Policies . . . . . . . . . . 39
ARTICLE 9 BOOKS OF ACCOUNT; REPORTS; FISCAL YEAR, ETC . . . . . . . . . . 39
9.1. Books of Account . . . . . . . . . . . . . . . . . . . . . . . 39
9.2. Annual Reports . . . . . . . . . . . . . . . . . . . . . . . . 40
9.3. Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.4. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.5. Tax Returns; Tax Matters Partner . . . . . . . . . . . . . . . 40
9.6. Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.7. Budgets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.8. Partnership Register . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 10 MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . 43
10.1. Duties and Powers of Managing Partner . . . . . . . . . . 43
10.1.1 General Scope of Duties and Authority . . . . . . . . . . 43
10.1.2 Reckson Affiliate as Managing Agent . . . . . . . . . . . 43
10.1.3 Reckson Affiliate as Construction Manager . . . . . . . . 45
10.2. Major Decisions . . . . . . . . . . . . . . . . . . . . . 46
10.3. Employment of Agents, etc . . . . . . . . . . . . . . . . 48
10.4. Time Devoted by General Partners; Compensation of Partner 48
10.5. Powers of General and Limited Partners . . . . . . . . . . 48
10.6. Sale and Refinancing. . . . . . . . . . . . . . . . . . . 49
10.6.1 Managing Partner's Authority. . . . . . . . . . . . . . . 49
10.6.2 First Refinancing . . . . . . . . . . . . . . . . . . . . 50
10.6.3 Future Refinancing . . . . . . . . . . . . . . . . . . . . 53
10.6.4 Cost and Expenses of the First Mortgage and TI Loan . . . 53
10.6.5 Current Interest Rate Swap . . . . . . . . . . . . . . . . 54
10.7. Conversion . . . . . . . . . . . . . . . . . . . . . . . . 56
10.7.1 Conversion Events . . . . . . . . . . . . . . . . . . . . 56
10.7.2 Co-Managing Partner Authority and Major Decisions . . . . 57
10.7.3 Odyssey Conversion Events . . . . . . . . . . . . . . . . 61
10.7.4 Effectuation of Conversion . . . . . . . . . . . . . . . . 61
10.7.5 Further Assurances . . . . . . . . . . . . . . . . . . . . 61
10.8. Managing Partner Duty . . . . . . . . . . . . . . . . . . 61
ARTICLE11 PRE-EXISTING OBLIGATIONS . . . . . . . . . . . . . . . . . . . 62
11.1. No Capital Contribution . . . . . . . . . . . . . . . . . 62
ARTICLE 12 TRANSFER OF PARTNERSHIP INTERESTS . . . . . . . . . . . . 62
12.1. Prohibited Transfers . . . . . . . . . . . . . . . . . . . 62
12.2. Permitted Transfers . . . . . . . . . . . . . . . . . . . 63
12.3. Conditions Applicable to All Transfers . . . . . . . . . . 64
12.4. Call and Put Rights . . . . . . . . . . . . . . . . . . . 66
12.5. Purchase of Partnership Interests . . . . . . . . . . . . 72
ARTICLE 13 WITHDRAWAL OF A PARTNER . . . . . . . . . . . . . . . . . 73
13.1. No Withdrawal . . . . . . . . . . . . . . . . . . . . . . 73
13.2. Termination of a Partner . . . . . . . . . . . . . . . . . 73
13.3. Effect of General Partner Becoming a Withdrawn Partner . . 73
13.4. Effect of Limited Partner Becoming a Withdrawn Partner . . 77
ARTICLE 14 DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . 77
14.1. Events of Default . . . . . . . . . . . . . . . . . . . . 77
14.2. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 79
14.3. Security Interest . . . . . . . . . . . . . . . . . . . . 80
ARTICLE 15 DISSOLUTION AND LIQUIDATION . . . . . . . . . . . . . . . 81
15.1. Events of Dissolution . . . . . . . . . . . . . . . . . . 81
15.2. Liquidation . . . . . . . . . . . . . . . . . . . . . . . 82
15.3. Period of Liquidation . . . . . . . . . . . . . . . . . . 83
15.4. Statement of Liquidation . . . . . . . . . . . . . . . . . 83
ARTICLE 16 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . 83
ARTICLE 17 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . 85
17.1. Representations and Warranties of Reckson . . . . . . . . 85
17.2. Representations and Warranties of The Odyssey Entities . . 86
ARTICLE 18 AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . 88
ARTICLE 19 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 88
ARTICLE 20 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . 88
ARTICLE 21 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 90
21.1. No Third-Party Beneficiaries . . . . . . . . . . . . . . . 90
21.2. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . 90
21.3. Rights and Remedies . . . . . . . . . . . . . . . . . . . 90
21.4. Integration . . . . . . . . . . . . . . . . . . . . . . . 91
21.5. Partial Invalidity . . . . . . . . . . . . . . . . . . . . 91
21.6. Survival . . . . . . . . . . . . . . . . . . . . . . . . . 91
21.7. Counterparts . . . . . . . . . . . . . . . . . . . . . . . 91
21.8. Successors and Assigns . . . . . . . . . . . . . . . . . . 91
21.9. Disposition of Documents . . . . . . . . . . . . . . . . . 91
21.10. Status Reportsbroo . . . . . . . . . . . . . . . . . . . . 92
21.11. Intentionally Omitted . . . . . . . . . . . . . . . . . . 92
21.12. No Oral Modification . . . . . . . . . . . . . . . . . . . 92
21.13. Table of Contents, Article and Section Headings . . . . . 93
21.14. Brokerage . . . . . . . . . . . . . . . . . . . . . . . . 93
21.15. Time of the Essence . . . . . . . . . . . . . . . . . . . 93
21.16. Good Faith Performance . . . . . . . . . . . . . . . . . . 93
21.17. Ownership of Partnership Property . . . . . . . . . . . . 93
21.18. Partnership Name . . . . . . . . . . . . . . . . . . . . . 93
21.19. Litigation; No Dissolution . . . . . . . . . . . . . . . . 93
21.20. No Liability for Return of Capital; No Interest . . . . . 94
21.21. Best Efforts and Sole Discretion . . . . . . . . . . . . . 94
21.22. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 94
21.23. Other Business . . . . . . . . . . . . . . . . . . . . . . 95
21.24. Obligations Are Without Recourse . . . . . . . . . . . . . 95
21.24.1 Reckson . . . . . . . . . . . . . . . . . . . . . . . . . 95
21.24.2 Odyssey Entities . . . . . . . . . . . . . . . . . . . . . 97
21.25. Construction . . . . . . . . . . . . . . . . . . . . . . . 98
21.26. Insurance . . . . . . . . . . . . . . . . . . . . . . . . 98
EXHIBITS
- --------
A - Legal Description
B - Confirmation of Prior Guaranty
C - Guarantee Milestone Dates and Amounts
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
OMNI PARTNERS, L.P.
This Third Amended and Restated Agreement of Limited Partnership (this
"Agreement") dated March 14, 1997 by and between Reckson Operating
Partnership, L.P., a Delaware limited partnership, as a general partner
("Reckson"), Odyli, Inc., a Delaware corporation, as a general partner
("Odyli") and Odyssey Partners, L.P., a Delaware limited partnership, as a
limited partner ("Odyssey").
R E C I T A L S
- - - - - - - -
Omni Partners, L.P., a Delaware limited partnership (the "Partnership"),
was formed pursuant to an agreement of limited partnership dated November 17,
1993 between Reckom, Inc., a New York Corporation ("Reckom") and FMCC
Associates, L.P., a New York limited partnership ("HMCC").
Odyli and Odyssey were admitted as partners to the Partnership pursuant
to an amended and restated agreement of limited partnership dated December
21, 1993 (the 1993 Partnership Agreement") among Reckom, HMCC, Odyli and
Odyssey.
Pursuant to a second amended and restated agreement of limited
partnership dated as of June 2, 1995 (the "Existing Partnership Agreement")
(i) Reckom and HMCC withdrew as partners from the Partnership and (ii)
Reckson was admitted as a general partner of the Partnership.
Odyli, Odyssey and Reckson desire to amend and restate the Existing
Partnership Agreement in its entirety on the terms and conditions set forth
in this Agreement and to continue to carry on the business of the Partnership
on the terms and conditions set forth in this Agreement.
Therefore, in consideration of the mutual agreements set forth herein
and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto hereby agree that the
Existing Partnership Agreement of the Partnership shall be amended, modified,
supplemented and restated in its entirety, effective as of the date first
above written, to read as follows:
ARTICLE I
DEFINITIONS
The following terms shall have the following meanings when used herein:
"Acceptable Institution" - A bona fide third party lender which is
----------------------
not an Affiliate of any Reckson Entity or any Odyssey Entity or otherwise
related to either such party pursuant to Treasury Regulation Section 1.752-4.
"Accrued AC Distributions" - As defined in Section 8.1(a)(iv).
------------------------
"Accrued CL Distributions" - As defined in Section 8.1(a)(iii).
------------------------
"Accrued Extraordinary Distributions" - As defined in Section
-----------------------------------
8.1(a)(i).
"Accrued Priority Distributions" - As defined in Section 8.1(a)(v).
------------------------------
"AC Distribution" - As defined in Section 8.1(a)(iv).
---------------
"Act" - The Securities Act of 1933, as amended.
---
"Additional Capital Account Amount" - With respect to each Partner,
---------------------------------
the then existing unreturned balance of the Additional Contributions made by
such Partner pursuant to Section 6.4 hereof less amounts of Losses allocated
to such Partner under Section 7.1(b)(iii) plus amounts of Profits allocated
to such Partner under Section 7.1(a)(i)(B).
"Additional Contribution" - As defined in Section 6.4.1.
-----------------------
"Adjusted Capital Account Amount" - With respect to each Partner, the
-------------------------------
balance of such Partner's Capital Account increased by the amount of such
Partner's Restoration Obligation.
"Affiliate" - With reference to a specified Person, any other Person
---------
which (i) directly or indirectly owns or Controls, is Controlled by, or is
under common Control with, the Person in question, or (ii) is an officer,
director or trustee of, or owner of a general partnership interest in (1) the
Person in question, (2) a general partner in the Person in question or (3)
any other Person described in clause (i) above with respect to the Person in
question, or (iii) with respect to any of the Odyssey Entities, is owned by
any partner in Odyssey. For purposes of this definition, "ownership" shall
mean direct or indirect ownership of more than five percent (5%) of the
beneficial interests of the Person in question. Without limiting the
foregoing, all members of the Immediate Rechler Family, their relatives (up
to the third degree of co-sanguinity (other than We're Associates and its
principals and any Person described in clause (i) or (ii) with respect to
We're Associates and its principals)) and their respective Affiliates shall
be deemed Affiliates of each other and of Reckson and its Affiliates.
"Agreement" - This Third Amended and Restated Agreement of Limited
---------
Partnership of Omni Partners, L.P., as it may be amended from time to time.
"Anti-Conversion Provision" - As defined in Section 10.7.1.
-------------------------
"Appraisal Date" - As defined in Section 12.4.2.
--------------
"Appraiser" - As defined in Section 12.4.3.
---------
"Bank Account" - As defined in Section 9.6.
------------
"Bankrupt" - A Partner or the Managing Agent or the Construction
--------
Manager shall be deemed "Bankrupt" if it, or any of its general partners, or
any general partner of any of its general partners, shall (i) make a general
assignment for the benefit of its creditors, (ii) generally not pay its debts
as they become due, (iii) admit in writing its inability to pay its debts as
they mature, or (iv) commence any case, proceeding or other action seeking
reorganization, arrangement, adjustment, liquidation, dissolution or
composition of it or its debts under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, or seeking appointment of a
receiver, trustee, custodian or other similar official for it or for all or
any substantial part of its property; or, if any case, proceeding or other
action against any such Partner or general partner or general partner of a
general partner shall be commenced seeking to have an order for relief
entered against it as debtor, or seeking reorganization, arrangement,
adjustment, liquidation, dissolution or composition of it or its debts under
any law relating to bankruptcy, insolvency, reorganization or relief of
debtors, or seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its property,
and such case, proceeding or other action results in the entry of an order
for relief against it which is not dismissed within one hundred and eighty
(180) days.
"Base Rate" - At any time of determination thereof, the so-called
---------
"base rate" of Citibank, N.A. as in effect at the time in question, except if
Citibank, N.A. no longer publishes its so-called "base rate" then the Base
Rate shall be the so-called "prime rate" of the largest bank, by assets, with
its principal place of business located in New York, New York to publish its
so-called "prime-rate", as in effect at such time.
"Budget" As defined in Section 9.7(a).
------
"Capital Account" - As defined in Section 6.5.1.
---------------
"Capital Budget" - As defined in Section 9.7(a).
--------------
"Capital Loan" - An unsecured loan made by a Partner to the
------------
Partnership pursuant to Section 6.4 on an interest-only basis, for a term of
ten (10) years from the date advanced, with interest payable thereon at the
Capital Loan Rate. Notwithstanding the foregoing, any Capital Loan made in
respect of TI Costs shall have a term which ends at the end of the Lockout
Period.
"Capital Loan Rate" - A floating rate equal to 100 basis points in
-----------------
excess of the lesser of (a) the interest rate paid by Reckson for funds
borrowed under its then existing credit line, if any (or if there is more
than one such credit line, the credit line (excluding credit lines having a
maximum availability (whether or not drawn) of less than $5,000,000) with the
lowest interest rate), and (b) the Base Rate plus 150 basis points.
Notwithstanding the foregoing, to the extent that any Capital Loan or
Additional Contribution is made to pay TI Costs, the Capital Loan Rate
applicable thereto (and to any accrued and unpaid interest thereon) shall be
computed as follows:
(a)If the outstanding principal amount of the Reckson TI Loans is
$750,000 or less interest shall be computed at the following per annum rate:
Through the first anniversary of the date of the Agreement-10.5%
After the first and through the fourth such anniversary -11.0%
After the fourth and through the sixth such anniversary -11.5%
Thereafter -12.0%
(b)If the outstanding principal amount of the Reckson TI Loans is more
than $750,000, interest shall be computed at the rate set forth in (a) above
with respect to the first $750,000 of outstanding principal amount, and any
balance shall bear interest at the same rate of interest as is payable on the
First Refinancing plus 2%. If the First Refinancing has not yet been
effectuated such balance shall bear interest at 10.5% per annum. If the
First Refinancing consists of more than one loan, such balance shall bear
interest at 2% in excess of the weighted average interest rate based upon the
interest rates then in effect under the loans comprising the First
Refinancing.
"Capital Requirements" - The funds necessary to: (a) cure a default
--------------------
in the Mortgage Debt or to satisfy a Mortgage Debt which becomes due in whole
or in part after the Managing Partner shall have exhausted its best efforts
to obtain replacement debt therefor in accordance with Section 10.6; (b) pay
(i) the costs of (i) improvements to the Project required by any Legal
Requirements, (ii) T1 Costs or (iii) subject to Article 4 hereof, capital
renewals, replacements and improvements to the Project that a prudent owner
would make; (c) to the extent not provided for pursuant to the preceding
clauses (a) and (b), pay for the Partnership Expenses; and/or (d) to pay
Capital Loans and Extraordinary Capital Loans at their maturity, in each case
if and to the extent the Partnership shall not have sufficient available Net
Ordinary Cash Flow, Cash Reserves or borrowing capacity under (or the ability
to make draws on) the TI Loan or (to the extent the same relates to TI Costs,
TI Reserves) to pay the same.
"Carrying Value" - With respect to any asset, the asset's adjusted
--------------
basis for federal income tax purposes, except as follows:
(i)the initial Carrying Value of any asset contributed (or deemed
contributed) to the Partnership shall be such asset's gross fair market value
at the time of such contribution;
(ii)upon adjustment of the Partners' Capital Accounts pursuant to
Section 6.5, the Carrying Values of all Partnership assets shall be adjusted
to equal their respective gross fair market values at the time of such
adjustment; and
(iii)if the Carrying Value of an asset has been determined pursuant to
paragraph (i) or (ii) above, such Carrying Value shall thereafter be adjusted
in the same manner as would the asset's adjusted basis for federal income tax
purposes, except that depreciation deductions shall be computed based on the
assets Carrying Value as so determined, and not on the asset's adjusted tax
basis.
"Cash Reserves" - Reserve funds which may be established pursuant to
-------------
the Budget or by the Managing Partner to pay Partnership Expenses and for
which the cash to make such payment(s) is not expected to be received from
operations of the Project subsequent to the establishment of such Cash
Reserves and prior to the time such payments are required to be made.
"CL Distribution" - As defined in Section 8.1(a)(iii).
---------------
"Closing Date" - As defined in Section 12.4.4.
------------
"Code" - The Internal Revenue Code of 1986, as amended from time to
----
time.
"Co-Managing Partner Major Decisions" - As defined in Section 10.7.2.
-----------------------------------
"Construction Agreement" - That certain construction and architect's
----------------------
agreement between Reckson Construction Group, Inc. and the Partnership, dated
as of December 2 1, 1993, and any replacement thereof, as in effect from time
to time.
"Construction Manager" - The construction manager under the
--------------------
Construction Agreement and any successor construction manager as may be
appointed in accordance with Section 10.1.3.
"Control" - (together with correlative meaning "controlled by" and
-------
"under common control with") - With respect to any person, the direct or
indirect power to direct the management and policies of such Person.
"Conversion Event" - Any of the following: (a) if the REIT or Reckson
----------------
becomes Bankrupt, (b) if a monetary or material non-monetary default beyond
any applicable notice and grace period or an Event of Withdrawal occurs with
respect to Reckson under this Agreement, or (c) a monetary or material non-
monetary default (beyond any applicable notice and grace period) occurs under
any instrument evidencing or securing such Indebtedness of the Partnership;
provided, that in the case of any such monetary default under this clause (c)
if under the applicable instrument evidencing or securing any Indebtedness of
the Partnership, the Partnership is not entitled to receive any notice of
such default, a Conversion Event shall not be deemed to occur with respect to
such default until the earlier of (i) the acceleration of such Indebtedness
and (ii) 5 days after notice of such default is given to Reckson by any of
the Odyssey Entities, the lender under such Indebtedness or any other Person.
"Correct Ratio" - As defined in Section 8.1(f).
-------------
"Current Interest" - As defined in the Note.
----------------
"Current Interest Rate Swap" - As defined in Section 10.6.5.
--------------------------
"Current Property Mortgage Debt" - The First Mortgage, the TI Loan
------------------------------
and the Midland Mortgage, collectively.
"Debt Service" - As defined in the definition of "Debt Service
------------
Coverage Ratio".
"Debt Service Coverage Ratio" - Net Operating Income divided by the
---------------------------
annual principal (exclusive of principal due at maturity or on demand) and
interest payments (the "Debt Service") with respect to (a) the proposed
Mortgage Debt in question plus (b) any existing Mortgage Debt which is to
remain after the closing of such proposed Mortgage Debt, in each case
forecasted for the first twelve (12) months following the projected date of
the closing of such proposed Mortgage Debt. In the forecasting of Net
Operating Income, it shall be assumed that the Partnership will receive
rents, percentage rents, expense reimbursements and other charges only from
Persons who have executed leases or other occupancy agreements with the
Partnership (without giving effect to any free-rent periods thereunder i.e.,
during any free-rent period thereunder all such Persons shall be deemed to be
then paying all rents, percentage rents, expense reimbursements and other
charges reserved thereunder which are subject to such free-rent periods as if
the rent commencement date has already occurred). In the forecasting of Debt
Service with respect to any loan or proposed loan having a floating rate of
interest, it shall be assumed that the interest rate shall be (i) the
interest rate on United States treasury securities with a maturity as close
as practicable to the maturity date of such loan or proposed loan plus 75% of
the actual spread over the reference rate (e.g., LIBOR or prime) normally
intended to be applicable to such loan or proposed loan or (ii) if a swap has
been entered into with respect to such loan or proposed loan, the interest
rate to the Partnership as a result of such swap or (iii) if a cap has been
entered into with respect to such loan or proposed loan, the lesser of (x)
the capped rate under such cap and (y) the rate set forth in the preceding
clause (i).
"Default Rate" - A fluctuating interest rate, which, at any time,
------------
shall be a rate per annum equal to the lesser of (i) the Base Rate plus 6% or
(ii) the maximum contract rate then permitted by law.
"Defaulting Partner" - As defined in Section 14.2.
------------------
"Deferral Election" - As defined in Section 12.4.1.
-----------------
"Deferred Interest" - As defined in the Note.
-----------------
"Entity Percentage Interests" - In the case of Reckson, its
---------------------------
Percentage Interest, and, in the case of the Odyssey General Partner, the sum
of the Percentage Interests of the Odyssey Entities.
"Event of Default" - As defined in Section 14.1.
----------------
"Event of Withdrawal" - As defined in Section 13.2.
-------------------
"Excess Distributions" - As defined in Section 8.1(f).
--------------------
"Exercise Notice" - As defined in Section 12.4.3.
---------------
"Existing Partnership Agreement" - As defined in the Recitals.
------------------------------
"Extraordinary Capital Loan" - A loan made by Odyssey to the
--------------------------
Partnership pursuant to Section 6.4 on an interest-only basis, for a term of
one (1) year from the date advanced, with interest payable thereon at the
Default Rate.
"Extraordinary Distribution" - As defined in Section 8.1(a)(i).
--------------------------
"First Mortgage" - That certain Amended and Restated Land Loan
--------------
Mortgage and Security Agreement, dated as of June 2, 1995, made by the
Partnership to Fleet Bank covering the Project and securing the principal
amount of $26,000,000.
"First Refinancing" - As defined in Section 10.6.2(c)(iii).
-----------------
"Fleet Document" - Any document evidencing or securing the Fleet Loan
--------------
or delivered to Fleet Bank in connection therewith.
"Fleet Loan" - As defined in Section 10.6.4(a).
----------
"Fleet Loan Expenses" - As defined in Section 10.6.4(a).
-------------------
"General Partners" - Reckson, Odyli and any other Person which now or
----------------
hereafter becomes a general partner in the Partnership in accordance with the
terms hereof. Reference to a "General Partner" shall refer to any of the
General Partners.
"general partnership interest" - The interest of a partner as a
----------------------------
general partner in a limited partnership.
"Governmental Authority" - The United States, the State of New York,
----------------------
the County of Nassau, the City of Uniondale, and all departments, boards,
agencies, offices, commissions and other subdivisions thereof, and any
official thereof, and any other governmental, public or quasi-public
authority, or any of the foregoing.
"Ground Lease" - As defined in the definition of "Leasehold".
------------
"Guaranty" - As defined in Section 10.6.5.
--------
"Hedge Costs and Payments" - As defined in Section 10.6.5.
------------------------
"Hedge Instrument" - As defined in Section 10.6.5.
----------------
"HMCC" - As defined in the Recitals.
----
"Immediate Rechler Family" - Any one or combination of Donald
------------------------
Rechler, Roger Rechler, Mitchell Rechler, Gregg Rechler, Scott Rechler, Mark
Rechler, Glenn Rechler or Todd Rechler.
"Indebtedness" - With respect to any Person, without duplication, (a)
------------
all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or other similar
instruments, (c) all obligations of such Person upon which interest charges
are customarily paid, (d) all obligations of such Person under conditional
sale or other title retention agreements relating to property purchased by
such Person, (e) all obligations of such Person issued or assumed as the
deferred purchase price of property or services, (f) all obligations as
lessee under any lease which shall have been or should be, in accordance with
generally accepted accounting principles, treated as a capital lease, (g) all
reimbursement obligations under letters of credit, surety bonds or similar
obligations, (h) all obligations under swaps, caps or other derivative
instruments, and (i) all obligations under direct or indirect guarantees in
respect of, and all obligations (contingent or otherwise) to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in respect
of, indebtedness or obligations of any other Person of the kinds referred to
in clauses (a) through (h) above.
"Indemnitees" - As defined in Article 20.
-----------
"Independent Appraisal" - As defined in Section 12.4.3.
---------------------
"Key Documents" - All mortgages, deeds of trust and other documents
-------------
evidencing Partnership Indebtedness, leases to which the Partnership is a
party or by which the Partnership is bound, brokerage agreements to which the
Partnership is a party or by which the Partnership is bound, the Management
Agreement, the Construction Agreement, service agreements for the Project,
all permits and licenses relating to the Project, all easements and other
recorded and unrecorded agreements affecting the Project or to which the
Partnership is a party or by which the Partnership is bound and the Ground
Lease.
"Land" - That certain real property located in the City of Uniondale,
----
State of New York and described in Exhibit A attached hereto.
"Leasehold" - The leasehold and other interests of the Partnership in
---------
the Land pursuant to a Lease Agreement (together with all modifications and
amendments thereto, the "Ground Lease") dated November 24, 1981 between the
County of Nassau, as ground lessor, and Reckson Associates, as ground lessee,
which ground lease (i) was assigned by Reckson Associates to HMCC by
instrument dated September 22, 1986 as amended by instrument dated March 1,
1988, and (ii) was assigned by HMCC to the Partnership by instrument dated
December 20, 1993.
"Legal Requirements" - All laws, statutes, or ordinances, including
------------------
building codes, zoning regulations, environmental protection and safety laws,
OSHA requirements, and the orders, rules, regulations, directives and
requirements of any Governmental Authority which are applicable to the
Project; all requirements, obligations, terms, restrictions, provisions and
conditions of all instruments now or hereafter applicable to the Project
whether or not of record; and all rules, regulations and requirements of any
insurance company insuring all or any part of the Project.
"Limited Capital Requirements" - The funds necessary to pay for
----------------------------
Capital Requirements other than (a) the principal amount of any non-recourse
Mortgage Debt which becomes due at its maturity, (b) capital improvements to
the Project (other than those required by any Legal Requirement or made in
connection with any life safety system of the Project or for TI Costs), (c)
Extraordinary Capital Loans at their maturity and (d) Partnership Expenses
that are not of the type or category set forth in the Budget as last in
effect when Reckson was a Managing Partner if and to the extent that the
Partnership shall not have sufficient available Net Ordinary Cash Flow, Cash
Reserves or borrowing capacity under (or the ability to make draws on) the TI
Loan or (to the extent the same relates to TI Costs, TI Reserves) to pay the
same.
"Limited Partners" - Odyssey and any other Person which now or
----------------
hereafter becomes a limited partner in the Partnership in accordance with the
terms hereof.
"Limited partnership interest" - The interest of a partner as a
----------------------------
limited partner in a limited partnership.
"Liquidating Partner" - As defined in Section 15.2.
-------------------
"Lockout Period" - As defined in Section 12.4.1.
--------------
"Losses" - As defined in Section 6.7.
------
"Major Capital Event" - Any extraordinary transaction with respect to
-------------------
the Project which generates cash receipts other than ordinary operating
income, including, without limitation, sales of real or personal property
(other than sales of personal property in the ordinary course of business),
condemnations (and conveyances in lieu thereof), recoveries relating to
damage to the Project, receipts of insurance proceeds relating to damage to
the Project and borrowings.
"Major Decisions" - As defined in Section 10.2.
---------------
"Management Agreement" - That certain management and leasing
--------------------
agreement between Reckson Management Group, Inc. and the Partnership, dated
as of December 21, 1993, and any replacement thereof, as in effect from time
to time, covering the leasing and management of the Project.
"Managing Agent" - The managing agent of the Project under the
--------------
Management Agreement and any successor managing agent as may be appointed in
accordance with Section 10.1.2.
"Managing Partner" - Reckson or any other Partner that becomes the
----------------
Managing Partner in accordance with the terms
"Material Difference" - As defined in Section 12.4.3.
-------------------
"Midland Mortgage" - That certain mortgage dated December 20, 1993,
----------------
made by the Partnership to River Bank America covering the Project and
securing the principal amount of $10,000,000 and assigned to Marine Midland
Bank pursuant to an assignment of mortgage dated June 6, 1996.
"Minimum Gain" - The amount determined by computing with respect to
------------
each nonrecourse liability of the Partnership the amount of gain, if any,
that would be realized by the Partnership if it disposed of the property (in
a taxable transaction) securing such liability in full satisfaction thereof
(and for no other consideration) and by then aggregating the amounts so
computed, as provided in Treasury Regulation Section 1.7042(d).
"Mortgage Debt" - The Current Property Mortgage Debt, the First
-------------
Refinancing or any complete or partial replacement thereof in accordance with
this Agreement, each as then in effect.
"Net Extraordinary Cash Flow" - The amount remaining, if any, after
---------------------------
subtracting from cash receipts arising from a Major Capital Event (i) all
expenses of the Partnership related to such Major Capital Event, including,
without limitation, all Indebtedness of the Partnership actually paid by
reason of the occurrence of such Major Capital Event and (ii) such reasonable
reserves for the business of the Partnership as may be established by the
Managing Partner.
"Net Operating Income" - As of any specified date means the Net
--------------------
Ordinary Cash Flow for the twelve (12) complete calendar months immediately
preceding such date or the Net Ordinary Cash Flow for the twelve (12)
complete calendar months immediately succeeding such date projected in
accordance with the provisions of this Agreement, as the case may be,
modified as follows: (a) in computing Receipts and Partnership Expenses,
rents, real estate taxes, and insurance payments shall be accrued regardless
of when actually paid, but there shall be no straight-lining of rents, (b) in
computing Receipts, there shall be excluded the amount of any net reduction
of Cash Reserves, and (c) in computing Partnership Expenses there shall be
excluded (i) all of the items of the type described in items (c), (h) and (i)
of the definition of Partnership Expenses and, in addition, (ii) all
expenses, costs and charges (whether or not specifically described in items
(a) - (k) of the definition of Partnership Expenses) in connection with any
capital renewal, replacement or improvement to the Project or which are
otherwise required to be capitalized for tax or accounting purposes.
"Net Ordinary Cash Flow" - For any given period of time, the Receipts
----------------------
for such period of time minus the Partnership Expenses for such period of
time. Anything to the contrary contained herein notwithstanding, Net
Ordinary Cash Flow shall be determined using cash basis accounting.
"1993 Partnership Agreement" - As defined in the Recitals.
--------------------------
"NML" - As defined in Section 10.6.2(a).
---
"NML Commitment" - As defined in Section 10.6.2(a).
--------------
"Non-Defaulting Partner" - As defined in Section 14.2.
----------------------
"Nonrecourse Deductions" - For a year or other period, an amount of
----------------------
deductions, losses and Section 705(a)(2)(B) Expenditures equal to the excess,
if any, of the net increase in the amount of Partnership Minimum Gain during
such year, over the aggregate amount of any distributions during such year or
proceeds of a nonrecourse liability that are allocable to an increase in
Partnership Minimum Gain, as provided in Treasury Regulation Section 1.704-
2(c).
"Non-Withdrawn Partner" - As defined in Section 13.3(e).
---------------------
"Notice" - As defined in Article 16.
------
"Odyli" - As defined on page 1 of this Agreement.
-----
"Odyssey" - As defined on page 1 of this Agreement.
-------
"Odyssey Acceleration Election" - As defined in Section 12.4.4.
-----------------------------
"Odyssey Commitment" - As defined in Section 10.6.2(b).
------------------
"Odyssey Contribution Election" - As defined in Section 6.4.4.
-----------------------------
"Odyssey Conversion Event" - Any of the following: (a) if the Odyssey
------------------------
General Partner or the Odyssey Successor becomes Bankrupt, (b) provided no
Conversion Event has previously occurred, if a monetary or material non-
monetary default beyond any applicable notice and grace period or an Event of
Withdrawal occurs with respect to the Odyssey General Partner or the Odyssey
Successor under this Agreement, or (c) a monetary or material non-monetary
default (beyond any applicable notice and grace period) under any instrument
executed (or consented to in writing) by the Odyssey General Partner
evidencing or securing any Indebtedness of the Partnership caused by (i) a
monetary or material non-monetary default by the Odyssey General Partner or
the Odyssey Successor under any instrument executed by the Odyssey General
Partner or the Odyssey Successor or (ii) the occurrence of any event with
respect to the Odyssey General Partner or the Odyssey Successor.
"Odyssey Entities" - Odyli and Odyssey collectively and any Affiliate
----------------
to which either or both transfers all or any part of their Partnership
interest in accordance with Section 12.2(b).
"Odyssey General Partner" - Odyli and any Person to which it
-----------------------
transfers all or any part of its Partnership Interest in accordance with
Section 12.2(a) and is admitted to the Partnership in accordance with Section
12.2(b).
"Odyssey Partnership Interest" - As defined in Section 12.4.1(c).
----------------------------
"Odyssey Partnership Interest Payment Amount" - As defined in Section
-------------------------------------------
12.4.1(c).
"Odyssey Put Notice" - As defined in Section 12.4.1(b).
------------------
"Odyssey Put Right" - As defined in Section 12.4.1(b).
-----------------
"Odyssey Refinancing" - As defined in Section 10.6.2(b).
-------------------
"Odyssey Successor" - Any Person to whom Odyssey's interest in the
-----------------
Partnership is transferred in accordance with this Agreement.
"Odyssey Undistributed Income" - As defined in Section 21.24.2.
----------------------------
"Odyssey's Share" - As defined in Section 8.1(f)(C).
---------------
"Operating Budget" - As defined in Section 9.7(a).
----------------
"Partner Minimum Gain" - Minimum Gain that would result if Partner
--------------------
Nonrecourse Debt were treated as a nonrecourse liability of the Partnership
and the Partnership had no other nonrecourse liabilities.
"Partner Nonrecourse Debt" - Partner nonrecourse debt, as defined in
------------------------
Treasury Regulation Section 1.704-2(b)(4).
"Partner Nonrecourse Deductions" - As defined in Section 73(a).
------------------------------
"Partners" - Reckson, Odyli and Odyssey and any Person who may be
--------
admitted as a successor or additional Partner in accordance with the terms of
this Agreement. Reference to a "Partner" shall refer to any of the Partners.
"Partnership" - As defined in the Recitals.
-----------
"Partnership Accountants" - A firm of independent certified public
-----------------------
accountants which is any of (i) David Berdon & Co., (ii) Ernst & Young LLP,
(iii) a "Big Six" accounting firm selected by the Managing Partner or (iv)
acceptable to all of the General Partners.
"Partnership Act" - The Delaware Revised Uniform Limited Partnership
---------------
Act (6 Del.C. Section 17-101, et seq.) or any successor thereto, as in
------ -- ---
effect from time to time.
"Partnership Attorneys" - Weil, Gotshal & Manges and/or Lazer,
---------------------
Aptheker, Feldman, Rosella & Yedid, LLP and, with respect to the First
Refinancing, Fried, Frank, Harris, Shriver & Jacobson or such other attorneys
as are selected by the Managing Partner.
"Partnership Expenses" - For a given period of time, a sum equal to
--------------------
the aggregate of the expenditures, charges and costs actually paid or
required to be paid during such period of time in accordance with the terms
of this Agreement or otherwise in connection with the business of the
Partnership including, without duplication or limitation:
(a) expenses, costs and charges in connection with the ownership,
operation, management or leasing of all or any portion of the Project;
(b) expenses, costs and charges in connection with the repair,
maintenance, replacement, alteration of or capital improvement to any portion
of the Project, including any casualty or condemnation losses, to the extent
that the losses are not reimbursed during such period by any third party
responsible therefor or through insurance maintained by the Partnership;
(c) all payments of principal and interest on loans (other than
Extraordinary Capital Loans and Capital Loans) to the Partnership;
(d) all sales, payroll, real estate, personal property, occupancy and
other excise, property, privilege or similar taxes and assessments imposed
upon the Partnership or the Project;
(e) utility costs and deposits and other costs and deposits required to
obtain or lease any service or equipment relating to the Project;
(f) management fees, leasing fees and reimbursements payable to the
Managing Agent pursuant to the Management Agreement;
(g) all fees and reimbursements payable to the Construction Manager
pursuant to the Construction Agreement;
(h) leasing expenditures required to be made in connection with any
lease covering space in or at the Project, including leasing commissions due
to brokers other than the Managing Agent, tenant improvements, tenant
allowances and payments, costs incurred in connection with the Partnership
assuming a tenant's lease obligations with respect to other real property and
costs incurred in connection with the Partnership's exercise of a right to
"take-back" space in the Project;
(i) the net increase, if any, in the Cash Reserves during such period
of time;
(j) the fees and expenses of the Partnership Accountants, Partnership
Attorneys, architects, engineers, appraisers, and other professionals
retained by or on behalf of the Partnership in accordance with the terms
hereof; and
(k) all other appropriate and necessary direct costs and expenses of
the Partnership incurred in accordance with this Agreement.
Notwithstanding the foregoing, there shall, however, be excluded from
Partnership Expenses:
(1) all non-cash items such as depreciation;
(2) amounts distributed to the Partners pursuant to this Agreement;
(3) all payments and expenses deducted from the proceeds of a Major
Capital Event to determine the Net Extraordinary Cash Flow;
(4) all payments of principal and interest on Extraordinary Capital
Loans and Capital Loans;
(5) any expense, cost or charge enumerated in clauses (a) through (h),
(j) or (k) above, to the extent such expense, cost or charge was paid from
Cash Reserves; and
(6) any and all expenses of Reckson and the REIT.
"Percentage Interest" - As defined in Section 6.3.
-------------------
"Permitted Transferee" - With respect to Reckson, (x) any Person
--------------------
which succeeds to all or substantially all of the assets of Reckson, whether
by merger, consolidation or acquisition of all or substantially all of the
assets of Reckson and/or the REIT, and (y) any Person which at all times is,
directly or indirectly, wholly-owned by Reckson or such successor. With
respect to Odyssey or Odyli, (i) any Person which succeeds to all or
substantially all of the assets of Odyssey or Odyli, whether by merger,
consolidation or acquisition of all or substantially all of the assets of
Odyssey or Odyli, (ii) any Affiliate of Odyssey or Odyli and (iii) any Person
in which 50% or more of the beneficial interests are owned, directly or
indirectly, by one or more Persons who, as of the date hereof, are
(indirectly, through their interests in Odyssey and/or Odyli) investors in
the Partnership (the "Existing Investors") or any of such Existing Investors'
heirs, estates, legal representatives, successors, family members or trusts
or other fiduciary relationships for the benefit of any of the foregoing
Persons (or for the benefit of any of the foregoing Persons and a charity).
For purposes of clause (ii) a Person shall be deemed an Affiliate of Odyssey
or Odyli if such Person would have been deemed an Affiliate on the date
hereof, regardless of whether Odyssey or Odyli is still in existence or such
Person would be deemed an Affiliate of Odyssey or Odyli at the time of
transfer.
"Person" - Any individual, partnership, trust (including, without
------
limitation, a liquidating trust), corporation, limited liability company,
firm or other entity.
"Pledge Agreement" - The Pledge and Security Agreement dated the date
----------------
hereof pursuant to which Odyssey and Odyli granted the Pledge Lender a first
priority security interest in their Partnership interests.
"Pledge Lender" - Reckson and any assignee of its interest in the
-------------
Pledge Loan permitted under the Pledge Agreement.
"Pledge Loan" - The loan made the date hereof from the Pledge Lender
-----------
to Odyssey and Odyli in the principal amount of $16,990,000.
"Pledge Note" - The promissory note dated the date hereof evidencing
-----------
the Pledge Loan.
"Priority Capital Account Amount" - With respect to Reckson, the then
-------------------------------
existing unreturned balance of its Priority Contribution less amounts of
Losses allocated to Reckson under Section 7.1(b)(ii) plus amounts of Profits
allocated to Reckson under Section 7.1(a)(i)(C).
"Priority Contribution" - $11 million less any amounts distributed
---------------------
from time to time pursuant to Section 8.1(c)(viii).
"Priority Distribution" - As defined in Section 8.1(a)(v).
---------------------
"Profits" - As defined in Section 6.7.
-------
"Project" - The real property consisting of the Leasehold and all of
-------
the buildings and other improvements located thereon, commonly known as the
Omni at Nassau West, together with all rights and appurtenances pertaining to
such real property, including any right, title and interest in and to
adjacent roads, streets, alleys or rights of way and together with all
buildings, improvements, fixtures and equipment now or hereafter located
thereon.
"Purchase Notice" - As defined in Section 13.3(e)(i).
---------------
"Purchase Price" - As defined in Section 13.3(e)(ii).
--------------
"Purchase Response Notice" - As defined in Section 13.3(e)(i).
------------------------
"Qualified Income Offset Amount" - As defined in Section 73(c).
------------------------------
"Receipts" - For any given period of time, a sum equal to the
--------
aggregate of all amounts actually received by or unconditionally made
available to the Partnership from or in respect of the Project or other
property of the Partnership during such period, including, without
limitation:
(a) all rents, percentage rent, expense reimbursements and other
charges received from tenants and other occupants of the Project;
(b) proceeds of rent insurance and business interruption insurance;
(c) all utility or other deposits returned to the Partnership;
(d) interest, if any, earned on tenants' security deposits or escrows
to the extent unconditionally retained and security deposits to the extent
applied pursuant to the provisions of the applicable leases;
(e) interest, if any, earned and available to the Partnership on any
Cash Reserves or other Partnership funds, or on any escrow funds deposited by
the Partnership with others;
(f) the amount of any net reduction of Cash Reserves, other than to pay
Partnership Expenses; and
(g) revenue (other than receipts from a Major Capital Event) received
by the Partnership from any other source.
Notwithstanding the foregoing, Receipts shall not include (w) amounts
contributed or loaned by the Partners pursuant to this Agreement, (x) each
tenant's security deposit and interest thereon, if any, as long as the
Partnership has a contingent legal obligation to return that deposit or such
interest thereon and (y) amounts arising from a Major Capital Event.
"Rechler Family" - Any of the Immediate Rechler Family, any children
--------------
or grandchildren of any of the Immediate Rechler Family, any trust
established for the benefit of any of the Immediate Rechler Family or any
trust established for the benefit of the grandchildren or children of any of
the Immediate Rechler Family.
"Recipient" - As defined in Section 12.4.3.
---------
"Recipient's Appraisal" - As defined in Section 12.4.3.
---------------------
"Reckom" - As defined in the Recitals.
------
"Reckson" - As defined on page 1 of this Agreement.
-------
"Reckson Call Notice" - As defined in Section 12.4.1(a).
-------------------
"Reckson Call Right" - As defined in Section 12.4.1(a).
------------------
"Reckson Claims" - As defined in Section 12.4.6.
--------------
"Reckson Default" - As defined in Section 12.4.6.
---------------
"Reckson Entities" - Reckson, Reckom and HMCC collectively and any
----------------
Affiliate to which any such Person transfers all or any part of its
Partnership interest in accordance with Section 12.2(a) and is admitted to
the Partnership pursuant to Section 12.2(b).
"Reckson Equalization Payment" - As defined in Section 10.6.5.
----------------------------
"Reckson Fleet Loan Indemnity Expenses," - As defined in Section
-------------------------------------
10.6.4(a).
"Reckson Hedge Indemnity" - As defined in Section 10.6.5.
-----------------------
"Reckson TI Loans" - All Capital Loans made by Reckson in respect of
----------------
TI Costs.
"Reckson Undistributed Income" - As defined in Section 21.24.1.
----------------------------
"Reckson's Share" - As defined in Section 8.1(f)(C).
---------------
"Refinance" - To effect a Refinancing.
---------
"Refinancing" - Any amendment, modification, replacement, renewal, or
-----------
extension of all or a portion of any Partnership Indebtedness.
"Refinancing Appraisal Date" - As defined in Section 10.6.2(c)(iii).
--------------------------
"Refinancing Guidelines" - As defined in Section 10.6.2(c).
----------------------
"Regular Capital Account Amount" - The excess at a given time of (i)
------------------------------
a Partner's Adjusted Capital Account Amount over (ii) the aggregate of such
Partner's Additional Capital Account Amount and Priority Capital Account
Amount.
"REIT" - Reckson Associates Realty Corp., a Maryland corporation.
----
"Responsible Partner" - As defined in Section 12.3.1(a)(ii).
-------------------
"Restoration Obligation" - For a Partner at a given time, an amount
----------------------
equal to the sum at such time, of (i) such Partner's allocable share (as
determined under Section 752 of the Code) of any recourse indebtedness of the
Partnership which could not be repaid out of the Partnership's assets if all
such assets were sold at their respective Carrying Values, (ii) any
unconditional obligation of such Partner to contribute additional amounts to
the capital of the Partnership in the future (to the extent not previously
taken into account in determining such Partner's share of recourse
liabilities of the Partnership) and (iii) such Partner's share of Minimum
Gain and share of Partner Minimum Gain.
"Sale Transaction Costs" - All costs that would be incurred in
----------------------
connection with the sale in question, including, without limitation, brokers'
commissions, gains and transfer taxes, legal, accounting and other
professional fees and expenses, title insurance costs, recording fees, the
cost of environmental and engineering reports and all other customary costs
of effectuating, documenting and closing a sale (as conclusively determined
by the Partnership Accountants).
"Section 705(a)(2)(B) Expenditure" - An expenditure of the
--------------------------------
Partnership (as described in Section 705(a)(2)(B) of the Code) which is
neither deductible in computing taxable income nor properly chargeable to
capital account, and any other expenditure considered to be such an
expenditure pursuant to Treasury Regulation Section 1.7041-1(b)(2)(4)(h)(i).
"Security Account" - As defined in Section 9.6.
----------------
"Sender" - As defined in Section 12.4.3.
------
"Sender's Appraisal" - As defined in Section 12.4.3.
------------------
"Share" - Either of Odyssey's Share or Reckson's Share.
-----
"Special Odyssey Partnership Interest Payment Amount" - As defined in
---------------------------------------------------
Section 12.4.6.
"Substitute Interest Rate Cap" - As defined in Section 10.6.5.
----------------------------
"Substitute Interest Rate Swap" - As defined in Section 10.6.5.
-----------------------------
"TI Costs" - Costs of tenant space installations, leasing
--------
commissions, legal fees for lease negotiations, or any other payment to be
made in connection with the leasing or releasing of space.
"TI Loan" - A loan in the maximum principal amount of $7,000,000 made
-------
by Fleet Bank to the Partnership to fund the cost of tenant improvements,
leasing commissions and other costs incurred in leasing the space at the
Property which was vacant and available for leasing as of December 15, 1994
secured by that certain Amended and Restated Building Costs Mortgage and
Security Agreement, dated as of the date hereof, made by the Partnership to
Fleet Bank.
"TI Reserve" - As defined in Section 6.3.
----------
"TI Reserve Account" - As defined in Section 6.3.
------------------
"Transaction Costs" - All costs that would be incurred in connection
-----------------
with any refinancing of the Mortgage Debt, including, without limitation,
commitment fees, deposits, origination fees, brokers' commissions, gains and
transfer taxes, legal, accounting and other professional fees and expenses,
title insurance costs, recording fees, the cost of environmental and
engineering reports and all other customary costs of effectuating,
documenting and closing a refinancing (as conclusively determined by the
Partnership Accountants).
"Transferee" - As defined in Section 12.2(a).
----------
"Transferor" - As defined in Section 12.2(a).
----------
"Unites" - "Partnership Units" of "Limited Partner Interests" as such
------
terms are defined in the Reckson L.P. Agreement.
"Withdrawn Partner" - As defined in Section 13.2.
-----------------
ARTICLE 2
FORMATION AND CONTINUATION
2.1.Formation and Continuation of Partnership. The Partnership,
-----------------------------------------
previously formed under the Partnership Act, is hereby continued upon the
terms and conditions set forth below.
2.2.Statement of Partnership. Concurrently with the execution of
------------------------
this Agreement, the Partners shall execute and acknowledge, and the Managing
Partner shall promptly file or record with the proper offices in each
jurisdiction and political subdivision in which the Partnership does
business, and if necessary or desirable, cause to be published, such
certificates or amended certificates, if any, as are required or permitted by
the Partnership Act, or any fictitious name act, or act relating to
qualification to do business, or similar statute or any rule or regulation in
effect in such jurisdiction or political subdivision. The Partners shall
further execute and acknowledge and the Managing Partner shall promptly file
or record such amended certificates or additional certificates or instruments
of whatever nature as may from time to time be called for or required by such
statutes, rules or regulations to permit the continued existence and
operation of the Partnership.
ARTICLE 3
NAME AND PLACE OF BUSINESS; REGISTERED OFFICE
3.1.Name, Place of Business and Office. The business of the
----------------------------------
Partnership shall be conducted under the firm name "Omni Partners, L.P.", or
such other name as the Partners may agree upon. The principal place of
business of the Partnership shall be at 225 Broadhollow Road - CS5431,
Melville, New York 11747, or such other place in New York City or Nassau or
Suffolk County as the Managing Partner shall determine.
3.2.Registered Office and Registered Agent. The address of the
--------------------------------------
registered office and the name and address of the registered agent for
service of process on the Partnership in the state of Delaware is The
Prentice-Hall Corporation System, Inc., 32 Lockerman Square, Suite L-100,
Dover, Kent County, Delaware 19904.
ARTICLE 4
PURPOSES
The sole purposes of the Partnership shall be to own, hold, maintain,
operate, use, lease, finance and sell the Project or any portion thereof, and
to do all other things reasonably incident thereto, in accordance with the
terms of this Agreement. The Partnership shall not acquire any land or
interest therein in addition to the Project nor further improve, develop,
renovate (except for repairs in the ordinary course of business), or expand
the Project. Except as herein expressly provided and to the extent required
by applicable Legal Requirements, no easement; restrictive covenant or other
encumbrance or title condition shall be placed on any part of the Project and
no existing easement, restrictive covenant or other encumbrance or title
condition shall be modified, provided that the Managing Partner may grant or
modify utility or similar easements to the extent necessary to provide
services to the Project.
ARTICLE 5
TERM
5.1.Term. The term of the Partnership shall continue until December
----
31, 2043, unless sooner terminated pursuant to the provisions hereof.
5.2.No Termination, etc. Except as specifically provided in this
--------------------
Agreement:
(a) the Partners shall continue as Partners hereunder;
(b) no Partner shall terminate or attempt to terminate this Agreement
or voluntarily take any action which would result in such termination; and
(c) no Partner shall file for, pursue or seek any partition of the
Project or other assets of the Partnership.
ARTICLE 6
PERCENTAGE INTERESTS;
CAPITAL CONTRIBUTIONS; TI RESERVE; CAPITAL ACCOUNTS
6.1.Initial Contribution of Reckom, HMCC, Odyli and Odyssey. As
-------------------------------------------------------
provided in the Existing Partnership Agreement and the 1993 Partnership
Agreement, Odyli, Odyssey and Reckson have previously made contributions to
the Partnership, and Reckson has succeeded to the right, title and interest
in the initial contributions of Reckom and HMCC.
6.2.Percentage Interests. As of the date hereof, the "Percentage
--------------------
Interest" of (a) Odyli, as a General Partner, is .5 %, (b) Odyssey, as a
Limited Partner, is 39.5 % and (c) Reckson, as a General Partner, is 60%,
subject in each instance, however, to adjustment as provided in Section
6.4.4.
6.3.TI Reserve. On the date hereof the Managing Partner shall
----------
establish a "TI Reserve Account" at a bank selected by the Managing Partner.
The TI Reserve Account shall be kept separate from other accounts of the
Partnership and shall be interest-bearing. At any time and from time to time
during which the amount (including accrued interest) on deposit in the TI
Reserve Account (herein, the "TI Reserve") is less than $2.5 million, amounts
which would otherwise be distributed to the Partners under Section 8.1 shall,
to the extent provided in such Section, be deposited into the TI Reserve
Account. Although the TI Reserve shall be Partnership property, the Managing
Partner shall separately record on the books and records of the Partnership
the amounts deposited by or on behalf of each of the Reckson Entities and the
Odyssey Entities in the TI Reserve Account and the interest earned on account
of the amounts deposited by each of the Reckson Entities and the Odyssey
Entities. Funds in the TI Reserve Account shall only be withdrawn as
follows:
(A)to pay TI Costs incurred by the Partnership after the date hereof, in
which event the amount of the withdrawal shall be debited against Reckson's
Share and Odyssey's Share in accordance with the Correct Ratio;
(B)if all accrued and unpaid Current Interest and Deferred Interest under the
Pledge Note is not paid on any "Interest Payment Date" (as defined in the
Pledge Note) from distributions of Net Ordinary Cash Flow or Net
Extraordinary Cash Flow (other than Extraordinary Distributions and
distributions in respect of the First Refinancing or Extraordinary Capital
Loans), and the Odyssey Entities fail to pay the shortfall from other funds,
then to pay to Pledge Lender an amount (which shall be debited against
Odyssey's Share) equal to the lesser of (x) Odyssey's Share and (y) such
shortfall;
(C)as provided in Section 14.3, in which event the amount of the withdrawal
shall be debited against the Share of the Defaulting Partner; or
(D)if the Pledge Loan is accelerated, then to pay to Pledge Lender an amount
(which shall be debited against Odyssey's Share) equal to the lesser of (x)
Odyssey's Share and (y) the amount owed under the Pledge Loan.
6.4.Loans/Additional Contributions.
------------------------------
6.4.1The Managing Partner shall promptly provide notice to the Partners
of any Capital Requirement and the nature thereof, including without
limitation as to whether the same relates to a TI Cost. The Odyssey Entities
shall not be required to make any contributions or loans to the Partnership
on account of any Capital Requirement unless they so elect. If the Odyssey
Entities elect to make a contribution to the Partnership on account of any
Capital Requirement, then each Partner shall make a contribution (each, an
"Additional Contribution") to the Partnership on account of such Capital
Requirement in proportion to their respective Percentage Interests within
thirty (30) days (or any shorter period (but not less than ten (10) business
days) as may be required under the circumstances) following the giving of
notice by the Managing Partner of such Capital Requirement. In no event
shall the Odyssey Entities' Percentage Interests, share of Profits or Losses
or distribution of Net Ordinary Cash Flow or Net Extraordinary Cash Flow be
reduced or diminished by reason of any contributions or loans made by Reckson
on account of any Capital Requirement nor shall the Capital Accounts of the
Odyssey Entities be adjusted as a result of their election not to make any
contribution or loan to the Partnership on account of any Capital
Requirement.
6.4.2(a)If (i) the Managing Partner provides notice to the Partners of a
Capital Requirement and (ii) the Odyssey Entities elect not to contribute
their respective Percentage Interests of such Capital Requirement to the
Partnership, then Reckson shall make a Capital Loan to the Partnership of the
entire amount of such Capital Requirement (i.e., the amount thereof allocated
to both Reckson and the Odyssey Entities).
(b)Notwithstanding the foregoing Section 6.4.2(a), if (i) Reckson's
interest in the Partnership shall have been converted into a limited
partnership interest pursuant to Section 10.7 prior to the date on which the
Managing Partner provides notice to the Partners of a Capital Requirement and
(ii) the Odyssey General Partner is the sole Managing Partner of the
Partnership, then, during any such period when Reckson is a Limited Partner
(x) Reckson shall only be obligated to make Capital Loans to the Partnership
pursuant to Section 6.4.2(a) if such Capital Requirement is a Limited Capital
Requirement, in which case Reckson and the Odyssey Entities shall each make a
Capital Loan to the Partnership on account of such Limited Capital
Requirement in accordance -with their respective Percentage Interests within
thirty (30) days (or any shorter period (but not less than ten (10) days) as
may be required under the circumstances) following the giving of notice by
the Managing Partner of such Limited Capital Requirement and (y) if such
Capital Requirement is not a Limited Capital Requirement, Reckson shall not
be obligated to make a Capital Loan to the Partnership on account of such
Capital Requirement and the Odyssey Entities may elect, in their sole
absolute discretion, to make a Capital Loan to the Partnership of all or any
portion of such Capital Requirement.
6.4.3Any amounts contributed by a Partner to the Partnership on account
of any Capital Requirements pursuant to this Section 6.4 shall be treated as
a capital contribution to the Partnership, but such contributions shall not
increase such Partner's Percentage Interest, share of Profits and Losses, or
distribution of Net Ordinary Cash Flow or Net Extraordinary Cash Flow, except
as otherwise provided in Section 6.4.4.
6.4.4If at any time or times Reckson shall fail to timely make any loan
or capital contribution to the Partnership which Reckson is obligated to make
under this Section 6.4, and such failure shall continue for a period of five
(5) business days after notice of such failure from another Partner, Reckson
shall be deemed to be a "Defaulting Partner" under Article 14. In addition
to any remedies the Odyssey Entities may have elsewhere under this Agreement,
Odyssey may, but shall not be required to, elect to (i) make an Extraordinary
Capital Loan to the Partnership for all or any portion of the amount which
Reckson failed to loan or contribute to the Partnership and/or (ii) to the
extent not so loaned to the Partnership by Odyssey, contribute all or any
portion of such amount which Reckson failed to loan or contribute to the
Partnership (each, an "Odyssey Contribution Election"), and the making of
either/or both of such elections shall not be deemed to cure such default by
Reckson. If Odyssey makes an Odyssey Contribution Election and contributes
capital to the Partnership in accordance with this Section 6.4.4, (x) the
Percentage Interest of Reckson shall be decreased immediately thereafter by
that number of percentage points equal in amount to the quotient (expressed
as a percentage) of the amount so contributed by Odyssey divided by the total
amount of the Capital Accounts (minus the amount of the Priority
Contribution) of all of the Partners on the date hereof plus the entire
amount of all contributions made by any Partner after the date hereof through
and including the date of such Odyssey Contribution Election and after giving
effect thereto) and (y) the Percentage Interest of Odyssey shall be increased
by the same number of percentage points.
6.4.5No Partner shall be obligated to make any capital contributions to
the Partnership except as set forth in this Article 6. Any election on the
part of the Odyssey Entities not to contribute any amounts requested to be
contributed in accordance with this Section 6.4 (other than as expressly
provided in Section 6.4.2(b)) shall not constitute a default or Event of
Default hereunder or give rise to any right or remedy on the part of Reckson.
6.5.Capital Accounts.
----------------
6.5.1Each Partner shall have a capital account (a "Capital Account")
equal to its Capital Account on the date immediately prior hereto.
6.5.2Each Partner's Capital Account shall be maintained and adjusted in
accordance with Treasury Regulations Sections 1.704-1(b) and 1.704-2.
Consistent with such Regulations, (a) there shall be credited to each
Partner's Capital Account: (i) the amount of any cash and the fair market
value of any property contributed by such Partner to the capital of the
Partnership, (ii) such Partner's share of Profits (as determined in
accordance with Section 7.1), and (iii) any items of income or gain allocated
to such Partner pursuant to any provision of Section 7.3; and (b) there shall
be charged against each Partner's Capital Account: (i) the amount of all cash
distributions to such Partner (other than any amounts treated as guaranteed
payments), (ii) the fair market value of any property distributed to such
Partner by the Partnership (net of any liability secured by such property
that the Partner is considered to assume or take subject to under Section 752
of the Code), (iii) such Partner's share of Losses (as determined in
accordance with Section 7.1), and (iv) any items of loss, deduction or
Section 705(a)(2)(B) Expenditures allocated to such Partner pursuant to any
provision of Section 7.3. Any liabilities of a Partner assumed by the
Partnership and any liabilities of the Partnership assumed by a Partner shall
be treated in a manner consistent with Treasury Regulation Section
1.7041(b)(2)(iv)(c).
6.5.3Except as otherwise provided in this Agreement, whenever it is
necessary to determine the Capital Account of any Partner, the Capital
Account of such Partner shall be determined after giving effect to all
allocations pursuant to Article 7 and all distributions in respect to
transactions effected before the date as of which such determination is to be
made.
6.5.4Except as otherwise set forth in Section 6.4, no Partner with a
negative balance in its Capital Account shall have any obligation to the
Partnership or the other Partners to restore such negative balance.
6.5.5The transferee of any Partnership interest transferred in
accordance with the terms of this Agreement shall succeed to the Capital
Account of the transferor to the extent it relates to the transferred
interest.
6.5.6If the Partnership at any time distributes any of its assets in-
kind to any Partner, the Capital Accounts of the Partners shall be adjusted
to account for the Partners' allocable shares (as determined, in each case,
in accordance with Article 7) of Profits or Losses that would have been
realized by the Partnership had it sold the distributed assets at their
respective fair market values immediately prior to their distribution.
6.5.7In the event that the Partnership makes an election under Section
754 of the Code, the amounts of any adjustments to the bases (or Carrying
Values) of the assets of the Partnership made pursuant to Section 743 of the
Code shall not be reflected in the Capital Accounts of the Partners, but the
amounts of any adjustments to the bases (or Carrying Values) 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 (i) be reflected in the Capital Account of the Partner
receiving such distribution in the case of a distribution in liquidation of
such Partner's interest in the Partnership and (ii) otherwise be reflected in
the Capital Accounts of the Partners in the manner in which the unrealized
income and gain that is displaced by such adjustments would have been shared
had the property been sold at its Carrying Value immediately prior to such
adjustments.
6.5.8Immediately prior to any Partner making a capital contribution, at
the election of such Partner, the Capital Accounts of all Partners shall be
adjusted (pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(f))
upward or downward to reflect any unrealized gain or loss attributable to
each Partnership property, as if such unrealized gain or loss had been
recognized upon an actual sale of each Partnership property for its fair
market value, immediately prior to such distribution or issuance, and had
been allocated to the Partners at such time pursuant to Article 7.
6.5.9Upon the withdrawal of a Partner requiring a payment to the
Withdrawn Partner under Section 13.3 or 13.4, the Capital Accounts of all
Partners shall be adjusted (pursuant to Treasury Regulation Section 704-
1(b)(2)(iv)(f)) upward or downward to reflect any unrealized gain or loss
attributable to each Partnership property, as if such unrealized gain or loss
had been recognized upon an actual sale of each Partnership property for its
fair market value, at the time of the withdrawal, and had been allocated to
the Partners at such time pursuant to Article 7.
6.6.Limited Partner's Liability. The liability of a Limited Partner,
---------------------------
as such, to make capital contributions to the Partnership, shall be limited
to the amount of capital contributions which it has made and is obligated to
make pursuant to this Article 6. No Limited Partner shall have any further
obligation to contribute money to or in respect of any liability or other
obligation of the Partnership, nor shall any Limited Partner be personally
liable for any liability or other obligation of the Partnership.
Notwithstanding the foregoing two sentences, if the general partnership
interest of Reckson is converted into a limited partnership interest pursuant
to Section 10.7, then Reckson shall remain liable for, and be obligated to
make, all loans and contributions in accordance with Section 6.4 which it was
theretofore obligated to make, subject to the limitation as to Capital Loans
set forth in Section 6.4.2(b).
6.7.Additional Definitions Relating to Allocations. "Profits" and
----------------------------------------------
"Losses" shall mean the taxable income or loss, respectively, for a period as
determined for federal income tax purposes, computed with the following
adjustments:
(a)items of gain, loss and deduction relating to Partnership assets
shall be computed based upon the Carrying Values of the Partnership's assets
rather than upon the assets' adjusted basis for federal income tax purposes;
(b)tax-exempt income received by the Partnership shall be deemed, for
purposes of this definition only, to be gross income;
(c)the amount of any adjustment to the Carrying Value of any asset of
the Partnership pursuant to Section 743 of the Code shall not be taken into
account in computing Profits and Losses;
(d)Section 705(a)(2)(B) Expenditures shall be treated as deductible
expenses;
(e)any items of gross income, gain, loss, deduction or Section
705(a)(2)(B) Expenditures allocated pursuant to any provision of Section 7.3
shall be excluded from the computation of Profits and Losses; and
(f)Nonrecourse Deductions and Partner Nonrecourse Deductions shall be
excluded from the computation of Profits and Losses.
ARTICLE 7
TAX MATTERS; ALLOCATION OF PROFITS AND LOSSES
7.1.Allocations of Profits and Losses. (a) Profits for each fiscal
---------------------------------
period of the Partnership shall be allocated among the Partners in the
following amounts and order of priority:
(i)to the extent Losses have been allocated pursuant to Section 7.1(b) for
any prior period, first (A) to the General Partners to offset any Losses
allocated pursuant to subclause (iv) of Section 7.1(b) not previously
reversed with an allocation of Profits under this subclause (and in
proportion to any Losses so allocated), second (B) to the Partners to offset
any Losses allocated pursuant to subclause (iii) of Section 7.1(b) not
previously reversed with an allocation of Profits under this subclause (and
in proportion to any Losses so allocated), third (C) to Reckson to offset any
Losses allocated pursuant to subclause (ii) of Section 7.1(b) not previously
reversed with an allocation of Profits under this subclause, and fourth (D)
to the Partners to offset any Losses allocated pursuant to subclause (i) of
Section 7.1(b) not previously reversed with an allocation of Profits under
this subclause (and in proportion to any Losses so allocated); and
(ii)thereafter, to the Partners, pro rata in accordance with their Percentage
Interests.
(b)Losses for each fiscal period of the Partnership shall be allocated
among the Partners in the following amounts and order of priority:
(i)first, to the Partners, pro rata in accordance with their Percentage
Interests, until their Regular Capital Account Amounts are reduced to zero;
(ii)second, to Reckson until its Priority Capital Account Amount is reduced
to zero;
(iii)third, to the Partners, pro rata in accordance with their respective
remaining positive Adjusted Capital Account Amounts until their Adjusted
Capital Account Amounts are reduced to zero; and
(iv)thereafter, to the General Partners, pro rata in accordance with their
respective Entity Percentage Interests.
(c)Notwithstanding paragraphs (a) and (b) of this Section 7.1, (i) all
Fleet Loan Expenses and any other loss, cost or expense described in Section
10.6.4(a) payable by Reckson and all Hedge Costs and Payments shall be
allocated exclusively to Reckson and (ii) an amount of gross income equal to
the amount of any Reckson Equalization Payment made to Reckson shall be
allocated to Reckson.
7.2.Tax Allocations. (a) For tax purposes, all items of income, gain,
loss, or deduction shall be allocated to the Partners in the same
manner as are Profits and Losses and any amounts allocated under Section
7.3; provided, however, that if the Carrying Value of any property of the
Partnership differs from its adjusted basis for tax purposes, then items of
income, gain, loss, deduction for tax purposes shall be allocated among the
Partners in a manner that takes account of the variation between the adjusted
basis of the property for tax purposes and its Carrying Value in the manner
provided for under Sections 704(b) and 704(c) of the Code and the related
Treasury Regulations thereunder.
(b)Items of credit shall be allocated among the Partners in the manner
provided in Treasury Regulation Section 1.704-1(b)(4)(ii).
(c)Notwithstanding any other provision hereof, any income from the full
or partial discharge of indebtedness arising prior to the admission of the
Odyssey Entities to the Partnership shall be allocated entirely to Reckson.
(d)Notwithstanding anything to the contrary contained herein, the
Partnership shall continue to allocate to Odyssey amortization deductions
relating to $100,000 of Partnership organization expense currently being
allocated to Odyssey. Such allocations shall have no effect on the Capital
Accounts of the Partners.
7.3.Special Allocations. (a) Allocation of Nonrecourse Deductions
-------------------
and Partner Nonrecourse Deductions. Notwithstanding the provisions of
Section 7.1, and subject to the provisions of subsections (b) and (c) of this
Section 7.3, (i) Nonrecourse Deductions for the year or other period shall be
allocated to the Partners pro rata in accordance with their respective
Percentage Interests, and (ii) items of loss and deductions and Section
705(a)(2)(B) Expenditures attributable, under Treasury Regulation Section
1.704-2(i), to Partner Nonrecourse Debt ("Partner Nonrecourse Deductions")
shall be allocated in accordance with the ratios in which the Partners bear
the economic risk of loss for such debt (as determined pursuant to Treasury
Regulation Section 1.752-2).
(b)Minimum Gain Chargeback. If in any year or other period, there is
-----------------------
a net decrease in the amount of the Partnership's Minimum Gain or in Partner
Minimum Gain, then prior to any allocation pursuant to Section 7.1, each
Partner shall be allocated income and gain for such year or other period
(and, if necessary, for subsequent years) in proportion to, and to the extent
of, the portion of such Partner's share of the net decrease in Minimum Gain
or Partner Minimum Gain during such year or period as determined in
accordance with Treasury Regulation Sections 1.704-2(g) or 1.704-2(i).
(c)Qualified Income Offset. If, during any year any Partner
-----------------------
unexpectedly receives any adjustment, allocation or distribution described in
Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), then items
of income and gain for such year or other period (and if necessary subsequent
years), shall (prior to any allocation pursuant to Sections 7.1 or 7.3(a)) be
allocated to such Partner in an amount equal to its Qualified Income Offset
Amount, if any; provided, however, that an allocation pursuant to this
sentence shall be made only if, and only to the extent that, such Partner
would have a Qualified Income Offset Amount after all other allocations
provided for in this Section 73(c) were tentatively made as if this Section
73(c) were not contained in this Agreement. As used herein, the term
"Qualified Income Offset Amount" for a Partner means the excess, if any, of
(i) the negative balance such Partner has in its Capital Account following
the adjustment, allocation or distribution described in the preceding
sentence over (ii) such Partner's Restoration Obligation. All terms not
otherwise defined shall have the meaning given them under Section 704(b) of
the Code and the related Treasury Regulations.
7.4.Modifications to Preserve Economic Effect. The Partners intend
-----------------------------------------
that allocations of tax items corresponding to allocations under this Article
7 be respected as having substantial economic effect under the Code and the
related Treasury Regulations. If at any time it appears, in the judgment of
the Managing Partner, that such result would not be achieved, including as a
result of a change in the Percentage Interests of the Partners pursuant to
Section 6.4.4, the Partners agree to amend the provisions of this Article 7
to the extent and in such manner as may be necessary to achieve such result,
provided that such amendments shall not, in any event, affect the amounts
distributable to any Partner pursuant to Article 8.
7.5.Other Tax Matters. (a) Notwithstanding anything to the contrary
-----------------
contained herein, for all purposes herein, each Partner's share of "excess
nonrecourse liabilities," as such term is defined in Treasury Regulation
Section 1.752-3(a)(3), shall be the amount of such liabilities multiplied by
its Percentage Interest.
(b)Notwithstanding anything to the contrary contained herein, the AC
Distributions and the Priority Distribution shall be treated as guaranteed
payments under Section 707(c) of the Code, and accordingly, shall be deducted
by the Partnership in calculating Profits and Losses as such amounts accrue
to the benefit of the Partners. Capital Loans and Extraordinary Capital
Loans shall be treated as loans, and Extraordinary Distributions, CL
Distributions and AC Distributions shall be treated as interest payments.
ARTICLE 8
DISTRIBUTIONS
8.1.Distributions of Net Ordinary Cash Flow and Net Extraordinary
-------------------------------------------------------------
Cash Flow.
- ---------
(a) Distribution of Net Ordinary Cash Flow. Except as provided in
--------------------------------------
Section 8.5, all distributions of Net Ordinary Cash Flow with respect to any
calendar year shall be made in the following manner:
(i)to the extent that Odyssey has made any Extraordinary Capital Loans
which remain outstanding, Odyssey shall receive a distribution (the
"Extraordinary Distribution") equal to (x) the principal amount of each of
its outstanding Extraordinary Capital Loans multiplied by (y) the Default
Rate multiplied by (z) a fraction, the numerator of which equals the number
of days in such year that each such Extraordinary Capital Loan was
outstanding and the denominator of which equals 365. In the event there is
insufficient Net Ordinary Cash Flow to pay the entire Extraordinary
Distribution, the unpaid amount thereof shall accrue with interest at the
Default Rate, compounding quarterly. All such accrued, but unpaid, amounts
(together with such accrued, but unpaid, interest thereon, collectively
"Accrued Extraordinary Distributions") shall be payable from subsequent Net
Ordinary Cash Flow distributions as an Extraordinary Distribution;
(ii)to the extent that Odyssey has made any Extraordinary Capital Loans
which remain outstanding, Odyssey shall receive an amount equal to the
principal amount of its then outstanding Extraordinary Capital Loans;
(iii)to the extent that any Partner has made any Capital Loans which
remain outstanding, such Partner shall receive a distribution (the "CL
Distribution") for each such Capital Loan which remains outstanding equal to
(x) the principal amount of such outstanding Capital Loan multiplied by (y)
the Capital Loan Rate multiplied by (z) a fraction, the numerator of which
equals the number of days in such year that such Capital Loan was outstanding
and the denominator of which equals 365. In the event there is insufficient
Net Ordinary Cash Flow to pay the entire CL Distribution, the unpaid amount
thereof shall accrue with interest at the Capital Loan Rate, compounding
quarterly. All such accrued, but unpaid, amounts (together with such
accrued, but unpaid, interest thereon, collectively "Accrued CL
Distributions") shall be payable from subsequent Net Ordinary Cash Flow
distributions as a CL Distribution. If more than one Partner has made
Capital Loans, the CL Distribution will be made on a pro rata basis, in
proportion to the respective outstanding principal amounts of their Capital
Loans. If any Partner holds Capital Loans which bear different interest
rates, such Partner shall apply any CL Distribution distributed to it to the
interest due on each such Capital Loan on a pro rata basis, in proportion to
the respective principal amounts of such Capital Loans;
(iv)to the extent that any Partner has made Additional Contributions
which remain outstanding, each such Partner shall receive a distribution (the
"AC Distribution") for each such Additional Contribution which remains
outstanding equal to (x) the principal amount of such outstanding Additional
Contribution multiplied by (y) the Capital Loan Rate multiplied by (z) a
fraction, the numerator of which equals the number of days in such year that
such Additional Contribution was outstanding and the denominator of which
equals 365. In the event there is insufficient Net Ordinary Cash Flow to pay
the entire AC Distribution, the unpaid amount thereof shall accrue with
interest at the Capital Loan Rate, compounding quarterly. All such accrued,
but unpaid, amounts (together with such accrued, but unpaid, interest
thereon, collectively "Accrued AC Distributions") shall be payable from
subsequent Net Ordinary Cash Flow distributions as an AC Distribution. If
more than one Partner has made Additional Contributions, the AC Distribution
will be made on a pro rata basis, in proportion to their respective
outstanding amounts of Additional Contributions. If any Partner has made
Additional Contributions which bear different interest rates, such Partner
shall apply any AC Distribution distributed to it on a pro rata basis to the
interest due on each such AC Distribution in proportion to their respective
principal amounts;
(v)a distribution (the "Priority Distribution") to Reckson equal to (x)
the outstanding Priority Contribution multiplied by (y) 12% multiplied by (z)
a fraction, the numerator of which equals the number of days in such year
that such Priority Contribution was outstanding and the denominator of which
equals 365. In the event there is insufficient Net Ordinary Cash Flow to pay
the entire Priority Distribution, the unpaid amount thereof shall accrue with
interest at 12% per annum, compounding quarterly. All such accrued, but
unpaid, amounts (together with such accrued, but unpaid, interest thereon,
collectively "Accrued Priority Distributions") shall be payable from
subsequent Net Ordinary Cash Flow distributions as a Priority Distribution;
and
(vi)thereafter, the balance of any remaining Net Ordinary Cash Flow
shall be distributed to the Partners pro rata in accordance with their then
Percentage Interests.
Notwithstanding the foregoing, so long as the Pledge Loan remains
outstanding, distributions of Net Ordinary Cash Flow (other than
Extraordinary Distributions and distributions in respect of the First
Refinancing or Extraordinary Capital Loans) otherwise payable to the Odyssey
Entities in accordance with this Section 8.1(a) shall be applied in
accordance with Section 8.1(f) below.
(b)Net Ordinary Cash Flow. Net Ordinary Cash Flow shall be
----------------------
determined monthly and shall be applied and distributed by the Managing
Partner as provided in Section 8.1(a) on or before the twentieth (20th) day
of the next succeeding calendar month following the end of such month.
Notwithstanding the preceding sentence, which is intended to permit interim
distributions of Net Ordinary Cash Flow, Net Ordinary Cash Flow shall be
ultimately determined on an annual basis, and if the annual audited report of
the Partnership shall show that there was any overdistribution of Net
Ordinary Cash Flow to a Partner, the amount of such overdistribution shall be
deducted from the next distributions of Net Ordinary Cash Flow which such
Partner may be entitled to hereunder. If such annual audited report shall
show that there was an underdistribution of Net Ordinary Cash Flow to a
Partner, such underdistribution shall within thirty (30) days after receipt
of such report be paid to such Partner.
(c)Net Extraordinary Cash Flow. Except as provided in Section 8.5,
---------------------------
and subject to the provisions of paragraph (f) below, all distributions of
Net Extraordinary Cash Flow shall be made in the following manner:
(i)to Odyssey in an amount equal to its then accrued, but unpaid Accrued
Extraordinary Distributions computed through the date of such distribution
hereunder, if any;
(ii)to Odyssey in an amount equal to its then outstanding Extraordinary
Capital Loans, if any;
(iii)to the Partners, on a pro rata basis (in proportion to the
respective outstanding principal amounts of their Capital Loans), in an
amount equal to their then accrued, but unpaid Accrued CL Distributions
computed through the date of such distribution hereunder, if any;
(iv)to the Partners, on a pro rata basis (in proportion to the
respective outstanding principal amounts of their Capital Loans), in an
amount equal to their then outstanding Capital Loans, if any;
(v)to the Partners, on a pro rata basis (in proportion to their
respective outstanding amounts of Additional Contributions), in an amount
equal to the then accrued, but unpaid Accrued AC Distributions computed
through the date of such distribution hereunder, if any;
(vi)to the Partners, on a pro rata basis (in proportion to their
respective outstanding amounts of Additional Contributions), in an amount
equal to their then outstanding Additional Contributions, if any;
(vii)to Reckson in an amount equal to the then accrued, but unpaid
Accrued Priority Distributions computed through the date of such distribution
hereunder, if any;
(viii)to Reckson in an amount equal to the then outstanding amount of
the Priority Contribution; and
(ix)the balance of any remaining Net Extraordinary Cash Flow shall be
distributed to the Partners pro rata in accordance with their then Percentage
Interests.
(d)If any Partner has outstanding Capital Loans and/or outstanding
Additional Contributions which bear different interest rates and there is
insufficient Net Extraordinary Cash Flow to pay the entire amount of accrued
but unpaid Accrued CL Distributions, Capital Loans, Accrued AC Distributions
or Additional Contributions, any amounts distributed to such Partner shall be
applied (i) if received in respect of outstanding Capital Loans and/or
Accrued CL Distributions pro rata in the proportion which the principal
amounts of outstanding Capital Loans bearing different interest rates bear to
each other, and (ii) if received in respect of outstanding Additional
Contributions or Accrued AC Distributions, pro rata in the proportion which
the principal amounts of outstanding Additional Contributions bearing
different interest rates bear to each other.
(e)Net Extraordinary Cash Flow. Net Extraordinary Cash Flow (other
---------------------------
than Net Extraordinary Cash Flow arising from a sale incidental to the
dissolution and liquidation of the Partnership) shall be applied and
distributed by the Managing Partner as provided in Section 8.1(c) promptly
after receipt.
(f)Reference is made to the Pledge Agreement and to the provisions of
Section 6.3 of this Agreement. Pursuant to the terms of the Pledge Agreement
the Odyssey Entities have directed as follows:
(i)any distributions of Net Ordinary Cash Flow or Net Extraordinary Cash
Flow (other than Extraordinary Distributions and distributions in respect of
the First Refinancing or Extraordinary Capital Loans) which the Odyssey
Entities are entitled to receive pursuant to this Section 8.1 shall be
applied to the extent necessary to pay accrued and unpaid Current Interest
and Deferred Interest under the Pledge Note; and
(ii)any distributions of Net Extraordinary Cash Flow (other than
Extraordinary Distributions and distributions in respect of the First
Refinancing or Extraordinary Capital Loans) which the Odyssey Entities are
entitled to receive pursuant to this Section 8.1 remaining after payment of
accrued and unpaid Current Interest and Deferred Interest under the Pledge
Note shall be applied to prepayment of the Pledge Note (without penalty or
premium, except as expressly provided in Section 3 of the Pledge Note).
Distribution to the Odyssey Entities of Net Ordinary Cash Flow (other than
Extraordinary Distributions and distributions in respect of the First
Refinancing or Extraordinary Capital Loans) in excess of accrued and unpaid
Current Interest and Deferred Interest under the Pledge Note are herein
referred to as "Excess Distributions."
Excess Distributions shall be applied as follows:
(A)if there are any outstanding Capital Loans in respect of TI Costs
made by Reckson (other than Capital Loans made pursuant to Section 6.4.2(b)),
the greater of (x) 60% of such Excess Distributions and (y) 60% of Odyssey's
and Odyli's taxable income (for the tax year to which the amount being
distributed is allocated) attributable to Odyssey's and Odyli's interest in
the Partnership shall be applied to repay the principal amount of any Capital
Loans in respect of TI Costs made by Reckson (other than Capital Loans made
pursuant to Section 6.4.2(b)), until the principal amount of such Capital
Loans have been paid in full);
(B)an amount equal to 66 2/3% of the amount, if any, applied to
repayment of Capital Loans in respect of TI Costs made by Reckson pursuant to
subclause (A) shall be distributed to the Odyssey Entities;
(C)if there is any balance of the Excess Distribution remaining' after
payment of the amounts under (A) and (B) above, and the portion of the funds
in the TI Reserve Account deposited by or on behalf of the Odyssey Entities
plus--a interest accrued thereon, less amounts properly
withdrawn from such account and charged against such funds and interest
(herein, "Odyssey's Share") is less than $1 million, 60% of such remaining
Excess Distribution shall be deposited by the Managing Partner (for the
account of the Odyssey Partners) in the TI Reserve until Odyssey's Share of
the funds in the TI Reserve Account equals $1 million provided that
simultaneously therewith Reckson shall deposit (or, if Reckson is not the
Managing Partner, the Managing Partner shall deposit from amounts
distributable to Reckson) in the TI Reserve an amount equal to 150% of the
amount deposited by the Odyssey Entities in the TI Reserve Account until the
portion of the funds in the TI Reserve Account deposited by or on behalf of
Reckson plus interest accrued thereon, less amounts properly
withdrawn from such account and charged against such funds and interest
(herein, "Reckson's Share") equals $1.5 million; and
(D)If there is any balance of the Excess Distribution remaining after
payment of the amounts under subclauses (A), (B) and (C) above, such balance
shall be remitted to the Odyssey Entities.
For purposes of subclause (A) above, Odyssey's and Odyli's taxable
income for a tax year shall be deemed to equal the sum of (1) all items of
income that it is anticipated will appear on the Schedules K-1 for Odyssey
and Odyli of the Partnership's Form 1065 (or any successor information return
or schedule thereof), plus (2) all distributions to Odyssey and Odyli in
excess of their respective tax bases in the Partnership for such tax year.
If the amount of income actually appearing on Odyssey's or Odyli's Schedule
K-1 (or any successor schedule) (the "Actual K-1 Amounts") for any tax year
differs from the amount originally anticipated to appear on such Schedule
pursuant to the immediately preceding sentence, then, to the extent that
using the Actual K-1 Amounts in computing Odyssey's and Odylis' taxable
income would have resulted in Reckson or the Odyssey Entities receiving more
or less of the Excess Distributions for such tax year in accordance with the
provisions of this Section 8.1(f), such overpayment or underpayment shall be
corrected from the next application of Excess Distributions hereunder before
any other application of such Excess Distributions. Notwithstanding the
provisions of subclause (C) above, if pursuant to Section 6.3 funds from the
TI Reserve are properly withdrawn for a reason other than to pay TI Costs and
as a result thereof the ratio of the Reckson Share to the Odyssey Share
ceases to be 1.5 to 1 (the "Correct Ratio") then (I) if funds which were so
withdrawn are debited against the Odyssey Share, then notwithstanding the
provisions of subclause (C) above Reckson shall have no obligation to make
deposits into the TI Reserve Account until the Correct Ratio has been
achieved and (II) if funds which were so withdrawn are debited against the
Reckson Share, Reckson shall immediately deposit an amount such that the
Correct Ratio has been achieved, and until then, in addition to the other
rights and remedies the Odyssey Entities may have, they may suspend making
payments into the TI Reserve and the Odyssey Entities shall be entitled to
receive the amount of such payments which would otherwise be required to be
paid into the TI Reserve by the Odyssey Entities.
8.2.Liquidating Distributions. Subject to Section 15.2, liquidating
-------------------------
distributions (whether of Net Ordinary Cash Flow or Net Extraordinary Cash
Flow) shall be made in the same manner as distributions of Net Ordinary Cash
Flow and Net Extraordinary Cash Flow as provided in Section 8.1; provided,
however, that to the extent funds on deposit in the TI Reserve are available
after payment of Partnership liabilities, the Odyssey Entities shall receive
Odyssey's Share thereof (provided, that if and to the extent that the Pledge
Loan is then outstanding, Odyssey's Share of the TI Reserve shall be paid to
Pledge Lender to the extent necessary to pay the Pledge Loan in full and the
remainder of Odyssey's Share thereof shall be paid to the Odyssey Entities)
and Reckson shall receive Reckson's Share thereof.
8.3.No Restoration of Funds. Except as provided in Section 8.1(b),
-----------------------
no Partner shall be required to restore to the Partnership any funds properly
distributed to such Partner pursuant to any of the provisions of this Article
8 or pursuant to Article 15, unless required by applicable law.
8.4.Limitation on Distributions. No Partner shall be entitled to (a)
---------------------------
receive any distribution from the Partnership (including a withdrawal of any
of such Partner's capital) except pursuant to this Article 8 and Article 15,
(b) receive interest upon any capital contributed to the Partnership except
in accordance with the provisions of this Article 8, or (c) receive property
other than cash in return for such Partner's capital contributions. No
distributions from the Partnership shall be made except as expressly provided
in this Article 8 and Article 15.
8.5.Claims Paid Under Title Insurance Policies. In the event a claim
------------------------------------------
for damages is made by the Partnership under the policy or policies of title
insurance insuring the Partnership's title to the Project, which claim could
have been properly denied or successfully defended based on prior knowledge
of the Reckson Entities, but for which payment is nevertheless made to the
Partnership by reason of the non-imputation endorsement contained in such
policy or policies of title insurance, any such funds paid by the title
insurers shall be paid immediately to the Odyssey Entities (in the proportion
which the Percentage Interest of each such entity bears to the total of the
then Percentage Interests of the Odyssey Entities) and the Reckson Entities
shall not receive any portion thereof. No such payment to the Odyssey
Entities shall be treated as a return of such entities' capital contributions
to the Partnership.
ARTICLE 9
BOOKS OF ACCOUNT; REPORTS; FISCAL YEAR, ETC.
9.1. Books of Account. At all times during the existence of the
----------------
Partnership, the books of account of the Partnership shall be prepared and
kept by the Managing Partner in accordance with generally accepted accounting
principles and procedures applied in a consistent manner, which shall reflect
all Partnership transactions and shall be appropriate and adequate for the
Partnership's business, and which books of account shall be maintained at the
principal place of business of the Partnership. There shall be maintained at
the principal place of business of the Partnership (a) copies of the
Partnership's federal, state and local income tax returns and reports
(including all reporting work papers and documentation), if any, for the six
most recent years, (b) a copy of this Agreement and all amendments thereto
and of any financial statements of the Partnership (including all reporting
work papers and documentation) for the six most recent years and (c) copies
of all Key Documents and other Partnership records, including, without
limitation, the records regarding the TI Reserve required by this Agreement.
Any Partner or its duly authorized representatives shall have the right at
any time to inspect and copy such books and documents during normal business
hours upon reasonable notice. Each Partner and their duly authorized
representatives shall have the right to examine (and copy) or conduct an
audit of the Partnership's books and records at any time during normal
business hours and upon reasonable notice at the Partnership's principal
place of business set forth in Article 3 hereof. Any such examination or
special audit (i.e., audits other than the annual audits for the
Partnership which shall be conducted as of December 31 at the Partnership's
sole cost and expense) shall be performed at such Partner's sole cost and
expense.
9.2. Annual Reports. As soon as practicable after December 31, but
--------------
no later than March 31, the Managing Partner shall deliver to the Partners a
financial report of the Partnership for the preceding fiscal year, including
a balance sheet and a statement of operations, and statements of Partners'
Capital Accounts, changes in financial position, Net Ordinary Cash Flow and
Net Extraordinary Cash Flow, all of which shall be audited by the Partnership
Accountants in accordance with generally accepted auditing standards, and all
of which (except for the reports of Net Ordinary Cash Flow and Net
Extraordinary Cash Flow and other reports prepared on a cash basis) shall be
prepared in accordance with generally accepted accounting principles,
consistently applied. At the request of any Partner made from time to time,
the Managing Partner shall deliver to the Partners as soon as reasonably
practicable (but in any event within thirty (30) days of such request) (a) a
calculation of Net Operating Income for the twelve (12) months immediately
preceding such request and (b) a projection of Net Operating Income for the
twelve (12) months immediately succeeding any date (or dates) specified in
such request (in which rental revenues are projected solely on the basis of
executed leases or occupancy agreements without giving effect to any free-
rent periods thereunder (i.e., during any free-rent periods thereunder all
Persons thereunder shall be deemed to be then paying all rents reserved
thereunder which are subject to such free-rent periods as if the rent
commencement date had already occurred)).
9.3. Reports. Pursuant to the Management Agreement, the Managing
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Agent is required to prepare and deliver to the Partnership the quarterly
reports described therein by no later than the dates set forth in the
Management Agreement (which reports shall set forth the expiration dates for
each of the leases, licenses and other occupancy agreements affecting the
Project). Upon the Managing Partner's receipt of such reports from the
Managing Agent, it shall promptly deliver copies of such reports to the other
Partners.
9.4. Fiscal Year. The Partnership's fiscal year shall be the
-----------
calendar year for all operating, audit and accounting purposes including,
without limitation, the reports and Budget referred to in Sections 9.2, 9.3
and 9.7.
9.5. Tax Returns; Tax Matters Partner. The Managing Partner shall
--------------------------------
cause to be prepared by the Partnership Accountants and shall within seventy-
five (75) days after the end of each Partnership fiscal year submit to the
other Partners for their approval a copy of the proposed annual federal and
necessary state or local Partnership tax returns. Such returns (including
all elections made therein) shall be subject to the approval of the General
Partners. The Managing Partner shall cause all tax returns to be timely
filed with the applicable government authorities. Reckson shall be the tax
matters partner (as described in Section 6231(a)(7) of the Code) of the
Partnership provided it is not a Defaulting Partner, and if it is, the
Odyssey General Partner shall be the tax matters partner. The tax matters
partner shall not extend the statute of limitations on behalf of the
Partnership, select the Partnership's choice of litigation forum in any tax
action or take any other action in its capacity as tax matters partner
without the consent of the other General Partners. The tax matters partner
shall keep the other Partners fully advised of the progress of any audit and
shall, promptly upon receipt, supply the other Partners with copies of any
written communications received from the Internal Revenue Service, or other
taxing authority, relating to any audit promptly after receipt thereof, and
shall, at least five (5) business days prior to submitting any materials to
the Internal Revenue Service, or other taxing authority, provide such
materials to the other Partners for their approval. The Partnership will
report the transactions contemplated herein on its tax returns in a manner
consistent with the description of such transactions contained herein.
9.6. Bank Accounts. All funds of the Partnership shall be deposited
-------------
in the Partnership name in one or more separate bank accounts (each, a "Bank
Account") at a bank selected by the Managing Partner. Each General Partner
shall designate two authorized signatories for withdrawals and other
activities in respect of each such Bank Account. Each such Bank Account
shall be used exclusively for Partnership funds and no other funds shall be
commingled therein. Withdrawals may be made from such Bank Account only by
the Managing Partner and only for purposes authorized under this Agreement.
All security deposits shall be deposited in the Partnership name in a
separate bank account ("Security Account") at a bank selected by the Managing
Partner. All withdrawals from the Bank Account or the Security Account shall
be made only upon the signature of an authorized signatory of the Managing
Partner. As used in this Section 9.6, an "authorized signatory" of a General
Partner shall refer, (a) if such General Partner is corporation, to an
officer of such corporation who is in the position of vice-president or
higher in such corporation, (b) if such General Partner is a general or
limited partnership, (i) to an individual general partner thereof or (ii) if
there is a corporate general partner, an officer thereof who is in the
position of vice-president or higher in such corporation.
9.7. Budgets. Pursuant to the Management Agreement, the Managing
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Agent is required to prepare and submit to the Partnership by November 30th
of each year for approval by the Managing Partner a proposed pro forma budget
for the operation and maintenance of the Project during the succeeding fiscal
year commencing January 1 and ending December 31 (the "Budget"). The
Managing Partner shall deliver a copy of the proposed Budget to the other
Partners promptly after its receipt thereof. The Budget shall consist of an
operating budget (the, "Operating Budget") and a capital improvements budget
(the "Capital Budget"). The Operating Budget shall show, on a month-by-month
basis, in reasonable detail, each line item of anticipated income and expense
(on a cash and accrual basis), including, without limitation, amounts
required to establish, maintain and/or increase Cash Reserves. The Capital
Budget shall show, on a month-by-month basis, in reasonable detail, each line
item of anticipated capital expenditures. The Budget shall also contain a
statement of the Net Ordinary Cash Flow the Project is expected to generate
during the succeeding calendar year. If the Managing Partner modifies the
Budget during the course of any fiscal year, such modification shall be
included in the next quarterly report delivered to the other Partners
pursuant to Section 9.3. On or before April 1 of each year, the Managing
Partner shall deliver to the other Partners a reasonably detailed comparison
of the Budget for the preceding fiscal year and the actual Partnership
Expenses for such fiscal year. The Managing Partner shall use diligent, good
faith efforts to operate the Project in conformity with the Budget, as
modified from time to time. Nothing in this Section 9.7 shall require the
Managing Partner to obtain the consent of any other Partner to approve or
modify the Budget.
9.8. Partnership Register. The Managing Partner shall keep a
--------------------
register for the Partnership on which the transfer, pledge or release of
partnership interests shall be shown and pursuant to which entries must be
made to effect all transfers, pledges or releases as required by Sections 8-
207, 8-313(l) 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 Managing Partner shall (i) place
proper entries in such register clearly showing each transfer and each pledge
and grant of security interest (including, without limitation, the pledge and
grant of security interest by Reckson to the Odyssey Entities and by the
Odyssey Entities to Reckson of their respective partnership interests
pursuant to Section 14.3 hereof and by the Odyssey Entities to Reckson of
their respective partnership interests pursuant to the Pledge) and the
transfer and assignment pursuant thereto, such entries to be endorsed by the
Managing 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.
ARTICLE 10
MANAGEMENT
10.1. Duties and Powers of Managing Partner.
-------------------------------------
10.1.1 General Scope of Duties and Authority. Subject to the
-------------------------------------
provisions of this Article 10 (including, without limitation, Section 10.7),
the Managing Partner shall have the obligation and authority to (a) implement
all Major Decisions approved by the General Partners, (b) conduct (or cause
to be conducted under its supervision) the day-today business and affairs of
the Partnership subject to, and in accordance with, this Agreement, and (c)
perform or observe all of the specific obligations to be performed by the
Managing Partner hereunder. The Managing Partner shall use due care and
shall use its best efforts in performing its obligations hereunder.
10.1.2 Reckson Affiliate as Managing Agent. So long as the
-----------------------------------
Managing Agent is an Affiliate of Reckson:
(a) any default by the Managing Agent under the Management
Agreement shall be deemed a default by Reckson under this Agreement if
(i) except as set forth in subparagraph (ii), such default shall be of
such a nature so as to constitute (v) willful malfeasance, (w) fraud,
(x) embezzlement, (y) theft and/or (z) a violation of the criminal laws
of the State of New York by the Managing Agent, or any of its partners,
principals, agents or employees and if the monies and/or other property
which is the subject of such willful malfeasance, fraud, embezzlement,
theft or other criminal violation shall not be repaid and/or returned to
the Partnership or the Partners, as the case may be, within five (5)
business days following notice thereof to Reckson, or (ii) such default
shall be of the nature described in subparagraph (i) above and such
default was actually committed by the president or an executive vice
president of the corporate general partner of Reckson (or, if there is
no such corporate general partner, the individuals holding equivalent
positions) whether or not such monies and/or property shall have been
paid and/or returned to the Partnership or the Partners;
(b) (i) if the Managing Agent shall default in the performance of
any of its obligations under the Management Agreement beyond any
applicable grace period, (ii) if Reckson is a Defaulting Partner or
(iii) if Reckson is a Withdrawn Partner, then, the Odyssey General
Partner shall have the right, on behalf of the Partnership and without
the consent of any other Partner, to enforce and/or terminate the
Management Agreement subject to and in accordance with the terms
thereof;
(c) if the Management Agreement shall be terminated as a result of
any of the events described in paragraph (b) above, the Odyssey General
Partner shall have the right on behalf of the Partnership, subject to
the consent of Reckson (not to be unreasonably withheld and to be deemed
given if not denied, by notice specifying in reasonable detail the
reason for such denial, within 10 days after request by the Odyssey
General Partner) to appoint a new Managing Agent selected by the Odyssey
General Partner provided that such new Managing Agent shall be of good
character and reputation and shall have been actively involved in the
management of first class suburban office buildings for not less than
the preceding five (5) years, and in such event, the Odyssey General
Partner shall have the sole right to negotiate and determine the terms
of the new Management Agreement provided such terms are no more
favorable to the new Managing Agent than those terms that are then
customary for management agreements with managing agents comparable in
stature and reputation to the Managing Agent appointed for first class
suburban office buildings;
(d) the Odyssey General Partner shall have the sole right on
behalf of the Partnership, without the consent of any other Partner, to
enforce the material obligations of the Managing Agent and/or exercise
any right to terminate the Management Agreement in accordance with the
terms thereof; provided, that if the Odyssey General Partner shall
become the Managing Partner hereunder and shall subsequently become a
Defaulting Partner, then the General Partners (including any Defaulting
Partner) shall have the right to enforce the obligations of the Managing
Agent and/or exercise any right to terminate the Management Agreement in
accordance with the terms thereof; and
(e) the Management Agreement shall not be modified, changed,
amended or renewed (other than any renewal of the Management Agreement
on the same terms and conditions as the existing Management Agreement).
10.1.3 Reckson Affiliate as Construction Manager. So long as
-----------------------------------------
the Construction Manager is an Affiliate of Reckson:
(a) any default by the Construction Manager under the Construction
Agreement shall be deemed a default by Reckson under this Agreement if
(i) except as set forth in subparagraph (ii), such default shall be of
such a nature so as to constitute (v) willful malfeasance, (w) fraud,
(x) embezzlement, (y) theft and/or (z) a violation of the criminal laws
of the State of New York by the Construction Manager, or any of its or
their partners, principals, agents or employees and if the monies and/or
other property which is the subject of such willful malfeasance, fraud,
embezzlement, theft or other criminal violation shall not be repaid
and/or returned to the Partnership or the Partners, as the case may be,
within five (5) business days following notice thereof to Reckson, or
(ii) such default shall be of the nature described in subparagraph (i)
above and such default was actually committed by the president or an
executive vice president of the corporate general partner of Reckson
(or, if there is no such corporate general partner, the individuals
holding equivalent positions) whether or not such monies and/or property
shall have been paid and/or returned to the Partnership or the Partners;
(b) (i) if the Construction Manager shall default in the
performance of any of its obligations under the Construction Agreement
beyond any applicable grace period, (ii) if Reckson is a Defaulting
Partner or (iii) if Reckson is a Withdrawn Partner, then the Odyssey
General Partner shall have the right, on behalf of the Partnership and
without the consent of any other Partner, to enforce and/or terminate
the Construction Agreement subject to and in accordance with the terms
thereof;
(c) if the Construction Agreement shall be terminated as a result
of any of the events described in paragraph (b) above, the Odyssey
General Partner shall have the right on behalf of the Partnership,
subject to the consent of Reckson (not to be unreasonably withheld and
to be deemed given if not denied, by notice specifying in reasonable
detail the reason for such denial, within 10 days after request by the
Odyssey General Partner) to appoint a new Construction Manager selected
by the Odyssey General Partner provided that such new Construction
Manager shall be of good character and reputation and shall have
experience in work similar to the work undertaken to be performed in the
Construction Agreement, and in such event, the Odyssey General Partner
shall have the sole right to negotiate and determine the terms of the
new Construction Agreement provided such terms are no more favorable to
the new Construction Manager than terms that are then customary for
construction and architect's agreements with construction managers
comparable in stature and reputation to the new Construction Manager so
appointed;
(d) the Odyssey General Partner shall have the sole right on behalf
of the Partnership, without the consent of any other Partner, to enforce
the obligations of the Construction Manager and/or exercise any right to
terminate the Construction Agreement in accordance with the terms
thereof; provided, that if the Odyssey General shall become the Managing
Partner hereunder and shall subsequently become a Defaulting Partner,
then the General Partners (including any Defaulting Partner) shall have
the right to enforce the obligations of the Construction Manager and/or
exercise any right to terminate the Construction Agreement in accordance
with the terms thereof, and
(e) the Construction Agreement shall not be modified, changed,
amended or renewed.
10.2. Major Decisions. No act shall be taken, sum expended or
---------------
obligation incurred by the Managing Partner within the scope of the major
decisions expressly set forth below (collectively, the "Major Decisions")
unless such Major Decision has been approved by all of the General Partners.
The Major Decisions shall be:
(a) any selection of a replacement Managing Agent or Construction
Manager or the determination of the terms of any replacement Management
Agreement or Construction Agreement (except as otherwise specifically
provided in Section 10.1), which approvals shall not be unreasonably
withheld;
(b) any material modification, change or amendment to, or
termination or cancellation of, any mortgage, deed of trust or other
document evidencing Partnership Indebtedness (except in connection with
a refinancing of Mortgage Debt which shall be governed by Section 10.6
below), or the approval of or consent to any material matter under any
of the foregoing documents;
(c) modifying, amending or otherwise taking any action under the
Ground Lease, if any such modification, amendment or action is, or could
be deemed to be, a disposition of Partnership property or substantially
equivalent thereto; provided, that in no event shall the Odyssey General
Partner have any approval rights with respect to any amendment or
modification of the Ground Lease required by NML in connection with the
First Refinancing;
(d) any material tax election (including, without limitation, the
making of an election under Section 754 of the Code); the selection of
accounting methods or the material variation of existing accounting
methods (but only to the extent such accounting methods could affect the
tax position of the Partnership or any of its Partners); provided, that
the selection or variation of generally accepted accounting principles
shall not constitute a Major Decision so long as the same could not
affect the tax position of any of the Odyssey Entities;
(e) any other action with respect to any matter which, pursuant to
the express provisions of this Agreement, requires the approval, consent
or agreement of all of the General Partners;
(f) determination of the maximum and minimum requirements for any
reserve upon dissolution and liquidation of the Partnership;
(g) any direction to the Managing Agent to perform any service for
which the Managing Agent is entitled to or will charge additional fees;
(h) all environmental matters requiring remediation estimated to
cost in excess of $ 100,000 and for which there is, or may be, a
recourse claim against any of the Odyssey Entities (including, without
limitation, Odyli in its capacity as a general partner of the
Partnership); or
(i) the sale, or other disposition of all or any portion of the
Project except in accordance with the provisions of Sections 10.6 and
12.4.6 of this Agreement, or incurrence of any Partnership Indebtedness
except in accordance with the provisions of Sections 6.4 and 10.6.
The General Partners agree that they shall use their good faith efforts
to expeditiously resolve any disputes regarding proposed Major Decisions;
provided, that failure of the General Partners to agree with respect to any
Major Decision shall constitute disapproval of such Major Decision and any
such dispute shall not be arbitrated.
10.3. Employment of Agents, etc.
--------------------------
(a) Subject to the provisions of Section 10.2 and to paragraphs
(b) and (c) below, the Managing Partner may employ, on behalf of the
Partnership, such firms or corporations as it shall deem advisable for the
operation of the Partnership and, on such terms and for such compensation as
the Managing Partner shall determine, provided such terms are reasonable, and
provided further that such services are reasonably necessary and customary.
(b) Except for the Management Agreement and the Construction
Agreement, no Partner shall enter into any agreement or other arrangement for
the furnishing to or by the Partnership of goods or services (including any
construction work) with any Person which is an Affiliate of such Partner or
any partner of such Partner (or permit the Managing Agent to enter into any
such agreement or arrangement with any person which is an Affiliate of such
Partner or of any partner of such Partner or of such Managing Agent) unless
such agreement or arrangement has been approved by the General Partners after
the nature of the relationship or affiliation and the terms of such agreement
or arrangement have been disclosed in writing. Notwithstanding the
foregoing, the REIT, Reckson and/or any Affiliates thereof (including the
Construction Manager and the Managing Agent) may lease up to 25,000 rentable
square feet of space at the Project, in the aggregate, for their own use
provided such lease reflects, in the Odyssey General Partner's judgment,
market terms and conditions.
(c) The Managing Partner shall employ, on behalf of the
Partnership, the Partnership Attorneys and the Partnership Accountants and no
other Person shall be retained to provide legal or accounting services to the
Partnership.
10.4. Time Devoted by General Partners;. Compensation of Partner.
----------------------------------------------------------
Each General Partner shall devote such time to the Partnership as is
reasonably necessary to perform its obligations hereunder. Except as
otherwise expressly provided herein, the Partners shall not be entitled to
any salary or other compensation from the Partnership except for their
respective distributions as set forth in Articles 8 and 15.
10.5. Powers of General and Limited Partners.
--------------------------------------
10.5.1 Subject to the provisions of this Article 10 and the
other provisions of this Agreement, the General Partners shall have the
exclusive right, power and authority to conduct the business of the
Partnership and, except as otherwise expressly provided herein, shall possess
the same rights and powers as general partners in a general partnership
formed under Delaware law. Except where the Partnership Act expressly
provides to the contrary, all decisions of the Partnership made by the
General Partner or those General Partners entitled to make such decision
under the terms of this Agreement shall be binding on the Partnership and
each of the Partners.
10.5.2 To the extent permitted by law, each General Partner may
execute for and on behalf of the Partnership any documents or instruments in
connection with any transactions permitted by this Agreement and approved by
any Partner whose approval is required hereunder. Nevertheless, if a General
Partner requests, any of the other Partners will execute and deliver within
ten (10) business days following request any instruments the General Partner
may reasonably require to confirm its authority hereunder.
10.5.3 The General Partners shall use their best efforts to
cause the Partnership to do or refrain from doing such acts as shall be
required by the Partnership Act in order to preserve the valid existence of
the Partnership as a Delaware limited partnership and the limited liability
of the Limited Partners.
10.5.4 A Limited Partner in its capacity as a limited partner,
shall have no right to, and shall not, take part in the management or control
of the Partnership's business or act for or bind the Partnership, except that
each Limited Partner shall have the rights and powers granted to Limited
Partners hereunder or under the Partnership Act.
10.5.5 For the avoidance of doubt, each Partner agrees that any
action taken by a Partner in accordance with the terms of this Agreement in
its capacity as General Partner or Managing Partner during the period it is
properly acting as such shall be binding upon the Partnership notwithstanding
that such Partner subsequently loses such capacity.
10.6. Sale and Refinancing
--------------------
10.6.1 Managing Partner's Authority.
----------------------------
(a) Unless and until the Lockout Period has expired, the Managing
Partner shall have no right to sell, or otherwise dispose of all or any
portion of the Project (or enter into any agreement with respect thereto)
without the consent of the Odyssey General Partner. Thereafter, subject to
the provisions of Section 12.4.6, the Managing Partner shall have the sole
authority to enter into any agreement to sell (and to consummate such
agreement to sell) all (but not less than all) the Project. Notwithstanding
the foregoing, each General Partner shall have the right to fully participate
in the negotiation of any agreement to sell the Project.
(b) Subject to the rights provided to the Odyssey General Partner
set forth in Section 10.6.2 below (which shall apply only if the Odyssey
General Partner is not the sole Managing Partner), the Managing Partner shall
have the sole authority to refinance the then existing Mortgage Debt.
10.6.2 First Refinancing.
-----------------
(a) The Managing Partner shall use its best efforts to Refinance
the Current Property Mortgage Debt with Northwestern Mutual Life Insurance
Company ("NML") in accordance with the terms and conditions of the NML
commitment letter dated December 2, 1996 (the "NML Commitment") and in a
manner consistent with the Refinancing Guidelines. If the Managing Partner
is unable to Refinance the Current Property Mortgage Debt with NML in
accordance with the NML Commitment, the Managing Partner may seek to
Refinance such debt on or before December 31, 1997 with another lender,
provided that such Refinancing satisfies the Refinancing Guidelines.
(b) If the Managing Partner is unable to Refinance the Current
Property Mortgage Debt on or before December 31, 1997 in accordance with
paragraph (a) above, the Odyssey General Partner may at any time during 1998
elect, by notice given to the Managing Partner, to seek to Refinance all or
part of the Current Property Mortgage Debt in an aggregate principal amount
of up to $58 million upon terms which satisfy the Refinancing Guidelines (an
"Odyssey Refinancing"). Such financing or refinancing may differ from the
Refinancing contemplated by the NML Commitment. If the Odyssey General
Partner so elects, the Managing Partner shall not seek to effectuate a
Refinancing until the earliest to occur of (i) the later of (A) January 1,
1999 and (B) 180 days after the entering into of the Odyssey Commitment, in
either case without an Odyssey Refinancing having occurred, (ii) the closing
of an Odyssey Refinancing, and (iii) the Odyssey General Partner notifying
the Managing Partner that is no longer seeking to effectuate an Odyssey
Refinancing. The Odyssey General Partner may, at any time during 1998,
produce a commitment or term sheet (the "Odyssey Commitment") for a
Refinancing that satisfies the Refinancing Guidelines for an aggregate
principal amount of not more than -$58 million, and which contemplates a
closing no later than the later of 180 days after the entering into of the
Odyssey Commitment and the end of 1998.
(c) The "Refinancing Guidelines" are as follows:
(i) the lender shall be an Acceptable Institution;
(ii) the interest rate shall be a market rate and may be a fixed or
floating rate, or a floating rate subject to a swap, "cap" or other
hedge (provided, that in the case of any Odyssey Refinancing, such
interest rate shall be subject to the approval of Reckson, not to be
unreasonably withheld and to be deemed given if not denied within 10
days after request by the Odyssey General Partner);
(iii) the loan amount may not exceed the greater of (x) subject
to the following provisions of this subclause (iii), an amount such that
the loan-to-value ratio would equal seventy-five (75%) percent of the
appraised fair market value of the Project on a date which is not more
than 180 days prior to the date of the closing of the Refinancing in
question (the "Refinancing Appraisal Date") based on an appraisal
prepared by an Appraiser retained by the Managing Partner and approved
by the Acceptable Institution committing to make such Loan or, at the
Managing Partner's election, an Appraiser retained by the Acceptable
Institution committing to make such Loan setting forth the Appraiser's
opinion of the fair market value of the Project valued free and clear of
the Mortgage Debt and other Indebtedness of the Partnership and (y) the
then outstanding amount of the Indebtedness of the Partnership to be
refinanced plus Transaction Costs. Notwithstanding the foregoing no
appraisal shall be required in connection with the Refinancing
contemplated by the NML Commitment or any other Refinancing of the
Current Mortgage Property Debt effected by the Managing Partner in
accordance with this Section 10.6 or for an Odyssey Refinancing (any of
which is herein referred to as the "First Refinancing") it being agreed
that the principal amount thereof shall not exceed $58 million;
(iv) any Refinancing shall be nonrecourse to the Partnership and
the Partners except for (x) environmental issues, (y) with respect to
any particular Partner, fraud and/or misapplication of funds by such
Partner and (z) with respect to the Managing Partner, other standard
carve-outs which are then customary in similar non-recourse mortgage
loans;
(v) the term shall be at least five (5) years;
(vi) the Debt Service Coverage Ratio shall be at least 1.35 to 1;
(vii) cap and hedge costs shall be amortized on a straight-line
basis (or on such other basis as agreed to by all of the General
Partners), without interest, over the term of the mortgage and treated
as additional interest costs;
(viii) participation or contingent payments based on revenues,
sales, refinancing proceeds, appreciation in value or other items shall
not be permitted;
(ix) the lender shall not be permitted to convert any of its debt
into equity;
(x) transfers of interests in the Partnership between the Partners
and by the Odyssey Entities shall not be prohibited or restricted in any
manner whatsoever; provided that this Refinancing Guideline may be
waived in whole or in part by the Odyssey General Partner in its sole
and absolute discretion;
(xi) any Refinancing shall not (x) be cross-defaulted or cross
collateralized with any obligations of Reckson or the REIT or their
Affiliates or (y) contain any defaults based on the status of, or any
events relating to, Reckson or the REIT or their Affiliates (other than
a default based upon the Bankruptcy of Reckson); provided that this
Refinancing Guideline may be waived in whole or in part by the Odyssey
General Partner in its sole and absolute discretion; and
(xii) principal or interest payments under any Refinancing
shall not be guaranteed by any Person, except that principal may be
guaranteed by Reckson or its designees such that the amount of principal
so guaranteed at any time does not exceed the amount set forth opposite
the dates on Exhibit C and the terms of any guarantee shall provide for
automatic reduction of the principal amount so guaranteed in accordance
with Exhibit C (for example, if the refinancing occurred on the date
hereof, the principal amount guaranteed could not exceed $40,200,000 and
the guarantee would be required to provide that the principal amount
guaranteed would be reduced to no more than $22,600,000 from and after
June 3, 1997); provided that this Refinancing Guideline may be waived by
the Odyssey General Partner in whole or in part in its sole and absolute
discretion, but the Odyssey General Partner may not require Reckson to
provide a guaranty.
(d) The Managing Partner shall provide the Odyssey General Partner
with such information concerning the Project that the Odyssey General Partner
may reasonably request in order to obtain the Odyssey Commitment. In the
event the Odyssey General Partner delivers an Odyssey Commitment which
complies with the Refinancing Guidelines, the Managing Partner will use its
best efforts to negotiate and execute the Odyssey Commitment and close the
loan contemplated thereby. At the request of the Odyssey General Partner,
the Managing Partner shall timely pay from Partnership assets any deposit or
commitment fee for the Odyssey Commitment and the same shall be a Partnership
Expense.
(e) Notwithstanding anything herein contained to the contrary, the
Odyssey General Partner shall have the right, so long as no monetary or
material non-monetary default beyond any applicable notice and grace period
exists under the Pledge Loan to fully participate in the negotiation of all
loan documents related to the NML Commitment or any other or future
Refinancing and Reckson shall have the right, so long as Reckson is not a
Defaulting Partner, to fully participate in the negotiation of all loan
documents related to an Odyssey Refinancing.
10.6.3 Future Refinancing. Following the First Refinancing
------------------
(or the inability of either Reckson or the Odyssey General Partner to
effectuate the First Refinancing), the Managing Partner may at any time and
from time to time seek to Refinance all or any portion of the Mortgage Debt
in accordance with the following:
(a) The terms of any Refinancing shall comply with the Refinancing
Guidelines.
(b) The Managing Partner shall give the Odyssey General Partner at
least 60 days' advance notice of the terms and conditions of any
proposed Refinancing and shall provide the Odyssey General Partner with
a commitment or term sheet describing such terms and conditions and
evidencing satisfaction of the Refinancing Guidelines.
10.6.4 Cost and Expenses of the First Mortgage and TI Loan.
---------------------------------------------------
(a) All costs and expenses (collectively, the "Fleet Loan Expenses")
incurred in obtaining the First Mortgage and TI Loan (collectively, the
"Fleet Loan") shall be borne solely by Reckson and the same shall not be
deemed to affect the Percentage Interests of the Partners or any
distributions by the Partnership. The payment of any such costs and expenses
by Reckson shall be deemed to be a contribution to Reckson's Capital Account
and such costs and expenses shall be written off immediately by the
Partnership without any amortization whatsoever. Furthermore, Reckson hereby
indemnifies the Partnership and Odyssey Entities and holds it and them and
their Affiliates, directors and officers harmless against any and all claims,
demands, losses, damages, liabilities, lawsuits and other proceedings,
judgments, costs, expenses and reasonable attorneys' fees (including, without
limitation, if the same arise directly or indirectly from any acceleration of
the Fleet Loan), to the extent the same arise directly or indirectly from (i)
any breach of any of the terms, covenants or conditions contained in any
Fleet Document (including, without limitation, under any indemnity by
Reckson, the REIT or any of their Affiliates) by the Partnership resulting
from any act or omission of Reckson or its Affiliates or (ii) any claimed
misrepresentation made by Reckson or its Affiliates on their own behalf or on
behalf of the Partnership in respect of the Fleet Loan or in any Fleet Loan
Document (unless such misrepresentation is based upon information, if any,
provided by either of the Odyssey Entities or their Affiliates), in each case
other than by Reckson or its Affiliates as Managing Partner and not involving
gross negligence or willful misconduct on the part of Reckson or its
Affiliates as Managing Partner (collectively, the "Reckson Fleet Loan
Indemnity Expenses").
(b) The Odyssey Entities hereby indemnify the Partnership and
Reckson and holds it and them and its Affiliates, directors and officers
harmless against any and all claims, demands, losses, damages, liabilities,
lawsuits and other proceedings, judgments, costs, expenses and reasonable
attorneys' fees (including, without limitation, if the same arise directly or
indirectly from any acceleration of the Fleet Loan), to the extent the same
arise directly or indirectly from (i) any breach of any of the terms,
covenants or conditions contained in any Fleet Document by the Partnership
resulting from any act or omission of the Odyssey Entities or their
Affiliates or (ii) any claimed misrepresentation made by either of the
Odyssey Entities or their Affiliates on their own behalf or on behalf of the
Partnership in respect of the Fleet Loan or in any Fleet Document (unless
such misrepresentation is based upon information, if any, provided by Reckson
or its Affiliates), in each case other than by an Odyssey Entity or its
Affiliates as Managing Partner and not involving gross negligence or willful
misconduct on the part of such Odyssey Entity or its Affiliates as Managing
Partner.
10.6.5 Current Interest Rate Swap. In connection with the
--------------------------
Fleet Loan, the Partnership has entered into an interest rate swap agreement
with Fleet Bank (the "Current Interest Rate Swap"), the effect of which is to
cause the effective interest rate (including the actual spread over the LIBOR
reference rate) on the Fleet Loan to be not greater than 8.5% per annum. If
the Current Interest Rate Swap (or any substitute therefor) is terminated
prior to the maturity date of the Fleet Loan, then Reckson shall, within five
(5) days of the date of such termination, cause the Partnership to enter into
a substitute interest rate swap agreement (the "Substitute Interest Rate
Swap") with a bank having at least a "AA" long term debt rating, the effect
of which is to limit the interest rate (including the actual spread over the
LIBOR reference rate) on the Fleet Loan to not greater than 8.5% per annum.
If Reckson does not cause the Partnership to enter into a Substitute Interest
Rate Swap within five (5) days of such termination, the Odyssey General
Partner shall have the right to cause the Partnership to purchase an interest
rate cap (the "Substitute Interest Rate Cap") from a bank having at least a
"AA" long term debt rating, the effect of which is to limit the interest rate
(including the actual spread over the LIBOR reference rate) on the Fleet Loan
to 8.5% per annum (or a higher rate selected by the Odyssey General Partner
in its sole discretion). All costs and expenses of the Current Interest Rate
Swap, the Substitute Interest Rate Swap, the Substitute Interest Rate Cap
(each a "Hedge Instrument") and all amounts that may be due and payable
pursuant to any of the foregoing, including, without limitation, all amounts
which may become due upon a termination for any reason (including, without
limitation, a termination resulting from the prepayment or acceleration of
the Fleet Loan) of any of the foregoing (collectively, the "Hedge Costs and
Payments") shall be borne and paid solely by Reckson, and the same shall not
be deemed to affect the Percentage Interests of the Partners or any
distributions by the Partnership except as expressly provided in this Section
10.6.5. Notwithstanding the foregoing, the Hedge Costs and Payments
(including amounts due on termination of any Hedge Instrument) shall not
include payments which are equal to interest at a rate of up to 8.5% per
annum payable on a notional amount equal to the outstanding principal amount
of the Fleet Loan from time to time. Without limiting the foregoing, Reckson
acknowledges and agrees that the Odyssey General Partner may exercise its
right under this Section 10.6 to refinance the Fleet Loan notwithstanding
that such refinancing will require termination of the Current Interest Rate
Swap (or any substitute therefor) which may have a substantial cost to
Reckson. The payment of any of the Hedge Costs and Payments by Reckson shall
be deemed to be a contribution to Reckson's Capital Account and the same
shall be written off immediately by the Partnership without any amortization
whatsoever. In connection with a permitted refinancing of the Current
Property Mortgage Debt in accordance with this Section 10.6, any Hedge
Instrument shall be terminated unless Reckson, at its sole cost and expense,
modifies such Hedge Instrument to provide that (a) the Partnership is not a
party to such Hedge Instrument, (b) the assets of the Partnership (including,
without limitation, the Project) do not secure such Hedge Instrument and (c)
the Partnership has no liability whatsoever with respect to such Hedge
Instrument. Except as provided in the preceding sentence, no Hedge
Instrument shall be amended, modified or terminated without the consent of
Reckson and the Odyssey General Partner, which consent, in the case of the
Odyssey General Partner, shall not be unreasonably withheld; provided,
however, that if the effective interest rate (including the actual spread
over the LIBOR reference rate) on the Fleet Loan would be greater than 8.5%
per annum after giving effect to any such amendment, modification or
termination or the amendment, modification or termination would result in any
cost or expense to the Partnership or the Odyssey Entities or in any increase
in any liability or potential liability of the Partnership or the Odyssey
Entities, the Odyssey General Partner may withhold its consent thereto in its
sole discretion. Regardless of the actual rate of interest on the Fleet
Loan, for purposes of calculating distributions of Net Ordinary Cash Flow,
the interest rate on the Fleet Loan shall be deemed to equal 8.5% per annum.
To the extent that interest payable by the Partnership pursuant to the Fleet
Loan for any period, after giving effect to the Current Interest Rate Swap or
Substitute Interest Rate Swap as then in effect (if any), is at a rate that
is less than 8.5% per annum, the Partnership will, at the same time that the
Managing Partner makes its monthly distribution of Net Ordinary Cash Flow
pursuant to Section 8.1, make a distribution to Reckson (a "Reckson
Equalization Payment") equal in amount to the difference between (i) the
interest payment that would be payable by the Partnership for such monthly
period under the Fleet Loan for such period if the rate were 8.5% per annum
and (ii) the actual interest payable by the Partnership for such monthly
period under the Fleet Loan, after giving effect to any payment received
under any Hedge Instrument as then in effect (if any); provided, however,
that a Reckson Equalization Payment shall not be paid at any time that a
monetary default or an Event of Default then exists hereunder with respect to
Reckson, but any amount not paid shall be payable if and when such monetary
default or Event of Default has been cured. Any Reckson Equalization Payment
made or payable shall not be deemed to affect the Percentage Interests of the
Partners. Reckson hereby indemnifies the Partnership and the Odyssey
Entities and holds them and their Affiliates, partners, directors and
officers harmless against any and all claims, demands, losses, damages,
liabilities, lawsuits and other proceedings, judgments, awards, costs and
expenses (including reasonable attorneys' fees) to the extent the same arise
directly or indirectly from any Hedge Instrument or any interest rate costs
payable by the Partnership in respect of the Fleet Loan, after giving effect
to any Hedge Instrument as then in effect (if any), exceeding 8.5% per annum
on the outstanding principal amount of the Fleet Loan (the "Reckson Hedge
Indemnity"). The obligations of Reckson with respect to the Fleet Loan
Expenses, the Reckson Fleet Loan Indemnity Expenses, any Hedge Instrument,
the Hedge Costs and Payments and the Reckson Hedge Indemnity under Section
10.6.4 and this Section 10.6.5 are unconditionally guaranteed, jointly and
severally, by Reckson and the REIT and Reckson and the REIT as evidenced by
the Guaranty attached as Exhibit E to the Existing Partnership Agreement (as
amended, the "Guaranty"), which Guaranty has been confirmed on the date
hereof. Such confirmation is attached hereto as Exhibit B.
10.7. Conversion.
----------
10.7.1 Conversion Events. If any Conversion Event occurs,
-----------------
then the Odyssey General Partner shall become the sole General Partner and
the Managing Partner of the Partnership and the general partnership interest
of Reckson in the Partnership shall be automatically converted to a limited
partnership interest. Notwithstanding the foregoing, if the general
partnership interest of Reckson in the Partnership is so converted into a
limited partnership interest and if within one hundred eighty (180) days
after the date of such conversion, Reckson cures the default that is the
basis for the Conversion Event, then the partnership interest of Reckson in
the Partnership shall be reconverted to a general partnership interest and
Reckson and the Odyssey General Partner shall thereafter be co-Managing
Partners of the Partnership; provided, however, that if the Mortgage Debt (or
any Mortgage Debt proposed in any commitment for any Refinancing or any draft
documentation thereof) contains a provision (a "Anti-Reconversion Provision")
prohibiting such reconversion or requiring the consent of the holder of such
Mortgage Debt (or the proposed holder of such proposed Mortgage Debt) to such
reconversion, then such reconversion shall be subject to the consent of the
holder (or such proposed holder); and provided further that if the Conversion
Event was the REIT or Reckson becoming Bankrupt, such reconversion shall be
subject to the Rechler Family possessing, whether legally or in practical
effect, the power to direct or cause the direction of the management and
policy of the REIT (whether through the ownership of voting securities, by
statute or according to the provisions of a contract) at the time of such
reconversion. Notwithstanding anything herein contained to the contrary, if
(i) on any one occasion following a Conversion Event Reckson reconverts its
partnership interest in the Partnership from a limited partnership interest
to a general partnership interest and (ii) thereafter any single Conversion
Event occurs, then (1) the Odyssey General Partner shall automatically become
the sole Managing Partner, (2) the general partnership interest of Reckson in
the Partnership shall be automatically converted to a limited partnership
interest and (3) Reckson shall have no further right hereunder to again
become a general partner of the Partnership. Reckson shall from time to time
promptly inform the Odyssey General Partner if any Conversion Event has
occurred and if so, the nature thereof. Upon request from time to time by
the Odyssey General Partner, Reckson shall provide the Odyssey General
Partner documentation and evidence reasonably satisfactory to the Odyssey
General Partner that no Conversion Event has occurred, or if it has, the
nature thereof. Notwithstanding anything herein contained to the contrary,
following the automatic conversion of the general partnership interest of
Reckson in the Partnership to a limited partnership interest pursuant to this
Section 10.7.1, the Odyssey General Partner shall have the right by notice
given to Reckson (which notice may be given or withheld in the sole and
absolute discretion of the Odyssey General Partner) to cause the partnership
interest of Reckson in the Partnership to reconvert from a limited
partnership interest to a general partnership interest, in which case Reckson
and the Odyssey General Partner shall be co-Managing Partners of the
Partnership.
10.7.2 Co-Managing Partner Authority and Major Decisions.
-------------------------------------------------
(a) Except as otherwise expressly provided in this Agreement, the
provisions of this Section 10.7.2 shall control during any period when
Reckson and the Odyssey General Partner are co-Managing Partners.
(b) The Odyssey General Partner shall conduct (or cause to be
conducted under its supervision) the day-to-day business and affairs of the
Partnership subject to, and in accordance with, this Agreement.
Notwithstanding anything contained in this Agreement to the contrary, in the
event of a dispute between the co-Managing Partners (or the failure of the
co-Managing Partners to agree) regarding the sale, transfer, financing or
refinancing of the Project or the incurrence of third party Indebtedness of
the Partnership or any of the Co-Managing Partner Consulting Decisions (as
defined below), the decision of the Odyssey General Partner shall govern.
(c) No act shall be taken, sum expended or obligation incurred by
the Odyssey General Partner within the scope of the decisions expressly set
forth below (collectively, the "Co-Managing Partner Consulting Decisions")
unless the Odyssey General Partner first consults with all of the other
General Partners. The Co-Managing Partner Consulting Decisions shall be:
(i) any lease, license or occupancy agreement (or any
modification, amendment, termination or surrender thereof) covering in
excess of 5,000 rentable square feet in the Project;
(ii) the granting or modification of any easement permitted
under Article 4;
(iii) any selection of a replacement Managing Agent or the
determination of the terms of any replacement Management Agreement
(except as otherwise specifically provided in Section 10.1); the
employment of any third party broker (other than in connection with the
multiple listing of the Project) by the Partnership or the Managing
Agent;
(iv) the approval of the standard -form of lease for the
Project and any material modification or change to the standard form of
lease for the Project made generally or in connection with any lease to
a tenant, it being acknowledged that each Partner has heretofore been
provided with a copy of the current standard form of lease;
(v) any material modification, change or amendment to, or
termination or cancellation of, any of the Key Documents (except in
connection with a refinancing of Mortgage Debt which shall be governed
by Section 10.6) or any of the other instruments or agreements which
grant the Partnership any rights with respect to the Project or any
portion thereof or which restrict the use thereof, or the approval of or
consent to any material matter under any Key Document;
(vi) in the event of a fire, other casualty or partial
condemnation, determination of whether to construct or reconstruct the
improvements located on the Project, where such construction or
reconstruction (i) is not required under the terms of any Key Document
affecting the damaged or condemned portion of the Project and (ii) will
cost in excess of $100,000;
(vii) in the event of a fire or other casualty, the right
to adjust, settle and receive all insurance proceeds payable in
connection with any such fire or other casualty loss in excess of $
100,000;
(viii) any material tax election (including, without
limitation, the making of an election under Section 754 of the Code);
the selection of accounting methods or the material variation of
existing accounting methods;
(ix) approval of, or modification or change to, the Budget or
determination to make an expenditure which is not in the Budget except
in the case of emergency which is of such a nature as to make it
impractical to consult with the other General Partners prior to taking
such action (such as fire or other casualty) because of time constraints
imposed by such emergency, in which event the Odyssey General Partner
shall be authorized to spend such amounts as shall be reasonably
necessary to deal with such emergency without making such consultation;
(x) subject to Section 21.26, determination of the types,
amounts and carriers of insurance to be maintained in respect of the
Project or any other assets of the Partnership and any other material
insurance matters (provided that such carrier shall have a "Best" rating
of not lower than A-VII);
(xi) entering into any agreement or other arrangement with a
Person which is an Affiliate of any Partner (except as provided in
Section 10.3), or the modification, amendment or change of any such
agreement or other arrangement;
(xii) initiation or settlement of any claim (including
claims made by or against tenants) by or against the Partnership for an
amount in excess of $50,000;
(xiii) termination of any lease or the bringing of any
summary dispossess proceeding with respect to any Lease for space in
excess of 10,000 rentable square feet;
(xiv) any other action with respect to any matter which,
pursuant to the express provisions of this Agreement, requires the
approval, consent or agreement of all of the General Partners;
(xv) determination of whether or not distributions should be
made to the Partners, except as provided in Article 8 or Article 15;
(xvi) determination of the maximum and minimum
requirements for Cash Reserves or a reserve upon dissolution and
liquidation of the Partnership;
(xvii) approval of or consent to any matter which pursuant
to the terms of the Management Agreement requires the approval or
consent of the Partnership or any direction to the Managing Agent to
perform any service for which the Managing Agent is entitled to or will
charge additional fees;
(xviii) all environmental matters requiring remediation
(except in case of an emergency which is of such a nature as to make it
impractical to consult with the other General Partners prior to taking
such action because of time constraints imposed by such emergency, in
which event the Odyssey General Partner shall be authorized to spend
such amounts as shall be reasonably necessary to deal with such
emergency without making such consultation); or
(xix) taking any action which would cause the Partnership
to be Bankrupt.
(d) If the General Partners do not agree with respect to any Co-
Managing Partner Consulting Decision within 10 days after the Odyssey General
Partner first consults with the other General Partners (or such earlier date
in the case of emergency or other time constraints) the decision of the
Odyssey General Partner shall govern and the Odyssey General Partner shall be
entitled to take such action as it deems appropriate.
10.7.3 Odyssey Conversion Events. If any Odyssey Conversion
-------------------------
Event occurs, then the general partnership interest of the Odyssey General
Partner in the Partnership shall be automatically converted to a limited
partnership interest.
10.7.4 Effectuation of Conversion. In the event of any
--------------------------
conversion of the general partnership interest of Reckson or the Odyssey
General Partner to a limited partnership interest pursuant to this Section
10.7, (a) if any filing, application, approval or consent is required in
connection therewith, the Managing Partner shall promptly make such filing or
application or obtain such approval or consent at the sole cost and expense
of the party whose general partnership interest was converted to a limited
partnership interest, (b) Reckson or the Odyssey General Partner, as the case
may be, shall execute, acknowledge and deliver any partnership certificates,
fictitious name certificates and all other instruments of whatever nature
that are called for or required by the applicable statutes, rules or
regulations of the State of Delaware, including, without limitation, the
Partnership Act, to effect such conversion and (c) Reckson and the Odyssey
General Partner each hereby irrevocably appoint the Managing Partner, as its
agent and attorney-in-fact, irrevocably and coupled with an interest and with
power of substitution, to execute all filings, applications, documents and
instruments necessary or desirable to effect the provisions of this Section
10.7.
10.7.5 Further Assurances. Each Partner agrees that it shall
------------------
be reasonable and cooperate with the Managing Partner, including, without
limitation, executing any documents which may be reasonably required, in
order to effectuate the provisions of this Section 10.7.
10.8. Managing Partner Duty. Consistent with their fiduciary and
---------------------
other obligations as Managing Partner (if applicable) and as a General
Partner, neither General Partner shall (nor, in the case of Reckson, permit
the REIT to) enter into any agreement which would limit the rights or powers
of the General Partner(s) to operate the Project or the Partnership or impose
any restraints on the discretion or decision making authority of the Managing
Partner(s) or the General Partner(s).
ARTICLE 11
PRE-EXISTING OBLIGATIONS
11.1. No Capital Contribution. Except as expressly provided in
-----------------------
this Agreement, the Reckson Entities shall not receive any credit to their
Capital Account for any debts, liabilities or obligations incurred by any of
the Reckson Entities on behalf of the Project or the Partnership prior to
December 21, 1993 or for any payments made with respect to any of the matters
covered by the indemnification contained in Section 11.1 of the Existing
Partnership Agreement.
ARTICLE 12
TRANSFER OF PARTNERSHIP INTERESTS
12.1. Prohibited Transfers. Except in accordance with, and as
--------------------
permitted by Sections 12.2, 12.4, 13.3(e), 13.4 and 14.3, a Partner may not
sell, assign, transfer, mortgage, pledge, hypothecate or otherwise encumber
all or any part of its interest in the Partnership (including, without
limitation, the right to receive any distributions or other income in respect
of any such partnership interest) and any attempt to do so shall be null and
void. Any of the following, whether accomplished directly or indirectly, by
contract, operation of law, voluntarily or involuntarily, shall be deemed a
transfer for purposes hereof:
(a) any sale, assignment or other transfer, mortgage,
hypothecation or other encumbrance of (i) any of the partnership interests of
any Partner that is a partnership, (ii) any of the stock of any Partner that
is a corporation or (iii) any of the legal or beneficial interests in any
Partner that is a trust or other entity;
(b) the admission of any additional partners to any Partner which
is a partnership, or the issuance of additional stock in any Partner which is
a corporation, or the issuance of any beneficial interests in any Partner
that is a trust or other entity; and
(c) the occurrence of any of the transactions described in
paragraphs (a) or (b) above with respect to any partnership, corporation,
trust or other entity which is itself a partner of a Partner; or any other
transaction, howsoever effected, which changes the ultimate beneficial
ownership of a Partner from that existing on the date hereof.
Notwithstanding the preceding clauses (a), (b) and (c), nothing contained in
this Section 12.1 shall be deemed to prohibit (A) sales, assignments,
transfers, hypothecations and encumbrances of (x) the partnership interests
of the partners of Reckson Operating Partnership, L.P. or any successor
thereof permitted under clause (x) of the definition of "Permitted
Transferee" (but specifically excluding any successor permitted under clause
(y) of the definition of "Permitted Transferee") or Odyssey (or of the direct
or indirect ownership interests therein) or (y) the stock of Odyli by the
holders thereof (or of the direct or indirect ownership interests therein) or
(B) the sale or issuance of stock in the REIT or the admission of limited
partners in Reckson, provided that the foregoing shall not affect the
provisions of any other Section of this Agreement.
12.2. Permitted Transfers.
-------------------
(a) Notwithstanding the provisions of Section 12.1 hereof, a
Partner (the "Transferor") shall have the right, without the consent of the
other Partners, to sell, assign or transfer all or some of its Partnership
interests to any Permitted Transferee of such Partner (the "Transferee"). A
Transferee who acquires one or more Partnership interests but who is not
admitted as a substituted Partner pursuant to Section 12.2(b) hereof shall be
entitled only to allocations and distributions with respect to such interests
in accordance with this Agreement, and shall have no right to any information
or accounting of the affairs of the Partnership, shall not be entitled to
inspect the books or records of the Partnership, and shall not have any of
the rights of a General Partner or a Limited Partner under the Partnership
Act or this Agreement.
(b) Subject to the other provisions of this Article 12, a
Transferee may be admitted to the Partnership as a substituted Partner only
upon satisfaction of the following conditions:
(i) The Transferee becomes a party to this Agreement as a
Partner and executes such documents and instruments as the Managing
Partner may reasonably request (including, without limitation,
amendments to the Certificate) as may be necessary or appropriate to
confirm such Transferee as a Partner in the Partnership and such
Transferee's agreement to be bound by the terms and conditions hereof;
and
(ii) The Transferee pays or reimburses the Partnership for all
reasonable legal, filing, and publication costs that the Partnership
incurs in connection with the admission of the Transferee as a Partner
with respect to the transferred interests.
(c) Upon satisfaction of the terms and conditions of Section
12.2(b), a Transferee shall be admitted to the Partnership as a Partner
effective immediately prior to the effective date of the transfer, and,
immediately following such admission, if the Transferor has transferred its
entire interest in the Partnership, the Transferor shall cease to be a
partner of the Partnership. In such event, the Partnership shall not
dissolve if the business of the Partnership is continued without dissolution
in accordance with Articles 13 and 15 hereof.
12.3. Conditions Applicable to All Transfers.
--------------------------------------
12.3.1 (a) (i) Notwithstanding anything to the contrary
contained in this Agreement (but subject to Section 12.3.1(a)(iii) below),
any sale, assignment or transfer, whether direct or indirect, of any interest
in the Partnership, or of any ownership interest in any Partner, shall be
made in full compliance with (x) all applicable Legal Requirements and (y)
the material contracts, deeds of trust, mortgages, certificates, easement
agreements, insurance policies, service agreements and any other agreements
affecting the Project, so that the operation of the Project can continue
without interruption and without violation of any applicable law or any of
such instruments. In the event that any filing, application, approval or
consent is required in connection with any such sale, assignment or transfer,
the "Responsible Partner" (as hereinafter defined) shall promptly make such
filing or application or obtain such approval or consent, at its sole
expense, and shall reimburse the other Partner for any costs or expenses
(including attorneys' fees) incurred by such Partner in connection with any
filing, application, approval or consent.
(ii) The "Responsible Partner" shall be (w) in the case of a
transfer under Section 12.2 the transferring Partner, (x) in the case of a
transfer under Section 12.4, Reckson, (y) in the case of a transfer under
Section 13.3 or 13.4, the Withdrawn Partner and (z) in the case of a transfer
under Section 14.2, the Defaulting Partner. In the event the Responsible
Partner shall fail to comply with its obligations under Section 12.3.1(a)(i)
above, the other Partner, upon ten (10) business days' prior written notice
to the Responsible Partner may do so at the sole cost and expense of the
Responsible Partner and adjourn the closing for such periods of time as are
necessary, and all amounts so incurred by the other Partner, including
accounting, attorneys and other professional fees, shall be payable by the
Responsible Partner within ten (10) days after demand.
(iii) Notwithstanding anything herein contained to the
contrary, in the case of a transfer under Sections 12.4, 13.3, 13.4 or 14.2,
if the Responsible Partner shall fail to comply with its obligations under
Section 12.3.1(a)(i) above, then (x) the other Partner shall have the option
to require that the Responsible Partner close on such transfer even if (1)
any required filing or application has not been made or (2) any required
consent or approval has not been obtained and (y) the Responsible Partner
shall indemnify the other Partner against any loss, liability or damage
suffered or incurred by the other Partner as a result of the Responsible
Partner's failure to comply with its obligations under Section 12.3.1(a)(i)
above.
(b) Notwithstanding anything to the contrary contained in this
Agreement, each Partner and each transferee of all or any part of an interest
in the Partnership and each Person which is the general partner of the owner
of any interest in the Partnership, (x) shall at all times maintain an office
or agency for the service of process in the United States of America, which
shall also be its address for delivery of notices under Article 16 and (y)
shall be a "United States person" as defined in Section 7701(a)(30) of the
Code.
12.3.2 Notwithstanding anything to the contrary contained in this
Agreement, no change in ownership of the interest of any Partner (excluding,
for purposes hereof, a transfer described in paragraphs (a), (b) or (c) of
Section 12.1 with respect to direct or indirect ownership of any Partner)
shall be binding upon the other Partner unless and until (a) true copies of
the instruments of transfer executed and delivered pursuant to or in
connection with such transfer shall have been delivered to such other
Partner, (b) the Transferee shall have delivered to such other Partner an
executed and acknowledged assumption agreement pursuant to which the
Transferee assumes all the obligations of the Transferor from and after the
date of such transfer under, and agrees to be bound by all the provisions of,
this Agreement, and (c) the Transferee shall have executed, acknowledged and
delivered any instruments required under the Partnership Act to effect such
transfer and its admission to the Partnership. Upon the execution and
delivery of such assumption agreement, the Transferor shall have no further
obligation hereunder thereafter accruing except that (x) the Transferor shall
remain primarily liable for all accrued obligations (as of the date of
transfer) of the Transferor under this Agreement and (y) if the Transferor is
Reckson, Reckson shall remain primarily liable for its obligations under
Section 12.4, in each case, notwithstanding any transfer pursuant to this
Article 12. In connection with any transfer of an interest in the
Partnership permitted under this Article 12, each Partner hereby consents to
the withdrawal of the Transferor Partner as a Partner and the admission of
the Transferee Partner as a Partner with the rights of the Transferor Partner
hereunder, including, without limitation, rights with respect to management
and distributions.
12.3.3 If, notwithstanding the provisions of Section 12.1, any
party or entity acquires all or any part of the interest of a Partner in the
Partnership or an ownership interest in a Partner in violation of this
Article 12 by operation of law or judicial proceeding, the holder(s) of the
affected interest shall have no right to take action under this Agreement,
and the Partner whose interest was affected shall be deemed to be in default
under Article 14.
12.3.4 Notwithstanding anything to the contrary herein
contained, a Partner shall not be obligated to cooperate with the selling
Partner under Section 12.2 if such cooperation would result in such Partner
incurring liability or expense for any item not contemplated by the
provisions thereof, it being agreed, however, that in any event such Partner
shall bear the cost of its legal expenses.
12.3.5 Notwithstanding anything to the contrary herein
contained, no Partner shall be entitled to consummate a transfer of all or
any part of its Partnership interest if the same would result in the
Partnership being characterized as an "association" pursuant to Reg.
301.7701-2 of the Code. Prior to the consummation of any such transfer, such
Partner shall deliver to the other Partners a legal opinion, in form and
delivered by counsel reasonably satisfactory to such other Partners stating
that such transfer shall not result in the Partnership being so characterized
or in a termination of the Partnership within the meaning of Section 708 of
the Code.
12.4. Call and Put Rights.
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12.4.1 (a) The Odyssey Entities hereby grant to Reckson the
right (the "Reckson Call Right") to elect to purchase all (but not less than
all) their interest in the Partnership at the time and on the terms and
conditions set forth in this Section 12.4.
At least one year (but not more than two years) prior to the end of
the "Lockout Period" (as hereinafter defined), as it may be extended, Reckson
shall give the Odyssey Entities a notice (the "Reckson Call Notice") stating
whether or not Reckson has elected to exercise the Reckson Call Right. The
failure of Reckson to timely give the Reckson Call Notice shall be deemed an
election by Reckson not to exercise the Reckson Call Right.
The "Lockout Period" shall be the period commencing on the date of this
Agreement and ending on the tenth anniversary thereof; provided, however,
that Reckson may elect to extend the Lockout Period until the fifteenth
anniversary of the date of this Agreement by giving notice of such election
(a "Deferral Election") on or before the ninth anniversary of the date of
this Agreement; and provided, further, however, that (i) no Deferral Election
may be made if a Reckson Call Notice has been previously given and (ii) if
the Pledge Loan is still outstanding on the date of any Deferral Election,
such Deferral Election shall not be effective unless it is accompanied by a
notice from the Pledge Lender unconditionally extending the term of the
Pledge Loan to be co-terminous with the extended Lockout Period.
(b) If Reckson fails to timely exercise the Reckson Call Right,
the Odyssey Entities shall have the right (the "Odyssey Put Right") to
require Reckson (or its designee) to purchase all the Partnership Interests
of the Odyssey Entities at the time and on the terms and conditions set forth
in this Section 12.4. The Odyssey Put Right shall be exercised no later than
180 days prior to the end of the Lockout Period by notice given by the
Odyssey Entities to Reckson (the "Odyssey Put Notice"). The failure of the
Odyssey Entities to timely give the Odyssey Put Notice shall be deemed an
election by the Odyssey Entities not to exercise the Odyssey Put Right.
(c) Each of the Reckson Call Notice and the Odyssey Put Notice
shall constitute a binding agreement of purchase and sale between the Odyssey
Entities and Reckson with respect to the Partnership interests of the Odyssey
Entities (collectively, the "Odyssey Partnership Interest"). The price to be
paid for the Odyssey Partnership Interest (the "Odyssey Partnership Interest
Payment Amount") will be the fair market value of the Odyssey Partnership
Interest computed in accordance with Section 12.4.2.
12.4.2 The fair market value of the Odyssey Partnership Interest
shall be the amount that would have been distributed to the Odyssey Entities
under Section 8.2 if (a) the Project were sold for 90% of its appraised fair
market value as determined in accordance with Section 12.4.3 (reflecting the
fact that the Odyssey Entities have only a minority interest in the
Partnership with limited approval rights) as of a date (the "Appraisal Date")
specified in the Reckson Call Notice or Odyssey Put Notice, as the case may
be (which date shall be not more than 60 days prior to the giving of such
notice), subject to deduction therefrom of the actual out-of-pocket costs
paid by Reckson in connection with the purchase by Reckson of the Odyssey
Partnership Interest in accordance with this Section 12.4 and (b) the
Partnership was immediately thereafter liquidated in accordance with Article
15.
12.4.3 Accompanying either the Reckson Call Notice or the
Odyssey Put Notice (each, an "Exercise Notice") will be a fair market value
appraisal, as of the Appraisal Date, of the Project commissioned by the party
sending the Exercise Notice ("Sender") (the "Sender's Appraisal"). The
Sender's Appraisal must be prepared by an independent MAI designated
appraiser having at least ten (10) years' experience in appraising Class A
Office Buildings in New York City and Nassau County (an "Appraiser") and
shall set forth the Appraiser's opinion of the fair market value of the
Project valued free and clear of the Mortgage Debt and other Indebtedness of
the Partnership. The recipient of the Exercise Notice ("Recipient") may
accept the Sender's Appraisal or may deliver to the Sender, within thirty
(30) days after receipt of the Sender's Appraisal, a fair market value
appraisal, as of the Appraisal Date, of the Project (the "Recipient's
Appraisal") also prepared by an Appraiser and shall set forth such
Appraiser's opinion of the fair market value of the Project valued free and
clear of the Mortgage Debt and other Indebtedness of the Partnership. The
failure of the Recipient to timely deliver the Recipient's Appraisal or to
state its determination of the fair market value shall conclusively
constitute its agreement with the fair market value stated in the Sender's
Appraisal. In the event the fair market value as determined by the Appraisal
prepared for the Odyssey Entities is 106% or more of the fair market value as
stated in the Appraisal prepared for Reckson (herein, a "Material
Difference"), either the Odyssey General Partner or Reckson may, within five
(5) days of delivery of the Recipient's Appraisal, request that a third
Appraiser (who has not been employed by either the Odyssey Entities or
Reckson or any of their Affiliates within the preceding three (3) years) be
retained to render a fair market value appraisal (the "Independent
Appraisal"), as of the Appraisal Date, of the Project and shall set forth
such Appraiser's opinion of the fair market value of the Project valued free
and clear of the Mortgage Debt and other Indebtedness of the Partnership, but
shall not be greater than the fair market value as set forth in the Appraisal
prepared at the request of Odyssey or less than the fair market value set
forth in the Appraisal prepared at the request of Reckson. The Independent
Appraisal shall be delivered to the Odyssey General Partner and Reckson
within thirty (30) days after the appointment of such third Appraiser. In
the event the Odyssey General Partner and Reckson cannot agree within five
(5) days on an Appraiser to render the Independent Appraisal, either party
shall have the right to apply to the American Arbitration Association to
appoint such Appraiser. After receipt of the Independent Appraisal, the fair
market value shall be determined by averaging the respective fair market
values of the two appraisals that are closest in value to each other. In the
event there is no Material Difference between the Appraisal prepared for the
Odyssey Entities and the Appraisal prepared for Reckson or neither the
Odyssey Entities nor Reckson elects to seek the Independent Appraisal, the
fair market value of the Project shall be the average of the Sender's
Appraisal and the Recipient's Appraisal.
12.4.4 The closing of the purchase shall be on the last day of
the Lockout Period (the "Closing Date") (subject to adjournment (i) as
provided in Section 12.3 and Section 12.4.5(h) below and (ii) if, for any
reason, the Odyssey Partnership Interest Payment Amount has not yet been
finally determined by the last day of the Lockout Period, then on a date
designated by the Odyssey Entities within 10 days after such final
determination)) and at a place in New York, New York designated by the
Managing Partner. Notwithstanding anything herein contained to the contrary,
if on the last day of the Lockout Period the Odyssey Partnership Interest
Payment Amount has not yet been fully determined, then the Odyssey Entities
may elect (the "Odyssey Acceleration Election"), in their sole and absolute
discretion, to have the Closing Date occur (and cause Reckson to close on the
purchase of, and pay for, the Odyssey Partnership Interest) on any date on or
after the last day of the Lockout Period and prior to such final
determination, in which case, for purposes of such closing only, the Odyssey
Partnership Interest Payment Amount shall be calculated based on the Reckson
Appraisal and there shall be a subsequent adjustment of the Odyssey
Partnership Interest Payment Amount promptly following such final
determination. If Odyssey makes the Odyssey Acceleration Election, then, as
security for the payment of any balance due the Odyssey Entities on account
of the Odyssey Partnership Interest Payment Amount, at the closing Reckson
shall execute and deliver a separate security agreement, UCC financing
statements and such other documents as are reasonably requested by the
Odyssey General Partner pursuant to which Reckson shall assign and grant to
the Odyssey Entities a first priority lien upon, and a security interest in,
Reckson's Partnership interest (including, without limitation, the interests
in the Partnership transferred to Reckson by the Odyssey Entities) and all
amounts, payments and proceeds becoming distributable or payable to Reckson
by the Partnership, as collateral security for the payment of such balance.
Such security agreement shall contain the same substantive provisions
(appropriately modified) as are set forth in Section 14.3 of the Existing
Partnership Agreement and shall otherwise be in form reasonably satisfactory
to the Odyssey Entities.
12.4.5 At the closing:
(a) the Odyssey Entities shall deliver to Reckson (or its
designee) a duly executed and acknowledged instrument of assignment
transferring the interests of the Odyssey Entities to Reckson (or its
designee) free and clear of all liens and encumbrances (other than that
created pursuant to Section 14.3 or pursuant to the Pledge Agreement),
which instrument shall contain surviving representations concerning due
organization and authority of the Odyssey Entities and the absence of
liens and encumbrances and shall contain a provision indemnifying and
holding Reckson harmless from any loss, liability, cost or expense
(including reasonable attorneys' fees) it may incur by reason of any
breach of such representation;
(b) subject to Section 21.22, the Odyssey Entities shall pay
all transfer, stamp or similar taxes due in connection with the
conveyance of its 40% Partnership interest;
(c) Reckson shall pay the Odyssey Partnership Interest
Payment Amount to the Odyssey Entities in immediately available funds.
In addition, Reckson shall deliver to the Odyssey Entities a duly
executed agreement (which shall survive the closing under this Section
12.4.4) indemnifying the Odyssey Entities against (i) claims based upon
events arising from or in connection with the Partnership or the Project
from and after the closing date and (ii) any Partnership liabilities for
which the Odyssey Entities are liable on a recourse basis;
(d) the Partnership Accountants shall close the books of the
Partnership as of the Closing Date, and all items of Partnership income
and expense shall be apportioned between the Odyssey Entities and
Reckson in proportion to their respective shares of Net Ordinary Cash
Flow for the current calendar period, as of 11:59 p.m. of the day
preceding the Closing Date in accordance with the customs and practices
usual in Nassau County, New York in transactions involving property
comparable to the Project;
(e) to the extent not otherwise distributed to the Odyssey
Entities as part of the Odyssey Partnership Interest Payment Amount, Net
Ordinary Cash Flow and Net Extraordinary Cash Flow up to the Closing
Date, taking into account clause (d) above, shall be distributed in
accordance with the provisions of Article 8, which provisions shall
survive the closing pursuant hereto for purposes of making or correcting
any customary closing adjustments;
(f) there shall be distributed to the Odyssey Entities their
Percentage Interests of Cash Reserves (to the extent not otherwise
distributed to the Odyssey Entities as part of the Odyssey Partnership
Interest Payment Amount) and Odyssey's Share of the TI Reserve;
(g) to the extent not otherwise taken into account in
determining the Odyssey Partnership Interest Payment Amount, the Odyssey
Partnership Interest Payment Amount shall be decreased by any amounts of
Net Extraordinary Cash Flow distributed to the Odyssey Entities pursuant
to Article 8 during the period between the Appraisal Date and the
Closing Date;
(h) the Odyssey Entities shall discharge of record all liens
and encumbrances affecting their interests in the Partnership (other
than liens in favor of the holder of any Mortgage Debt and any lien
created under Section 14.3 or pursuant to the Pledge Agreement), and if
they fail to do so, Reckson may use any portion of the Odyssey
Partnership Interest Payment Amount to pay and discharge any such liens
and/or encumbrances and any related expenses and adjourn the closing for
such period as may be necessary for such purpose; and
(i) the Partners shall execute all amendments to fictitious
name, limited partnership or similar certificates necessary to effect
the withdrawal of the Odyssey Entities from the Partnership and, if
applicable, the termination of the Partnership.
The Odyssey Entities acknowledge and agree that pursuant to the Pledge
Agreement they have agreed that if the Pledge Loan is then outstanding, on
the Closing Date any amounts payable to them under this Section 12.4
(including, without limitation, any amounts payable to the Odyssey Entities
on the Closing Date if the Odyssey Entities make the Odyssey Acceleration
Election and any amounts payable to the Odyssey Entities after such Closing
Date upon the final determination of the Odyssey Partnership Interest Payment
Amount) shall be applied first to pay any amounts outstanding under the
Pledge Loan and the balance, if any, shall be paid over to or at the
direction of the Odyssey Entities. Without limiting the provisions of
Section 19 of the Pledge Agreement and Section 11 of the Note, in no event
will the Odyssey Entities have any liability if the amounts payable to them
under this Agreement, including, without limitation, Section 12.4, are
insufficient to repay the amounts outstanding under the Pledge Loan.
12.4.6 If Reckson fails to close on the purchase of the Odyssey
Entities' Partnership interests and/or pay the Odyssey Partnership Interest
Payment Amount (a "Reckson Default"), then, in addition to all rights at law
or in equity that the Odyssey Entities may have (including, without
limitation, the right to bring actions seeking specific performance and/or
damages), but subject to Section 21.24.1(g), at the Odyssey Entities'
election, either (a) the Odyssey Entities shall have the right to purchase
Reckson's then Percentage Interest in the Partnership at a price equal to the
amount that would have been distributed to Reckson under Section 8.2 if (x)
the Project were sold for its appraised fair market value (determined in
accordance with Section 12.4.3) as of the Appraisal Date after making a
deduction for all Sale Transaction Costs that would have been incurred in
connection with such sale (in which case such closing shall occur in the
manner described in Section 12.4.5 mutatis mutandis) and (y) the Partnership
was immediately thereafter liquidated in accordance with Article 15, or (b)
the Odyssey General Partner shall be entitled to sell the Project on behalf
of the Partnership without the consent of Reckson. If the Odyssey General
Partner so sells the Project, then, notwithstanding anything herein contained
to the contrary, after payment of all third-party Indebtedness and third-party
obligations of the Partnership and all Sale Transaction Costs, the Special
Odyssey Partnership Interest Payment Amount (as defined below) shall be paid
to the Odyssey Entities from the proceeds of such sale (even if such proceeds
are less than the appraised fair market value of the Project determined in
accordance with the procedures in Section 12.4.3 above) before any proceeds
therefrom are paid to Reckson whether on account of Capital Loans made by
Reckson to the Partnership, distributions that would otherwise be made to
Reckson or otherwise (collectively, the "Reckson Claims") and the Odyssey
Entities shall have no liability whatsoever to Reckson if the proceeds of
such sale are not sufficient to pay all or any portion of the Reckson Claims.
"Special Odyssey Partnership Interest Payment Amount"
---------------------------------------------------
means the fair market value of the Odyssey Partnership Interest calculated in
accordance with Section 12.4.2; provided, that clause (a) of Section 12.4.2
shall be deemed amended so that the fair market value of the Odyssey
Partnership Interest shall be calculated as if the Project were sold for 100%
of its appraised fair market value as determined in accordance with Section
12.4.3.
12.4.7 As provided in the Pledge Note, if for any reason (other
than default by the Odyssey Entities in closing the sale of their Partnership
interests hereunder) the Closing Date occurs after the end of the Lockout
Period, the maturity date of the Pledge Loan will automatically be deemed
extended until such Closing Date with interest payable at the same non-
default rate as was in effect at the Lockout Period; provided, however, in
the event of a Reckson Default the maturity of the Pledge Loan shall be
extended until the earlier of (a) the date the Project is sold under clause
(b) of Section 12.4.6 or (b) five (5) years after the end of the Lockout
Period.
12.4.8 If the Odyssey Entities default in closing the sale of
the Odyssey Partnership Interest following the exercise of the Odyssey Put
Right, then as Reckson's sole remedy therefor, the Odyssey Entities shall
have no further rights under this Section 12.4 to exercise the Odyssey Put
Right. If the Odyssey Entities default in closing the sale of the Odyssey
Partnership Interest following the exercise of the Reckson Call Right, then
(i) the Odyssey Entities shall have no further rights under this Section 12.4
to exercise the Odyssey Put Right and (ii) the same shall constitute an Event
of Default by the Odyssey Entities and Reckson shall have the right to pursue
its remedies under Section 14.2.
12.4.9 Each Partner agrees that it shall be reasonable and
cooperate with the other Partner, including, without limitation, executing
any documents which may be reasonably required, in order to consummate the
transactions contemplated by this Section 12.4.
12.5. Purchase of Partnership Interests.
---------------------------------
Any purchase by a Partner of another Partner's interest in the
Partnership pursuant to Section 12.4 shall be deemed to include the purchase
of all of such other Partner's Extraordinary Capital Loans, Capital Loans,
Additional Contributions, Priority Contributions and all related interest
thereon and accruals thereof, if any.
ARTICLE 13
WITHDRAWAL OF A PARTNER
13.1. No Withdrawal. No Partner shall withdraw or retire from
-------------
the Partnership without the prior consent of the other Partners, except in
connection with a transfer of its entire Partnership interest in accordance
with Article 12 or Article 14.
13.2. Termination of a Partner. If any of the following events
------------------------
shall occur with respect to a Partner (each, an "Event of Withdrawal") such
General Partner shall be deemed a "Withdrawn Partner":
(a) if it becomes Bankrupt;
(b) if he is a natural person, upon his death, or adjudicated
incompetence;
(c) if it is a corporation, upon the filing of a certificate of
dissolution or its equivalent for such corporation, or the revocation of
its charter or certificate of incorporation and the expiration of ninety
(90) days after the date of notice to the corporation of revocation
without reinstatement of its charter;
(d) if it is a partnership, upon the dissolution and commencement
of winding up of such partnership, or the occurrence of any of the
events described in paragraphs (a), (b) and (c) above with respect to
the last general partner of such partnership; or
(e) if it withdraws or retires from the Partnership in
contravention of Article 12 or Section 13.1.
No Partner shall voluntarily take any action (or omit to take any
action) which would cause any of the events described in paragraphs (a), (c),
(d) or (e) to occur with respect to it. Anything to the contrary contained
herein notwithstanding, the provisions of this Section 13.2 shall not apply
to Odyssey and in no event shall Odyssey be deemed to be a Withdrawn Partner
13.3. Effect of General Partner Becoming a Withdrawn Partner. If
------------------------------------------------------
a General Partner becomes a Withdrawn Partner, the following shall apply:
(a) the business of the Partnership may, at the option of the
other General Partner, be continued as a limited partnership without
dissolution;
(b) at the option of the other General Partner to be exercised
within ninety (90) days after the occurrence of the Event of Withdrawal
(i) the estate, legal representatives or successors of the General
Partner who retired, withdrew or with respect to whom the Event of
Withdrawal occurred shall be admitted as a successor General Partner,
except that such successor General Partner shall have no right to
participate in Partnership decisions or management, or (ii) the interest
of the Withdrawn Partner shall be converted to a limited partnership
interest, and the estate, legal representative or successor of the
Withdrawn Partner shall be admitted as a Limited Partner hereunder (it
being agreed that if the other General Partner fails to timely exercise
such option, then the other General Partner shall be deemed to have
opted for the preceding clause (ii));
(c) for a period of one hundred eighty (180) days after the other
General Partner obtains notice that a General Partner has become a
Withdrawn Partner (which 180-day period shall be extended if any stay or
injunction is in effect during such period for a number of days equal to
the number of days that any such stay or injunction is in effect), the
Partnership interest of such Withdrawn Partner and the Partnership
interest of any Limited Partner that is an Affiliate of such Withdrawn
Partner may be purchased by the other General Partner or its Affiliates
in accordance with the procedures set forth in Section 13.3(e), except
if the Event of Withdrawal is an event described in Section 13.2(b), or
in Section 13.2(b) insofar as it relates to Section 13.2(d), the
purchase price to be paid thereunder shall be paid in cash, certified
check or immediately available funds, and accordingly there shall be no
promissory note;
(d) from and after the date on which such General Partner becomes
a Withdrawn Partner, the interest of such Withdrawn Partner shall be
converted to a limited partnership interest and such Withdrawn Partner
shall be a Limited Partner hereunder;
(e) a General Partner which is not a Withdrawn Partner or its
Affiliates (a "Non-Withdrawn Partner") may purchase the interest in the
Partnership of a General Partner that has become a Withdrawn Partner in
accordance with the following:
(i) The Non-Withdrawn Partner shall send a notice ("Purchase
Notice") to the Withdrawn Partner stating its election to purchase the
Withdrawn Partner's interest in the Partnership pursuant to this
paragraph (e) and its determination of the fair market value of the
Partnership assets, free and clear of all Partnership liabilities and
other encumbrances. Such notice shall constitute a binding agreement of
purchase and sale between the Partners, subject to the cancellation
rights of the Non-Withdrawn Partner set forth below. The Withdrawn
Partner shall send a notice ("Purchase Response Notice") to the Non-
Withdrawn Partner within ten (10) business days of receipt of the
Purchase Notice stating that it agrees with the fair market value of the
Partnership stated in the Purchase Notice or, if it does not, its
determination of the fair market value of such Partnership assets. The
failure of the Withdrawn Partner to timely send a Purchase Response
Notice or to state its determination of the fair market value of the
Partnership assets shall conclusively constitute its agreement with the
fair market value stated in the Purchase Notice. If in its Purchase
Response Notice the Withdrawn Partner disagrees with the fair market
value specified in the Purchase Notice and sets forth a different fair
market value, such fair market value shall be determined by arbitration
before a single arbitrator (who has not been employed by any Partner or
any of its Affiliates within the preceding three (3) years) held in New
York, New York in accordance with the rules of the American Arbitration
Association for commercial arbitration, subject, however, to the
following: (1) the arbitrator shall be an Appraiser; and (2) the
arbitrator shall fix as the fair market value of the Partnership assets
either the fair market value of the Partnership assets as specified by
the Non-Withdrawn Partner in its Purchase Notice, or as specified by the
Withdrawn Partner in its Purchase Response Notice, depending on which is
closer to the fair market value of the assets of the Partnership as
determined by the arbitrator. The decision of the arbitrator shall be
conclusive and judgment may be had thereon in any court of competent
jurisdiction; provided, however, that if the arbitrator selects the fair
market value as specified by the Withdrawn Partner, the Non-Withdrawn
Partner may, within thirty (30) days after receipt of the arbitrator's
decision, cancel its election to purchase the Partnership interest of
the Withdrawn Partner.
(ii) The purchase price (the "Purchase Price") of the Withdrawn
Partner's interest shall be an amount equal to the amount which would
have been distributed to such Withdrawn Partner under Article 15 if the
Project were sold for its fair market value, as determined in accordance
with clause (i) above (after paying all Partnership liabilities and the
costs that would have been incurred in connection with any such sale,
including, without limitation, broker's commissions, gains and transfer
taxes and other customary closing costs as conclusively determined by
the Partnership Accountants), and less deductions for any damages or
costs to the Partnership or the Non-Withdrawn Partner resulting from the
Event of Withdrawal, including all costs to the Non-Withdrawn Partner in
connection with the purchase (including reasonable attorneys' fees)
together with interest thereon at the Default Rate on such amounts,
costs or damages from the date incurred until the date paid. Such
amounts, costs, damages and interest shall first be deducted from the
cash portion of the Purchase Price and then from the principal amount of
the promissory note delivered in connection with the purchase of the
Withdrawn Partner's interest (as described in clause (iii) below).
Notwithstanding the foregoing, if the Withdrawn Partner is the Odyssey
General Partner or the Odyssey Successor, then the Purchase Price of
such Withdrawn Partner's interest shall be an amount equal to the amount
which would have been distributed to such Withdrawn Partner if the
Project were sold for 90% of its fair market value as determined in
accordance with clause (i) above (subject to the payment of Partnership
liabilities and such costs as provided above in this clause (ii) and the
deduction of such amounts, costs, damages and interest as provided above
in this clause (ii)).
(iii) On a closing date, which date shall be not later than one
hundred eighty (180) days after delivery of the Purchase Notice (which
180-day period shall be extended if any stay or injunction is in effect
during such period for a number of days equal to the number of days that
any such stay or injunction is in effect), and at a place specified by
the Non-Withdrawn Partner upon not less than ten (10) business days'
notice to the Withdrawn Partner, the Withdrawn Partner shall sell, and
the Non-Withdrawn Partner shall purchase, all of the Withdrawn Partner's
interest in the Partnership in the manner described in Section 12.4.5,
except that the Non-Withdrawn Partner shall, subject to Section 13.3(c),
pay the Purchase Price by delivering not less than twenty-five percent
(25%) of the Purchase Price, less the deductions provided for in clause
(ii) above, in cash, certified check, or immediately available funds,
and an unsecured promissory note for the balance, such promissory note
to bear interest at the Base Rate as published from time to time during
the term of said note, payable quarterly in arrears, and to have a term
of ten (10) years at the end of which the outstanding principal balance,
and all accrued and unpaid interest due thereon, will become due and
payable. Such promissory note shall provide that it may be prepaid at
any time, in whole or in part, without penalty or premium.
(iv) In the event the Non-Withdrawn Partner shall elect to purchase
the Withdrawn Partner's interest pursuant to this Section 13.3(e), then
the Non-Withdrawn Partner shall be entitled to deduct from the Purchase
Price the amount of all actual damages incurred by the Non-Withdrawn
Partner as a result of the Event of Withdrawal. The deductions shall
first be applied in reduction of the cash portion of the Purchase Price
and then from the principal amount of the promissory note delivered in
connection with the purchase of the Withdrawn Partner's interest (as
described in clause (iii) above).
13.4. Effect of Limited Partner Becoming a Withdrawn Partner. A
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Limited Partner's becoming a Withdrawn Partner shall not, in and of itself,
cause, the Partnership to be dissolved or terminated. If an Event of
Withdrawal occurred with respect to such Limited Partner, the estate, legal
representative or successor of such Limited Partner shall be entitled to be
admitted as a successor Limited Partner in the Partnership subject to
compliance with the provisions of this Agreement, including, without
limitation, Section 12.3. However, whether or not such estate, legal
representative or successor is so admitted, for a period of one hundred
eighty (180) days after the General Partners obtain notice that a Limited
Partner has become a Withdrawn Partner (which 180-day period shall be
extended if any stay or injunction is in effect during such period for a
number of days equal to the number of days that any such stay or injunction
is in effect), the Partnership interest of such Withdrawn Partner may be
purchased by the General Partner (or its designee) that is not an Affiliate
of such Withdrawn Partner in accordance with the procedures set forth in
Section 13.3(e), except, if the Event of Withdrawal is by reason of
bankruptcy, death or incompetency, the purchase price shall be paid in cash,
certified check or immediately available funds, and accordingly there shall
be no promissory note.
ARTICLE 14
DEFAULT
14.1. Events of Default. Each of the following events shall
-----------------
constitute an "Event of Default" hereunder:
(a) if any Partner fails to make any contribution, loan or payment
which it is required to make under this Agreement within ten (10)
business days after notice from another Partner that such Partner failed
to make such contribution or payment on the due date therefor; or
(b) if any Partner defaults in the observance or performance of
any term, covenant or condition of this Agreement, other than a default
in making a contribution or payment or a default in the performance of
its obligations under Article 12 and such default continues for thirty
(30) days after such Partner receives notice thereof from another
Partner (or, if such default cannot reasonably be cured within such 30-
day period by virtue of the nature of such default, such Partner does
not commence to cure such default within such period and thereafter
diligently prosecute such cure to completion); or
(c) if any Partner defaults in the observance or performance of
its obligations under Section 12.1 or 12.2; or
(d) if any Partner withdraws or retires from the Partnership in
contravention of Section 13.1 (provided, that in no event shall Odyssey
be deemed to be a Defaulting Partner by reason of the foregoing) or
voluntarily takes any action (or omits to take any action) which causes
any of the events described in paragraph (a), (c) or (d) of Section 13.2
to occur with respect to it; or
(e) if in the case of Reckson, any of the representations and
warranties of Reckson Entities contained in Section 17.1 hereof or, in
the case of the Odyssey Entities, any of the representations and
warranties of the Odyssey Entities contained in Section 17.2 hereof,
shall not be true and complete in all material respects; or
(f) with respect to Reckson so long as an Affiliate of Reckson is
the Managing Agent, if the Managing Agent shall be in default under the
Management Agreement and (i) except as set forth in subparagraph (ii),
such default shall be of such a nature so as to constitute (v) willful
malfeasance, (w) fraud, (x) embezzlement, (y) theft, and/or (z) a
criminal violation of the laws of the State of New York by the Managing
Agent, or any of its partners, principals, agents or employees, and if
the monies and/or other property which is the subject of such willful
malfeasance, fraud, embezzlement, theft or other criminal violation
shall not be repaid and/or returned to the Partnership or the Partners,
as the case may be, within five (5) business days following notice
thereof to Reckson or (ii) such default shall be of the nature described
in subparagraph (i) above and such default was actually committed by the
president or an executive vice president of the corporate general
partner of Reckson (or if there is no such corporate general partner,
the individuals holding equivalent positions) whether or not such monies
and/or property shall have been paid and/or returned to the Partnership
or the Partners; or
then such Partner shall be deemed to be in default hereunder; or
(g) with respect to Reckson, if Reckson or the REIT defaults in
the observance or performance of any of its obligations under the
Guaranty or if any of the representations or warranties of Reckson or
the REIT contained therein shall prove to be untrue or incorrect in any
material respect; or
(h) with respect to Reckson, if any act or omission of Reckson or
its Affiliates causes an event of default to occur under the Mortgage
Debt (other than an act or omission by Reckson or its Affiliates as
Managing Partner if such act or omission does not involve the gross
negligence or willful misconduct of such Managing Partner); or
(i) with respect to the Odyssey Entities, if any act or omission
of the Odyssey Entities or their Affiliates causes an event of default
to occur under the Mortgage Debt (other than an act or omission by an
Odyssey Entity or its Affiliates as Managing Partner if such act or
omission does not involve gross negligence or willful misconduct of such
Managing Partner); or
(j) with respect to the Odyssey Entities, if a monetary or
material non-monetary default beyond any applicable notice and grace
period occurs with respect to the Pledge Loan.
If the Defaulting Partner is Odyli, then Odyssey (and any Affiliate to
whom the Odyssey Entities have transferred part of their Partnership
interest) shall also be deemed a Defaulting Partner, and if the Defaulting
Partner is Odyssey, then Odyli shall also be deemed a Defaulting Partner, and
any remedy exercised by the other Partners pursuant to Section 14.3(c) shall
be exercised with respect to both the limited and general partnership
interests of the Odyssey Entities. If the Defaulting Partner is Reckson,
then any Affiliate to whom Reckson has transferred part of its Partnership
interest shall also be deemed a Defaulting Partner and if the Defaulting
Partner is an Affiliate to whom Reckson has transferred part of its
Partnership interest, Reckson shall also be deemed a Defaulting Partner.
14.2. Remedies. If a Partner (the "Defaulting Partner") is in
--------
default hereunder, then either Reckson or the Odyssey Entities, as the case
may be (in either case, and only if it is not then a Defaulting Partner, the
"Non-Defaulting Partner") may exercise any one or more of the remedies
described below:
(a) institute suit in any court of competent jurisdiction to
obtain (i) specific performance of the obligations of the Defaulting
Partner under this Agreement, (ii) reimbursement for all costs of court
and reasonable attorneys' fees thereby incurred and (iii) damages, if
any, resulting to the Partnership or the Non-Defaulting Partner from
such default by the Defaulting Partner plus interest thereon at the
Default Rate from the date incurred until the date paid;
(b) cure the default, in which case the Defaulting Partner shall
pay to the Non-Defaulting Partner, on demand, the cost of such cure
(including any interest on funds borrowed for the purpose) together with
interest thereon at the Default Rate from the date incurred until the
date paid; and
(c) elect to terminate the Partnership.
If Reckson is the Defaulting Partner, then the Odyssey Entities may
set-off amounts owed by Reckson under this Agreement against amounts
owed by the Odyssey Entities under the Pledge Note and Pledge Agreement.
14.3. Security Interest. (a) For purposes of this Section 14.3,
-----------------
(i) the Odyssey Entities (and any other Affiliate of the Odyssey Entities to
whom the Odyssey Entities transfer any part of their Partnership interests
pursuant to Section 12.2(a)) shall be deemed a single "Partner" and (ii)
Reckson and any other Affiliate of Reckson to whom Reckson transfers any part
of its Partnership interests pursuant to Section 12.2(a) shall be deemed a
single "Partner", and any action taken by the Odyssey Entities or the Reckson
Entities, as the case may be, in either capacity shall bind it in both
capacities, the interest in the Partnership of such "Partner" shall be deemed
to be both the limited and general partnership interests, and any notice to
or from any such Partner shall be deemed a notice to or from both of such
Partners. Each Partner hereby assigns and grants to the other Partner a
first priority lien upon, and a security interest in, the interest of such
Partner in the Partnership and all amounts, payments and proceeds becoming
distributable or payable to such Partner by the Partnership (including,
without limitation, the TI Reserve), as collateral security for the payment
and performance of such Partner's obligations under this Agreement
(including, without limitation, all of Reckson's obligations with respect to
the Odyssey Put Right); provided, however, that for so long as the Pledge
Loan is outstanding the lien and security interest granted by the Odyssey
Entities hereunder shall be subject and subordinate to the lien and security
interest granted to the Pledge Lender. Each Partner shall execute such
financing statements as the other Partner shall reasonably request in order
to perfect and maintain the perfection of the lien and security interest
herein granted. Any transfer of the Partnership interest of a Partner shall
be subject to such lien and security interest. Each Partner shall notify
each other Partner within thirty (30) days of any change in its chief
executive offices from that set forth in Article 17.
(b) If (and only if) a Partner becomes a Defaulting Partner, (x)
all amounts, payments and proceeds which may become distributable or payable
by the Partnership to such Defaulting Partner which are secured by a security
interest created pursuant to paragraph (a) above shall, subject to the rights
of the Pledge Lender if Reckson is not the Defaulting Partner and the Pledge
Loan is then outstanding, be paid to the Non-Defaulting Partner until all
amounts due to the Non-Defaulting Partner have been paid in full, but shall
nevertheless be deemed to have been distributed to the Defaulting Partner and
(y) the Non-Defaulting Partner may withdraw from the TI Reserve all amounts
due to it up to the amount of the Defaulting Partner's Share.
(c) Notwithstanding that each Partner has granted to the other
Partners a lien and security interest in such Partner's interest in the
Partnership, no Partner shall have the right to exercise its remedy as a
secured party under such version of the Uniform Commercial Code as is
applicable pursuant to Section 9.8 hereof to sell, assign or deliver a
Defaulting Partner's interest in the Partnership unless and until such
Partner obtains a final judgment from a court of competent jurisdiction as to
the default by such Defaulting Partner.
ARTICLE 15
DISSOLUTION AND LIQUIDATION
15.1. Events of Dissolution. The Partnership shall be dissolved
upon the earliest to occur of the following:
(a) the expiration of the term of the Partnership;
(b) the mutual consent of all the General Partners;
(c) the occurrence of any of the events described in Section 13.2
above with respect to any General Partner or the occurrence of any other
event that results in a General Partner ceasing to be a general partner
of the Partnership under the Partnership Act, unless (i) at the time of
such event there is at least one remaining General Partner who is hereby
authorized to and does elect to continue the business of the Partnership
pursuant to Section 13.3, or (ii) within ninety (90) days after the
occurrence of such event, all of the remaining Partners agree in writing
to continue the business of the Partnership and to the appointment,
effective as of the date of such event, if required, of one or more
additional general partners of the Partnership;
(d) the sale, taking in condemnation or by eminent domain or other
disposition of all or substantially all of the Partnership's assets,
unless the Partnership acquires an asset, other than cash, in connection
with any such sale or disposition, in which event the Partnership shall
be dissolved upon the conversion of such asset to cash;
(e) any other termination of the Partnership in accordance with
the provisions of this Agreement; and
(f) the entry of a decree of judicial dissolution pursuant to
Section 17-802 of the Partnership Act.
15.2. Liquidation. If the Partnership is dissolved, the Managing
-----------
Partner shall be the "Liquidating Partner". The Liquidating Partner shall
immediately file any notice, publish any advertisements or take any other
action required under applicable law to effect such dissolution, commence to
wind up the affairs of the Partnership, liquidate the assets of the
Partnership by converting the same to cash and shall apply and distribute the
proceeds of such liquidation and any undistributed Net Ordinary Cash Flow in
the following order of priority:
(a) first, to the payment of all debts and obligations of the
Partnership (including any debts of the Partnership to a Partner other
than with respect to any Extraordinary Capital Loans, Capital Loans,
Additional Contributions, Priority Contributions or any interest thereon
or accruals thereof); provided, however, to the fullest extent permitted
by law, that all debts and obligations of the Partnership as to which
personal liability exists with respect to any Partner shall be satisfied
or a reserve shall be established therefor, prior to the satisfaction of
any debt or other obligation of the Partnership as to which no such
personal liability exists; and provided, further, that where a
contingent debt, obligation or liability exists, a reserve in such
amount as the Liquidating Partner deems reasonable and appropriate
(subject to Section 10.2(f) above), shall be established to satisfy such
contingent debt, obligation or liability, which reserve shall be
deposited in a separate interest-bearing account in accordance with
Section 9.6 and distributed as provided in this Section 15.2 only upon
the termination of such contingency; and
(b) the balance, if any, in the same order of priority as set
forth in Section 8.2.
15.3. Period of Liquidation. A reasonable time shall be allowed
---------------------
for the orderly liquidation of the assets of the Partnership and the
discharge of liabilities to creditors so as to enable the Partners to
minimize losses.
15.4. Statement of Liquidation. Each of the Partners shall be
------------------------
furnished with a statement prepared by, or under the supervision of, the
Liquidating Partner and the Partnership Accountants which shall set forth the
assets and liabilities of the Partnership as of the date of complete
liquidation. Upon dissolution and liquidation of the Partnership, the
Liquidating Partner shall execute, acknowledge and cause to be filed any
notice or certificate required by law to reflect the termination of the
Partnership.
ARTICLE 16
NOTICES
Any notice or other communication that is required or permitted to be
given under the terms of this Agreement (each, a "Notice") shall be in
writing and shall be given by (a) registered or certified mail, return
receipt requested, (b) personal delivery, (c) a nationally recognized
overnight courier, or (d) facsimile transmission with an original of such
Notice sent by one of the methods described in clauses (a), (b), or (c) above
on the same day as such facsimile transmission, to the parties hereto at the
following addresses or at such other address as any party hereto shall
hereafter specify by ten (10) business days' prior Notice given and received
in the manner provided in this Article 16 to the other parties described in
this Article 16. Any notice of any default hereunder shall specifically
state that it is a notice of default and shall contain a specific reference
to the provision hereof under which such default is alleged.
If to Reckson:
c/o Reckson Associates
225 Broadhollow Road - CS5341
Melville, New York 11747
Attn: Mr. Scott Rechler
with a copy of all default notices to:
Brown & Wood
One World Trade Center
New York, New York 10048
Attn: Lee Saltzman, Esq.
If to Odyli or Odyssey:
c/o Odyssey Partners, L.P.
31 West 52nd Street
New York, New York 10019
Attn: Chief Financial Officer
with copies to:
Martin Rabinowitz, Esq.
c/o Odyssey Partners, L.P.
31 West 52nd Street
New York, New York 10019
and
Joshua Mermelstein, Esq.
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
If to the Partnership, to both Reckson and the Odyssey Entities as
aforesaid.
A Notice shall be deemed to have been duly received (and the time period
in which a response thereto is required shall commence) (w) if mailed, on the
date set forth on the return receipt, (x) if personally delivered, on the
date of such delivery (as evidenced by the receipt of the personal delivery
service), (y) if delivered by overnight courier, on the date of such delivery
(as evidenced by the receipt of the overnight courier service), or (z) if
delivered by facsimile transmission, on the date of delivery of the original
of such Notice as described above by mail, personal delivery or overnight
courier. The inability to make delivery because of changed address of which
no notice was given, or rejection or refusal to accept any Notice offered for
delivery shall be deemed to be receipt of the Notice as of the date of such
inability to deliver or rejection or refusal to accept. Any Notice may be
given by counsel for the party giving same.
ARTICLE 17
REPRESENTATIONS AND WARRANTIES
17.1. Representations and Warranties of Reckson. Reckson hereby
-----------------------------------------
represents and warrants as of the date hereof that:
17.1.1 Reckson is a duly formed and validly existing limited
partnership formed under the laws of the State of Delaware. The sole general
partner of Reckson is the REIT. A true, correct and complete copy of the
limited partnership agreement of Reckson and all amendments thereto have
heretofore been delivered to the Odyssey Entities.
17.1.2 Reckson has the requisite partnership power and authority
to enter into and perform the terms of this Agreement and the Guaranty, the
execution and delivery of this Agreement and the Guaranty, and the
consummation of the transactions contemplated hereby and thereby have been
duly authorized and no other partnership or other action on the part of
Reckson or any of its partners is necessary in order to permit Reckson or any
of its partners to consummate the transactions contemplated hereby or
thereby. This Agreement and the Guaranty constitute valid and binding
obligations of Reckson, enforceable in accordance with their respective terms
as the same may be limited, however, by applicable insolvency, bankruptcy or
other laws affecting creditors' rights generally or by general principles of
equity.
17.1.3 Neither the execution, delivery or performance by the
Reckson Entities of this Agreement, the Guaranty, or the transactions
contemplated hereby or thereby will conflict with, or will result in a breach
of, or will constitute a default under, (i) any agreement or instrument by
which the Reckson Entities may be bound or (ii) any Legal Requirement or any
other judgment, statute, rule, law, order, decree, writ or injunction of any
court or Governmental Authority.
17.1.4 No approval, consent, order or authorization of, or
designation, registration or declaration with, any Governmental Authority is
required in connection with the valid execution and delivery of, and
compliance with, this Agreement and the Guaranty by the Reckson Entities and
the performance by the Reckson Entities of the transactions contemplated
hereby and thereby. The Reckson Entities have paid or shall pay all
transfer, gains and other taxes required by the State of New York to be paid
with respect to the formation of the Partnership.
17.1.5 The chief executive offices of Reckson are located in
Suffolk County, New York.
17.2. Representations and Warranties of The Odyssey Entities.
------------------------------------------------------
The Odyssey Entities hereby represent and warrant as of the date hereof that:
17.2.1 Odyli is a duly formed and validly existing corporation
organized under the laws of the State of Delaware and Odyssey is a duly
formed and validly existing limited partnership organized under the laws of
the State of Delaware (provided, that effective January 31, 1997, Odyssey has
dissolved in accordance with its Agreement of Limited Partnership, amended
and restated as of January 1, 1994). True, correct and complete copies of
the limited partnership agreement of Odyssey and all amendments thereto have
heretofore been delivered to the Reckson Entities.
17.2.2 Odyssey has the requisite partnership power and authority
to enter into and perform the terms of this Agreement; the execution and
delivery of this Agreement, and the consummation of the transactions
contemplated hereby have been duly authorized and no other partnership or
other action on the part of Odyssey or any of its partners is necessary in
order to permit Odyssey or any of its partners to consummate the transactions
contemplated hereby. This Agreement constitutes the valid and binding
obligations of Odyssey, enforceable in accordance with its terms as the same
may be limited, however, by applicable insolvency, bankruptcy or other laws
affecting creditors' rights generally or by general principles of equity.
17.2.3 Odyli has the requisite corporate power and authority to
enter into and perform the terms of this Agreement; the execution and
delivery of this Agreement, and the consummation of the transactions
contemplated hereby have been duly authorized and no other corporate or other
action on the part of Odyli or any of its shareholders is necessary in order
to permit Odyli or any of its officers to consummate the transactions
contemplated hereby. This Agreement constitutes the valid and binding
obligations of Odyli, enforceable in accordance with its terms as the same
may be limited, however, by applicable insolvency, bankruptcy or other laws
affecting creditors' rights generally or by general principles of equity.
17.2.4 Neither the execution, delivery or performance by the
Odyssey Entities of this Agreement or the transactions contemplated hereby
will conflict with, or will result in a breach of, or will constitute a
default under, (i) any agreement or instrument by which Odyssey Entities may
be bound or (ii) any Legal Requirement or any other judgment, statute, rule,
law, order, decree, writ or injunction of any court or Governmental
Authority.
17.2.5 No approval, consent, order or authorization of, or
designation, registration or declaration with, any Governmental Authority is
required in connection with the valid execution and delivery of, and
compliance with, this Agreement by the Odyssey Entities and the performance
by Odyssey Entities of the transactions contemplated hereby.
17.2.6 he chief executive offices of Odyli and Odyssey are
located in New York County, New York.
ARTICLE 18
AMENDMENTS
This Agreement may be amended, from time to time, only with the written
consent of all Partners.
ARTICLE 19
GOVERNING LAW
The Managing Partner shall, at Partnership expense, cause to be filed
for record in the office of the appropriate authorities of the State of
Delaware and any other place of business of the Partnership, such partnership
certificates, amended partnership certificates, fictitious name certificates
and all other instruments of whatever nature that are called for or required
by the applicable statutes, rules or regulations of the State of Delaware.
All matters in connection with the power, authority and rights of the
Partners and all matters pertaining to the operation, construction or
interpretation of this Agreement shall be governed and determined by the
internal laws of the State of Delaware, without giving effect to the
principles of conflicts of laws.
ARTICLE 20
INDEMNIFICATION
(a) The Partnership hereby agrees to indemnify each of the Partners and
their Affiliates, partners, directors and officers (collectively, the
"Indemnitees") and to hold them harmless against any and all claims, demands,
losses, damages, liabilities, lawsuits and other proceedings, judgments,
awards, costs and expenses (including reasonable attorneys' fees) to the
extent same arise directly or indirectly from the ownership or operation of
the Project, provided the same does not arise out of the gross negligence or
willful misconduct of such Indemnitee. The Partnership shall indemnify,
defend and protect each General Partner from any losses, liabilities,
damages, costs and expenses (including, without limitation, reasonable
attorneys' fees and disbursements) incurred by each General Partner by reason
of its acts or omissions which are (i) for or on behalf of the Partnership,
and (ii) pursuant to the authority of such General Partner granted by this
Agreement, except for such General Partner's gross negligence or willful
misconduct or breach of this Agreement; provided, however, that in seeking to
recover from the Partnership, any such General Partner may look solely to the
assets of the Partnership and none of the Partners shall be personally liable
nor shall any of their assets be available to satisfy any claim or judgment
awarded to any such General Partner seeking indemnity hereunder. Except in
the case of gross negligence or willful misconduct or breach of this
Agreement by a General Partner, such General Partner shall in no event be
liable to the other Partners or the Partnership for any act or omission
performed or omitted in good faith and pursuant to the authority granted by
this Agreement to such General Partner.
(b) Reckson shall hold harmless and defend the Partnership and the
Odyssey Entities from and against all claims, demands, losses, damages,
liabilities, lawsuits and other proceedings, judgments, awards, costs and
expenses (including, without limitation, reasonable attorneys' fees,
disbursements and court costs) arising out of or based upon any untrue or
alleged untrue statement of material fact contained in any registration
statement of the REIT, any preliminary prospectus, final prospectus, summary
prospectus or amendment or supplement thereto contained therein, or any other
offering materials relating to any offer or sale of issuance of shares in the
REIT or Units in Reckson, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading or arising out of or based upon any actual or
alleged breach or non-compliance with any federal or state securities or
other law relating to any offer or sale or issuance of shares in the REIT or
Units in Reckson. This indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Partnership on
the Odyssey Entities.
(c) If the indemnification provided for in Section 20(b) is unavailable
to an indemnified party with respect to any claims, demands, losses, damages,
costs or expenses referred to therein or is insufficient to hold the
indemnified party harmless as contemplated therein, then Reckson, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such claims, demands,
losses, damages, lawsuits and other proceedings, judgments, awards, costs or
expenses in such proportion as is appropriate to reflect the relative fault
of Reckson, on the one hand, and the indemnified party, on the other hand, in
connection with the statements or omissions which resulted in such claims,
demands, losses, damages, lawsuits and other proceedings, judgments, awards,
costs or expenses as well as any other relevant equitable considerations.
The relative fault of Reckson, on the one hand, and of the indemnified party,
on the other hand, shall be determined by reference to, among other factors,
whether the untrue or alleged untrue statement of a material fact or omission
to state a material fact relates to information supplied by Reckson or by the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
Reckson and the Odyssey Entities agree that it would not be just and
equitable if contribution pursuant to this Section 20(c) were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in this Section 20(c).
ARTICLE 21
MISCELLANEOUS
21.1. No Third-Party Beneficiaries. None of the provisions of
----------------------------
this Agreement shall be for the benefit of or enforceable by any third
parties, including, without limitation, creditors of the Partnership or of
the Partners.
21.2. No 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 a waiver of any such breach or of such or any other
covenant, agreement, term or condition. Any Partner by an instrument in
writing may, but shall be under no obligation to, waive any of its rights or
any conditions to its obligations hereunder, or any duty, obligation or
covenant of any other Partner, but no waiver shall be effective unless in
writing and signed by the Partner making such waiver. No waiver shall affect
or alter the remainder of this Agreement but each and every covenant,
agreement, term and condition hereof shall continue in full force and effect
with respect to any other then existing or subsequent breach.
21.3. Rights and Remedies. The rights and remedies of any of the
-------------------
parties hereunder shall not be mutually exclusive, and the exercise of one or
more of the provisions of this Agreement shall not preclude the exercise of
any other provisions of this Agreement. Each of the parties confirms that
damages at law may be an inadequate remedy for a breach or threatened breach
of any provision hereof. The respective rights and obligations hereunder
shall be enforceable by specific performance, injunction or other suitable
remedy, but nothing herein contained is intended to or shall limit or affect
any rights of law or by statute or otherwise of any party aggrieved as
against the other party for a breach or threatened breach of any provision
hereof, it being the intention by this Section 21.3 to make clear the
agreement of the parties that the respective rights and obligations of the
parties hereunder shall be enforceable in equity as well as at law or
otherwise.
21.4. Integration. This Agreement, all Exhibits attached hereto
-----------
and any agreements executed in connection herewith, constitute the entire
agreement between the parties hereto pertaining to the subject matter hereof
and supersede all prior and contemporaneous agreements and understandings of
the parties in connection therewith. No covenant, representation or
condition not expressed in this Agreement or such other agreements, if any,
shall affect, or be effective to interpret, change or restrict, the express
provisions of this Agreement.
21.5. Partial Invalidity. If any term or provision of this
------------------
Agreement or any part of such term or provision the application thereof to
any Person or circumstance shall be invalid or unenforceable, the remainder
of this Agreement or the application of such term or provision or remainder
thereof to Persons or circumstances other than those as to which it is held
invalid or unenforceable shall not be affected thereby and each term and
provision of this Agreement shall be valid and enforceable to the fullest
extent permitted by law.
21.6. Survival. All representations, warranties and covenants
--------
contained in this Agreement shall survive the transfer of tangible and
intangible property to the Partnership pursuant to this Agreement and shall
not merge in said transfer.
21.7. Counterparts. This Agreement and any amendments hereto may
------------
be executed in one or more counterparts, all of which, taken together, shall
be deemed to constitute but one Agreement.
21.8. Successors and Assigns. Except as otherwise provided
----------------------
herein, this Agreement shall be binding upon and shall inure to the benefit
of the parties, their heirs, legal representatives, successors and permitted
assigns.
21.9. Disposition of Documents. All documents and records of the
------------------------
Partnership, including, without limitation, all Key Documents, financial
records, vouchers, canceled checks, and bank statements shall be delivered to
Reckson upon termination of the Partnership provided that Reckson is not then
in default (beyond any applicable notice and grace period) hereunder and
Reckson or any of its Affiliates is then a Partner, and otherwise to the
Odyssey Entities. The Partner holding such documents and records shall
retain them for a period of at least six (6). years or such longer period as
may be required under the Code after the termination of the Partnership and
shall make copies thereof available to the other Partner during such period.
21.10. Status Reports. Recognizing that each Partner may find it
--------------
necessary from time to time to establish to third parties, such as
accountants, banks, mortgagees, prospective transferees of their Partnership
interest, or the like, the then current status of performance of the Project
and hereunder, each Partner shall, within ten (10) business days following
the written request of another Partner (provided any such written request is
not made more than twice in any twelve (12) month period), furnish a written
statement (in recordable form, if requested) on the status of the following:
(a) that this Agreement is unmodified and in full force and effect
(or if there have been modifications, that the Agreement is in full
force and effect as modified and stating the modifications);
(b) stating whether or not to the best knowledge of such
certifying Partner (i) the other Partners in the Partnership are in
default in keeping, observing or performing any of the terms contained
in this Agreement and, if in default, specifying each such default
(limited to those defaults of which the certifying Partner has
knowledge), and (ii) there has occurred an event that with the passage
of time or the giving of notice, or both, would ripen into a default
hereunder on the part of such other Partners (limited to those events of
which the certifying Partner has knowledge); and
(c) to the best of the knowledge and belief of the party making
such statement, with respect to any other matters as may be reasonably
requested by the other Partners.
Such statement may be relied upon by such other Partner and any other Person
for whom such statement is requested, but no such statement shall operate as
a waiver as to any default or other matter as to which the Partner executing
it did not have actual knowledge.
21.11. Intentionally Omitted.
---------------------
21.12. No Oral Modification. This Agreement cannot be changed,
--------------------
modified or discharged except by an instrument in writing, signed by the
party against whom enforcement of the changes, modifications or discharge is
sought.
21.13. Table of Contents, Article and Section Headings. The Table
-----------------------------------------------
of Contents attached hereto and Article and Section headings herein are for
convenience only, and are not to be used in determining the meaning of this
Agreement or any part thereof.
21.14. Brokerage. Each of the Reckson Entities and Odyssey
---------
Entities represents to the other that it dealt with no broker in connection
with the execution and delivery of this Agreement and consummation of the
transactions contemplated hereby.
21.15. Time of the Essence. Except as otherwise expressly
-------------------
provided in this Agreement, time shall be of the essence with respect to all
time periods set forth in this Agreement.
21.16. Good Faith Performance. Each Partner shall act in good
----------------------
faith in dealing with the other Partners and in performing all of its
obligations and exercising all of its rights and authority under this
Agreement (but each Partner may in its sole discretion determine whether to
grant its approval or consent to any matter hereunder unless expressly
provided otherwise herein).
21.17. Ownership of Partnership Property. The interest of each
---------------------------------
Partner in the Partnership shall be personal property for all purposes. All
real and other property owned by the Partnership shall be deemed owned by the
Partnership as Partnership property. No Partner, individually, shall have
any direct ownership of such property and title to such property shall be
held in the name of the Partnership.
21.18. Partnership Name. If, at any time, the Partnership name
----------------
shall include the name of, or any trade name used by, a Partner or any of its
Affiliates, neither the Partnership nor any other Partner shall acquire any
right, title or interest in or to such name or trade name.
21.19. Litigation; No Dissolution. Any Partner shall be entitled
--------------------------
to maintain, on its own behalf or on behalf of the Partnership, any action or
proceeding against any other Partner (including, without limitation, any
action for damages, specific performance or declaratory relief) for or by
reason of a default by such Partner under this Agreement or any other
agreement entered into pursuant to or in connection with this Agreement,
notwithstanding that any or all of the parties to such proceeding may then be
Partners in the Partnership. The Partnership shall not dissolve by reason of
the bringing of any such action or proceeding.
21.20. No Liability for Return of Capital: No Interest. The
-----------------------------------------------
Partners shall in no event be personally liable for the return of the capital
contributions made by any of the Partners, it being expressly agreed that any
return of capital as may be made from time to time, shall be made solely from
the assets of the Partnership and in accordance with the terms hereof.
Except as expressly provided in this Agreement, no Partner shall receive any
interest on its capital contribution.
21.21. Best Efforts and Sole Discretion. For the purposes of this
--------------------------------
Agreement, the term "best efforts" means that the obligated party is required
to make a diligent, reasonable and good faith effort to accomplish the
applicable objective. Such an obligation, however, shall neither require the
expenditure of funds or the incurrence of any liability or obligation by a
party which is not then commercially reasonable to accomplish the applicable
objective, nor require that the obligated party act in a manner which would
otherwise be contrary to prudent business judgment or normal commercial
practices in order to accomplish the objective. The fact that the objective
is not actually accomplished is no indication that the obligated party did
not in fact utilize its best efforts in attempting to accomplish the
objective. Whenever in this Agreement a General Partner is permitted or
required to make a decision (i) in its "sole discretion" or "discretion" or
under a grant of similar authority or latitude, the General Partner shall be
entitled to consider such interests and factors as it desires, including 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 expressed 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 any
other agreement contemplated herein or by relevant provisions of law or in
equity or otherwise.
21.22. Expenses. (a) Except as otherwise expressly provided in
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this Agreement, Reckson will pay and indemnify the Odyssey Entities from and
against, all transaction costs, including, without limitation, all New York
State or local transfer or gains taxes imposed upon any Partner, arising in
connection with the transactions occurring pursuant to, and in connection
with, the execution and delivery of the Second Amendment or the return of the
Odyssey Capital Amount pursuant to the Existing Partnership Agreement
(including, without limitation, interest and penalties assessed in connection
therewith), but excluding the legal fees of the Odyssey Entities in
connection with the preparation, negotiation and execution of this Agreement
and excluding any federal, state or local income taxes payable by either of
the Odyssey Entities. Notwithstanding anything herein contained to the
contrary, the payment of such sums by Reckson shall not increase its Capital
Account.
(b) In the event of any dispute which results in legal proceedings
between the Odyssey Entities and the Reckson Entities, all expenses of the
party prevailing in such legal proceedings after a final non-appealable
judgment of a court of competent jurisdiction has been entered shall be paid
by the party not prevailing in such action within ten (10) days after demand
therefor.
21.23. Other Business. Except as otherwise provided herein, any
--------------
Partner may own, purchase, sell, or otherwise deal in any manner with any
property not owned by the Partnership or engage in any business whatsoever
which is not the business of the Partnership without notice to any other
Partner, without participation of any other Partner, and without liability to
it or any of them, and may, without notice to the other Partner, and without
obligation to present to the Partnership an opportunity of any kind
whatsoever, acquire, sell, finance, lease, operate, manage, develop or
syndicate any real property not owned by the Partnership, free of any claim
whatsoever of any other Partner or the Partnership.
21.24. Obligations Are Without Recourse.
--------------------------------
21.24.1 Reckson. Notwithstanding anything to the contrary
-------
contained in this Agreement, no recourse shall be had in excess of $3,000,000
against Reckson, whether by levy or execution or otherwise, for the payment
of any loans or other payments due or for any other claim under this
Agreement or based on the failure of performance or observance of any of the
terms and conditions of this Agreement against Reckson, the partners of
Reckson or any predecessor, successor or Affiliate of Reckson or any of their
respective assets other than Reckson's interest in the Partnership (including
Reckson's Share of the TI Reserve Account) or any undistributed Net Ordinary
Cash Flow or Net Extraordinary Cash Flow due or to become due to Reckson
(collectively, "Reckson Undistributed Income") or against any principal,
partner, shareholder, controlling person, officer, director, agent or
employee of any of the aforesaid Persons, under any rule of law, statute or
constitution, or by the enforcement of any assessment or penalty, or
otherwise, nor shall any of such Persons be personally liable for any
contributions, loans, payments or claims, or liable for any deficiency
judgment based thereon or with respect thereto, it being expressly understood
that the sole remedies of the Partnership or any other Partner with respect
to such amounts and claims shall be against such interest in the Partnership
and Reckson Undistributed Income, and that all such liability of the
aforesaid Persons, except as expressly provided in this Section, is expressly
waived and released as a condition of, and as consideration for, the
execution of this Agreement and the admission of each Partner to the
Partnership; provided, however, that nothing contained in this Agreement
(including, without limitation, the provisions of this Section), (a) shall
constitute a waiver of any obligation of a Partner under this Agreement, (b)
shall be taken to prevent recourse to and the enforcement against such
Partnership interest and Reckson Undistributed Income for all of the
respective liabilities, obligations, and undertakings of the aforesaid
Persons contained in this Agreement, (c) shall be taken to prevent recourse
to and the enforcement against (i) a transferring Partner of its liabilities,
obligations and undertakings contained in any instrument of assignment or
indemnity delivered in connection with such transfer (but such recourse shall
be limited to the proceeds received by such transferring Partner in
connection with the assignment to the purchasing Partner (or its designee))
or (ii) any security delivered by any of the aforesaid Persons pursuant to
this Agreement, (d) shall be taken to limit or restrict any action or
proceeding against any of the aforesaid Persons which does not seek damages
or a money judgment or does not seek to compel payment of money (or the
performance of obligations which would require the payment of money) by any
of the aforesaid Persons, (e) shall be deemed to release Reckson from any
obligation under any guaranty executed by Reckson (including, without
limitation, the Guaranty), (f) prevent full recourse against Reckson or any
of such other Persons if Reckson or the REIT voluntarily takes any action or
enters into any agreement that violates or breaches (or would (or could),
with the passage of time or the giving of notice, violate or breach) the
provisions of this Agreement, (g) shall be deemed to permit recourse against
Reckson, other than recourse to and enforcement against such Partnership
interest and Reckson Undistributed Income or the exercise by the Odyssey
Entities of their rights pursuant to Section 12.4.6 to purchase Reckson's
Percentage Interest in the Partnership or to sell the Project, on account of
its obligations pursuant to Section 12.4 and (h) shall prevent full recourse
against Reckson or any of such other Persons if Reckson or any of such other
Persons takes any action or enters into any agreement which constitutes a
breach of this Agreement and which adversely affects the tax position of any
of the Odyssey Entities or fails to distribute to the Odyssey Entities any
Net Ordinary Cash Flow, Net Extraordinary Cash Flow or other amounts which
the Odyssey Entities are entitled to under this Agreement. For the purposes
of this Section 21.24, the term "shareholder" shall be deemed to include the
shareholders of any corporation which is a shareholder, principal, partner or
agent and the term "partner" shall be deemed to include the partners of any
partnership which is (w) a partner in a partnership, (x) a shareholder in a
corporation, (y) a principal or (z) an agent.
21.24.2 Odyssey Entities. Notwithstanding anything to the
----------------
contrary contained in this Agreement, no recourse shall be had against the
Odyssey Entities, whether by levy or execution or otherwise, for the payment
of any loans or other payments due or for any other claim under this
Agreement or based on the failure of performance or observance of any of the
terms and conditions of this Agreement against any of the Odyssey Entities,
the partners of any of the Odyssey Entities or any predecessor, successor or
Affiliate of any of the Odyssey Entities or any of their respective assets
other than such Odyssey Entity's interest in the Partnership (including
Odyssey's Share of the TI Reserve) or any undistributed Net Ordinary Cash
Flow or Net Extraordinary Cash Flow due or to become due to such Odyssey
Entity (collectively, "Odyssey Undistributed Income") or against any
principal, partner, shareholder, controlling person, officer, director, agent
or employee of any of the aforesaid Persons, under any rule of law, statute
or constitution, or by the enforcement of any assessment or penalty, or
otherwise, nor shall any of such Persons be personally liable for any
contributions, loans, payments or claims, or liable for any deficiency
judgment based thereon or with respect thereto, it being expressly understood
that the sole remedies of the Partnership or any other Partner with respect
to such amounts and claims shall be against such interest in the Partnership
and Odyssey Undistributed Income, and that all such liability of the
aforesaid Persons, except as expressly provided in this Section, is expressly
waived and released as a condition of, and as consideration for, the
execution of this Agreement and the admission of each Partner to the
Partnership; provided, however, that nothing contained in this Agreement
(including, without limitation, the provisions of this Section), (a) shall
constitute a waiver of any obligation of a Partner under this Agreement, (b)
shall be taken to prevent recourse to and the enforcement against such
Partnership interest and Odyssey Undistributed Income for all of the
respective liabilities, obligations, and undertakings of the aforesaid
Persons contained in this Agreement, (c) shall be taken to prevent recourse
to and the enforcement against (i) a transferring Partner of its liabilities,
obligations and undertakings contained in any instrument of assignment or
indemnity delivered in connection with such transfer (but such recourse shall
be limited to the proceeds received by such transferring Partner in
connection with the assignment to the purchasing Partner (or its designee))
or (ii) any security delivered by any of the aforesaid Persons pursuant to
this Agreement and (d) shall be taken to limit or restrict any action or
proceeding against any of the aforesaid Persons which does not seek damages
or a money judgment or does not seek to compel payment of money (or the
performance of obligations which would require the payment of money) by any
of the aforesaid Persons.
21.25. Construction. Whenever the phrase "by agreement of
------------
the General Partners" or any other phrase of similar intent is used herein,
the same shall be deemed to mean "by agreement of all of the General
Partners". For the avoidance of doubt, if the Managing Partner is the only
General Partner, any matter which requires the consent, approval or agreement
of all the General Partners shall require the consent, approval or agreement
of only the Managing Partner.
21.26. Insurance. The Managing Partner shall procure and
---------
maintain throughout the term of this Agreement, on behalf of the Partnership,
the insurance coverage required by the Mortgage Debt (or if no Mortgage Debt
then exists, the immediately prior Mortgage Debt) and excess (umbrella)
liability coverage of no less than $100,000,000 per occurrence.
IN TESTIMONY WHEREOF, the parties hereto have executed this Agreement on
the date set forth above.
RECKSON OPERATING PARTNERSHIP, L.P.
By: Reckson Associates Realty Corp., its General
Partner
_________________________ By:__________________________________
Corporate Seal Name
Title:
ODYLI, INC.
_________________________ By:________________________________________
Corporate Seal Name
Title:
ODYSSEY PARTNERS, L.P.
By:________________________________________
Name
Title:
Exhibit 10.19
RECKSON ASSOCIATES REALTY CORP. AMENDED AND RESTATED
1997 STOCK OPTION PLAN
ARTICLE 1. GENERAL
1.1. Purpose. The purpose of the Reckson Associates Realty Corp. 1997
Stock Option Plan (the "Plan") is to provide for certain officers, directors
and key employees, as defined in Section 1.3, of Reckson Associates Realty
Corp. (the "Company") and certain of its Affiliates (as defined below) an
equity-based incentive to maintain and enhance the performance and
profitability of the Company. It is the further purpose of this Plan to
permit the granting of awards that will constitute performance based
compensation for certain executive officers, as described in Section 162(m)
of the Internal Revenue Code of 1986, as amended (the "Code"), and
regulations promulgated thereunder.
1.2. Administration.
(a) The Plan shall be administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Company (the "Board"), which
Committee shall consist of two or more directors, or by the Board. It is
intended that the directors appointed to serve on the Committee shall be
"non-employee directors" (within the meaning of Rule 16b-3 promulgated under
the Securities Exchange Act of 1934 (the "Act")) and "outside directors"
(within the meaning of Code Section 162(m)); however, the mere fact that a
Committee member shall fail to qualify under either of these requirements
shall not invalidate any award made by the Committee which award is otherwise
validly made under the Plan. The members of the Committee shall be appointed
by, and may be changed at any time and from time to time in the discretion
of, the Board.
(b) The Committee shall have the authority (i) to exercise all of the
powers granted to it under the Plan, (ii) to construe, interpret and
implement the Plan and any Plan agreements executed pursuant to the Plan,
(iii) to prescribe, amend and rescind rules relating to the Plan, (iv) to
make any determination necessary or advisable in administering the Plan, and
(v) to correct any defect, supply any omission and reconcile any
inconsistency in the Plan. The Committee shall have no authority to
interpret or administer Article 5 of the Plan or to take any action with
respect to any awards thereunder.
(c) The determination of the Committee on all matters relating to the
Plan or any Plan agreement shall be conclusive.
(d) No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any award
hereunder.
(e) Notwithstanding anything to the contrary contained herein, the Board
may, in its sole discretion, at any time and from time to time, resolve to
administer the Plan, in which case, the term Committee as used herein shall
be deemed to mean the Board.
1.3. Persons Eligible for Awards. Awards under the Plan may be made to
such officers, directors and key employees ("key personnel") of the Company
or its Affiliates as the Committee shall from time to time in its sole
discretion select. No member of the Board who is not an officer or employee
of the Company or an Affiliate (an "Independent Director") shall be eligible
to receive any Awards under the Plan, except for non-qualified stock options
granted automatically under the provisions of Article 5 of the Plan.
1.4. Types of Awards Under Plan.
(a) Awards may be made under the Plan in the form of (i) stock options
("options"), (ii) restricted stock awards, and (iii) unrestricted stock
awards in lieu of cash compensation, all as more fully set forth in Articles
2 and 3.
(b) Options granted under the Plan may be either (i) "nonqualified"
stock options ("NQSOs") or (ii) options intended to qualify for incentive
stock option treatment described in Code Section 422 ("ISOs"). Grants of
options made under the Plan may also be made in lieu of cash fees otherwise
payable to Directors of the Company or cash bonuses payable to employees of
the Company or any Affiliate.
(c) All options when granted are intended to be NQSOs, unless the
applicable Plan agreement explicitly states that the option is intended to be
an ISO. If an option is intended to be an ISO, and if for any reason such
option (or any portion thereof) shall not qualify as an ISO, then, to the
extent of such nonqualification, such option (or portion) shall be regarded
as a NQSO appropriately granted under the Plan provided that such option (or
portion) otherwise meets the Plan's requirements relating to NQSOs.
1.5. Shares Available for Awards.
(a) Subject to Section 4.5 (relating to adjustments upon changes in
capitalization), as of any date the total number of shares of Common Stock
with respect to which awards may be granted under the Plan, shall equal the
excess (if any) of 3,000,000 shares of Common Stock, over (i) the number of
shares of Common Stock subject to outstanding awards, (ii) the number of
shares in respect of which options have been exercised, or grants of
restricted or unrestricted Common Stock have been made pursuant to the Plan,
and (iii) the number of shares issued subject to forfeiture restrictions
which have lapsed.
In accordance with (and without limitation upon) the preceding sentence,
awards may be granted in respect of the following shares of Common Stock:
shares covered by previously-granted awards that have expired, terminated or
been cancelled for any reason whatsoever (other than by reason of exercise or
vesting).
(b) In any year, a person eligible for awards under the Plan may not be
granted options under the Plan covering a total of more than 150,000 shares
of Common Stock.
(c) Shares of Common Stock that shall be subject to issuance pursuant to
the Plan shall be authorized and unissued or treasury shares of Common Stock,
or shares of Common Stock purchased on the open market or from shareholders
of the Company for such purpose.
(d) Without limiting the generality of the foregoing, the Committee may,
with the grantee's consent, cancel any award under the Plan and issue a new
award in substitution therefor upon such terms as the Committee may in its
sole discretion determine, provided that the substituted award shall satisfy
all applicable Plan requirements as of the date such new award is made.
1.6. Definitions of Certain Terms.
(a) The term "Affiliate" as used herein means Reckson Operating
Partnership, L.P., Reckson FS Limited Partnership, Reckson Executive Centers,
L.L.C., Reckson Finance, Inc., Reckson Management Group, Inc., Reckson
Construction Group, Inc., and any person or entity as subsequently approved
by the Board which, at the time of reference, directly, or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with, the Company.
(b) The term "Cause" shall mean a finding by the Committee that the
recipient of an award under the Plan has (i) acted with gross negligence or
willful misconduct in connection with the performance of his material duties
to the Company or its Affiliates; (ii) defaulted in the performance of his
material duties to the Company or its Affiliates and has not corrected such
action within 15 days of receipt of written notice thereof; (iii) willfully
acted against the best interests of the Company or its Affiliates, which act
has had a material and adverse impact on the financial affairs of the Company
or its Affiliates; or (iv) been convicted of a felony or committed a material
act of common law fraud against the Company, its Affiliates or their
employees and such act or conviction has, or the Committee reasonably
determines will have, a material adverse effect on the interests of the
Company or its Affiliates.
(c) The term "Common Stock" as used herein means the shares of common
stock of the Company as constituted on the effective date of the Plan, and
any other shares into which such common stock shall thereafter be changed by
reason of a recapitalization, merger, consolidation, split-up, combination,
exchange of shares or the like.
(d) The "fair market value" (or "FMV") as of any date and in respect of
any share of Common Stock shall be:
(i) if the Common Stock is listed for trading on the New York
Stock Exchange, the closing price, regular way, of the Common Stock
as reported on the New York Stock Exchange Composite Tape, or if no
such reported sale of the Common Stock shall have occurred on such
date, on the next preceding date on which there was such a reported
sale; or
(ii) the Common Stock is not so listed but is listed on another
national securities exchange or authorized for quotation on the
National Association of Securities Dealers Inc.'s NASDAQ National
Market System ("NASDAQ/NMS"), the closing price, regular way, of
the Common Stock on such exchange or NASDAQ/NMS, as the case may
be, on which the largest number of shares of Common Stock have been
traded in the aggregate on the preceding twenty trading days, or if
no such reported sale of the Stock shall have occurred on such date
on such exchange or NASDAQ/NMS, as the case may be, on the
preceding date on which there was such a reported sale on such
exchange or NASDAQ/NMS, as the case may be; or
(iii) if the Stock is not listed for trading on a national
securities exchange or authorized for quotation on NASDAQ/NMS, the
average of the closing bid and asked prices as reported by the
National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or, if no such prices shall have been so reported
for such date, on the next preceding date for which such prices
were so reported.
1.7. Agreements Evidencing Awards.
(a) Options and restricted stock awards granted under the Plan shall be
evidenced by written agreements. Any such written agreements shall (i)
contain such provisions not inconsistent with the terms of the Plan as the
Committee may in its sole discretion deem necessary or desirable and (ii) be
referred to herein as "Plan Agreements."
(b) Each Plan agreement shall set forth the number of shares of Common
Stock subject to the award granted thereby.
(c) Each Plan agreement with respect to the granting of an option shall
set forth the amount (the "option exercise price") payable by the grantee to
the Company in connection with the exercise of the option evidenced thereby.
The option exercise price per share shall not be less than 100% of the fair
market value of a share of Common Stock on the date the option is granted.
ARTICLE 2. STOCK OPTIONS
2.1. Option Awards.
(a) Grant of Stock Options. The Committee may grant options to
purchase shares of Common Stock in such amounts and subject to such terms and
conditions as the Committee shall from time to time in its sole discretion
determine, subject to the terms of the Plan.
(b) Dividend Equivalent Rights. To the extent expressly provided by the
Committee at the time of the grant, each NQSO granted under this Section 2.1
shall also generate Dividend Equivalent Rights ("DERs"), which shall entitle
the grantee to receive an additional share of Common Stock for each DER
received upon the exercise of the NQSO, at no additional cost, based on the
formula set forth herein. As of the last business day of each calendar
quarter, the amount of dividends paid by the Company on each share of Common
Stock with respect to that quarter shall be divided by the FMV per share to
determine the actual number of DERs accruing on each share subject to the
NQSO. Such amount of DERs shall be multiplied by the number of shares
covered by the NQSO to determine the number of DERs which accrued during such
quarter. The provisions of this Section 2.1(b) shall not be amended more
than once every six months other than to comport with changes in the Code,
the Employee Retirement Income Security Act ("ERISA") or the rules
thereunder.
For example. Assume that a grantee holds a NQSO to purchase 600 shares
-----------
of Common Stock. Further assume that the dividend per share for the first
quarter was $0.10, and that the FMV per share on the last business day of the
quarter was $20. Therefore, .005 DER would accrue per share for that quarter
and such grantee would receive three DERs for that quarter (600 X .005). For
purposes of determining how many DERs would accrue during the second quarter,
the NQSO would be considered to be for 603 shares of Common Stock.
2.2. Exercisability of Options. Subject to the other provisions of the
Plan:
(a) Exercisability Determined by Plan Agreement. Each Plan agreement
shall set forth the period during which and the conditions subject to which
the option shall be exercisable (including, but not limited to vesting of
such options), as determined by the Committee in its discretion.
(b) Partial Exercise Permitted. Unless the applicable Plan agreement
otherwise provides, an option granted under the Plan may be exercised from
time to time as to all or part of the full number of shares for which such
option is then exercisable, in which event the DERs relating to the portion
of the option being exercised shall also be exercised.
(c) Notice of Exercise; Exercise Date.
(i) An option shall be exercisable by the filing of a written
notice of exercise with the Company, on such form and in such
manner as the Committee shall in its sole discretion prescribe, and
by payment in accordance with Section 2.4.
(ii) Unless the applicable Plan agreement otherwise provides, or
the Committee in its sole discretion otherwise determines, the date
of exercise of an option shall be the date the Company receives
such written notice of exercise and payment.
2.3. Limitation on Exercise. Notwithstanding any other provision of the
Plan, no Plan agreement shall permit an ISO to be exercisable more than 10
years after the date of grant.
2.4. Payment of Option Price.
(a) Tender Due Upon Notice of Exercise. Unless the applicable Plan
agreement otherwise provides or the Committee in its sole discretion
otherwise determines, any written notice of exercise of an option shall be
accompanied by payment of the full purchase price for the shares being
purchased.
(b) Manner of Payment. Payment of the option exercise price shall be
made in any combination of the following:
(i) by certified or official bank check payable to the Company
(or the equivalent thereof acceptable to the Committee);
(ii) by personal check (subject to collection), which may in the
Committee's discretion be deemed conditional;
(iii) with the consent of the Committee in its sole discretion, by
delivery of previously acquired shares of Common Stock owned by the
grantee for at least six months having a fair market value
(determined as of the option exercise date) equal to the portion of
the option exercise price being paid thereby, provided that the
Committee may require the grantee to furnish an opinion of counsel
acceptable to the Committee to the effect that such delivery would
not result in the grantee incurring any liability under Section
16(b) of the Act and does not require any Consent (as defined in
Section 4.2); and
(iv) with the consent of the Committee in its sole discretion, by
the full recourse promissory note and agreement of the grantee
providing for payment with interest on the unpaid balance accruing
at a rate not less than that needed to avoid the imputation of
income under Code Section 7872 and upon such terms and conditions
(including the security, if any, therefor) as the Committee may
determine; and
(v) by withholding shares of Common Stock from the shares
otherwise issuable pursuant to the exercise.
(c) Cashless Exercise. Payment in accordance with Section 2.4(b) may be
deemed to be satisfied, if and to the extent provided in the applicable Plan
agreement, by delivery to the Company of an assignment of a sufficient amount
of the proceeds from the sale of Common Stock acquired upon exercise to pay
for all of the Common Stock acquired upon exercise and an authorization to
the broker or selling agent to pay that amount to the Company, which sale
shall be made at the grantee's direction at the time of exercise, provided
that the Committee may require the grantee to furnish an opinion of counsel
acceptable to the Committee to the effect that such delivery would not result
in the grantee incurring any liability under Section 16 of the Act and does
not require any Consent (as defined in Section 4.2).
(d) Issuance of Shares. As soon as practicable after receipt of full
payment, the Company shall, subject to the provisions of Section 4.2, deliver
to the grantee one or more certificates for the shares of Common Stock so
purchased, which certificates may bear such legends as the Company may deem
appropriate concerning restrictions on the disposition of the shares in
accordance with applicable securities laws, rules and regulations or
otherwise.
2.5. Default Rules Concerning Termination of Employment.
Subject to the other provisions of the Plan and unless the applicable
Plan agreement otherwise provides:
(a) General Rule. All options granted to a grantee shall terminate upon
the grantee's termination of employment for any reason except to the extent
post-employment exercise of the option is permitted in accordance with this
Section 2.5.
(b) Termination for Cause. All unexercised or unvested options granted
to a grantee shall terminate and expire on the day a grantee's employment is
terminated for Cause.
(c) Regular Termination; Leave of Absence. If the grantee's employment
terminates for any reason other than as provided in subsection (b), (d) or
(f) of this Section 2.5, any awards granted to such grantee which were
exercisable immediately prior to such termination of employment may be
exercised, and any awards subject to vesting may continue to vest, until the
earlier of either: (i) 90 days after the grantee's termination of employment
and (ii) the date on which such options terminate or expire in accordance
with the provisions of the Plan (other than this Section 2.5) and the Plan
agreement; provided that the Committee may, in its sole discretion, determine
such other period for exercise in the case of a grantee whose employment
terminates solely because the grantee's employer ceases to be an Affiliate or
the grantee transfers employment with the Company's consent to a purchaser of
a business disposed of by the Company. The Committee may, in its sole
discretion, determine (i) whether any leave of absence (including short-term
or long-term disability or medical leave) shall constitute a termination of
employment for purposes of the Plan and (ii) the effect, if any, of any such
leave on outstanding awards under the Plan.
(d) Retirement. If a grantee's employment terminates by reason of
retirement (i.e., the voluntary termination of employee by a grantee after
attaining the age of 55), the options exercisable by the grantee immediately
prior to the grantee's retirement shall be exercisable by the grantee until
the earlier of (i) 12 months after the grantee's retirement and (ii) the date
on which such options terminate or expire in accordance with the provisions
of the Plan (other than this Section 2.5) and the Plan agreement.
(e) Death After Termination. If a grantee's employment terminates in
the manner described in subsections (c) or (d) of this Section 2.5 and the
grantee dies within the period for exercise provided for therein, the options
exercisable by the grantee immediately prior to the grantee's death shall be
exercisable by the personal representative of the grantee's estate or by the
person to whom such options pass under the grantee's will (or, if applicable,
pursuant to the laws of descent and distribution) until the earlier of (i) 12
months after the grantee's death and (ii) the date on which such options
terminate or expire in accordance with the provisions of subsections (c) or
(d) of this Section 2.5.
(f) Death Before Termination. If a grantee dies while employed by the
Company or any Affiliate, all options granted to the grantee but not
exercised before the death of the grantee, whether or not exercisable by the
grantee before the grantee's death, shall immediately become and be
exercisable by the personal representative of the grantee's estate or by the
person to whom such options pass under the grantee's will (or, if applicable,
pursuant to the laws of descent and distribution) until the earlier of (i) 12
months after the grantee's death and (ii) the date on which such options
terminate or expire in accordance with the provisions of the Plan (other than
this Section 2.5) and the Plan agreement.
2.6. Special ISO Requirements. In order for a grantee to receive
special tax treatment with respect to stock acquired under an option intended
to be an ISO, the grantee of such option must be, at all times during the
period beginning on the date of grant and ending on the day three months
before the date of exercise of such option, an employee of the Company or any
of the Company's parent or subsidiary corporations (within the meaning of
Code Section 424), or of a corporation or a parent or subsidiary corporation
of such corporation issuing or assuming a stock option in a transaction to
which Code Section 424(a) applies. If an option granted under the Plan is
intended to be an ISO, and if the grantee, at the time of grant, owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the grantee's employer corporation or of its parent or subsidiary
corporation, then (i) the option exercise price per share shall in no event
be less than 110% of the fair market value of the Common Stock on the date of
such grant and (ii) such option shall not be exercisable after the expiration
of five years after the date such option is granted.
ARTICLE 3. RESTRICTED STOCK AND UNRESTRICTED STOCK AWARDS
3.1. Restricted Stock Awards.
(a) Grant of Awards. The Committee may grant restricted stock awards,
alone or in tandem with other awards, under the Plan in such amounts and
subject to such terms and conditions as the Committee shall from time to time
in its sole discretion determine; provided, however, that the grant of any
such restricted stock awards may be made only in lieu of cash compensation
and bonuses. The vesting of a restricted stock award granted under the Plan
may be conditioned upon the completion of a specified period of employment
with the Company or any Affiliate, upon the attainment of specified
performance goals, and/or upon such other criteria as the Committee may
determine in its sole discretion.
(b) Payment. Each Plan agreement with respect to a restricted stock
award shall set forth the amount (if any) to be paid by the grantee with
respect to such award. If a grantee makes any payment for a restricted stock
award which does not vest, appropriate payment may be made to the grantee
following the forfeiture of such award on such terms and conditions as the
Committee may determine. The Committee shall have the authority to make or
authorize loans to finance, or to otherwise accommodate the financing of, the
acquisition or exercise of a restricted stock award.
(c) Forfeiture upon Termination of Employment. Unless the applicable
Plan agreement otherwise provides or the Committee otherwise determines, (i)
if a grantee's employment terminates for any reason (including death) before
all of his restricted stock awards have vested, such awards shall terminate
and expire upon such termination of employment, and (ii) in the event any
condition to the vesting of restricted stock awards is not satisfied within
the period of time permitted therefor, such unvested shares shall be returned
to the Company.
(d) Issuance of Shares. The Committee may provide that one or more
certificates representing restricted stock awards shall be registered in the
grantee's name and bear an appropriate legend specifying that such shares are
not transferable and are subject to the terms and conditions of the Plan and
the applicable Plan agreement, or that such certificate or certificates shall
be held in escrow by the Company on behalf of the grantee until such shares
vest or are forfeited, all on such terms and conditions as the Committee may
determine. Unless the applicable Plan agreement otherwise provides, no share
of restricted stock may be assigned, transferred, otherwise encumbered or
disposed of by the grantee until such share has vested in accordance with the
terms of such award. Subject to the provisions of Section 4.2, as soon as
practicable after any restricted stock award shall vest, the Company shall
issue or reissue to the grantee (or to the grantee's designated beneficiary
in the event of the grantee's death) one or more certificates for the Common
Stock represented by such restricted stock award.
(e) Grantees' Rights Regarding Restricted Stock. Unless the applicable
Plan agreement otherwise provides: (i) a grantee may vote and receive
dividends on restricted stock awarded under the Plan; and (ii) any stock
received as a distribution with respect to a restricted stock award shall be
subject to the same restrictions as such restricted stock.
3.2. Unrestricted Shares. The Committee may issue stock under the Plan,
alone or in tandem with other awards, in such amounts and subject to such
terms and conditions as the Committee shall from time to time in its sole
discretion determine; provided, however, that the grant of any such
unrestricted stock awards may be made only in lieu of cash compensation and
bonuses.
ARTICLE 4. MISCELLANEOUS
4.1. Amendment of the Plan; Modification of Awards.
(a) Plan Amendments. The Board may, without stockholder approval, at
any time and from time to time suspend, discontinue or amend the Plan in any
respect whatsoever, except that no such amendment shall impair any rights
under any award theretofore made under the Plan without the consent of the
grantee of such award. Furthermore, except as and to the extent otherwise
permitted by Section 4.5 or 4.11, no such amendment shall, without
stockholder approval:
(i) materially increase the benefits accruing to grantees under
the Plan;
(ii) increase the maximum number of shares which may be made
subject to awards to an individual as options in any year;
(iii) materially increase, beyond the amounts set forth in Section
1.5, the number of shares of Common Stock in respect of which
awards may be issued under the Plan;
(iv) materially modify the designation in Section 1.3 of the class
of persons eligible to receive awards under the Plan;
(v) provide for the grant of stock options having an option
exercise price per share of Common Stock less than 100% of the fair
market value of a share of Common Stock on the date of grant; or
(vi) extend the term of the Plan beyond the period set forth in
Section 4.13.
(b) Award Modifications. Subject to the terms and conditions of the
Plan (including Section 4.1(a)), the Committee may amend outstanding Plan
agreements with such grantee, including, without limitation, any amendment
which would (i) accelerate the time or times at which an award may vest or
become exercisable and/or (ii) extend the scheduled termination or expiration
date of the award, provided, however, that no modification having a material
adverse effect upon the interest of a grantee in an award shall be made
without the consent of such grantee.
4.2. Restrictions.
(a) Consent Requirements. If the Committee shall at any time determine
that any Consent (as hereinafter defined) is necessary or desirable as a
condition of, or in connection with, the granting of any award under the
Plan, the acquisition, issuance or purchase of shares or other rights
hereunder or the taking of any other action hereunder (each such action being
hereinafter referred to as a "Plan Action"), then such Plan Action shall not
be taken, in whole or in part, unless and until such Consent shall have been
effected or obtained to the full satisfaction of the Committee. Without
limiting the generality of the foregoing, the Committee shall be entitled to
determine not to make any payment whatsoever until Consent has been given if
(i) the Committee may make any payment under the Plan in cash, Common Stock
or both, and (ii) the Committee determines that Consent is necessary or
desirable as a condition of, or in connection with, payment in any one or
more of such forms.
(b) Consent Defined. The term "Consent" as used herein with respect to
any Plan Action means (i) any and all listings, registrations or
qualifications in respect thereof upon any securities exchange or other
self-regulatory organization or under any federal, state or local law, rule
or regulation, (ii) the expiration, elimination or satisfaction of any
prohibitions, restrictions or limitations under any federal, state or local
law, rule or regulation or the rules of any securities exchange or other
self-regulatory organization, (iii) any and all written agreements and
representations by the grantee with respect to the disposition of shares, or
with respect to any other matter, which the Committee shall deem necessary or
desirable to comply with the terms of any such listing, registration or
qualification or to obtain an exemption from the requirement that any such
listing, qualification or registration be made, and (iv) any and all
consents, clearances and approvals in respect of a Plan Action by any
governmental or other regulatory bodies or any parties to any loan agreements
or other contractual obligations of the Company or any Affiliate.
4.3. Nontransferability. No award granted to any grantee under the Plan
or under any Plan agreement shall be assignable or transferable by the
grantee other than by will or by the laws of descent and distribution.
During the lifetime of the grantee, all rights with respect to any award
granted to the grantee under the Plan or under any Plan agreement shall be
exercisable only by the grantee.
4.4. Withholding Taxes.
(a) Whenever under the Plan shares of Common Stock are to be delivered
pursuant to an award, the Committee may require as a condition of delivery
that the grantee remit an amount sufficient to satisfy all federal, state and
other governmental withholding tax requirements related thereto. Whenever
cash is to be paid under the Plan, the Company may, as a condition of its
payment, deduct therefrom, or from any salary or other payments due to the
grantee, an amount sufficient to satisfy all federal, state and other
governmental withholding tax requirements related thereto or to the delivery
of any shares of Common Stock under the Plan.
(b) Without limiting the generality of the foregoing, (i) a grantee may
elect to satisfy all or part of the foregoing withholding requirements by
delivery of unrestricted shares of Common Stock owned by the grantee for at
least six months (or such other period as the Committee may determine) having
a fair market value (determined as of the date of such delivery by the
grantee) equal to all or part of the amount to be so withheld, provided that
the Committee may require, as a condition of accepting any such delivery, the
grantee to furnish an opinion of counsel acceptable to the Committee to the
effect that such delivery would not result in the grantee incurring any
liability under Section 16(b) of the Act and (ii) the Committee may permit
any such delivery to be made by withholding shares of Common Stock from the
shares otherwise issuable pursuant to the award giving rise to the tax
withholding obligation (in which event the date of delivery shall be deemed
the date such award was exercised).
4.5. Adjustments Upon Changes in Capitalization. If and to the extent
specified by the Committee, the number of shares of Common Stock which may be
issued pursuant to awards under the Plan, the maximum number of options which
may be granted to any one person in any year, the number of shares of Common
Stock subject to awards, the option exercise price of options theretofore
granted under the Plan, and the amount payable by a grantee in respect of an
award, shall be appropriately adjusted (as the Committee may determine) for
any change in the number of issued shares of Common Stock resulting from the
subdivision or combination of shares of Common Stock or other capital
adjustments, or the payment of a stock dividend after the effective date of
the Plan, or other change in such shares of Common Stock effected without
receipt of consideration by the Company; provided that any awards covering
fractional shares of Common Stock resulting from any such adjustment shall be
eliminated and provided further, that each ISO granted under the Plan shall
not be adjusted in a manner that causes such option to fail to continue to
qualify as an ISO within the meaning of Code Section 422. Adjustments under
this Section shall be made by the Committee, whose determination as to what
adjustments shall be made, and the extent thereof, shall be final, binding
and conclusive.
4.6. Right of Discharge Reserved. Nothing in the Plan or in any Plan
agreement shall confer upon any person the right to continue in the
employment of the Company or an Affiliate or affect any right which the
Company or an Affiliate may have to terminate the employment of such person.
4.7. No Rights as a Stockholder. No grantee or other person shall have
any of the rights of a stockholder of the Company with respect to shares
subject to an award until the issuance of a stock certificate to him for such
shares. Except as otherwise provided in Section 4.5, no adjustment shall be
made for dividends, distributions or other rights (whether ordinary or
extraordinary, and whether in cash, securities or other property) for which
the record date is prior to the date such stock certificate is issued. In
the case of a grantee of an award which has not yet vested, the grantee shall
have the rights of a stockholder of the Company if and only to the extent
provided in the applicable Plan agreement.
4.8. Nature of Payments.
(a) Any and all awards or payments hereunder shall be granted, issued,
delivered or paid, as the case may be, in consideration of services performed
for the Company or for its Affiliates by the grantee.
(b) No such awards and payments shall be considered special incentive
payments to the grantee or, unless otherwise determined by the Committee, be
taken into account in computing the grantee's salary or compensation for the
purposes of determining any benefits under (i) any pension, retirement, life
insurance or other benefit plan of the Company or any Affiliate or (ii) any
agreement between the Company or any Affiliate and the grantee.
(c) By accepting an award under the Plan, the grantee shall thereby
waive any claim to continued exercisability or vesting of an award or to
damages or severance entitlement related to non-continuation of the award
beyond the period provided herein or in the applicable Plan agreement,
notwithstanding any contrary provision in any written employment contract
with the grantee, whether any such contract is executed before or after the
grant date of the award.
4.9. Non-Uniform Determinations. The Committee's determinations under
the Plan need not be uniform and may be made by it selectively among persons
who receive, or are eligible to receive, awards under the Plan (whether or
not such persons are similarly situated). Without limiting the generality of
the foregoing, the Committee shall be entitled, among other things, to make
non-uniform and selective determinations, and to enter into non-uniform and
selective Plan agreements, as to (a) the persons to receive awards under the
Plan, (b) the terms and provisions of awards under the Plan, and (c) the
treatment of leaves of absence pursuant to Section 2.7(c).
4.10. Other Payments or Awards. Nothing contained in the Plan
shall be deemed in any way to limit or restrict the Company, any Affiliate or
the Committee from making any award or payment to any person under any other
plan, arrangement or understanding, whether now existing or hereafter in
effect.
4.11. Reorganization.
(a) In the event that the Company is merged or consolidated with another
corporation and, whether or not the Company shall be the surviving
corporation, there shall be any change in the shares of Common Stock by
reason of such merger or consolidation, or in the event that all or
substantially all of the assets of the Company are acquired by another
person, or in the event of a reorganization or liquidation of the Company
(each such event being hereinafter referred to as a "Reorganization Event")
or in the event that the Board shall propose that the Company enter into a
Reorganization Event, then the Committee may in its discretion, by written
notice to a grantee, provide that his options will be terminated unless
exercised within 30 days (or such longer period as the Committee shall
determine in its sole discretion) after the date of such notice; provided
that if, and to the extent that, the Committee takes such action with respect
to the grantee's options not yet exercisable, the Committee shall also
accelerate the dates upon which such options shall be exercisable. The
Committee also may in its discretion by written notice to a grantee provide
that all or some of the restrictions on any of the grantee's awards may lapse
in the event of a Reorganization Event upon such terms and conditions as the
Committee may determine.
(b) Whenever deemed appropriate by the Committee, the actions referred
to in Section 4.11(a) may be made conditional upon the consummation of the
applicable Reorganization Event.
4.12. Section Headings. The section headings contained herein are
for the purposes of convenience only and are not intended to define or limit
the contents of said sections.
4.13. Effective Date and Term of Plan.
(a) The Plan shall be deemed adopted and become effective upon the
approval thereof by the shareholders of the Company.
(b) The Plan shall terminate 10 years after the earlier of the date on
which it becomes effective or is approved by shareholders, and no awards
shall thereafter be made under the Plan. Notwithstanding the foregoing, all
awards made under the Plan prior to such termination date shall remain in
effect until such awards have been satisfied or terminated in accordance with
the terms and provisions of the Plan and the applicable Plan agreement.
4.14. Governing Law. The Plan shall be governed by the laws of the
State of New York applicable to agreements made and to be performed entirely
within such state.
ARTICLE 5. STOCK OPTIONS GRANTED TO INDEPENDENT DIRECTORS
5.1. Automatic Grant of Options. Each Independent Director appointed or
elected for the first time shall automatically be granted a NQSO to purchase
6,000 shares of Common Stock on his date of appointment or election. Each
Independent Director who is serving as Director of the Company on the fifth
business day after each annual meeting of shareholders shall automatically be
granted on such day NQSOs to acquire 2,000 shares of Common Stock; provided,
however, that an Independent Director who is appointed or elected for the
first time shall not be eligible to receive NQSOs pursuant to this sentence
for the year of his initial appointment or election. The exercise price per
share for the Common Stock covered by a NQSO granted pursuant to this Section
5.1 shall be equal to the FMV of the Common Stock on the date the NQSO is
granted.
5.2. Exercise; Termination; Non-Transferability
(a) All NQSOs granted under this Article 5 shall be immediately
exercisable. No NQSO issued under this Article 5 shall be exercisable after
the expiration of ten years from the date upon which such NQSO is granted.
(b) The rights of an Independent Director in a NQSO granted under this
Article 5 shall terminate twelve months after such Director ceases to be a
Director of the Company or the specified expiration date, if earlier;
provided, however, that such rights shall terminate immediately on the date
on which an Independent Director ceases to be a Director by reason of
termination of his directorship on account of any act of (i) fraud or
intentional misrepresentation or (ii) embezzlement, misappropriation or
conversion of assets or opportunities of the Company or any Affiliate.
(c) No NQSO granted under this Article 5 shall be transferable by the
grantee otherwise than by will or by the laws of descent and distribution,
and such grantee shall be exercisable during the grantee's lifetime only by
the grantee. Any NQSO granted to an Independent Director and outstanding on
the date of his death may be exercised by the legal representative or legatee
of the grantee for the period of twelve months from the date of death or
until the expiration of the stated term of the option, if earlier.
(d) NQSOs granted under this Article 5 may be exercised only by written
notice to the Company specifying the number of shares to be purchased.
Payment of the full purchase price of the shares to be purchased may be made
by certified or official bank check payable to the Company. A grantee shall
have the rights of a stockholder only as to shares acquired upon the exercise
of a NQSO and not as to unexercised NQSOs.
5.3. Adjustments Upon Changes in Capitalization. The number of shares
of Common Stock subject to awards and the option exercise price of NQSOs
theretofore granted under this Article 5, and the amount payable by a grantee
in respect of an award, shall be appropriately adjusted for any change in the
number of issued shares of Common Stock resulting from the subdivision or
combination of shares of Common Stock or other capital adjustments, or the
payment of a stock dividend after the effective date of the Plan, or other
change in such shares of Common Stock effected without receipt of
consideration by the Company; provided that any awards covering fractional
shares of Common Stock resulting from any such adjustment shall be
eliminated.
5.4 Limited to Independent Directors. The provisions of this Article 5
shall apply only to NQSOs granted or to be granted to Independent Directors,
shall be interpreted as if this Article 5 constituted a separate plan of the
Company and shall not be deemed to modify, limit or otherwise apply to any
other provision of this Plan or to any NQSO issued under this Plan to a
participant who is not an Independent Director of the Company. To the extent
inconsistent with the provisions of any other Section of this Plan, the
provisions of this Article 5 shall govern the rights and obligations of the
Company and Independent Directors respecting NQSOs granted or to be granted
to Independent Directors. The provisions of this Article 5 shall not be
amended more than once every six months other than to comport with changes in
the Code, ERISA or the rules thereunder.
Exhibit 10.20
RECKSON ASSOCIATES REALTY CORP.
1998 STOCK OPTION PLAN
ARTICLE 1. GENERAL
1.1. Purpose. The purpose of the Reckson Associates Realty Corp. 1998
Stock Option Plan (the "Plan") is to provide for a broad base of officers,
directors and key employees, as defined in Section 1.3, of Reckson Associates
Realty Corp. (the "Company") and certain of its Affiliates (as defined below)
an equity-based incentive to maintain and enhance the performance and
profitability of the Company.
1.2. Administration.
(a) The Plan shall be administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Company (the "Board"), which
Committee shall consist of two or more directors, or by the Board. It is
intended that the directors appointed to serve on the Committee shall be
"non-employee directors" (within the meaning of Rule 16b-3 promulgated under
the Securities Exchange Act of 1934 (the "Act")); however, the mere fact that
a Committee member shall fail to qualify under either of these requirements
shall not invalidate any award made by the Committee which award is otherwise
validly made under the Plan. The members of the Committee shall be appointed
by, and may be changed at any time and from time to time in the discretion
of, the Board.
(b) The Committee shall have the authority (i) to exercise all of the
powers granted to it under the Plan, (ii) to construe, interpret and
implement the Plan and any Plan agreements executed pursuant to the Plan,
(iii) to prescribe, amend and rescind rules relating to the Plan, (iv) to
make any determination necessary or advisable in administering the Plan, and
(v) to correct any defect, supply any omission and reconcile any
inconsistency in the Plan. The Committee shall have no authority to
interpret or administer Article 5 of the Plan or to take any action with
respect to any awards thereunder.
(c) The determination of the Committee on all matters relating to the
Plan or any Plan agreement shall be conclusive.
(d) No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any award
hereunder.
(e) Notwithstanding anything to the contrary contained herein, the Board
may, in its sole discretion, at any time and from time to time, resolve to
administer the Plan, in which case, the term Committee as used herein shall
be deemed to mean the Board.
1.3. Persons Eligible for Awards. Awards under the Plan may be made to
such officers, directors and key employees ("key personnel") of the Company
or its Affiliates as the Committee shall from time to time in its sole
discretion select. No member of the Board who is not an officer or employee
of the Company or an Affiliate shall be eligible to receive any Awards under
the Plan.
1.4. Types of Awards Under Plan.
(a) Awards may be made under the Plan in the form of (i) stock options
("options"), (ii) restricted stock awards, and (iii) unrestricted stock
awards in lieu of cash compensation, all as more fully set forth in Articles
2 and 3.
(b) Options granted under the Plan may be either (i) "nonqualified"
stock options ("NQSOs") or (ii) options intended to qualify for incentive
stock option treatment described in Section 422 of the Internal Revenue Code
of 1986 (the "Code") ("ISOs"). Grants of options made under the Plan may
also be made in lieu of cash fees otherwise payable to Directors of the
Company or cash bonuses payable to employees of the Company or any Affiliate.
(c) All options when granted are intended to be NQSOs, unless the
applicable Plan agreement explicitly states that the option is intended to be
an ISO. If an option is intended to be an ISO, and if for any reason such
option (or any portion thereof) shall not qualify as an ISO, then, to the
extent of such nonqualification, such option (or portion) shall be regarded
as a NQSO appropriately granted under the Plan provided that such option (or
portion) otherwise meets the Plan's requirements relating to NQSOs.
1.5. Shares Available for Awards.
(a) Subject to Section 4.5 (relating to adjustments upon changes in
capitalization), as of any date the total number of shares of Common Stock
with respect to which awards may be granted under the Plan, shall equal the
excess (if any) of 3,000,000 shares of Common Stock, over (i) the number of
shares of Common Stock subject to outstanding awards, (ii) the number of
shares in respect of which options have been exercised, or grants of
restricted or unrestricted Common Stock have been made pursuant to the Plan,
and (iii) the number of shares issued subject to forfeiture restrictions
which have lapsed.
In accordance with (and without limitation upon) the preceding sentence,
awards may be granted in respect of the following shares of Common Stock:
shares covered by previously-granted awards that have expired, terminated or
been cancelled for any reason whatsoever (other than by reason of exercise or
vesting).
(b) Shares of Common Stock that shall be subject to issuance pursuant to
the Plan shall be authorized and unissued or treasury shares of Common Stock,
or shares of Common Stock purchased on the open market or from shareholders
of the Company for such purpose.
(c) Without limiting the generality of the foregoing, the Committee may,
with the grantee's consent, cancel any award under the Plan and issue a new
award in substitution therefor upon such terms as the Committee may in its
sole discretion determine, provided that the substituted award shall satisfy
all applicable Plan requirements as of the date such new award is made.
1.6. Definitions of Certain Terms.
(a) The term "Affiliate" as used herein means Reckson Operating
Partnership, L.P., Reckson FS Limited Partnership, Reckson Executive Centers,
L.L.C., Reckson Finance, Inc., Reckson Management Group, Inc., Reckson
Construction Group, Inc., and any person or entity as subsequently approved
by the Board which, at the time of reference, directly, or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with, the Company.
(b) The term "Cause" shall mean a finding by the Committee that the
recipient of an award under the Plan has (i) acted with gross negligence or
willful misconduct in connection with the performance of his material duties
to the Company or its Affiliates; (ii) defaulted in the performance of his
material duties to the Company or its Affiliates and has not corrected such
action within 15 days of receipt of written notice thereof; (iii) willfully
acted against the best interests of the Company or its Affiliates, which act
has had a material and adverse impact on the financial affairs of the Company
or its Affiliates; or (iv) been convicted of a felony or committed a material
act of common law fraud against the Company, its Affiliates or their
employees and such act or conviction has, or the Committee reasonably
determines will have, a material adverse effect on the interests of the
Company or its Affiliates.
(c) The term "Common Stock" as used herein means the shares of common
stock of the Company as constituted on the effective date of the Plan, and
any other shares into which such common stock shall thereafter be changed by
reason of a recapitalization, merger, consolidation, split-up, combination,
exchange of shares or the like.
(d) The "fair market value" (or "FMV") as of any date and in respect of
any share of Common Stock shall be:
(i) if the Common Stock is listed for trading on the New York
Stock Exchange, the closing price, regular way, of the Common Stock
as reported on the New York Stock Exchange Composite Tape, or if no
such reported sale of the Common Stock shall have occurred on such
date, on the next preceding date on which there was such a reported
sale; or
(ii) the Common Stock is not so listed but is listed on another
national securities exchange or authorized for quotation on the
National Association of Securities Dealers Inc.'s NASDAQ National
Market System ("NASDAQ/NMS"), the closing price, regular way, of
the Common Stock on such exchange or NASDAQ/NMS, as the case may
be, on which the largest number of shares of Common Stock have been
traded in the aggregate on the preceding twenty trading days, or if
no such reported sale of the Stock shall have occurred on such date
on such exchange or NASDAQ/NMS, as the case may be, on the
preceding date on which there was such a reported sale on such
exchange or NASDAQ/NMS, as the case may be; or
(iii) if the Stock is not listed for trading on a national
securities exchange or authorized for quotation on NASDAQ/NMS, the
average of the closing bid and asked prices as reported by the
National Association of Securities Dealers Automated Quotation
System ("NASDAQ") or, if no such prices shall have been so reported
for such date, on the next preceding date for which such prices
were so reported.
1.7. Agreements Evidencing Awards.
(a) Options and restricted stock awards granted under the Plan shall be
evidenced by written agreements. Any such written agreements shall (i)
contain such provisions not inconsistent with the terms of the Plan as the
Committee may in its sole discretion deem necessary or desirable and (ii) be
referred to herein as "Plan Agreements."
(b) Each Plan agreement shall set forth the number of shares of Common
Stock subject to the award granted thereby.
(c) Each Plan agreement with respect to the granting of an option shall
set forth the amount (the "option exercise price") payable by the grantee to
the Company in connection with the exercise of the option evidenced thereby.
The option exercise price per share shall not be less than 100% of the fair
market value of a share of Common Stock on the date the option is granted.
ARTICLE 2. STOCK OPTIONS
2.1. Option Awards.
(a) Grant of Stock Options. The Committee may grant options to
purchase shares of Common Stock in such amounts and subject to such terms and
conditions as the Committee shall from time to time in its sole discretion
determine, subject to the terms of the Plan.
(b) Dividend Equivalent Rights. To the extent expressly provided by the
Committee at the time of the grant, each NQSO granted under this Section 2.1
shall also generate Dividend Equivalent Rights ("DERs"), which shall entitle
the grantee to receive an additional share of Common Stock for each DER
received upon the exercise of the NQSO, at no additional cost, based on the
formula set forth herein. As of the last business day of each calendar
quarter, the amount of dividends paid by the Company on each share of Common
Stock with respect to that quarter shall be divided by the FMV per share to
determine the actual number of DERs accruing on each share subject to the
NQSO. Such amount of DERs shall be multiplied by the number of shares
covered by the NQSO to determine the number of DERs which accrued during such
quarter. The provisions of this Section 2.1(b) shall not be amended more
than once every six months other than to comport with changes in the Code,
the Employee Retirement Income Security Act ("ERISA") or the rules
thereunder.
For example. Assume that a grantee holds a NQSO to purchase 600 shares
-----------
of Common Stock. Further assume that the dividend per share for the first
quarter was $0.10, and that the FMV per share on the last business day of the
quarter was $20. Therefore, .005 DER would accrue per share for that quarter
and such grantee would receive three DERs for that quarter (600 X .005). For
purposes of determining how many DERs would accrue during the second quarter,
the NQSO would be considered to be for 603 shares of Common Stock.
2.2. Exercisability of Options. Subject to the other provisions of the
Plan:
(a) Exercisability Determined by Plan Agreement. Each Plan agreement
shall set forth the period during which and the conditions subject to which
the option shall be exercisable (including, but not limited to vesting of
such options), as determined by the Committee in its discretion.
(b) Partial Exercise Permitted. Unless the applicable Plan agreement
otherwise provides, an option granted under the Plan may be exercised from
time to time as to all or part of the full number of shares for which such
option is then exercisable, in which event the DERs relating to the portion
of the option being exercised shall also be exercised.
(c) Notice of Exercise; Exercise Date.
(i) An option shall be exercisable by the filing of a written
notice of exercise with the Company, on such form and in such
manner as the Committee shall in its sole discretion prescribe, and
by payment in accordance with Section 2.4.
(ii) Unless the applicable Plan agreement otherwise provides, or
the Committee in its sole discretion otherwise determines, the date
of exercise of an option shall be the date the Company receives
such written notice of exercise and payment.
2.3. Limitation on Exercise. Notwithstanding any other provision of the
Plan, no Plan agreement shall permit an ISO to be exercisable more than 10
years after the date of grant.
2.4. Payment of Option Price.
(a) Tender Due Upon Notice of Exercise. Unless the applicable Plan
agreement otherwise provides or the Committee in its sole discretion
otherwise determines, any written notice of exercise of an option shall be
accompanied by payment of the full purchase price for the shares being
purchased.
(b) Manner of Payment. Payment of the option exercise price shall be
made in any combination of the following:
(i) by certified or official bank check payable to the Company
(or the equivalent thereof acceptable to the Committee);
(ii) by personal check (subject to collection), which may in the
Committee's discretion be deemed conditional;
(iii) with the consent of the Committee in its sole discretion, by
delivery of previously acquired shares of Common Stock owned by the
grantee for at least six months having a fair market value
(determined as of the option exercise date) equal to the portion of
the option exercise price being paid thereby, provided that the
Committee may require the grantee to furnish an opinion of counsel
acceptable to the Committee to the effect that such delivery would
not result in the grantee incurring any liability under Section
16(b) of the Act and does not require any Consent (as defined in
Section 4.2); and
(iv) with the consent of the Committee in its sole discretion, by
the full recourse promissory note and agreement of the grantee
providing for payment with interest on the unpaid balance accruing
at a rate not less than that needed to avoid the imputation of
income under Code Section 7872 and upon such terms and conditions
(including the security, if any, therefor) as the Committee may
determine; and
(v) by withholding shares of Common Stock from the shares
otherwise issuable pursuant to the exercise.
(c) Cashless Exercise. Payment in accordance with Section 2.4(b) may be
deemed to be satisfied, if and to the extent provided in the applicable Plan
agreement, by delivery to the Company of an assignment of a sufficient amount
of the proceeds from the sale of Common Stock acquired upon exercise to pay
for all of the Common Stock acquired upon exercise and an authorization to
the broker or selling agent to pay that amount to the Company, which sale
shall be made at the grantee's direction at the time of exercise, provided
that the Committee may require the grantee to furnish an opinion of counsel
acceptable to the Committee to the effect that such delivery would not result
in the grantee incurring any liability under Section 16 of the Act and does
not require any Consent (as defined in Section 4.2).
(d) Issuance of Shares. As soon as practicable after receipt of full
payment, the Company shall, subject to the provisions of Section 4.2, deliver
to the grantee one or more certificates for the shares of Common Stock so
purchased, which certificates may bear such legends as the Company may deem
appropriate concerning restrictions on the disposition of the shares in
accordance with applicable securities laws, rules and regulations or
otherwise.
2.5. Default Rules Concerning Termination of Employment.
Subject to the other provisions of the Plan and unless the applicable
Plan agreement otherwise provides:
(a) General Rule. All options granted to a grantee shall terminate upon
the grantee's termination of employment for any reason except to the extent
post-employment exercise of the option is permitted in accordance with this
Section 2.5.
(b) Termination for Cause. All unexercised or unvested options granted
to a grantee shall terminate and expire on the day a grantee's employment is
terminated for Cause.
(c) Regular Termination; Leave of Absence. If the grantee's employment
terminates for any reason other than as provided in subsection (b), (d) or
(f) of this Section 2.5, any awards granted to such grantee which were
exercisable immediately prior to such termination of employment may be
exercised, and any awards subject to vesting may continue to vest, until the
earlier of either: (i) 90 days after the grantee's termination of employment
and (ii) the date on which such options terminate or expire in accordance
with the provisions of the Plan (other than this Section 2.5) and the Plan
agreement; provided that the Committee may, in its sole discretion, determine
such other period for exercise in the case of a grantee whose employment
terminates solely because the grantee's employer ceases to be an Affiliate or
the grantee transfers employment with the Company's consent to a purchaser of
a business disposed of by the Company. The Committee may, in its sole
discretion, determine (i) whether any leave of absence (including short-term
or long-term disability or medical leave) shall constitute a termination of
employment for purposes of the Plan and (ii) the effect, if any, of any such
leave on outstanding awards under the Plan.
(d) Retirement. If a grantee's employment terminates by reason of
retirement (i.e., the voluntary termination of employee by a grantee after
attaining the age of 55), the options exercisable by the grantee immediately
prior to the grantee's retirement shall be exercisable by the grantee until
the earlier of (i) 12 months after the grantee's retirement and (ii) the date
on which such options terminate or expire in accordance with the provisions
of the Plan (other than this Section 2.5) and the Plan agreement.
(e) Death After Termination. If a grantee's employment terminates in
the manner described in subsections (c) or (d) of this Section 2.5 and the
grantee dies within the period for exercise provided for therein, the options
exercisable by the grantee immediately prior to the grantee's death shall be
exercisable by the personal representative of the grantee's estate or by the
person to whom such options pass under the grantee's will (or, if applicable,
pursuant to the laws of descent and distribution) until the earlier of (i) 12
months after the grantee's death and (ii) the date on which such options
terminate or expire in accordance with the provisions of subsections (c) or
(d) of this Section 2.5.
(f) Death Before Termination. If a grantee dies while employed by the
Company or any Affiliate, all options granted to the grantee but not
exercised before the death of the grantee, whether or not exercisable by the
grantee before the grantee's death, shall immediately become and be
exercisable by the personal representative of the grantee's estate or by the
person to whom such options pass under the grantee's will (or, if applicable,
pursuant to the laws of descent and distribution) until the earlier of (i) 12
months after the grantee's death and (ii) the date on which such options
terminate or expire in accordance with the provisions of the Plan (other than
this Section 2.5) and the Plan agreement.
2.6. Special ISO Requirements. In order for a grantee to receive
special tax treatment with respect to stock acquired under an option intended
to be an ISO, (i) the Plan must be approved by the Company's shareholders in
accordance with the requirements of Code Section 422(b) and (ii) the grantee
of such option must be, at all times during the period beginning on the date
of grant and ending on the day three months before the date of exercise of
such option, an employee of the Company or any of the Company's parent or
subsidiary corporations (within the meaning of Code Section 424), or of a
corporation or a parent or subsidiary corporation of such corporation issuing
or assuming a stock option in a transaction to which Code Section 424(a)
applies. If an option granted under the Plan is intended to be an ISO, and
if the grantee, at the time of grant, owns stock possessing more than 10% of
the total combined voting power of all classes of stock of the grantee's
employer corporation or of its parent or subsidiary corporation, then (i) the
option exercise price per share shall in no event be less than 110% of the
fair market value of the Common Stock on the date of such grant and (ii) such
option shall not be exercisable after the expiration of five years after the
date such option is granted.
ARTICLE 3. RESTRICTED STOCK AND UNRESTRICTED STOCK AWARDS
3.1. Restricted Stock Awards.
(a) Grant of Awards. The Committee may grant restricted stock awards,
alone or in tandem with other awards, under the Plan in such amounts and
subject to such terms and conditions as the Committee shall from time to time
in its sole discretion determine; provided, however, that the grant of any
such restricted stock awards may be made only in lieu of cash compensation
and bonuses. The vesting of a restricted stock award granted under the Plan
may be conditioned upon the completion of a specified period of employment
with the Company or any Affiliate, upon the attainment of specified
performance goals, and/or upon such other criteria as the Committee may
determine in its sole discretion.
(b) Payment. Each Plan agreement with respect to a restricted stock
award shall set forth the amount (if any) to be paid by the grantee with
respect to such award. If a grantee makes any payment for a restricted stock
award which does not vest, appropriate payment may be made to the grantee
following the forfeiture of such award on such terms and conditions as the
Committee may determine. The Committee shall have the authority to make or
authorize loans to finance, or to otherwise accommodate the financing of, the
acquisition or exercise of a restricted stock award.
(c) Forfeiture upon Termination of Employment. Unless the applicable
Plan agreement otherwise provides or the Committee otherwise determines, (i)
if a grantee's employment terminates for any reason (including death) before
all of his restricted stock awards have vested, such awards shall terminate
and expire upon such termination of employment, and (ii) in the event any
condition to the vesting of restricted stock awards is not satisfied within
the period of time permitted therefor, such unvested shares shall be returned
to the Company.
(d) Issuance of Shares. The Committee may provide that one or more
certificates representing restricted stock awards shall be registered in the
grantee's name and bear an appropriate legend specifying that such shares are
not transferable and are subject to the terms and conditions of the Plan and
the applicable Plan agreement, or that such certificate or certificates shall
be held in escrow by the Company on behalf of the grantee until such shares
vest or are forfeited, all on such terms and conditions as the Committee may
determine. Unless the applicable Plan agreement otherwise provides, no share
of restricted stock may be assigned, transferred, otherwise encumbered or
disposed of by the grantee until such share has vested in accordance with the
terms of such award. Subject to the provisions of Section 4.2, as soon as
practicable after any restricted stock award shall vest, the Company shall
issue or reissue to the grantee (or to the grantee's designated beneficiary
in the event of the grantee's death) one or more certificates for the Common
Stock represented by such restricted stock award.
(e) Grantees' Rights Regarding Restricted Stock. Unless the applicable
Plan agreement otherwise provides: (i) a grantee may vote and receive
dividends on restricted stock awarded under the Plan; and (ii) any stock
received as a distribution with respect to a restricted stock award shall be
subject to the same restrictions as such restricted stock.
3.2. Unrestricted Shares. The Committee may issue stock under the Plan,
alone or in tandem with other awards, in such amounts and subject to such
terms and conditions as the Committee shall from time to time in its sole
discretion determine; provided, however, that the grant of any such
unrestricted stock awards may be made only in lieu of cash compensation and
bonuses.
ARTICLE 4. MISCELLANEOUS
4.1. Amendment of the Plan; Modification of Awards.
(a) Plan Amendments. The Board may, without stockholder approval, at
any time and from time to time suspend, discontinue or amend the Plan in any
respect whatsoever, except that (i) no such amendment shall impair any rights
under any award theretofore made under the Plan without the consent of the
grantee of such award and (ii) except as and to the extent otherwise
permitted by Section 4.5 or 4.11, no such amendment shall cause the Plan to
fail to satisfy any applicable requirement under Rule 16b-3 without
stockholder approval.
(b) Award Modifications. Subject to the terms and conditions of the
Plan (including Section 4.1(a)), the Committee may amend outstanding Plan
agreements with such grantee, including, without limitation, any amendment
which would (i) accelerate the time or times at which an award may vest or
become exercisable and/or (ii) extend the scheduled termination or expiration
date of the award, provided, however, that no modification having a material
adverse effect upon the interest of a grantee in an award shall be made
without the consent of such grantee.
4.2. Restrictions.
(a) Consent Requirements. If the Committee shall at any time determine
that any Consent (as hereinafter defined) is necessary or desirable as a
condition of, or in connection with, the granting of any award under the
Plan, the acquisition, issuance or purchase of shares or other rights
hereunder or the taking of any other action hereunder (each such action being
hereinafter referred to as a "Plan Action"), then such Plan Action shall not
be taken, in whole or in part, unless and until such Consent shall have been
effected or obtained to the full satisfaction of the Committee. Without
limiting the generality of the foregoing, the Committee shall be entitled to
determine not to make any payment whatsoever until Consent has been given if
(i) the Committee may make any payment under the Plan in cash, Common Stock
or both, and (ii) the Committee determines that Consent is necessary or
desirable as a condition of, or in connection with, payment in any one or
more of such forms.
(b) Consent Defined. The term "Consent" as used herein with respect to
any Plan Action means (i) any and all listings, registrations or
qualifications in respect thereof upon any securities exchange or other
self-regulatory organization or under any federal, state or local law, rule
or regulation, (ii) the expiration, elimination or satisfaction of any
prohibitions, restrictions or limitations under any federal, state or local
law, rule or regulation or the rules of any securities exchange or other
self-regulatory organization, (iii) any and all written agreements and
representations by the grantee with respect to the disposition of shares, or
with respect to any other matter, which the Committee shall deem necessary or
desirable to comply with the terms of any such listing, registration or
qualification or to obtain an exemption from the requirement that any such
listing, qualification or registration be made, and (iv) any and all
consents, clearances and approvals in respect of a Plan Action by any
governmental or other regulatory bodies or any parties to any loan agreements
or other contractual obligations of the Company or any Affiliate.
4.3. Nontransferability. No award granted to any grantee under the Plan
or under any Plan agreement shall be assignable or transferable by the
grantee other than by will or by the laws of descent and distribution.
During the lifetime of the grantee, all rights with respect to any award
granted to the grantee under the Plan or under any Plan agreement shall be
exercisable only by the grantee.
4.4. Withholding Taxes.
(a) Whenever under the Plan shares of Common Stock are to be delivered
pursuant to an award, the Committee may require as a condition of delivery
that the grantee remit an amount sufficient to satisfy all federal, state and
other governmental withholding tax requirements related thereto. Whenever
cash is to be paid under the Plan, the Company may, as a condition of its
payment, deduct therefrom, or from any salary or other payments due to the
grantee, an amount sufficient to satisfy all federal, state and other
governmental withholding tax requirements related thereto or to the delivery
of any shares of Common Stock under the Plan.
(b) Without limiting the generality of the foregoing, (i) a grantee may
elect to satisfy all or part of the foregoing withholding requirements by
delivery of unrestricted shares of Common Stock owned by the grantee for at
least six months (or such other period as the Committee may determine) having
a fair market value (determined as of the date of such delivery by the
grantee) equal to all or part of the amount to be so withheld, provided that
the Committee may require, as a condition of accepting any such delivery, the
grantee to furnish an opinion of counsel acceptable to the Committee to the
effect that such delivery would not result in the grantee incurring any
liability under Section 16(b) of the Act and (ii) the Committee may permit
any such delivery to be made by withholding shares of Common Stock from the
shares otherwise issuable pursuant to the award giving rise to the tax
withholding obligation (in which event the date of delivery shall be deemed
the date such award was exercised).
4.5. Adjustments Upon Changes in Capitalization. If and to the extent
specified by the Committee, the number of shares of Common Stock which may be
issued pursuant to awards under the Plan, the maximum number of options which
may be granted to any one person in any year, the number of shares of Common
Stock subject to awards, the option exercise price of options theretofore
granted under the Plan, and the amount payable by a grantee in respect of an
award, shall be appropriately adjusted (as the Committee may determine) for
any change in the number of issued shares of Common Stock resulting from the
subdivision or combination of shares of Common Stock or other capital
adjustments, or the payment of a stock dividend after the effective date of
the Plan, or other change in such shares of Common Stock effected without
receipt of consideration by the Company; provided that any awards covering
fractional shares of Common Stock resulting from any such adjustment shall be
eliminated and provided further, that each ISO granted under the Plan shall
not be adjusted in a manner that causes such option to fail to continue to
qualify as an ISO within the meaning of Code Section 422. Adjustments under
this Section shall be made by the Committee, whose determination as to what
adjustments shall be made, and the extent thereof, shall be final, binding
and conclusive.
4.6. Right of Discharge Reserved. Nothing in the Plan or in any Plan
agreement shall confer upon any person the right to continue in the
employment of the Company or an Affiliate or affect any right which the
Company or an Affiliate may have to terminate the employment of such person.
4.7. No Rights as a Stockholder. No grantee or other person shall have
any of the rights of a stockholder of the Company with respect to shares
subject to an award until the issuance of a stock certificate to him for such
shares. Except as otherwise provided in Section 4.5, no adjustment shall be
made for dividends, distributions or other rights (whether ordinary or
extraordinary, and whether in cash, securities or other property) for which
the record date is prior to the date such stock certificate is issued. In
the case of a grantee of an award which has not yet vested, the grantee shall
have the rights of a stockholder of the Company if and only to the extent
provided in the applicable Plan agreement.
4.8. Nature of Payments.
(a) Any and all awards or payments hereunder shall be granted, issued,
delivered or paid, as the case may be, in consideration of services performed
for the Company or for its Affiliates by the grantee.
(b) No such awards and payments shall be considered special incentive
payments to the grantee or, unless otherwise determined by the Committee, be
taken into account in computing the grantee's salary or compensation for the
purposes of determining any benefits under (i) any pension, retirement, life
insurance or other benefit plan of the Company or any Affiliate or (ii) any
agreement between the Company or any Affiliate and the grantee.
(c) By accepting an award under the Plan, the grantee shall thereby
waive any claim to continued exercisability or vesting of an award or to
damages or severance entitlement related to non-continuation of the award
beyond the period provided herein or in the applicable Plan agreement,
notwithstanding any contrary provision in any written employment contract
with the grantee, whether any such contract is executed before or after the
grant date of the award.
4.9. Non-Uniform Determinations. The Committee's determinations under
the Plan need not be uniform and may be made by it selectively among persons
who receive, or are eligible to receive, awards under the Plan (whether or
not such persons are similarly situated). Without limiting the generality of
the foregoing, the Committee shall be entitled, among other things, to make
non-uniform and selective determinations, and to enter into non-uniform and
selective Plan agreements, as to (a) the persons to receive awards under the
Plan, (b) the terms and provisions of awards under the Plan, and (c) the
treatment of leaves of absence pursuant to Section 2.7(c).
4.10. Other Payments or Awards. Nothing contained in the Plan
shall be deemed in any way to limit or restrict the Company, any Affiliate or
the Committee from making any award or payment to any person under any other
plan, arrangement or understanding, whether now existing or hereafter in
effect.
4.11. Reorganization.
(a) In the event that the Company is merged or consolidated with another
corporation and, whether or not the Company shall be the surviving
corporation, there shall be any change in the shares of Common Stock by
reason of such merger or consolidation, or in the event that all or
substantially all of the assets of the Company are acquired by another
person, or in the event of a reorganization or liquidation of the Company
(each such event being hereinafter referred to as a "Reorganization Event")
or in the event that the Board shall propose that the Company enter into a
Reorganization Event, then the Committee may in its discretion, by written
notice to a grantee, provide that his options will be terminated unless
exercised within 30 days (or such longer period as the Committee shall
determine in its sole discretion) after the date of such notice; provided
that if, and to the extent that, the Committee takes such action with respect
to the grantee's options not yet exercisable, the Committee shall also
accelerate the dates upon which such options shall be exercisable. The
Committee also may in its discretion by written notice to a grantee provide
that all or some of the restrictions on any of the grantee's awards may lapse
in the event of a Reorganization Event upon such terms and conditions as the
Committee may determine.
(b) Whenever deemed appropriate by the Committee, the actions referred
to in Section 4.11(a) may be made conditional upon the consummation of the
applicable Reorganization Event.
4.12. Section Headings. The section headings contained herein are
for the purposes of convenience only and are not intended to define or limit
the contents of said sections.
4.13. Effective Date and Term of Plan.
(a) The Plan has been adopted and shall be effective as of January 9,
1998.
(b) The Plan shall terminate as of January 9, 2008, and no awards shall
thereafter be made under the Plan. Notwithstanding the foregoing, all awards
made under the Plan prior to such termination date shall remain in effect
until such awards have been satisfied or terminated in accordance with the
terms and provisions of the Plan and the applicable Plan agreement.
4.14. Governing Law. The Plan shall be governed by the laws of the
State of New York applicable to agreements made and to be performed entirely
within such state.
Exhibit 10.21
AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
RECKSON MORRIS OPERATING PARTNERSHIP, L.P.
THIS AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (THIS
"AGREEMENT") OF RECKSON MORRIS OPERATING PARTNERSHIP, L.P., A DELAWARE
LIMITED PARTNERSHIP (THE "PARTNERSHIP"), IS MADE AND ENTERED INTO AS OF THE
SIXTH DAY OF JANUARY, 1998, by and among RECKSON MORRIS INDUSTRIAL TRUST, a
Maryland real estate investment trust, as general partner, RECKSON MORRIS
INDUSTRIAL INTERIM GP LLC, a Delaware limited liability company, as interim
managing general partner, and those parties who are designated as limited
partners upon the Exhibit A attached hereto and made a part hereof by this
reference, as limited partners.
R E C I T A L S:
----------------
WHEREAS, the parties hereto have determined that it is in the best
interests of the parties' long term strategic growth to combine their
respective properties and related assets pursuant to that certain
Contribution and Exchange Agreement, dated October 7, 1997 (the "CONTRIBUTION
AND EXCHANGE AGREEMENT"), among the Partnership, Reckson Morris Industrial
Trust, Reckson Operating Partnership, L.P. (sometimes referred to as "Reckson
O.P."), Robert Morris and Joseph D. Morris, whereby the partners are
contributing to the Partnership, directly or indirectly, all of the partners'
right, title and interest in and to their respective properties, on the terms
and conditions set forth therein;
WHEREAS, the Partnership was previously formed pursuant to that certain
Agreement of Limited Partnership, dated as of December 10, 1997 (the
"Original Agreement"), and that certain Certificate of Limited Partnership,
dated as of December 1, 1997, which was filed with the Secretary of State of
Delaware on December 2, 1997 as amended by a First Amendment to Certificate
of Limited Partnership dated as of December 9, 1997 and filed December 10
with the Secretary of the State of Delaware.
WHEREAS, the parties hereto desire to continue the Partnership and amend
and restate the terms and provisions of the Original Agreement in its
entirety, all upon the terms and provisions, and subject to the conditions,
set forth herein;
NOW, THEREFORE, in consideration of the foregoing, of the mutual
promises contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE 1
---------
DEFINITIONS
-----------
As used in this Agreement, unless otherwise clearly indicated to the
contrary, the following terms have the meanings set forth below.
"ACCOUNTANTS" shall mean the firm or firms of independent certified
-----------
public accountants selected from time to time by the General Partner on
behalf of the Partnership to audit the books and records of the Partnership
and to prepare statements and reports in connection therewith.
"ACT" shall mean the Delaware Revised Uniform Limited Partnership Act,
---
as amended from time to time subsequent to the date hereof.
"ADDITIONAL PARTNERSHIP UNITS" shall have the definition assigned to
----------------------------
such term in Section 6.3 hereof.
"ADDITIONAL LIMITED PARTNER" shall have the definition assigned to such
--------------------------
term in Section 6.4 hereof.
"AFFILIATE" shall mean, with respect to any Partner (or as to any other
---------
Person the affiliates of whom are relevant for purposes of any of the
provisions of this Agreement), (i) any member of the Immediate Family of such
Partner; (ii) any trustee or beneficiary of a Partner; (iii) any legal
representative, successor or assignee of such Partner or any Person referred
to in the preceding clauses (i) and (ii); (iv) any trustee for the benefit of
such Partner or any Person referred to in the preceding clauses (i) through
(iii); or (v) any Person which directly or indirectly through one or more
intermediaries, Controls, is Controlled by, or is under common Control with
such Partner or any Person referred to in the preceding clauses (i) through
(iv).
"AGREED VALUE" shall mean, with respect to any property contributed by
------------
a Partner to the Partnership hereunder, an amount equal to (i) the Gross
Asset Value of the Capital Contribution determined as of the date of such
contribution, less (ii) the amount of any and all liabilities securing such
contributed property that the Partnership is considered to assume or take
subject to with respect to such property under Code Section 752 or the
Regulations promulgated thereunder.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the General
------------------
Partner.
"CAPITAL ACCOUNT" shall have the definition assigned to such term in
---------------
Section 6.5 hereof.
"CAPITAL CONTRIBUTION" shall mean, with respect to any Partner, the
--------------------
amount of money and the Agreed Value of any property (other than money)
contributed to the Partnership with respect to the Partnership Interest held
by such Partner.
"CERTIFICATE" shall mean the Partnership's Certificate of Limited
-----------
Partnership, as amended from time to time in accordance with the terms hereof
and the Act.
"CLOSING PRICE" shall mean, on any date, with respect to a share of
-------------
Common Stock, the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, for one share of Common Stock in either case as reported in the
principal consolidated transaction reporting system with respect to
securities listed or admitted to trading on the New York Stock Exchange or,
if the Common Stock is not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Common Stock is listed or admitted to
trading, or if the Common Stock is not listed or admitted to trading on any
national securities exchange, the last quoted price, or if not so quoted, the
average of the high bid and low asked prices in the over-the-counter market,
as reported by the National Association of Securities Dealers, Inc. Automated
Quotations System or, if such system is no longer in use, the principal other
automated quotations system that may then be in use or, if the Common Stock
is not quoted by any such organization, the average of the closing bid and
asked prices as furnished by a professional market maker making a market in
the Common Stock as such person is selected from time to time by the Board of
Directors.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
----
time to time, or any successor statute thereto.
"COMMON STOCK" shall mean the shares of beneficial interest, having a
------------
par value of $.01 per share, of the General Partner.
"COMPLETION OF THE OFFERING" shall mean the closing of the first sale
--------------------------
of Common Stock in the Offering and the contribution by the General Partner
of the net proceeds thereof to the Partnership.
"CONTRIBUTION AND EXCHANGE AGREEMENT" shall have the meaning assigned
-----------------------------------
to such term in the Recitals set forth above.
"CONTROL" shall mean the ability, whether by the direct or indirect
-------
ownership of shares or other equity interests, by contract or otherwise, to
elect a majority of the directors of a corporation, to select the managing
partner of a partnership, or otherwise to select, or have the power to remove
and then select, a majority of those persons exercising governing authority
over any particular entity. In the case of a limited partnership, the sole
general partner, all of the general partners to the extent each has equal
management control and authority, or the managing general partner or managing
general partners thereof shall be deemed to have control of such partnership
and, in the case of a trust, any trustee thereof or any Person having the
right to select any such trustee shall be deemed to have control of such
trust.
"CURRENT PER SHARE MARKET PRICE", on any date, shall mean the average
------------------------------
of the Closing Price for the five (5) consecutive Trading Days ending on such
date.
"DEPRECIATION" shall mean, with respect to any asset of the Partnership
------------
for any fiscal year or other period, the depreciation, depletion,
amortization or other cost recovery deduction, as the case may be, allowed or
allowable for Federal income tax purposes in respect of such asset for such
fiscal year or other period; provided, however, that if there is a
-------- -------
difference between the Gross Asset Value and the adjusted tax basis of such
asset, Depreciation shall mean "book depreciation, depletion or amortization"
as determined under Section 1.704-l(b)(2)(iv)(g)(3) of the Regulations.
"EXCESS DEFICIT CAPITAL ACCOUNT BALANCE" of any Partner shall be the
--------------------------------------
Capital Account balance of such Partner, adjusted as provided in the
immediately following sentence, to the extent, if any, that such balance is a
deficit (after adjustment). For purposes of determining the existence and
amount of an Excess Deficit Capital Account Balance, the Capital Account
balance of a Partner shall be adjusted by: (i) crediting thereto (A) that
portion of any deficit Capital Account balance that such Partner is required
to restore under the terms of this Agreement or any other document, and (B)
the amount of such Partner's share of Minimum Gain, including any Partner
Nonrecourse Debt Minimum Gain; and (ii) charging thereto the items described
in Regulation Sections 1.704-l(b)(2)(ii)(d)(4), (5) and (6) that apply to
such Partner. The existence and amount of Excess Deficit Capital Account
Balance at the end of any year shall be determined before any other
allocations provided for in Article 7 for such year have been made.
"EXERCISE NOTICE" shall mean the written notice as described in Section
---------------
10.3(b) hereof to be given by an Exercising Partner to the General Partner to
exercise Redemption Rights, the form of which Exercise Notice is attached
hereto as Exhibit B.
"EXERCISING PARTNERS" shall have the meaning set forth in Section
-------------------
10.3(b) hereof.
"GENERAL PARTNER" shall mean Reckson Morris Industrial Trust, a Maryland
---------------
real estate investment trust, and any substitute or additional General
Partner(s) duly admitted pursuant to the terms of this Agreement, or, where
the context so requires, any successor General Partner(s) acting pursuant to
the provisions of this Agreement, or, where the context so requires, the
Interim Managing General Partner.
"GROSS ASSET VALUE" shall mean, with respect to any asset of the
-----------------
Partnership, such asset's adjusted basis for Federal income tax purposes,
except as follows:
(a) The initial Gross Asset Value of any asset contributed by a
Partner shall be equal to the gross fair market value of such asset as
determined by the General Partner, in its reasonable discretion.
(b) If the General Partner reasonably determines that an adjustment
is necessary or appropriate to reflect the relative economic interests of the
Partners, the Gross Asset Values of all Partnership assets shall be adjusted
to equal their respective gross fair market values, as reasonably determined
by the General Partner, as of the following times:
(i) a Capital Contribution (other than a de minimis Capital
-- -------
Contribution) to the Partnership by a new or existing Limited Partner as
consideration for a Partnership Interest;
(ii) the distribution by the Partnership to a Partner of more
than a de minimis amount of Partnership money or property as
-- -------
consideration for the redemption of a Partnership Interest;
(iii) the liquidation of the Partnership within the meaning of
Section 1.704-l(b)(2)(ii)(g) of the Regulations (except for a
liquidation resulting from a termination of the Partnership under
Section 708(b)(1)(B) of the Code); and
(iv) any other time that such adjustment may be made under
the Code, the Regulations or any administrative pronouncement or ruling
by the IRS.
(c) The Gross Asset Values of Partnership assets distributed to any
Partner shall be the gross fair market values of such assets as reasonably
determined by the General Partner as of the date of distribution; and
(d) The Gross Asset Values of Partnership assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of such
assets pursuant to Sections 734(b) or 743(b) of the Code, but only to the
extent that such adjustments are taken into account in determining Capital
Accounts pursuant to Section 1.704-l(b)(2)(iv)(m) of the Regulations;
provided, however, that Gross Asset Values shall not be adjusted pursuant to
- -------- -------
this paragraph to the extent that the General Partner reasonably determines
that an adjustment pursuant to paragraph (b) above is necessary or
appropriate in connection with a transaction that would otherwise result in
an adjustment pursuant to this paragraph (d).
At all times, Gross Asset Values shall be adjusted by any Depreciation taken
into account with respect to the Partnership's assets for purposes of
computing Profits and Losses. Any adjustment to the Gross Asset Values of
Partnership property shall require an adjustment to the Partners' Capital
Accounts; as for the manner in which such adjustments are allocated to the
Capital Accounts, see clause (iii) of the definition of Profits and Losses in
the case of adjustment by Depreciation, and clause (iv) of said definition in
all other cases.
"IMMEDIATE FAMILY" shall mean, with respect to any individual Person,
----------------
such individual Person's spouse, parents, parents-in-law, descendants,
nephews, nieces, brothers, sisters, brothers-in-law, sisters-in-law and
children-in-law.
"INTERIM MANAGING GENERAL PARTNER" shall mean Reckson Morris Industrial
--------------------------------
Interim GP LLC, a Delaware limited liability company, and any substitute or
additional Interim Managing General Partner(s) duly admitted pursuant to the
terms of this Agreement and acting pursuant to Section 9.1(b) of this
Agreement, or, where the context so requires, any successor Interim Managing
General Partner(s) acting pursuant to the provisions of this Agreement.
"IPO" shall mean a transaction in which shares of the General Partner
---
are first sold to the public in an Offering.
"IPO DATE" shall mean the date on which the IPO closed.
--------
"IRS" means the Internal Revenue Service, which administers the federal
---
tax laws of the United States.
"LIMITED PARTNERS" shall mean any Person named as a Limited Partner on
----------------
the Exhibit A attached hereto as such Exhibit may be amended from time to
time, or any substituted Limited Partner or additional Limited Partner duly
admitted to the Partnership pursuant to the terms of this Agreement.
"LIQUIDATION" shall mean the disposition of all or substantially all of
-----------
the assets of the Partnership pursuant to a complete liquidation of the
Partnership.
"MINIMUM GAIN" shall have the meaning given such term in Treasury
------------
Regulation Section 1.704-2(d), and shall generally mean the amount by which
the nonrecourse liabilities secured by any assets of the Partnership exceed
the adjusted tax basis of such assets as of the date of determination. A
Partner's share of Minimum Gain (and any net decrease thereof) at any time
shall be determined in accordance with Treasury Regulation Section 1.7042(g).
"MORRIS GROUP" shall mean Robert Morris or Joseph D. Morris and any
------------
transferee of either of them.
"NET CASH FLOW" shall mean, with respect to any fiscal period of the
-------------
Partnership, the excess, if any, of "Receipts" over "Expenditures." For
purposes hereof, the term "Receipts" means the sum of (i) all cash receipts
of the Partnership from all sources for such period, including Net Sale
Proceeds and Net Financing Proceeds but excluding Capital Contributions, and
(ii) any amounts held as reserves as of the last day of the period
immediately prior to such fiscal period that the General Partner deemed
necessary for any capital or operating expenditure permitted hereunder. The
term "Expenditures" means the sum of (i) all cash expenses of the Partnership
for such period regardless of whether they are capitalized for book purposes
(net of any funds borrowed by the Partnership expressly for the purpose of
funding any such capital expenditures) or were expended from reserves for the
immediately prior fiscal period, (ii) the amount of all payments of principal
and interest on account of any indebtedness of the Partnership owed to any
Person, (iii) administrative expenses incurred by the General Partner to
maintain its REIT status, and (iv) any amounts held as reserves as of the
last day of such fiscal period as the General Partner in its sole discretion
deems necessary for any capital or operating expenditures permitted hereunder
or for any other proper Partnership purpose.
"NET FINANCING PROCEEDS" shall mean the cash proceeds received by the
----------------------
Partnership in connection with any borrowing or refinancing of borrowing by
or on behalf of the Partnership (whether or not secured), after deduction of
all costs and expenses incurred by the Partnership in connection with such
borrowing, and after deduction of that portion of such proceeds used to repay
any other indebtedness of the Partnership, or any interest or premium
thereon.
"NET SALE PROCEEDS" means the cash proceeds received by the Partnership
-----------------
in connection with a sale of any asset by or on behalf of the Partnership
after deduction of any costs or expenses incurred by the Partnership, or
payable specifically out of the proceeds of such sale (including, without
limitation, any repayment of any indebtedness required to be repaid as a
result of such sale or which the General Partner elects to repay out of the
proceeds of such sale, together with accrued interest and premium, if any,
thereon and any sales commissions or other costs and expenses due and payable
to any Person in connection with a sale, including to a Partner or its
Affiliates).
"OFFERED UNITS" shall mean the Partnership Units of the Exercising
-------------
Partners identified in an Exercise Notice which, pursuant to the exercise of
a Redemption Right, can be acquired by the General Partner under the terms
hereof.
"OFFERING" shall mean the initial public offering of the General
--------
Partner's Common Stock under the Securities Act.
"OP UNITS" shall mean those Partnership Units issued pursuant to the
--------
terms of the Contribution and Exchange Agreement and any additional OP Units
issued by the Partnership pursuant to Article 6 hereof.
"OPERATING AGREEMENT" shall mean the Operating Agreement of Reckson
-------------------
Morris Industrial Interim GP LLC dated as of January 6, 1998, between Reckson
Operating Partnership, L.P. and the Morris Contributors (as defined therein).
"ORGANIZATIONAL LIMITED PARTNER" shall mean the initial limited partner
------------------------------
of the Partnership.
"ORIGINAL AGREEMENT" shall have the meaning assigned to such term in the
------------------
Recitals set forth above.
"PARTNER OR PARTNERS" shall mean, unless the context in which the term
-------------------
is used requires otherwise, the General Partner, the Interim Managing General
Partner and the Limited Partners.
"PARTNER NONRECOURSE DEBT" shall have the meaning assigned to such term
------------------------
in Regulation Section 1.704-2(b)(4).
"PARTNER NONRECOURSE DEBT MINIMUM GAIN" shall have the meaning assigned
-------------------------------------
to such term in Regulation Section 1.704-2(i).
"PARTNERSHIP" shall mean Reckson Morris Operating Partnership, L.P., a
-----------
Delaware limited partnership.
"PARTNERSHIP AGREEMENT" shall mean this Agreement of Limited Partnership
---------------------
and the Exhibits and Schedules hereto, and any amendments hereto from time to
time.
"PARTNERSHIP INTEREST" shall mean the ownership interest of a Partner
--------------------
in the Partnership from time to time, including such Partner's Percentage
Interest and Capital Account and any and all other benefits to which the
holder of such a Partnership Interest may be entitled as provided in this
Agreement and under applicable laws, together with all obligations of such
Person to comply with the terms and provisions of this Agreement.
"PARTNERSHIP UNIT" shall mean a fractional, undivided share of the
----------------
Partnership Interests of all Partners issued pursuant to Article 6 hereof;
provided, however, that in the event the General Partner issues classes of
- -------- -------
Partnership Units to Limited Partners other than the OP Units pursuant to
Section 6.4 hereof, the term Partnership Unit shall mean with respect to each
class of Partnership Units, a fractional, undivided share of the Partnership
Interests of all Partners in such class.
"PARTNERSHIP PERCENTAGES" shall mean, in the case of any Partner, a
-----------------------
fraction, expressed as a percentage, the numerator of which is equal to the
number of OP Units owned by such Partner and the denominator of which is
equal to the aggregate number of OP Units owned by all Partners; provided,
--------
however, that in the event the General Partner issues classes of Partnership
- -------
Units to Limited Partners other than OP Units pursuant to Section 6.4 hereof,
the term Partnership Percentages shall mean with respect to each class of
Partnership Units, a fractional, undivided share of the Partnership Interests
of all Partners in such class.
"PARTNERSHIP RECORD DATE" shall mean the record date established by the
-----------------------
General Partner for any particular distribution of Net Cash Flow pursuant to
Article 8 hereof, which record date shall be the same as the record date
established by the General Partner for distribution to its stockholders of
some or all of its portion of such distribution.
"PERCENTAGE INTEREST" shall mean, with respect to any Partner, its
-------------------
interest in the Partnership as determined by dividing the number of OP Units
owned by such Partner by the total number of OP Units then issued and
outstanding; provided, however, that in the event the General Partner issues
-------- -------
classes of Partnership Units other than OP Units, the term Percentage
Interest shall mean with respect to each class of Partnership Units the
number of such class of Partnership Units owned by such Partner divided by
the total number of Partnership Units of such class then issued and
outstanding.
"PERCENTAGE INTEREST" shall mean with respect to any Partner, its
-------------------
interest in the Partnership as determined by dividing the Partnership Units
of each class owned by such Partner by the total number of Partnership Units
in such class then issued and outstanding.
"PERSON" shall mean a natural person, corporation, trust, partnership,
------
estate, unincorporated association or other entity.
"PRE-OFFERING UNIT VALUE" shall mean ($__________) .
-----------------------
"PROFITS OR LOSSES" shall mean, for each fiscal year or other applicable
-----------------
period, an amount equal to the Partnership's net income or loss for such year
or period as determined for Federal income tax purposes by the Accountants,
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) of the Code shall be included in taxable income or
loss), with the following adjustments: (i) by including as an item of gross
income any tax-exempt income received by the Partnership; (ii) by treating as
a deductible expense any expenditure of the Partnership described in Section
705(a)(2)(B) of the Code (including amounts paid or incurred to organize the
Partnership (unless an election is made pursuant to Code Section 709(b)) or
to promote the sale of interests in the Partnership and by treating
deductions for any losses incurred in connection with the sale or exchange of
Partnership property disallowed pursuant to Section 267(a)(1) or Section
707(b) of the Code as expenditures described in Section 705(a)(2) (B) of the
Code); (iii) in lieu of depreciation, depletion, amortization and other cost
recovery deductions taken into account in computing total income or loss,
there shall be taken into account Depreciation; (iv) gain or loss resulting
from any disposition of Partnership property with respect to which gain or
loss is recognized for Federal income tax purposes shall be computed by
reference to the Gross Asset Value of such property rather than its adjusted
tax basis; and (v) in the event of an adjustment of the Gross Asset Value of
any Partnership asset which requires that the Capital Accounts of the
Partnership be adjusted pursuant to Regulation Section 1.704-l(b)(2)(iv)(e),
(f) and (m), the amount of such adjustment is to be taken into account as
additional Profits or Losses.
"PROPERTIES" shall mean those partnerships or properties, as the case
----------
may be, listed on Exhibit C attached hereto in which, pursuant to the
Contribution and Exchange Agreement, the Partners are contributing to the
Partnership, directly or indirectly, all of their right, title and interest
as partners in such partnerships or owners of such properties, as the case
may be.
"RECKSON GROUP" shall mean the General Partner and any Affiliate of the
-------------
General Partner.
"REDEMPTION RIGHTS" shall have the meaning set forth in Section 10.3(a)
-----------------
hereof.
"REGULATIONS" shall mean the Income Tax Regulations promulgated under
-----------
the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"REGULATORY ALLOCATIONS" has the meaning set forth in Section 7.3(g) of
----------------------
this Agreement.
"REIT" shall mean a real estate investment trust under Section 856 of
----
the Code.
"REIT REQUIREMENTS" shall mean any and all requirements that must be met
-----------------
to qualify or continue to qualify as a REIT under the Code and the
Regulations.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
--------------
"TRADING DAY" shall mean a day on which the principal national
-----------
securities exchange on which the Common Stock is listed or admitted to
trading is open for the transaction of business or, if the Common Stock is
not listed or admitted to trading on any national securities exchange, any
day other than a Saturday, a Sunday or a day on which banking institutions in
the State of New York are authorized or obligated by law or executive order
to close.
ARTICLE 2
CONTINUATION OF THE PARTNERSHIP
-------------------------------
2.1 Continuation. The Partners hereby continue the Partnership as a
------------
limited partnership formed under and pursuant to the terms and provisions of
the Act, and the rights and obligations of the Partners shall be as provided
therein except as otherwise expressly provided in this Agreement. The
Partners agree to execute such certificates or documents and do such filings
and recordings and all other acts, including the filing or recording of an
amendment to the Certificate and any assumed name certificates in the
appropriate offices in the State of Delaware and any other applicable
jurisdictions as may be required to comply with applicable law. The Partners
agree that immediately after the admission of one Limited Partner, the
Organizational Limited Partner shall be deemed to have withdrawn from the
Partnership.
2.2 Entire Agreement. Each and every other agreement or understanding,
----------------
oral or written, relating in any way to the formation or operation of the
Partnership including, but not limited to, the Original Agreement, is hereby
superseded in its entirety. From and after the execution of this Agreement,
the same shall constitute the only Agreement of Limited Partnership of the
Partnership except as the same may hereafter be amended pursuant to the
provisions hereof. This Agreement represents the entire agreement and
understanding of the parties hereto concerning the Partnership and their
relationship as Partners, and all prior or concurrent agreements,
understandings, representations and warranties in regard to the subject
matter hereof including, but not limited to, the Original Agreement, are and
have been merged herein.
ARTICLE 3
---------
NAME AND OFFICES
----------------
3.1 Name. The business of the Partnership shall be conducted under the
----
name of "Reckson Morris Operating Partnership, L.P.", or such other name as
the General Partner may from time to time designate upon notice to the
Limited Partners.
3.2 Principal and Registered Offices. The principal place of business
--------------------------------
of the Partnership shall be located at c/o the General Partner at 535
Secaucus Road, Secaucus, NJ 07094, or such other place as the General Partner
may designate. The registered agent of the Partnership shall be The
Corporation Trust Company. The registered office of the Partnership shall be
Corporate Trust Center, 1209 Orange Street, Wilmington, DE 19801. The
General Partner may from time to time designate another registered agent or
another location for the registered office or principal place of business of
the Partnership upon notice to the other 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.
ARTICLE 4
---------
PURPOSE
-------
4.1 Purpose. The purpose and nature of the business to be conducted
-------
by the Partnership is (i) to conduct any business that may be lawfully
conducted by a limited partnership organized pursuant to the Act; provided,
--------
however, that such business shall be limited to and conducted in such a
- -------
manner as to permit the General Partner at all times to be classified as a
REIT for federal income tax purposes, unless the General Partner has
determined to cease to qualify as a REIT, subject to Section 9.3 hereof, (ii)
to enter into any partnership, joint venture or other similar arrangements to
engage in any of the foregoing or the ownership of interests in any entity
engaged in any of the foregoing and (iii) to do anything necessary or
incidental to the foregoing. In connection with the foregoing, and without
limiting the General Partner's right to cease qualifying as a REIT pursuant
to Section 9.3 hereof, the Partners acknowledge that the General Partner's
status as a REIT inures to the benefit of all of the Partners and not solely
the General Partner.
4.2 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; provided, that
--------
the Partnership shall not take, or shall 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 General Partner to
continue to qualify as a REIT, (ii) could subject the General Partner to any
additional taxes under Section 857 or Section 4981 of the Code or any
successor or newly enacted provisions of the Code imposing other additional
taxes or penalties on the General Partner, or (iii) could violate any law or
regulation of any governmental body or agency having jurisdiction over the
General Partner or its securities, unless any such action (or inaction) under
(i), (ii) or (iii) shall have been specifically consented to by the General
Partner in writing.
4.3 Pre-Offering. Prior to the IPO Date, in addition to the purposes
------------
set forth in Section 4.1 a purpose of the Partnership shall be to acquire
industrial properties or interests in entities that own industrial
properties. Such acquisitions shall be made from additional capital
contributed by the General Partner as the Interim Managing General Partner
may direct.
ARTICLE 5
---------
TERM AND FISCAL YEAR
--------------------
5.1 Term. The term of the Partnership commenced on January 6, 1998,
----
the date the Certificate was filed in the appropriate offices in the State of
Delaware, and shall continue until terminated pursuant to the provisions of
Article 14 of this Agreement.
5.2 Fiscal Year. The first fiscal year of the Partnership shall
-----------
terminate on December 31, 1998, and succeeding fiscal years shall terminate
on December 31 of each year thereafter, or such other date as the Partnership
shall terminate as herein provided.
ARTICLE 6
---------
CAPITAL CONTRIBUTIONS, ADDITIONAL FUNDING AND CAPITAL ACCOUNTS
--------------------------------------------------------------
6.1 Capital Contributions of the General Partner and the Interim
------------------------------------------------------------
Managing General Partner.
- ------------------------
(a) Initial Capital Contribution of the General Partner.
---------------------------------------------------
Concurrent with the execution of this Agreement, the General Partner,
pursuant to the Contribution and Exchange Agreement, shall contribute to the
Partnership, directly or indirectly, as its initial Capital Contribution, not
less than $50,000,000 (the "INITIAL CAPITAL CONTRIBUTION"). The General
Partner shall initially be issued OP Units based upon the Pre-Offering Unit
Value and thereafter shall own Partnership Units in the amount set forth
opposite its name on Exhibit A, which number of Partnership Units shall be
adjusted on such Exhibit A from time to time by the General Partner to the
extent necessary to reflect accurately issuances, exchanges, redemptions,
Capital Contributions, or similar events having an effect on a Partner's
Partnership Units. The General Partner shall have the right, before the
Offering, to receive a refund of its Initial Capital Contribution in an
amount (the "REFUND AMOUNT") not to exceed the difference between the amount
of the Initial Capital Contribution and $50,000,000 upon the following terms
and conditions: (i) the Partnership shall have received proceeds from a loan
with a third-party lender or Reckson Operating Partnership, L.P. in an amount
not more than the Refund Amount on terms approved by the Partnership and (ii)
the number of Partnership Units of the General Partner shall be reduced pro
rata based on the amount of the Refund Amount.
(b) Additional Capital Contribution Commitment Of The General
---------------------------------------------------------
Partner Pursuant to the Contribution and Exchange Agreement. Prior to the
- -----------------------------------------------------------
IPO Date, the General Partner intends to contribute to the Partnership such
amounts as are determined by Interim Managing General Partner, up to an
aggregate amount of $150,000,000 less the General Partner's Initial Capital
Contribution reduced by any refund thereof, within thirty (30) days after
receiving notice from Interim Managing General Partner that such amounts are
due. On the date on which any such funds are contributed to the Partnership,
the Partnership shall issue to the General Partner additional Partnership
Units. The number of additional Partnerships Units issued to the General
Partner on each such date (if any) shall be equal to the dollar amount of
funds contributed on that date divided by the Pre-Offering Unit Value.
(c) Capital Contribution of the General Partner Upon Completion
-----------------------------------------------------------
of the Offering. Upon Completion of the Offering, the General Partner shall
- ---------------
contribute the proceeds of the Offering to the Partnership, which proceeds
will be net of the underwriter's discount and other expenses.
Notwithstanding the exact amount of such net proceeds which are contributed
to the Partnership, the General Partner shall be deemed to have made a
Capital Contribution to the Partnership in the amount of the gross proceeds
of the Offering and the Partnership shall be deemed simultaneously to have
reimbursed the General Partner pursuant to Section 9.8(c) hereof for the
amount of any such underwriter's discount or other expenses paid out of the
gross proceeds of the Offering. The General Partner shall have the right, in
its sole and absolute discretion, to treat the contribution to the
Partnership by the General Partner of any proceeds from the Offering in a
manner other than that described in the immediately preceding sentence if,
upon the advice of counsel to the General Partner and/or the Partnership,
such alternative treatment will provide a more favorable federal or state tax
consequence to the General Partner and/or the Partnership without causing any
material adverse federal or state tax consequences to the Limited Partners.
Immediately prior to the Completion of the Offering, the number of OP Units
owned by each Partner shall be adjusted, upward or downward, by multiplying
the number of OP Units that such Partner owns by a fraction the numerator of
which is the aggregate value of all the OP Units owned by the Partners in
accordance with the valuation ascribed to such interest in the Offering and
the denominator of which is the initial offering price of the shares of
Common Stock sold in the IPO. The Partners hereby acknowledge and agree that
upon the Completion of the Offering the aggregate number of additional
Partnership Units to be issued to the General Partner upon Completion of the
Offering shall be exactly equal to the number of shares of Common Stock
issued in the Offering. Upon any subsequent sales of shares of Common Stock
pursuant to the exercise of an over-allotment option in connection with the
Offering, the General Partner shall, subject to and in accordance with the
terms and conditions of this Section 6.1, contribute the proceeds of such
subsequent sale to the Partnership, and shall be issued additional
Partnership Units in an amount exactly equal to the number of shares of
Common Stock subsequently sold in connection with the Offering.
(d) Capital Contribution of the Interim Managing General Partner.
------------------------------------------------------------
Concurrent with the execution of this Agreement, and subject to Section
9.1(b) hereof, the Interim Managing General Partner shall contribute to the
Partnership one dollar ($1.00) as its initial Capital Contribution. The
Interim Managing General Partner shall initially be issued and thereafter
shall own one Partnership Unit. Upon the Completion of the Offering, the
Interim Managing General Partner shall automatically be entitled to a return
of its Capital Contribution, and shall automatically be deemed to have
withdrawn from the Partnership and to have surrendered its Partnership Unit.
(e) Prior to the IPO Date, the General Partner or its affiliates
may contribute additional properties to the Partnership. Upon the completion
of each such contribution, the General Partner shall be issued OP Units equal
in amount to the agreed value of such additional properties (net of any
associated liabilities assumed or taken subject to by the Partnership)
divided by the Pre-Offering Unit Value.
6.2 Capital Contributions of the Limited Partners.
---------------------------------------------
(a) Concurrent with the execution of this Agreement, each Limited
Partner, pursuant to the Contribution and Exchange Agreement, shall
contribute to the Partnership, directly or indirectly, as its initial Capital
Contribution, all of such Limited Partner's right, title and interest in and
to the Properties. Such Properties shall have an agreed fair market value as
of the dates on which they are contributed to the Partnership as determined
in accordance with such Agreement and set forth on Exhibit A hereto. Each
Limited Partner shall initially be issued and thereafter shall own
Partnership Units based upon the Pre-Offering Unit Value in the amount set
forth opposite such Limited Partner's name on Exhibit A, which number of
Partnership Units on such Exhibit A shall be adjusted from time to time by
the General Partner to the extent necessary to reflect accurately exchanges,
redemptions, Capital Contributions, or similar events having an effect on
such Partner's Partnership Units or as required by Article 2 and Section
18.2(b) of the Contribution and Exchange Agreement.
(b) On the date of admission of one or more Limited Partners to
the Partnership, the Organizational Limited Partner shall be entitled to a
return of its Capital Contribution, and shall be deemed to have withdrawn
from the Partnership.
6.3 General Partner Option to Contribute Additional Capital. Subject
-------------------------------------------------------
to Delaware law:
(a) If the Partnership requires funds at any time or from time to
time in excess of funds available to the Partnership through borrowings or
additional Capital Contributions, the General Partner or Affiliates of the
General Partner may, but shall not be required to, borrow such funds from a
financial institution or other lender or through public debt offerings and
lend such funds to the Partnership only on such terms as may be approved by
the Board of Directors of the Interim General Partner. If, notwithstanding
the foregoing, the Partnership requires funds for any proper Partnership
purpose in excess of any other funds anticipated by the General Partner to be
available to the Partnership (including through borrowings and prior Capital
Contributions), or if the General Partner concludes that borrowings are
inappropriate, the General Partner may, but shall not be required to, raise
such additional funds pursuant to the issuance of shares of its Common Stock
(or New Securities subject to Section 6.4(b))(any such issuance which is made
for the purpose of providing additional funds to the Partnership shall be
referred to herein as an "Additional Issuance").
(b) Issuance of New Securities. Following Completion of the
--------------------------
Offering, the General Partner shall not issue any additional shares of Common
Stock (other than shares of Common Stock issued pursuant to Section 10.3
hereof), or rights, options, warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase shares of Common
Stock (collectively, "New Securities"), other than to all holders of shares
of Common Stock, unless (i) the General Partner shall cause the Partnership
to issue to the General Partner 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 are substantially similar to those of the New Securities, and (ii)
the General Partner contributes to the 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 General Partner 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 General Partner corresponding Partnership Interests, so long as
(x) the General Partner concludes in good faith that such issuance is in the
interest of the General Partner and the Partnership (for example, and not by
way of limitation, the issuance of shares of Common Stock and corresponding
Units pursuant to an employee stock purchase plan providing for employee
purchases of shares of Common Stock 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 shares of Common Stock, either at the time of issuance or
at the time of exercise), and (y) the General Partner contributes all
proceeds from such issuance and exercise to the Partnership.
(c) In the event that the General Partner shall issue shares of
Common Stock (and/or pay cash out of the net proceeds of any Additional
Issuance) in connection with any subsequent merger, consolidation or other
acquisition, the General Partner may contribute the shares of stock, assets
and/or other consideration received by the General Partner in connection
therewith to the capital of the Partnership in exchange for Additional
Partnership Units and be issued additional Partnership Units in an amount
exactly equal to the number of shares of Common Stock issued by the General
Partner in connection with such acquisition. The General Partner shall have
the right, in its sole discretion, to treat a contribution to the capital of
the Partnership in a manner other than as described above if, upon the advice
of counsel, such alternative treatment will provide a more favorable federal
state tax consequence to the General Partner and/or the Partnership and will
not cause any material adverse federal or state tax consequences to the
Limited Partners.
(d) If the proceeds actually received and thereafter contributed
to the Partnership by the General Partner pursuant to any Additional Issuance
as described in this Section 6.3 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 General Partner shall be
deemed to have made a Capital Contribution to the Partnership in the amount
of the gross proceeds of such issuance and the Partnership shall be deemed
simultaneously to have reimbursed the General Partner pursuant to Section
9.8(c) hereof for the amount of such underwriter's discount or other
expenses.
6.4 General Partner Option to Issue Additional Partnership Units to
---------------------------------------------------------------
Limited Partners; Issuance of New Securities by the General Partner. Subject
- -------------------------------------------------------------------
to Delaware law and Section 5.2(b) of the Operating Agreement:
(a) At any time after the date hereof without the consent of any
Partner, but subject to the provisions of Section 13.1 hereof, the General
Partner may, upon its determination, which shall be made in its sole and
absolute discretion, cause the Partnership to issue additional Partnership
Units to and admit as a limited partner in the Partnership, any Person (an
"Additional Limited Partner" herein) in exchange for the contribution by such
Person of cash and/or property desirable to further the purposes of the
Partnership under Article 4 hereof.
(b) In the event that additional Partnership Units are issued by
the Partnership pursuant to this Section 6.4, the amount of such Partnership
Units issued to each Additional Limited Partner shall, unless otherwise
determined by the General Partner in the exercise of its sole and absolute
discretion, be fixed by agreement between the General Partner and such
Additional Limited Partner.
(c) The General Partner is hereby authorized to cause the
Partnership from time to time to issue to the Partners (including the General
Partner) or other Persons additional Partnership Units or such other
Partnership Interests in one or more classes, or one or more series of such
classes, with such designations, preferences and relative, participating,
optional or other special rights, powers and duties, including rights, powers
and duties which may be senior, pari passu or junior to OP Units, all as
shall be determined by the General Partner in its sole and absolute
discretion 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
General Partner unless either (A)(1) the additional Partnership Interests are
issued in connection with the issuance of shares of Common Stock or other
shares by the General Partner, which shares have designations, preferences
and other rights such that the economic interests attributed to such shares
are substantially similar to the designations, preferences and other rights
of the additional Partnership Interests issued to the General Partner in
accordance with this Section 6.4, and (2) the General Partner shall make a
Capital Contribution to the Partnership in an amount equal to the net
proceeds raised in connection with the issuance of such shares of the General
Partner, or (B) the additional Partnership Units are issued to all the
Partners in proportion to their respective Percentage Interests.
(d) The General Partner shall be authorized on behalf of each of
the Partners to amend this Agreement to reflect the issuance of Additional
Partnership Units (including, without limitation, the issuance of new classes
of Partnership Units) and/or the admission of any Additional Limited
Partner(s) in accordance with the provisions of this Section 6.4, and the
General Partner shall promptly deliver a copy of such amendment (which, in
the event that new classes of Partnership Units are issued, shall contain the
terms of such new classes of Partnership Units) to each Limited Partner.
Without limiting the foregoing, the General Partner is expressly authorized
to cause the Partnership to issue Partnership Units for less than fair market
value, so long as (x) the General Partner concludes in good faith that such
issuance is in the interest of the General Partner and the Partnership (for
example, and not by way of limitation, the issuance of Partnership Units
pursuant to an employee purchase plan providing for employee purchases of
Partnership Units at a discount from fair market value or employee options
pursuant to the General Partner's Incentive Stock Option Plan that have an
exercise price that is less than the fair market value of the Partnership
Units, either at the time of issuance or at the time of exercise) and (y) the
General Partner contributes all net proceeds from such issuance and exercise
to the Partnership.
6.5 Capital Accounts. A separate capital account (a "Capital Account")
----------------
shall be maintained for each Partner in accordance with the Code and the
Regulations promulgated thereunder including, but not limited to, the rules
regarding the maintenance of partners' Capital Accounts set forth in
Regulation Section 1.704-1. Subject to the immediately preceding sentence,
there shall be credited to each Partner's Capital Account: (i) the amount of
money contributed or deemed contributed by the Partner to the Partnership,
(ii) the Agreed Value of any property contributed by the Partner to the
Partnership, (iii) the amount of any Partnership liabilities assumed by such
Partner (other than liabilities secured by property distributed to such
Partner that such Partner is considered to have assumed or taken subject to
under Section 752 of the Code), and (iv) the Partner's share of Profits.
There shall be charged against each Partner's Capital Account: (i) the amount
of money distributed to the Partner by the Partnership, (ii) the Agreed Value
of any property distributed to the Partner by the Partnership, (iii) the
amount of any liabilities of such Partner assumed by the Partnership (other
than liabilities secured by property contributed to the Partnership by such
Partner that the Partnership is considered to have assumed or taken subject
to pursuant to Section 752 of the Code), and (iv) the Partner's share of
Losses. To the extent a Partner's Capital Account is greater than zero, such
excess is hereinafter referred to as a "positive balance". To the extent a
Partner's Capital Account is less than zero, said amount is hereinafter
referred to as a "deficit balance".
6.6 Limited Liability. Notwithstanding anything in this Agreement to
-----------------
the contrary, the personal liability of a Limited Partner arising out of or
in any manner relating to the Partnership shall be limited to and shall not
exceed such Limited Partner's Capital Contribution made or required to be
made pursuant to this Agreement. No Limited Partner shall have any personal
liability for liabilities or obligations of the Partnership, except to the
extent of its Capital Contribution, as aforesaid.
6.7 Return of Capital. Except as otherwise provided herein, (i) no
-----------------
Partner shall be required to make any further or additional contributions to
the capital of the Partnership or to lend or advance funds to the Partnership
for any purpose and (ii) no Partner shall be entitled to the return of its
capital, except to the extent, if any, that distributions are made or deemed
to be made to such Partner otherwise than out of Profits pursuant to this
Agreement.
6.8 No Interest on Capital Contributions. No interest or additional
------------------------------------
share of Profits shall be paid or credited to the Partners on their Capital
Accounts, or on any undistributed Profits or funds left on deposit with the
Partnership; provided, however, that nothing contained herein shall be
-------- -------
construed to prevent or prohibit the payment of interest on account of loans
made by the Partners to the Partnership. Any loans made to the Partnership
by a Partner shall not increase its Capital Contribution or interest in the
Profits, Losses or Net Cash Flow of the Partnership, but shall be a debt due
from the Partnership and repaid accordingly.
6.9 No Third Party Beneficiary. No creditor or other third party
--------------------------
having dealings with the Partnership shall have the right to enforce the
right or obligation of any Partner to make Capital Contributions or loans or
to pursue any other right or remedy hereunder or at law or in equity, it
being understood and agreed among the parties hereto that the provisions of
this Agreement shall be solely for the benefit of, and may be enforced solely
by, the parties hereto and their respective successors and assigns. None of
the rights or obligations of the Partners herein set forth to make Capital
Contributions or loans to the Partnership shall be deemed an asset of the
Partnership for any purpose by any creditor or other third party, nor may
such rights or obligations be sold, transferred or assigned by the
Partnership or pledged or encumbered by the Partnership to secure any debt or
other obligation of the Partnership or of any of the Partners.
6.10 Incentive Stock Option Plans. The Partners hereby acknowledge that
----------------------------
prior to the date hereof the General Partner has adopted, and the Partners
hereby acknowledge and agree that from and after the date hereof the General
Partner may adopt, without the consent of any Limited Partner, one or more
qualified or non-qualified incentive stock option plans ("Stock Plans")
pursuant to which officers, directors, trustees and/or employees of the
General Partner, the Partnership or any Affiliate of either of them may
acquire shares of Common Stock. On each date on which the General Partner
issues any shares of Common Stock to a person pursuant to a Stock Plan (i)
the consideration paid for each such share of Common Stock shall, as soon as
received by the General Partner, be contributed to the capital of the
Partnership and (ii) the General Partner shall be issued Partnership Units in
an amount equal to that number of Partnership Units which, if such
Partnership Units were redeemed as of their date of issuance by the General
Partner for shares of Common Stock pursuant to Section 10.3 hereof, would
result in the General Partner receiving that number of shares of Common Stock
which are being issued to any such person pursuant to the Stock Plan. For
purposes of this Section 6.10 only, shares of Common Stock issued subject to
forfeiture or other similar restrictions shall be deemed issued upon the
lapse of such restrictions. Notwithstanding anything herein to the contrary,
the mere grant of options to purchase shares of Common Stock pursuant to any
Stock Plan shall not constitute the grant or issuance of shares of Common
Stock for purposes of this Section 6.10.
ARTICLE 7
---------
ALLOCATION OF PROFITS AND LOSSES
--------------------------------
7.1 General Allocation of Profits and Losses. Except as otherwise
----------------------------------------
provided in this Article 7, after giving effect to any and all allocations
set forth in Section 7.3 below, all Profits and Losses of the Partnership
(including all items of income and expense entering into the determination of
such Profits and Losses), for Federal income tax purposes for each fiscal
year of the Partnership, shall be allocated to and among the Partners in such
manner as will cause the positive or negative balance in the Partners'
Capital Accounts to be in the same proportions as the Partners' Percentage
Interests.
7.2 Allocations with Respect to Transferred Interests. Unless
-------------------------------------------------
otherwise required by the Code and/or the Regulations or as agreed to by the
General Partner, in its sole and absolute discretion, any Profits or Losses
allocable to an additional Partnership Interest issued during any year or to
a Partnership Interest which has been transferred during any year shall be
allocated among the Persons who were holders of such Partnership Interest
during such year in the manner described in Section 13.3(c) below.
7.3 Regulatory Allocations.
----------------------
(a) Minimum Gain Chargeback.
-----------------------
(i) Notwithstanding any other provision of this Agreement (except
as provided in subparagraph (ii) below), if there is a net decrease in
Minimum Gain for a Partnership taxable year, each Partner shall be allocated,
before any other allocation of Partnership items for such taxable year, items
of income and gain for such year (and, if necessary, for subsequent years) in
proportion to, and to the extent of, the amount of such Partner's share of
the net decrease in Minimum Gain during such year. The income allocated
pursuant to this Section 7.3(a) in any taxable year shall be determined in
accordance with Regulation Section 1.704-2(b)(6).
(ii) The allocation otherwise required pursuant to Section
7.3(a) shall not apply to a Partner to the extent that: (a) such Partner's
share of the net decrease in Minimum Gain is caused by a guarantee,
refinancing or other change in the instrument evidencing a nonrecourse debt
of the Partnership which causes such debt to become a partially or wholly
recourse debt or a Partner Nonrecourse Debt, and such Partner bears the
economic risk of loss (within the meaning of Regulation Section 1.752-2) for
such changed debt; (b) such Partner's share of the net decrease in Minimum
Gain results from the repayment of a nonrecourse liability of the
Partnership, which repayment is made using funds contributed by such Partner
to the capital of the Partnership; (iii) the IRS, pursuant to Regulation
Section 1.704-2(f)(4), waives the requirement of such allocation in response
to a request for such waiver made by the General Partner on behalf of the
Partnership (which request the General Partner may or may not make, in its
sole discretion, if it determines that the Partnership would be eligible
therefor); or (iv) additional exceptions to the requirement of such
allocation are established by revenue rulings issued by the IRS pursuant to
Regulation Section 1.704-2(f)(5), which exceptions apply to such Partner, as
determined by the General Partner in its sole discretion.
(b) Partner Minimum Gain Chargeback. If there is a net decrease
-------------------------------
for a Partnership taxable year in any Partner Nonrecourse Debt Minimum Gain
of the Partnership, each Partner with a share of such Partner Nonrecourse
Debt Minimum Gain as of the beginning of such year, as determined in
accordance with Regulation Section 1.704-2(i)(5), shall be allocated items of
gross income and gain in the manner and to the extent provided in Regulation
Section 1.704-2(i)(5).
(c) Qualified Income Offset. Notwithstanding any other provision
-----------------------
of this Agreement, if a Partner unexpectedly receives an adjustment,
allocation or distribution described in Regulation Section
1.704-l(b)(2)(ii)(d)(4),(5) or (6), that after giving effect to allocations
under Sections 7.3(a) and 7.3(b), causes or increases an Excess Deficit
Capital Account Balance with respect to such Partner, items of Partnership
gross income and gain shall be specially allocated to such Partner in an
amount and manner sufficient to eliminate such Excess Deficit Capital Account
Balance as quickly as possible.
(d) Gross Income Allocation. If at the end of any Partnership
-----------------------
taxable year, a Partner has an Excess Deficit Capital Account Balance, such
Partner shall be specially allocated items of Partnership gross income or
gain in an amount and manner sufficient to eliminate such Excess Deficit
Capital Account Balance as quickly as possible.
(e) Partner Nonrecourse Debt. Notwithstanding any other provision
------------------------
of this Agreement, any item of Loss that is attributable to a Partner
Nonrecourse Debt shall be allocated to those Partners that bear the economic
risk of loss for such Partner Nonrecourse Debt, and among such Partners in
accordance with the ratios in which they share such economic risk, determined
in accordance with Regulation Section 1.704-2(i).
(f) Interpretation. The foregoing provisions of this Section 7.3
--------------
are intended to comply with Regulation Sections 1.704-1(b) and 1.704-2 and
shall be interpreted consistently with this intention. Any terms used in
such provisions that are not specifically defined in this Agreement shall
have the meaning, if any, given such terms in the Regulations cited above.
(g) Curative Allocations. The allocations set forth in Sections
--------------------
7.3(a)-(e) (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 devise 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
Partner is zero. The General Partner will have discretion to accomplish this
result in any reasonable manner; provided, however, that no allocation
-------- -------
pursuant to this Section 7.3(g) shall cause the Partnership to fail to comply
with the requirements of Regulation Sections 1.704-1(b)(2)(ii)(d), 1.704-
1(b)2(e) or 1.704-2(i).
7.4 Tax Allocations. Except as otherwise provided in this Section 7.4,
---------------
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 Profit or Loss is allocated pursuant to Section 7.3.
Notwithstanding anything contained herein to the contrary, taxable income,
gain, loss and deduction with respect to any Partnership property that is
contributed to the Partnership by a Partner shall be shared among the
Partners for income tax purposes pursuant to Regulations promulgated under
Section 704(c) of the Code, so as to take into account the variation, if any,
between the adjusted tax basis of the property to the Partnership and its
initial Gross Asset Value. With respect to Partnership property that is
initially contributed to the Partnership upon its formation, such variation
between the adjusted tax basis and initial Gross Asset Value shall be taken
into account under the "traditional method" as described in Treasury
Regulation Section 1.704-3(b), unless otherwise determined by the General
Partner and the contributing Partner. With respect to properties subsequently
contributed to the Partnership, the Partnership shall account for such
variation under any method approved under Section 704(c) of the Code and the
applicable regulations as chosen by the General Partner. In the event the
Gross Asset Value of any Partnership asset is adjusted pursuant to
subparagraph (b) of the definition of Gross Asset Value (as provided in
Article 1 of this Agreement), subsequent allocations of tax items with
respect to such asset shall take account of the variation, if any, between
the adjusted tax basis of such asset and its Gross Asset Value in the same
manner as under Section 704(c) of the Code and the applicable Regulations.
7.5 Allocations with Respect to Partnership Units other than OP Units.
-----------------------------------------------------------------
In the event the General Partner issues additional classes of Partnership
Units other than OP Units to Limited Partners, then the General Partner shall
determine, in its sole discretion, the Profits and Losses attributable to
each class and shall allocate to Profits and Losses of each class of
Partnership Units among the Partners in such class in proportion to their
respective Percentage Interests in such class, after giving effect to any and
all special allocations set forth in Sections 7.3 and 7.4 above.
ARTICLE 8
---------
DISTRIBUTIONS
-------------
8.1 Distribution of Net Cash Flow.
-----------------------------
(a) From the date of formation until the IPO Date, quarterly
distributions of annual Net Cash Flow shall be made, to the extent available
and on a non-cumulative basis, in accordance with Article IV of the Operating
Agreement.
(b) After the admission of new partners to the Partnership and
until the IPO Date, distributions of Net Cash Flow shall be made to the
extent available and on a non-cumulative basis in accordance with the
following:
(i) The newly admitted partners shall receive their share of
Net Cash Flow in accordance with their respective Partnership
Percentages.
(ii) The remainder of Net Cash Flow shall be distributed
between Reckson and Morris in accordance with Article IV of the
Operating Agreement. Nothing contained in the Operating Agreement shall
affect the Net Cash Flow distributable to any newly admitted partner.
(c) Subsequent to the IPO Date, distributions shall be made to the
Partners in proportion to their respective Partnership Percentages.
(d) Notwithstanding subparagraphs (b) and (c) of this Section 8.1,
if Net Cash Flow has arisen pursuant to a Liquidation, such Net Cash Flow
shall be distributed to and among the Partners as provided in Section 14.4.
(e) Net Cash Flow shall be distributed to the Partners in such
amounts and at such intervals as the General Partner, in its sole discretion,
may determine, but no less frequently than quarterly. With respect to each
and every distribution of Net Cash Flow to the Partners hereunder, the
General Partner shall distribute such Net Cash Flow only to those Partners
who are Units were outstanding during the period to which such distribution
relates and, with respect to those Partners who were issued additional
Partnership Units during such period, the General Partner shall distribute
Net Cash Flow (i) on a pro-rated basis based upon the number of days during
such period that such Partners held such additional Partnership Units or (ii)
on such other reasonable basis as determined by the General Partner in its
sole discretion; provided, however, in no event may a Partner receive a
-------- -------
distribution of Net Cash Flow with respect to any particular Partnership Unit
if such Partner is entitled to receive a distribution out of such Net Cash
Flow with respect to one or more shares of Common Stock for which such
Partnership Unit has been redeemed. Notwithstanding the foregoing, the
General Partner shall take such reasonable efforts, as determined by it in
its sole and absolute discretion and consistent with its qualification as a
REIT, to cause the Partnership to distribute sufficient amounts to enable the
General Partner to pay stockholder dividends that will (i) satisfy the REIT
Requirements and (ii) avoid the imposition of any federal income or excise
tax on the General Partner resulting from its failure to pay adequate
dividends to its shareholders.
8.2 Distributions in Kind. No right is given to any Partner to demand
---------------------
and receive property or cash. The General Partner may determine, in its sole
and absolute discretion, to make a distribution in kind to the Partners of
Partnership assets, and such assets shall be distributed in such a fashion as
to ensure that the fair market value of such assets is distributed and
allocated in accordance with Section 8.1 hereof.
8.3 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 or reasonably believes 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 Code Sections 1441, 1442, 1445 or 1446. Any and all
amounts withheld pursuant to this Section 8.3 with respect to any allocation,
payment or distribution to any Partner hereunder shall be treated as amounts
distributed to such Partner pursuant to Section 8.1 hereof for all purposes
under this Agreement. If any amount is withheld by the Partnership pursuant
to this Section 8.3 with respect to a particular Partner and such amount
would not have been distributed to such Partner pursuant to Section 8.1
hereof at any time on or before the date it is withheld, then such Partner
shall contribute to the capital of the Partnership an amount equal to the
amount so withheld as soon as practicable after the delivery by the General
Partner to such Partner of a notice requesting such contribution to the
Partnership. The General Partner, on behalf of the Partnership, shall have
the right to offset any obligation of a Partner to contribute additional
funds to the Partnership pursuant to the immediately preceding sentence of
this Section 8.3 against any future distributions due to such Partner under
Section 8.1 hereof.
8.4 Distributions with Respect to Partnership Units other than OP
-------------------------------------------------------------
Units. Notwithstanding the foregoing provisions of this Article 8, in the
- -----
event the General Partner issues additional classes of Partnership Units
other than OP Units to Limited Partners, then the General Partner shall
determine, in its sole discretion, the amount of distributions of Net Cash
Flow attributable to each class and shall distribute the Net Cash Flow
attributable to each class of Partnership Units other than OP Units among the
Partners in such class in proportion to their respective Percentage Interests
in such class or otherwise required pursuant to the terms of this Agreement.
ARTICLE 9
---------
MANAGEMENT
----------
9.1 Management of Partnership Affairs.
---------------------------------
(a) General Partner. Except as otherwise specifically provided
---------------
in this Agreement, and subject to Section 9.1(b) below, the General Partner
shall have full, exclusive and complete responsibility and discretion in the
management and control of the business and affairs of the Partnership and
shall make all decisions affecting the Partnership's business and affairs.
Subject to the foregoing, the General Partner shall have all the rights,
powers and obligations of a general partner as provided in the Act, and,
except as otherwise provided, any action taken by the General Partner (in its
capacity as such) shall constitute the act of and serve to legally bind the
Partnership. Persons dealing with the Partnership shall be entitled to rely
conclusively on the power and authority of the General Partner as set forth
in this Agreement.
(b) Interim Managing General Partner. From the date hereof until
--------------------------------
Completion of the Offering, the Interim Managing General Partner shall,
subject to the rights accorded the Limited Partners hereunder and under the
Act, have full, exclusive and complete responsibility and discretion in the
management and control of the business and affairs of the Partnership and
shall make all decisions affecting the Partnership's business and affairs to
the extent otherwise granted to the General Partner hereunder, and the
General Partner shall have no such rights. Subject to the foregoing, the
Interim Managing General Partner shall have all the rights, powers and
obligations of a general partner as provided in the Act, and, except as
otherwise provided, any action taken by the Interim Managing General Partner
(in its capacity as such) shall constitute the act of and serve to legally
bind the Partnership. Persons dealing with the Partnership shall be entitled
to rely conclusively on the power and authority of the Interim Managing
General Partner as set forth in this Agreement. The Partners agree that
immediately upon the Completion of the Offering, the Interim Managing General
Partner shall automatically be deemed to have withdrawn from the Partnership,
and the General Partner shall be entitled to exercise in full the rights and
responsibilities hereunder accorded to the General Partner that it would have
received but for the rights accorded the Interim Managing General Partner
under this Section 9.1(b). Until the Completion of the Offering, references
to the General Partner in this Agreement shall be deemed to be references to
the Interim Managing General Partner, unless otherwise required by the
context thereof; provided, however, that references to the General Partner
-------- -------
herein, including, without limitation, those set forth in Articles 6, 7 and 8
and Section 10.3 hereof, shall always refer with respect to economic issues
(as opposed to management issues) to the General Partner.
9.2 Powers and Authorities of the General Partner. Except as otherwise
---------------------------------------------
specifically provided in this Agreement, and subject to Sections 9.1(b) and
9.3 hereof, the General Partner is hereby granted the right, power and
authority to do on behalf of the Partnership all things which, in its best
business judgment, are necessary, proper or desirable to carry out its duties
and responsibilities, including but not limited to, the right, power and
authority:
(a) To manage, control, invest, reinvest, acquire by purchase,
lease or otherwise, develop, expand, sell, contract to purchase or sell,
grant, obtain or exercise options to purchase, options to sell or conversion
rights, assign, transfer, convey, deliver, endorse, exchange, pledge,
mortgage, abandon, improve, repair, maintain, insure, lease for any term and
otherwise deal with any and all property of whatsoever kind and nature, and
wheresoever situated, in furtherance of the purposes of the Partnership;
(b) To acquire, directly or indirectly, interests in real estate
of any kind and of any type, and any and all kinds of interests therein, and
to determine the manner in which title thereto is to be held; to manage,
insure against loss, protect and subdivide any of the real estate, interests
therein or parts thereof; to improve, develop or redevelop and expand any
such real estate; to participate in the ownership and development of any
property; to dedicate for public use, to vacate any subdivisions or parts
thereof, to resubdivide, to contract to sell, to grant options to purchase or
lease, to sell on any terms; to convey, to mortgage, pledge or otherwise
encumber said property, or any part thereof; to lease said property or any
part thereof from time to time, upon any terms and for any period of time,
and to renew or extend leases, to amend, change or modify the terms and
provisions of any leases and to grant options to lease and options to renew
leases and options to purchase; to partition or to exchange said real
property, or any part thereof, for other real or personal property; to grant
easements or charges of any kind; to release, convey or assign any right,
title or interest in or about or easement appurtenant to said property or any
part thereof; to construct and reconstruct, remodel, alter, repair, add to or
take from buildings on said premises; to insure any Person having an interest
in or responsibility for the care, management or repair of such property; to
direct the trustee of any land trust to mortgage, lease, convey or contract
to convey the real estate held in such land trust or to execute and deliver
deeds, mortgages, notes, and any and all documents pertaining to the property
subject to such land trust or in any matter regarding such trust; to execute
assignments of all or any part of the beneficial interest in such land trust;
(c) To employ, engage or contract with or dismiss from employment
or engagement Persons to the extent deemed necessary by the General Partner
for the operation and management of the Partnership business, including but
not limited to, contractors, subcontractors, engineers, architects,
surveyors, mechanics, consultants, accountants, attorneys, insurance brokers,
real estate brokers and others;
(d) To enter into contracts on behalf of the Partnership;
(e) To borrow money, procure loans and advances from any Person
for Partnership purposes, and to apply for and secure, from any Person,
credit or accommodations; to contract liabilities and obligations, direct or
contingent and of every kind and nature with or without security; and to
repay, discharge, settle, adjust, compromise or liquidate any such loan,
advance, credit, obligation or liability;
(f) To pledge, hypothecate, mortgage, assign, deposit, deliver,
enter into sale and leaseback arrangements or otherwise give as security or
as additional or substitute security, or for sale or other disposition any
and all Partnership property, tangible or intangible, including, but not
limited to, real estate and beneficial interests in land trusts, and to make
substitutions thereof, and to receive any proceeds thereof upon the release
or surrender thereof; to sign, execute and deliver any and all assignments,
deeds and other contracts and instruments in writing; to authorize, give,
make, procure, accept and receive moneys, payments, property, notices,
demands, vouchers, receipts, releases, compromises and adjustments; to waive
notices, demands, protests and authorize and execute waivers of every kind
and nature; to enter into, make, execute, deliver and receive written
agreements, undertakings and instruments of every kind and nature; to give
oral instructions and make oral agreements; and generally to do any and all
other acts and things incidental to any of the foregoing or with reference to
any dealings or transactions which any attorney may deem necessary, proper or
advisable;
(g) To acquire and enter into any contract of insurance which the
General Partner deems necessary or appropriate for the protection of the
Partnership, for the conservation of the Partnership's assets or for any
purpose convenient or beneficial to the Partnership;
(h) To conduct any and all banking transactions on behalf of the
Partnership; to adjust and settle checking, savings, and other accounts with
such institutions as the General Partner shall deem appropriate; to draw,
sign, execute, accept, endorse, guarantee, deliver, receive and pay any
checks, drafts, bills of exchange, acceptances, notes, obligations,
undertakings and other instruments for or relating to the payment of money
in, into, or from any account in the Partnership's name; to execute, procure,
consent to and authorize extensions and renewals of the same; to make
deposits and withdraw the same and to negotiate or discount commercial paper,
acceptances, negotiable instruments, bills of exchange and dollar drafts;
(i) To demand, sue for, receive, and otherwise take steps to
collect or recover all debts, rents, proceeds, interests, dividends, goods,
chattels, income from property, damages and all other property, to which the
Partnership may be entitled or which are or may become due to the Partnership
from any Person; to commence, prosecute or enforce, or to defend answer or
oppose, contest and abandon all legal proceedings in which the Partnership is
or may hereafter be interested; and to settle, compromise or submit to
arbitration any accounts, debts, claims, disputes and matters which may arise
between the Partnership and any other Person and to grant an extension of
time for the payment or satisfaction thereof on any terms, with or without
security;
(j) To make arrangements for financing, including the taking of
all action deemed necessary or appropriate by the General Partner to cause
any approved loans to be closed;
(k) To take all reasonable measures necessary to insure compliance
by the Partnership with applicable arrangements, and other contractual
obligations and arrangements entered into by the Partnership from time to
including periodic reports as required to lenders and using all due diligence
to insure that the Partnership is in compliance with its contractual
obligations;
(l) To maintain the Partnership's books and records; and
(m) To prepare and deliver, or cause to be prepared and delivered
by the Partnership's Accountants, all financial and other reports with
respect to the operations of the Partnership, and preparation and filing of
all Federal and state tax returns and reports.
Except as otherwise provided herein, to the extent the duties of the General
Partner require expenditures of funds to be paid to third parties, the
General Partner shall not have any obligations hereunder except to the extent
that Partnership funds are reasonably available to it for the performance of
such duties, and nothing herein contained shall be deemed to authorize or
require the General Partner, in its capacity as such, to expend its
individual funds for payment to third parties or to undertake any individual
liability or obligation on behalf of the Partnership.
9.3 Major Decisions. During the three-year period following Completion
---------------
of the Offering, the General Partner shall not, without the prior written
consent of holders of at least seventy-five percent (75%) of the Partnership
Units taken as a single class, on behalf of the Partnership, undertake any of
the following actions:
(a) Cause or permit the merger of the Partnership into any Person
pursuant to a transaction in which the Partnership is not the surviving
entity, or take any other action which may have the effect of the foregoing;
(b) Dissolve, liquidate or wind-up the Partnership;
(c) Convey or otherwise transfer all or substantially all of the
Partnership's assets in one or a series of related transactions; or
(d) Cause or permit the General Partner to cease to qualify as a
REIT, or take any other action which may have the effect of the foregoing.
Upon the expiration of the three-year period referenced above, such
75% shall be reduced to 50%.
9.4 Restrictions on General Partner's Authority.
-------------------------------------------
(a) The General Partner may not take any action in contravention
of this Agreement, including, without limitation:
(i) Take any action that would make it impossible to carry
on the ordinary business of the Partnership, except as otherwise
provided in this Agreement;
(ii) Admit a Person as a Partner, except as otherwise
provided in this Agreement;
(iii) Perform any act that would subject a Limited Partner to
liability as a general partner in any jurisdiction or any other
liability except as provided herein or under the Act; or
(iv) Enter into any contract, mortgage, loan or other
agreement that prohibits or restricts, or has the effect of prohibiting
or restricting, the ability of a Limited Partner to exercise its
Redemption Rights in full, except with the written consent of such
Limited Partner.
(b) The General Partner may not, without the consent of all of the
Limited Partners, change its policy of holding its assets and conducting its
business solely through the Partnership.
9.5 Engagements by the Partnership. The General Partner may engage,
------------------------------
on behalf and at the expense of the Partnership, such professional persons,
firms or corporations as the General Partner in its reasonable judgment shall
deem advisable for the conduct and operation of the business of the
Partnership, including, without limitation, brokers, mortgage bankers,
lawyers, accountants, architects, engineers, consultants, contractors and
purveyors of other such services for the Partnership on such terms and for
such compensation or costs as the General Partner, in its reasonable
judgment, shall determine.
9.6 Engagement of Affiliates. The General Partner may, on behalf and
------------------------
at the expense of the Partnership, engage the General Partner or a firm in
which the General Partner, a Limited Partner, or a Partner, officer,
director, stockholder or Affiliate of any of them, has an interest, to render
services to the Partnership and/or the assets of the Partnership, provided
--------
that the fees or other compensation payable for such services are
specifically authorized by the terms of this Agreement or are comparable to
those prevailing in arm's-length transactions for similar services and are
approved by the Board of Directors.
9.7 Liability of the General Partner. The General Partner and its
--------------------------------
Affiliates, officers, directors, agents and employees shall not be liable,
responsible or accountable in damages or otherwise to the Partnership or any
of the Partners or their successors or assigns for any acts or omissions
performed or omitted within the scope of its authority as General Partner, or
otherwise conferred on the General Partner and such Affiliates, officers,
directors, agents and employees by this Agreement, provided that the General
--------
Partner or such Affiliates, officers, directors, agents or employees shall
not have acted in bad faith and shall not be guilty of willful misconduct or
gross negligence.
9.8 Reimbursement of Certain Expenses of the General Partner.
--------------------------------------------------------
(a) Except as provided in this Section 9.8 and elsewhere in this
Agreement (including the provisions of Articles 7 and 8 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 the General Partner may determine in its sole and
absolute discretion, for all expenses it incurs relating to the ownership
and operation of, or for the benefit of, the Partnership, including without
limitation, any expenses incurred by the General Partner in connection with
the management by the General Partner of any property owned by the
Partnership or any subsidiary of the Partnership; provided, however, 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. The Limited Partners
acknowledge that the General Partner's sole business is the ownership of
interests in and operation of the Partnership and that all of the General
Partner's expenses are incurred for the benefit of the Partnership.
(c) In accordance with the provisions of Sections 6.1, 6.3 and
6.4, the General Partner shall be deemed to be reimbursed for all expenses
it incurs relating to the Offering and any other offering and/or issuance of
Additional Partnership Units, Partnership Interests and/or Common Stock as
described therein.
9.9 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 as a General Partner and the management of the business
of the Partnership, and such activities as are incidental to same. The
General Partner shall not, directly or indirectly, participate in or
otherwise acquire any interest in any real or personal property, except its
Partnership Interest as a General Partner and as otherwise provided in this
Agreement, and other than such shortterm liquid investments, bank accounts or
similar instruments as it deems necessary to carry out its responsibilities
contemplated under this Agreement.
9.10 Operation in Accordance with REIT Requirements. Subject to
----------------------------------------------
Section 9.3 hereof, the Partners acknowledge and agree that the Partnership
shall be operated in a manner that will enable the General Partner to (i)
satisfy the REIT Requirements and (ii) avoid the imposition of any federal
income or excise tax liability on the General Partner. The Partnership shall
avoid taking any action which would result in the General Partner ceasing to
satisfy the REIT Requirements or would result in the imposition of any
federal income or excise tax liability on the General Partner.
9.11 Title Holder. To the extent allowable under applicable law, title
------------
to all or any part of the properties of the Partnership may be held in the
name of the Partnership or any other individual, corporation, partnership,
trust or otherwise, 100% of the beneficial interest in which shall at all
times be vested in the Partnership. Any such title holder shall perform any
and all of its respective functions to the extent and upon such terms and
conditions as may be determined from time to time by the General Partner.
ARTICLE 10
----------
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
------------------------------------------
10.1 No Participation in Management of Partnership; Rights of Limited
----------------------------------------------------------------
Partners to Certain Documents.
- -----------------------------
(a) The Limited Partners shall have such rights as are enumerated
as rights of limited partners under the Act. The Limited Partners, in such
capacity, shall not take part in, or interfere in any manner, with the
conduct or control of the Partnership's business and shall have no right or
authority to act for or bind the Partnership, said powers being vested solely
and exclusively in the General Partner. Except as specifically set forth in
Section 9.3 or otherwise in this Agreement, the Limited Partners, in their
capacities as such, shall not have any right or power whatsoever to take any
action with respect to the conduct or control of the Partnership or its
business including, but not limited to, any right to vote on, or otherwise
approve, any matters or decisions, whether material, major or otherwise, in
connection with the business of the Partnership.
(b) In addition to any other rights provided in this Agreement or
by the Act, and except as limited by Section 10.1(c) below, 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:
(i) to obtain a copy of the most recent annual and quarterly
reports filed with the Securities and Exchange Commission by the General
Partner pursuant to the Securities Exchange Act of 1934, as amended, and
each report sent to the stockholders of the General Partner;
(ii) to obtain a copy of the Partnership's federal, state and
local income tax returns for each fiscal year of the Partnership;
(iii) to obtain a current list of the name and last known
business, residence or mailing address of each Partner;
(iv) 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
(v) 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.
(c) Notwithstanding any other provisions of Section 10.1(b)
hereof, 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 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 the General Partner or (ii) the
Partnership or the General Partner is required by law or by agreements with
unaffiliated third parties to keep confidential.
10.2 Withdrawal, Retirement, Death, Incompetency, Insolvency or
----------------------------------------------------------
Dissolution of a Limited Partner. A Limited Partner shall have no right to
- --------------------------------
withdraw, retire or resign from the Partnership. The death, incompetency,
insolvency or dissolution of a Limited Partner shall not terminate the
Partnership. Upon the death of a Limited Partner, his or her executor,
administrator or successor in interest shall have all of the rights and
duties of a Limited Partner for the purpose of settling his or her estate.
10.3 Redemption Rights.
-----------------
(a) Grant of Rights. The General Partner does hereby grant to the
---------------
Limited Partners and the Limited Partners do hereby accept the right, but not
the obligation (such right shall be referred to hereinafter sometimes as the
"Redemption Rights"), to require the Partnership subsequent to the Offering
to redeem all or part of their Partnership Units for cash, at any time or
from time to time after the date which is the later of one (1) year after the
-----
Offering or one (1) year after the original issuance by the Partnership to
any Limited Partner of such Partnership Units, on the terms and subject to
the conditions and restrictions contained in this Section 10.3.
(b) Delivery of Exercise Notices. Any one or more Limited
----------------------------
Partners ("Exercising Partners") may, subject to the limitations set forth in
this Section 10.3, deliver to the General Partner an Exercise Notice pursuant
to which such Exercising Partners elect to exercise their Redemption Rights
with respect to all or any portion of their Partnership Units. The Exercise
Notice shall specify the specific number of Partnership Units which the
Limited Partner intends to require the Partnership to redeem. Only whole
numbers of Partnership Units may be redeemed. Once delivered, the Exercise
Notice shall be irrevocable.
(c) Assumption by General Partner. Notwithstanding anything
-----------------------------
contained herein to the contrary, the General Partner may, in its sole and
absolute discretion, assume directly the obligation with respect to and
satisfy an Exercising Partner's exercise of a Redemption Right by paying to
the Exercising Partner, at the General Partner's election, shares of Common
Stock and/or cash, as determined in accordance with the provisions of Section
10.3(e) below, whereupon the General Partner shall acquire the Offered Units
and shall be treated for all purposes of this Agreement as the owner of such
Offered Units. In the event the General Partner shall exercise its right to
satisfy the Redemption Right in the manner described in the preceding
sentence, the Partnership shall have no obligation to pay any amount to the
Exercising Partner with respect to such Exercising Partner's exercise of the
Redemption Right, and each of the Exercising Partner, the Partnership and the
General Partner shall treat the transaction between the General Partner and
the Exercising Partner as a sale of the Offered Units to the General Partner
for federal income tax purposes.
(d) Limitation on Exercise of Redemption Rights. Redemption Rights
-------------------------------------------
may be exercised at any time and from time to time after the date which is
the later of one (1) year after the Offering or one (1) year after the
-----
original issuance by the Partnership to any Limited Partner of such
Partnership Units, subject to the following limitations:
(i) A Limited Partner may not exercise its Redemption Rights
pursuant to any one particular Exercise Notice for less than One
Thousand (1,000) Partnership Units or, if such Limited Partner holds
less than One Thousand (1,000) Partnership Units, all of the Partnership
Units held by such Limited Partner;
(ii) A Limited Partner shall not have the right to exercise
its Redemption Rights hereunder if, in the opinion of counsel selected
by the General Partner, in its sole and absolute discretion, were the
General Partner to exercise its right to acquire the Offered Units for
shares of its Common Stock pursuant to Section 10.3(e), the issuance of
such shares of Common Stock may or would (A) violate the General
Partner's Articles of Incorporation, as amended from time to time, or
cause some of the shares of Common Stock to be "Excess Stock" as defined
in such Articles of Incorporation, (B) cause the General Partner to fail
any one or more of the REIT Requirements or (C) constitute a violation
of applicable securities laws; and
(iii) Each Limited Partner acknowledges and agrees that the
issuance of shares of Common Stock in connection with the exercise of
the Redemption Rights will not be registered under the Securities Act or
any state securities laws. Accordingly, shares of Common Stock issued
to such Limited Partner may be required to be held indefinitely and the
General Partner shall have no obligation to register such shares under
the Securities Act or any state securities laws unless required to do so
pursuant to a separate written agreement entered into by the General
Partner at the time of the issuance. In addition, such Limited Partner
will be required to meet such other requirements and to provide such
other information and representations as the General Partner may
require, which are required in the opinion of its counsel to lawfully
allow it to issue such shares without registration under the Securities
Act and any applicable state securities laws. Each Limited Partner
acknowledges that the certificates representing shares of Common Stock
issued will also bear a legend with respect to any restrictions on
transfer required in the opinion of counsel for the General Partner.
(e) Computation of Number of Exchange Shares and/or Cash To Be
----------------------------------------------------------
Paid. Each Partnership Unit which is to be redeemed for cash shall be
- ----
redeemed for an amount of cash equal to the Current Per Share Market Price
(determined as of the Trading Day immediately preceding the date upon which
the closing of the redemption of Offered Units is to occur). Notwithstanding
anything contained herein to the contrary, the General Partner, in its sole
and absolute discretion, shall have the right either (i) to deliver shares of
Common Stock to each Exercising Partner in lieu of all or any portion of the
cash requested by such Exercising Partner, the number of which shares of
Common Stock shall be equal to one per Partnership Unit or (ii) to cause the
Partnership to pay cash to each Exercising Partner in lieu of all or any
portion of the number of shares of Common Stock requested by such Exercising
Partner.
(f) Closing; Delivery of Election Notice. The closing of the
------------------------------------
redemption of Offered Units shall, unless otherwise mutually agreed, be held
at the principal offices of the General Partner, on the date agreed to by the
General Partner and the Exercising Partners, which date shall in no event be
later than: (i) ten (10) business days after the date of delivery of the
Exercise Notice to the General Partner or (ii) the first date upon which all
legal and other conditions with respect to such redemption have been
satisfied (which shall include the expiration or termination of any
applicable waiting periods).
(g) Closing Deliveries. At the closing of the redemption of
------------------
Offered Units, (i) the Exercising Partners shall execute and deliver (A)
proper instruments of transfer and assignment of the Offered Units and (B)
representations and warranties with respect to their due authority to sell
all of the right, title and interest in and to such Offered Units to the
General Partner and, with respect to the status of the Offered Units, that
such Offered Units are free and clear of all liens, claims and encumbrances
whatsoever, and (ii) the General Partner shall (A) if shares of Common Stock
are to be issued and the shares of Common Stock have an aggregate value
(based upon the Current Per Share Market Price) of in excess of $1,000,000,
execute and deliver representations and warranties with respect to its due
authority to issue the shares of Common Stock to be received in the exchange,
and deliver an opinion of counsel for the General Partner, reasonably
satisfactory to the Exercising Partners, to the effect that such shares of
Common Stock have been duly authorized, are validly issued, fully-paid and
nonassessable; and/or (B) if cash is to be paid for Partnership Units,
deliver a check in the amount of any cash due to the Exercising Partner(s) at
such closing. If shares of Common Stock are to be issued, the General
Partner shall deliver a stock certificate or certificates evidencing the
shares of Common Stock to be issued and registered in the names of the
Exercising Partners or their designees.
(h) Term of Rights. Unless sooner terminated, the rights of the
--------------
parties with respect to the Redemption Rights shall commence as of the later
of the Offering and the date which is one (1) year after the date of the
issuance of the Partnership Units and lapse for all purposes and in all
respects upon the termination of the Partnership; provided, however, that the
-------- -------
parties hereto shall continue to be bound by an Exercise Notice delivered to
the General Partner prior to such termination.
(i) Representations and Warranties of the General Partner. The
-----------------------------------------------------
General Partner represents and warrants, without time limit, that any Shares
of Common Stock issued in exchange for Partnership Units pursuant to this
Article X shall be duly authorized and validly issued and fully paid and non-
assessable and, in the event that the shares of Common Stock to be issued
have an aggregate value in excess of $1,000,000, shall be accompanied by an
opinion of counsel in form and substance reasonably acceptable to the
Exercising Partners.
(j) Covenants of the General Partner. To facilitate the General
--------------------------------
Partner's ability to fully perform its obligations hereunder, the General
Partner covenants and agrees as follows:
(i) At all times during the pendency of the Redemption
Rights, the General Partner shall reserve for issuance such number of
shares of Common Stock as may be necessary to enable the General Partner
to issue such shares in full exchange for all Partnership Units held by
the Limited Partners which are from time to time issued and outstanding;
(ii) During the pendency of the Redemption Rights, each
Limited Partner shall receive in a timely manner all reports and/or
other communications transmitted from time to time by the General
Partner to its stockholders generally; and
(iii) In case the General Partner shall issue rights or
warrants to all holders of shares of its Common Stock entitling them to
subscribe for or purchase shares of Common Stock at a price per share
less than the Current Per Share Market Price as of the date immediately
prior to the date of such issuance, the General Partner shall also issue
to each holder of a Partnership Unit such number of rights or warrants,
as the case may be, as he would have been entitled to receive had he
required the Partnership to redeem his Partnership Units immediately
prior to the record date for such issuance by the General Partner.
(iv) In case the outstanding shares of Common Stock shall be
subdivided into a greater number of shares, the number of shares of
Common Stock which the General Partner in its absolute discretion may
deliver in return for any Offered Unit as provided in Section 10.3(e)
shall be increased proportionately, and, conversely, in case outstanding
shares of Common Stock each shall be combined into a smaller number of
shares, the number of shares of Common Stock which the General Partner
in its absolute discretion may deliver in return for any Offered Unit as
provided in Section 10.3(e) shall be reduced proportionately, such
increase or reduction as the case may be, to become effective
immediately after the opening of business on the Trading Day following
the day upon which such subdivision or combination becomes effective.
(v) In case shares of Common Stock shall be changed into the
same or a different number of shares of any class or classes of shares
of beneficial interest, whether by capital reorganization,
reclassification or otherwise (other than a subdivision or combination
of shares or a stock dividend described in Section 10.3(i)(iv) above)
then and in each such event the Limited Partners shall have the right
thereafter to require the Partnership to redeem their Partnership Units
for the kind and amount of shares and other securities and property
which would have been received upon such reorganization,
reclassification or other change by holders of the number of shares of
Common Stock for which the Partnership Units might have been redeemed
immediately prior to such reorganization, reclassification or change.
(vi) The General Partner may, but shall not be required to,
make such adjustments to the number of shares of Common Stock issuable
upon redemption of a Partnership Unit, in addition to those required by
paragraphs (iii), (iv) and (v) of this Section 10.3(i), as the Board of
Directors considers to be advisable in order that any event treated for
Federal income tax purposes as a dividend of stock or stock rights shall
not be taxable to the recipients. The Board of Directors shall have the
power to resolve any ambiguity or correct any error in the adjustments
made pursuant to this Section 10.3(i) and its actions in so doing shall
be final and conclusive.
(k) Limited Partners' Covenant. Each Limited Partner covenants
--------------------------
and agrees with the General Partner that all Offered Units tendered to the
General Partner in accordance with the exercise of Redemption Rights herein
provided shall be delivered to the General Partner free and clear of all
liens, claims and encumbrances whatsoever and should any such liens, claims
and/or encumbrances exist or arise with respect to such Offered Units, the
General Partner shall be under no obligation to acquire the same. Each
Limited Partner further agrees that, in the event any state or local property
transfer tax is payable as a result of the transfer of its Offered Units to
the General Partner (or its designee), such Limited Partner shall assume and
pay such transfer tax.
ARTICLE 11
----------
BANKING, RECORDS AND TAX MATTERS
--------------------------------
11.1 Partnership Funds. All funds of the Partnership shall be
-----------------
deposited in its name in accounts (with banks, "money-market funds," or
securities of the United States government or like investment or depository
media) designated by the General Partner, and the General Partner or its
designees shall have the right to draw checks or other orders of withdrawal
thereon and make, deliver, accept and endorse negotiable instruments in
connection with the Partnership business.
11.2 Books and Records. The following books, records, and accounts
-----------------
shall be maintained by the Partnership, showing its assets, liabilities,
transactions, and financial condition: a current list of the full name and
last known address of each Partner, separately identifying the General and
Limited Partners and set forth in alphabetical order and setting forth the
amount of cash or a description and statement of the Agreed Value of other
property contributed or agreed to be contributed by each partner; the date on
which each became a Partner; a copy of the Certificate and all amendments
thereto; copies of the Partnership's federal, state and local income tax
returns and reports, if any, for the six most recent years; copies of this
Agreement and any amendments thereto; and copies of any financial statements
of the Partnership for the three most recent years. The Partnership's books
shall be maintained at the principal office of the Partnership. Each Partner
shall have the right to inspect and copy such materials at all reasonable
times and during ordinary business hours. The General Partner is not
required to deliver to any Limited Partner copies of the Certificate or any
amendments thereto, unless requested by such Limited Partner.
11.3 Financial Statements. Within ninety-five (95) days after the
--------------------
close of each fiscal year of the Partnership, the General Partner shall cause
to be prepared (at the Partnership's expense) and furnished to each Person
who was a Partner during the fiscal year then ended, a balance sheet of the
Partnership as of the close of such fiscal year and statements of income or
loss, and Net Cash Flow, if any. Such statements shall be prepared in
accordance with generally accepted accounting principles unless such
certification is waived, in writing, by all of the Partners.
11.4 Tax Returns. The General Partner shall cause to be prepared (at
-----------
the Partnership's expense) a United States Partnership Return of Income and
cause to be furnished to each Person who was a Partner during the fiscal year
a schedule (a "K-1 Schedule") of each such Partner's share of income,
credits, and deductions on the form then prescribed by the IRS. All elections
and options available to, or determinations as to items of income or expense
of, the Partnership for federal or state income tax purposes shall be taken,
rejected or made by the Partnership in the sole discretion of the General
Partner.
11.5 Section 754 Matters. If so requested by any Limited Partner or
-------------------
otherwise in its absolute discretion, the General Partner, on behalf of the
Partnership, shall file an election under Section 754 of the Code in
accordance with the procedures set forth in the applicable Regulations
promulgated thereunder, which shall be effective beginning with the first
fiscal year of the Partnership with respect to which the Partnership is
eligible to make such election, which election, for such fiscal year, may not
be revoked for any reason.
11.6 Tax Matter Partners. The General Partner is hereby appointed the
-------------------
"tax matters partner" of the Partnership for all purposes pursuant to
Sections 6221-6231 of the Code. The Partnership shall reimburse the tax
matters partner for any and all out-of-pocket costs and expenses (including
attorneys' and accountants' fees) incurred or sustained by it in its capacity
as tax matters partner. The Partnership shall indemnify, defend and hold the
tax matters partner harmless from and against any loss, liability, damage,
cost or expense (including attorneys' and accountants' fees) sustained or
incurred as a result of any act or decision concerning the Partnership tax
matters and within the scope of its responsibility as tax matters partner.
11.7 Other Reports. The General Partner shall deliver to each Limited
-------------
Partner, in a timely manner, all reports and/or other communications
transmitted from time to time by the General Partner to its shareholders.
ARTICLE 12
----------
TRANSFER OF GENERAL PARTNER INTERESTS
-------------------------------------
12.1 Transfer of Interest of the General Partner. No General Partner
-------------------------------------------
may at any time sell, assign, transfer, pledge or encumber any or all of its
Partnership Interest in the Partnership or withdraw or retire from the
Partnership except as otherwise provided herein or with the prior written
consent of Partners owning a majority of the issued and outstanding
Partnership Units (not including Partnership Units held by the General
Partner) taken as a single class. Retirement or withdrawal from the
Partnership shall not relieve the General Partner of any obligation
theretofore incurred by it hereunder. Notwithstanding anything contained
herein to the contrary, the Limited Partners shall have no right whatsoever
to remove the General Partner from the Partnership.
12.2 Retirement of the General Partner. If a General Partner other
---------------------------------
than the Interim Managing General Partner shall liquidate or dissolve, be
adjudged bankrupt, enter into an assignment for the benefit of creditors,
have a receiver appointed to administer its interest in the Partnership, be
the subject of a voluntary or involuntary petition for bankruptcy that is not
dismissed or vacated within ninety (90) days of filing, or have its interest
in the Partnership seized by a judgment creditor, or if there shall be an
individual general partner and he shall die, be adjudicated incompetent or
become permanently disabled (each of the foregoing events is referred to
hereinafter as an "Event of Retirement"), such General Partner, without
further act or notice, immediately shall be deemed to have retired as General
Partner of the Partnership. If the General Partner retires as General
Partner of the Partnership as aforesaid, (i) such General Partner (or its
administrator, executor, personal representative or successor) shall become a
Limited Partner retaining the General Partner's former interest in the
Profits, Losses, Net Cash Flow and distributions of the Partnership, pursuant
hereto, but shall have no right to participate in the management of the
affairs of the Partnership, and (ii) the surviving General Partner(s), if
any, shall remain as such and the Partners hereby agree and consent that the
Partnership shall continue in effect and shall not terminate, subject,
however, to the provisions of Section 12.5 hereof.
12.3 Retirement of Last Remaining General Partner. If the last
--------------------------------------------
remaining General Partner shall at any time withdraw or suffer an Event of
Retirement, the Limited Partners shall have the right, within ninety (90)
days thereafter, by a written consent executed and delivered by Limited
Partners owning a majority of the issued and outstanding Partnership
Interests taken as a single class, to appoint one or more new General
Partners as replacement General Partners, unless the Act requires a greater
percentage of the Limited Partners to consent to the continuation of the
Partnership, in which case such higher percentage shall be required for the
continuation of the Partnership. In such event, the Limited Partners shall
create for such replacement General Partners such interest in the Partnership
Profits, Losses and Net Cash Flow as the Limited Partners may agree upon from
among their collective interests in the Partnership.
12.4 Continuation of Partnership. In the event of the timely
---------------------------
appointment of a replacement or new General Partner(s) pursuant to this
Article 12, the relationship of the Partners shall be governed by the
provisions of this Agreement, the Partnership shall be continued, and the
replacement or new General Partner(s) shall have all of the management
rights, duties, responsibilities, authority and powers provided the General
Partner in this Agreement. If the Limited Partners fail to select a
replacement or new General Partner(s), whichever the case may be, within
ninety (90) days following retirement of the Last remaining General Partner,
the Partnership shall dissolve and terminate.
ARTICLE 13
----------
TRANSFER OF LIMITED PARTNER INTERESTS
-------------------------------------
13.1 Transfer of Interest of a Limited Partner. Except as otherwise
-----------------------------------------
specifically provided in this Agreement, no Limited Partner may sell, assign,
transfer, pledge, encumber or in any manner dispose of all or any part of its
Partnership Interest without the prior written consent of the General
Partner, which consent may be withheld by the General Partner in its sole
discretion. Notwithstanding the foregoing, each Limited Partner shall have
the right to (i) pledge or otherwise encumber all or any portion of its
Partnership Interest (subject, however, to applicable securities laws) and/or
(ii) transfer all or any portion of its Partnership Interest to members of
the Immediate Family of such Limited Partner and to one or more trusts or
other entities controlled by the Partner and/or members of its Immediate
Family for the benefit of one or more members of the Immediate Family of such
Limited Partner for family planning purposes, upon prior written notice to
the General Partner. Without limiting the generality of the foregoing, in no
event shall the General Partner consent to an assignment of all or any
portion of the Partnership Interest of a Limited Partner in the Partnership
if, in the opinion of the General Partner (or of counsel satisfactory to the
General Partner), such assignment (i) will result in a termination of the
Partnership for federal income tax purposes or otherwise result in adverse
tax consequences to the Partnership or any Partner, (ii) will result in the
Partnership failing to qualify for an exemption from the registration
requirements of the federal or any applicable state securities laws, (iii)
will result in the imposition of fiduciary responsibility on the Partnership
or any Partner under the Employee Retirement Income Security Act of 1974, as
amended from time to time, (iv) will result in a violation of any provision
of any mortgage or trust deed (or the note or bond secured thereby)
constituting a lien against any assets of the Partnership, or other
instrument, document or agreement to which the Partnership is a party or
otherwise bound, (v) represents a transfer of any component portion of a
Partnership Interest, such as the Capital Account, or rights to Net Cash
Flow, separate and apart from all other components of a Partnership Interest,
or (vi) may cause the General Partner to cease to comply with any and all
REIT Requirements. Subject to satisfaction of the conditions therefor set
forth or referred to herein, each Limited Partner hereby consents to the
substitution or admission of any assignee of a Limited Partner. Any sale,
assignment, transfer, pledge, encumbrance, hypothecation or other disposition
by a Limited Partner of all or any part of its Partnership Interest in
violation of the provisions hereof shall be void ab initio and of no force
---- -- ------
or effect whatsoever.
13.2 Assignee and Substitute Limited Partners. No Person shall be
----------------------------------------
admitted as an assignee or substituted Limited Partner under this Agreement
unless and until:
(a) An assignment is made in writing, signed by the assigning
Partner and accepted in writing by the assignee, and a duplicate original of
such assignment has been delivered to and approved by the General Partner;
(b) The General Partner has received an opinion of counsel
favorably covering the matters described in clauses (i) through (vi) of
Section 13.1 above, or waived all or any portion of this requirement;
(c) The prospective admittee executes and delivers to the General
Partner a written agreement in form reasonably satisfactory to the General
Partner pursuant to which said Person agrees to be bound by and confirms the
obligations, representations, warranties and power of attorney containedi n
this Agreement; and
(d) An appropriate amendment to this Agreement is executed.
13.3 Assignment. In the event an assignment is made in accordance with
----------
the terms hereof, unless otherwise required by the Code:
(a) The effective date of such assignment shall be the date the
written instrument of assignment is delivered to the Partnership and approved
by the General Partner;
(b) The Partnership and the General Partner shall be entitled to
treat the assignor of the assigned interest as the absolute owner thereof in
all respects and shall incur no liability for allocations of Profits or
Losses and distributions of Net Cash Flow made in good faith to such assignor
until such time as the written instrument of assignment has been actually
received and approved by the General Partner, and recorded in the books of
the Partnership; and
(c) The division and allocation of Profits or Losses, other than
Profits or Losses arising from a Liquidation of the Partnership, attributable
to the applicable Partnership Interests between the assignor and assignee
during any fiscal year of the Partnership shall be based upon the length of
time during such fiscal year, as measured by the effective date of such
assignment, that the assigned Partnership Interest was owned by each of them
and shall not be based upon the date or dates during such fiscal year in
which income was earned or losses were sustained by the Partnership;
provided, however, that the division and allocation of Profits or Losses
- -------- -------
resulting from a Liquidation of the Partnership shall be based upon the date
or dates such income was earned or losses were sustained.
13.4 Cost of Admission. The cost of processing and perfecting an
-----------------
admission contemplated by this Article 13 (including reasonable attorney's
fees incurred by the Partnership) shall be borne by the party seeking
admission as a Partner to the Partnership.
ARTICLE 14
----------
DISSOLUTION AND LIQUIDATION OF PARTNERSHIP
------------------------------------------
14.1 Dissolution of the Partnership. The Partnership shall be
------------------------------
dissolved upon the happening of any of the following:
(a) An election to dissolve and wind up the affairs of the
Partnership by the General Partner (subject to Section 9.3 hereof);
(b) The occurrence of an Event of Retirement to the last remaining
General Partner, unless the Limited Partners elect to continue the business
of the Partnership pursuant to the provisions of Sections 12.4 and 12.5
hereof;
(c) Any event that makes it unlawful for the Partnership business
to be continued;
(d) The sale, disposition, or abandonment of all or substantially
all of the assets of the Partnership unless the General Partner, with the
written consent of Partners owning, during the period up to three years after
the Offering, seventy-five percent (75%) and subsequent thereto, fifty
percent (50%) of the Partnership Interests taken as a single class (which
consent may not be unreasonably withheld), elects to continue the Partnership
business for the purpose of the receipt and the collection of indebtedness or
the collection of any other consideration to be received in exchange for the
assets of the Partnership (which activities shall be deemed to be part of the
winding up of the affairs of the Partnership);
(e) Dissolution required by operation of law; or
(f) December 31, 2097, unless a majority in interest of the
Partnership elects to continue the Partnership.
14.2 Winding Up of Affairs. In the event of the dissolution and
---------------------
liquidation of the Partnership for any reason, the General Partner shall
commence to wind up the affairs of the Partnership and shall convert all of
the Partnership's assets to cash or cash equivalents within such reasonable
period of time as may be required to receive fair value therefor. All Profit
or Loss realized pursuant to the sale and/or other liquidation of Partnership
property shall be allocated among the Partners in such manner as would cause
their respective Capital Accounts to be reduced to zero if (i) all of the
Partnership's assets remaining after all Partnership debts and liabilities
have been paid or discharged, including debts owed to Partners and Affiliates
of Partners, were then distributed in accordance with Sections 8.1(a), 8.1(c)
and 8.1(e) and (ii) any assets used by the General Partner to establish
reserves as provided in Section 14.4(b) were instead distributed to the
Partners. If there is no General Partner to effect such Liquidation, then
the Limited Partners, pursuant to a vote of Limited Partners owning a
majority of the issued and outstanding Partnership Units owned by all Limited
Partners, may designate any person, firm or corporation, as a Liquidating
Trustee, for that purpose who shall have all of the rights, powers and
authority of a General Partner stated herein in connection therewith.
14.3 Accounting. In the case of the dissolution and termination of the
----------
Partnership, prior to any distributions to Partners pursuant to Section
14.4(c) below, a proper accounting shall be made of the Capital Accounts of
the Partners and of each item of income, gain, loss, deduction and credit of
the Partnership from the date of the last previous accounting to the date of
dissolution. The General Partner shall provide a copy of such accounting to
all Partners.
14.4 Final Distribution of Partnership Property. Subject to Article
------------------------------------------
24 of the Contribution and Exchange Agreement, upon termination of the
Partnership, the General Partner shall apply and distribute the remaining
property of the Partnership, together with the proceeds of any sales of same,
as follows:
(a) first, all Partnership debts and liabilities shall be paid and
discharged, including debts owed to Partners and any Affiliates of Partners;
(b) second, to establish any reserve for any contingent or
unforeseen liabilities or obligations of the Partnership. Such funds shall
be placed in escrow by the General Partner for the purposes of disbursing
such funds in payment of any of the contingencies, liabilities or
obligations, and, at the expiration of such period as the General Partner
shall deem advisable, the balance then remaining shall be distributed
pursuant to subsection (c) of this Section 14.4; and
(c) third, to distribute the balance to the Partners as follows:
(i) any and all Net Cash Flow arising from the ordinary course of the
Partnership's business during the period of liquidation shall be distributed
pursuant to Sections 8.1(a), (b) or (c) and (ii) any and all Net Cash Flow
arising pursuant to the sale and/or other liquidation of Partnership property
shall be distributed to the Partners in proportion to, and to the extent of,
the positive balances in their respective Capital Accounts.
Distributions upon liquidation of the Partnership (or any Partner's
interest in the Partnership) and related adjustments shall be made by the end
of the taxable year of the liquidation (or, if later, within 90 days after
the date of such liquidation) or as otherwise permitted by the Regulations.
14.5 Certificate of Cancellation. Upon completion of the liquidation
---------------------------
of the Partnership and the distribution of all Partnership property, the
Partnership shall terminate and the General Partner shall have the authority
to execute and record one or more Certificates of Cancellation of the
Partnership as well as any and all other documents required or considered
advisable by the General Partner to effectuate the dissolution and
termination of the Partnership.
ARTICLE 15
----------
POWER OF ATTORNEY
-----------------
15.1 Power of Attorney. Each Partner, by its execution hereof,
-----------------
irrevocably constitutes and appoints the General Partner, or any substitute
or replacement General Partner, with full power of substitution, as such
Partner's true and lawful attorney-infact, in its name, place and stead to
make, execute, sign, acknowledge, certify, deliver, file and record on its
behalf and on behalf of the Partnership, the following:
(a) This Agreement, all Certificates of Limited Partnership,
Certificates of Doing Business under an Assumed Name, amendments to any or
all of the foregoing, and any other certificates or instruments which may be
required to be filed by the Partnership or the Partners under the laws of the
State of Delaware or any other jurisdiction;
(b) One or more Certificates of Cancellation of the Partnership
and such other instruments or documents as may be deemed necessary or
desirable by the General Partner upon termination of the Partnership
business;
(c) Any and all amendments to this Agreement and to the
instruments described in subsections (a) and (b) above, provided such
amendments are either required by law or have been authorized by the
Partner(s) in accordance with Article 16 and/or any other provision of this
Agreement (including, without limitation, any amendment to this Agreement and
to the Certificate to reflect the substitution or admission of a Limited
Partner pursuant to this Agreement); and
(d) Any and all such other documents and instruments as may be
deemed necessary or desirable by said attorney to carry out fully the
provisions of this Agreement in accordance with its terms.
15.2 Grant of Authority Irrevocable. The foregoing grant of authority
------------------------------
(a) is a special power of attorney coupled with an interest, is irrevocable
and shall survive the death or incapacity of a Partner who is a natural
person or, in the case of a Partner that is not a natural person, the merger,
dissolution or other termination of its existence of the Partner, (b) may be
exercised by the General Partner on behalf of each Partner, by a facsimile
signature or by listing all of the Partners executing any instrument with a
single signature as attorney-in-fact for all of them, and (c) shall survive
the assignment by a Partner of the whole or any portion of his or its
interest in the Partnership.
ARTICLE 16
----------
AMENDMENT OF PARTNERSHIP AGREEMENT
----------------------------------
16.1 Amendments by Partners. Except as may be specifically provided
----------------------
below in this Section 16.1 and in Section 16.2 hereof, this Agreement may
only be amended with the written concurrence of the General Partner and the
written consent of Partners owning a majority of the Partnership Units taken
as a single class (not including the General Partner); provided, however,
-------- -------
that absent the concurrence of the General Partner and the approval of all of
the Limited Partners no amendment shall:
(a) increase the obligation of any Limited Partner to make
contributions to the capital of the Partnership;
(b) modify the order of allocation of distributions of the Net
Cash Flow or liquidating distributions, or the allocation of Profits and
Losses among the Partners (other than as specifically provided for herein,
including without limitation, modifications pursuant to Section 6.4 hereof);
(c) change the Partnership to a general partnership;
(d) reduce the percentage of Limited Partners required to consent
to any matter in this Agreement;
(e) amend Section 9.4(a)(iv) hereof or amend Section 10.3 hereof
in any manner that prohibits or restricts, or has the effect of prohibiting
or restricting, the ability of a Limited Partner to exercise its Redemption
Rights in full; or
(f) amend this Article 16.
16.2 Amendment by the General Partner Alone. Notwithstanding anything
--------------------------------------
contained in this Agreement to the contrary, 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:
(a) 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;
(b) To reflect the admission, substitution, termination or
withdrawal of Partners in accordance with this Agreement, including without
limitation, the issuance of additional classes of Partnership Units to
Limited Partners pursuant to Section 6.4 hereof;
(c) 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;
(d) 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; and
(e) To amend the provisions of this Agreement that protect the
qualification of the General Partner as a REIT if such provisions are no
longer necessary because of a change in applicable law (or an authoritative
interpretation thereof), a ruling of the IRS, or if, subject to Section 9.3
hereof, the General Partner has determined to cease qualifying as a REIT.
The General Partner will provide notice to the Limited Partners when any
action under this Section 16.2 is taken.
16.3 Amendment by the General Partner and Certain Limited Partners.
-------------------------------------------------------------
Notwithstanding anything contained in this Agreement to the contrary, this
Agreement may be amended by the General Partner to provide that certain
Limited Partners have the obligation, upon liquidation of their interests in
the Partnership (within the meaning of Regulations Section 1.704-
1(b)(2)(ii)(g)), to restore to the Partnership the amounts of their negative
Capital Account balances, if any, for the benefit of creditors of the
Partnership or Partners with positive Capital Account balances or both,
together with any necessary corresponding amendments (including corresponding
amendments to Sections 6.6 and 6.9 and Article 7) with the consent of only
such Limited Partners and of any other Limited Partners already subject to
such a restoration obligation whose restoration obligation may be affected by
such amendment.
16.4 Amendment of Certificate. If this Agreement shall be amended
------------------------
pursuant to this Article 16, the General Partner shall cause the Certificate
to be amended, to the extent required by applicable law, to reflect such
change. The Partners shall be promptly notified of any amendments made under
this Article 16.
ARTICLE 17
----------
INDEMNIFICATION
---------------
17.1 Partnership Indemnification of Partner.
--------------------------------------
(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, reasonable attorneys' fees and other legal expenses),
judgments, fines, settlements, and other amounts arising from any and all
claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, that relate to the operations of the
Partnership as set forth in this Agreement, in which 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 (except as
may be otherwise agreed in writing) or otherwise for any indebtedness of the
Partnership or any Subsidiary of the Partnership (including without
limitation, any 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 17.1 in favor any Indemnitee having or potentially having
liability for any such indebtedness. Any indemnification pursuant to this
Section 17.1 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 17.1.
(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 17.1(a).
(c) The indemnification provided by this Section 17.1 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 17.1, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by it or 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 17.1; 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 17.1 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 17.1 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 17.1 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 171., 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.
17.2 Partner Indemnification of Partnership and Other Partners. In the
---------------------------------------------------------
event the Partnership or any Partner is made a party to any litigation or
otherwise incurs any loss or expense as a result of or in connection with any
other Partner's personal obligations or liabilities unrelated to Partnership
business, such other Partner shall indemnify and reimburse the Partnership or
Partner for all such loss and expense incurred, including reasonable
attorneys' fees, and the interest of such other Partner in the Partnership
may be charged therefor. The liability of a Partner under this Section 17.2
shall not be limited to such Partner's interest in the Partnership, but shall
be enforceable against such Partner personally. This indemnity shall be in
addition to and shall have no affect upon, any indemnity or similar
arrangement entered into separately by any Partner or Affiliate thereof.
ARTICLE 18
----------
MISCELLANEOUS PROVISIONS
------------------------
18.1 Notices. All notices and demands required or permitted under this
-------
Agreement shall be in writing and may be delivered personally to the Person
to whom it is authorized to be given, or sent by registered, certified or
first class mail, or by overnight delivery, postage prepaid, and if intended
for the Partnership, addressed to the Partnership at the principal office of
the Partnership, and if intended for a Partner, addressed to the Partner at
its address on the signature pages hereof, or to such other person or at such
other address designated by written notice given to the Partnership. Any
notice or demand mailed as aforesaid shall be deemed to have been delivered
two (2) days after the date that such notice or demand is deposited in the
mails. Any notices to the General Partner shall also be sent to c/o Jason M.
Barnett, Esq., Reckson Associates Realty Corp., 225 Broadhollow Road,
Melville, NY 11747.
18.2 Severability. If any provision of this Agreement or the
------------
application of such provision to any Person or circumstance shall be held
invalid, the remainder of this Agreement, or the application of such
provision to Persons or circumstances other than those as to which it is held
invalid shall not be affected.
18.3 Parties Bound. Any Person acquiring or claiming an interest in
-------------
the Partnership, in any manner whatsoever, shall be subject to and bound by
all terms, conditions and obligations of this Agreement to which his or its
predecessor in interest was subject or bound, without regard to whether such
Person has executed a counterpart hereof or any other document contemplated
hereby. No Person, including the legal representative, heir or legatee of a
deceased Partner, shall have any rights or obligations greater than those set
forth in this Agreement and no Person shall acquire an interest in the
Partnership or become a Partner thereof except as permitted by the terms of
this Agreement. This Agreement shall be binding upon the parties hereto,
their successors, heirs, devisees, assigns, legal representatives, executors
and administrators.
18.4 Applicable Law. The Partnership and this Agreement shall be
--------------
governed by the laws of the State of Delaware.
18.5 Partition. Each Partner hereby irrevocably waives during the term
---------
of the Partnership any right that he or it may have to maintain any action
for partition with respect to any property of the Partnership.
18.6 Headings. The headings in this Agreement are inserted for
--------
convenience and identification only and are in no way intended to describe,
interpret, define or limit the scope, extent or intent of this Agreement or
any provision.
18.7 Counterparts. This Agreement may be executed in multiple
------------
counterparts with separate signature pages, each such counterpart shall be
considered an original, but all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, each of the parties has executed this Agreement as
of the date first set forth above, confirms his or its agreement to become a
General Partner, Interim Managing General Partner or Limited Partner, as the
case may be, of the Partnership, agrees to be bound by this Agreement and
acknowledges the appointment of attorneys-in-fact as set forth herein, and
swears that the statements set forth herein are true and correct.
GENERAL PARTNER:
RECKSON MORRIS INDUSTRIAL TRUST, a
Maryland real estate investment trust
By:____________________________________
Its:
INTERIM MANAGING GENERAL
PARTNER:
RECKSON MORRIS INDUSTRIAL INTERIM GP LLC,
a Delaware limited liability company
By: _____________________________________
Its:
LIMITED PARTNERS:
__________________________________________
ROBERT MORRIS
__________________________________________
JOSEPH D. MORRIS
(Signature page to Reckson Morris Operating Partnership, L.P.)
_________________________________________
Ronald Schram
_________________________________________
Mark M. Bava
__________________________________________
Robert Morris, as Trustee
ESTATE OF MAX MORRIS
By:_____________________________________
Frances Morris, as Executrix
(Signature page to Reckson Morris Operating Partnership, L.P.)
EXHIBIT A
---------
Partners and Partnership Units
------------------------------
Name and Address of Partner Partnership Units
- --------------------------- -----------------
General Partner:
- ---------------
Reckson Morris Industrial Trust
225 Broadhollow Road
Melville, New York 11747-0983
INTERIM MANAGING GENERAL PARTNER:
- --------------------------------
Reckson Morris Industrial Interim GP LLC
225 Broadhollow Road
Melville, New York 11747-0983
LIMITED PARTNERS:
- -----------------
Robert Morris
Timberline Drive
Alpine, New Jersey 07620
Joseph D. Morris
846 Holland Road
Far Hills, New Jersey 07931
Robert Morris, as Trustee
Timberline Drive
Alpine, New Jersey 07620
The Estate of Max Morris
c/o Frances Morris
53-01 N.W. Second Avenue
Apartment 101
Boca Raton, Florida 33487
Mark M. Bava
1090 High Mountain Road
Franklin Lakes, New Jersey 07417
Ronald Schram
149 Norman Drive
Ramsey, New Jersey 07446
EXHIBIT B
Exercise Notice
---------------
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 and/or shares of Common Stock (if the General
Partner determines to satisfy this exercise of the Redemption Right by paying
in whole or in part with shares of Common Stock) deliverable upon exercise of
the Redemption Right be delivered to the address specified below, and if
Shares of Common Stock are to be delivered, such shares of Common Stock 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 persons 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 Shares of Common Stock are to be issued, issue to:
Name:
---------------------------------------------
Please insert social security number:
---------------------------
EXHIBIT C
List of Contributed Entity Interests and Properties
---------------------------------------------------
AMENDED & RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
RECKSON MORRIS OPERATING PARTNERSHIP, L.P.
DATED AS OF JANUARY 6, 1998
TABLE OF CONTENTS
Page
----
ARTICLE 1
DEFINITIONS
ARTICLE 2
CONTINUATION OF THE PARTNERSHIP
2.1 Continuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.2 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 3
NAME AND OFFICES
3.1 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.2 Principal and Registered Offices . . . . . . . . . . . . . . . . . . 12
ARTICLE 4
PURPOSE
4.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.2 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 5
TERM AND FISCAL YEAR
5.1 Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 6
CAPITAL CONTRIBUTIONS, ADDITIONAL FUNDING AND CAPITAL ACCOUNTS
6.1 Capital Contributions of the General Partner and
the Interim Managing General Partner . . . . . . . . . . . . . . . 14
6.2 Capital Contributions of the Limited Partners . . . . . . . . . . . 16
6.3 General Partner Option to Contribute Additional Capital . . . . . . 16
6.4 General Partner Option to Issue Additional Partnership
Units to Limited Partners . . . . . . . . . . . . . . . . . . . . 18
6.5 Capital Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.6 Limited Liability . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.7 Return of Capital . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.8 No Interest on Capital Contributions . . . . . . . . . . . . . . . . 20
6.9 No Third Party Beneficiary . . . . . . . . . . . . . . . . . . . . . 21
6.10 Incentive Stock Option Plans . . . . . . . . . . . . . . . . . . . . 21
ARTICLE 7
ALLOCATION OF PROFITS AND LOSSES
7.1 General Allocation of Profits and Losses . . . . . . . . . . . . . . 22
7.2 Allocations with Respect to Transferred Interests . . . . . . . . . 22
7.3 Regulatory Allocations . . . . . . . . . . . . . . . . . . . . . . . 22
7.4 Tax Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.5 Allocations with Respect to Partnership Units other
than OP Units . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 8
DISTRIBUTIONS
8.1 Distribution of Net Cash Flow . . . . . . . . . . . . . . . . . . . 25
8.2 Distributions in Kind . . . . . . . . . . . . . . . . . . . . . . . 26
8.3 Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.4 Distributions with Respect to Partnership Units other
than OP Units . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 9
MANAGEMENT
9.1 Management of Partnership Affairs . . . . . . . . . . . . . . . . . 27
9.2 Powers and Authorities of the General Partner . . . . . . . . . . . 28
9.3 Major Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.4 Restrictions on General Partner's Authority . . . . . . . . . . . . 32
9.5 Engagements by the Partnership . . . . . . . . . . . . . . . . . . . 32
9.6 Engagement of Affiliates . . . . . . . . . . . . . . . . . . . . . . 32
9.7 Liability of the General Partner . . . . . . . . . . . . . . . . . . 33
9.8 Reimbursement of Certain Expenses of the General Partner . . . . . . 33
9.9 Outside Activities of the General Partner . . . . . . . . . . . . . 34
9.10 Operation in Accordance with REIT Requirements . . . . . . . . . . 34
9.11 Title Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 10
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS
10.1 No Participation in Management of Partnership;
Rights of Limited Partners to Certain Documents . . . . . . . . . 34
10.2 Withdrawal, Retirement, Death, Incompetency,
Insolvency or Dissolution of a Limited Partner . . . . . . . . . . 36
ARTICLE 11
BANKING, RECORDS AND TAX MATTERS
11.1 Partnership Funds . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.2 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.3 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 41
11.4 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.5 Section 754 Matters . . . . . . . . . . . . . . . . . . . . . . . . 42
11.6 Tax Matter Partners . . . . . . . . . . . . . . . . . . . . . . . . 42
11.7 Other Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 12
TRANSFER OF GENERAL PARTNER INTERESTS
12.1 Transfer of Interest of the General Partner . . . . . . . . . . . . 43
12.2 Retirement of the General Partner . . . . . . . . . . . . . . . . . 43
12.3 Retirement of Last Remaining General Partner . . . . . . . . . . . 43
12.4 Continuation of Partnership . . . . . . . . . . . . . . . . . . . . 44
ARTICLE 13
TRANSFER OF LIMITED PARTNER INTERESTS
13.1 Transfer of Interest of a Limited Partner . . . . . . . . . . . . . 44
13.2 Assignee and Substitute Limited Partners . . . . . . . . . . . . . 45
13.3 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
13.4 Cost of Admission . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE 14
DISSOLUTION AND LIQUIDATION OF PARTNERSHIP
14.1 Dissolution of the Partnership . . . . . . . . . . . . . . . . . . 46
14.2 Winding Up of Affairs . . . . . . . . . . . . . . . . . . . . . . . 47
14.3 Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
14.4 Final Distribution of Partnership Property . . . . . . . . . . . . 48
14.5 Certificate of Cancellation . . . . . . . . . . . . . . . . . . . . 48
ARTICLE 15
POWER OF ATTORNEY
15.1 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . 48
15.2 Grant of Authority Irrevocable . . . . . . . . . . . . . . . . . . 49
ARTICLE 16
AMENDMENT OF PARTNERSHIP AGREEMENT
16.1 Amendments by Partners . . . . . . . . . . . . . . . . . . . . . . 49
16.2 Amendment by the General Partner Alone . . . . . . . . . . . . . . 50
16.3 Amendment by the General Partner and Certain Limited Partners . . . 51
16.4 Amendment of Certificate . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE 17
INDEMNIFICATION
17.1 Partnership Indemnification of Partner . . . . . . . . . . . . . . 51
17.2 Partner Indemnification of Partnership and Other Partners . . . . . 53
ARTICLE 18
MISCELLANEOUS PROVISIONS
18.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
18.2 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
18.3 Parties Bound . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
18.4 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . 54
18.5 Partition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
18.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
18.7 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Exhibit 10.22
==============================================================
CREDIT AGREEMENT
Dated as of January 2, 1998
among
RECKSON OPERATING PARTNERSHIP, L.P.
THE INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS LENDERS
and
THE CHASE MANHATTAN BANK
AS ARRANGER AND ADMINISTRATIVE AGENT
and
UNION BANK OF SWITZERLAND, NEW YORK BRANCH
AS ARRANGER AND DOCUMENTATION AGENT
================================================================
CREDIT AGREEMENT
This Credit Agreement dated as of January 2, 1998 (as amended,
supplemented or modified from time to time, the "Agreement") is entered
---------
into among RECKSON OPERATING PARTNERSHIP, L.P., a Delaware limited
partnership ("Reckson"), the institutions from time to time a party hereto
-------
as Lenders, whether by execution of this Agreement or an Assignment and
Acceptance, and THE CHASE MANHATTAN BANK, as Arranger and Administrative
Agent, and UNION BANK OF SWITZERLAND, NEW YORK BRANCH, as Arranger and
Documentation Agent.
The parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Certain Defined Terms . The following terms used in
----------------------
this Agreement shall have the following meanings, applicable both to the
singular and the plural forms of the terms defined:
"Adjusted Unencumbered NOI" means, for any period, the sum of (i) the
-------------------------
NOI from the Consolidated Businesses less the Unencumbered Capital
Expenditure Reserve Amounts for such period; (ii) the portion of NOI of the
Eligible Minority Holdings allocable to the Borrower, in accordance with GAAP
less the Unencumbered Capital Expenditure Reserve Amounts for such period;
and (iii) 50% of the portion of NOI of the Limited Minority Holdings
allocable to the Borrower in accordance with GAAP less 50% of the
Unencumbered Capital Expenditure Reserve Amounts for such period; which
amounts represent revenues earned from Real Property that is not subject to
or encumbered by Secured Indebtedness and which revenues are not subject to
any pledge, Lien or other hypothecation. The Borrower's share of NOI of the
Limited Minority Holdings included in clause (iii) hereof shall in no event
exceed fifteen percent (15%) of Adjusted Unencumbered NOI.
"Administrative Agent" means Chase.
--------------------
"Affiliate", as applied to any Person, means any other Person that
---------
directly or indirectly controls, is controlled by, or is under common control
with, that Person. For purposes of this definition, "control" (including,
with correlative meanings, the terms "controlling", "controlled by" and
"under common control with"), as applied to any Person, means the possession,
directly or indirectly, of the power to vote ten percent (10.0%) or more of
the equity Securities having voting power for the election of directors of
such Person or otherwise to direct or cause the direction of the management
and policies of that Person, whether through the ownership of voting equity
Securities or by contract or otherwise.
"Agents" means, collectively, UBS in its capacity as Documentation
------
Agent, Chase in its capacity as Administrative Agent, each Arranger, and each
successor agent appointed pursuant to the terms of Article XII of
-----------
this Agreement.
"Agreement" is defined in the preamble hereto.
---------
"Applicable Lending Office" means, with respect to a particular
-------------------------
Lender, (i) its Eurodollar Lending Office in respect of provisions relating
to Eurodollar Rate Loans and (ii) its Domestic Lending Office in respect of
provisions relating to Base Rate Loans.
"Applicable Margin" means, with respect to each Loan, the respective
-----------------
percentages per annum determined, at any time, based on the range into which
the Leverage Ratio then falls, in accordance with the following table. Any
change in the Applicable Margin shall be effective as of the financial
reporting dates set forth in Section 8.2 hereof.
-----------
<TABLE>
<CAPTION>
Applicable Applicable
Margin for Margin For
Eurodollar Base Rate
Loans Loans
Leverage Ratio (% per annum) (%per annum)
--------------- ------------- ------------
<S> <C> <C>
30% or less 1.125% 0.00%
Greater than 30%-35% 1.20% 0.00%
Greater than 35%-50% 1.25% 0.00%
Greater than 50% 1.50% 0.00125%
</TABLE>
"Arrangers" means UBS and Chase, each appointed pursuant to the terms
---------
of Article XII of this Agreement.
"Assignment and Acceptance" means an Assignment and Acceptance in
-------------------------
substantially the form of EXHIBIT A attached hereto and made a part hereof
---------
(with blanks appropriately completed) delivered to the Administrative Agent
in connection with an assignment of a Lender's interest under this Agreement
in accordance with the provisions of Section 14.1.
------------
"Authorized Financial Officer" means a chief executive officer,
----------------------------
president, chief financial officer, treasurer or other qualified senior
officer acceptable to the Administrative Agent.
"Base Rate" means, for any period, a fluctuating interest rate per
---------
annum as shall be in effect from time to time, which rate per annum shall at
all times be equal to the higher of:
(a) the rate of interest announced publicly by Chase in New York, New
York from time to time, as Chase's prime rate; and
(b) the sum of (A) one-half of one percent (0.50%) per annum plus
----
(B) the Federal Funds Rate in effect from time to time during such period.
"Base Rate Loan" means (i) a Loan which bears interest at a rate
--------------
determined by reference to the Base Rate and the Applicable Margin as
provided in Section 5.1(a) or (ii) an overdue amount which was a Base Rate
--------------
Loan immediately before it became due.
"Borrower" means Reckson.
--------
"Borrower Partnership Agreement" means the Reckson Partnership
------------------------------
Agreement as such agreement may be amended, restated, modified or
supplemented from time to time with the consent of the Agents or as permitted
under Section 10.9.
------------
"Borrowing" means a borrowing consisting of Loans of the same type
---------
made, continued or converted on the same day.
"Business Day" means a day, in the applicable local time, which is
------------
not a Saturday or Sunday or a legal holiday and on which banks are not
required or permitted by law or other governmental action to close (i) in New
York, New York and (ii) in the case of Eurodollar Rate Loans, in London,
England and (iii) in the case of Letter of Credit transactions for a
particular Lender, in the place where its office for issuance or
administration of the pertinent Letter of Credit is located.
"Capital Expenditures" means, for any period, the aggregate of all
--------------------
expenditures (whether payable in cash or other Property or accrued as a
liability (but without duplication)) during such period that, in conformity
with GAAP, are required to be included in or reflected by the Company's, the
Borrower's or any of its Subsidiaries' fixed asset accounts as reflected in
any of their respective balance sheets; provided, however,
-------- -------
Capital Expenditures shall include the sum of all expenditures by the
Consolidated Businesses and the portion of expenditures of Eligible Minority
Holdings and Limited Minority Holdings allocable to the Consolidated
Businesses for tenant improvements, leasing commissions, property level
capital expenditures (e.g., roof replacement, parking lot repairs, etc., but
not capital expenditures in connection with expansions).
"Capital Expenditure Reserve Amounts" means the greater of (i) the
-----------------------------------
sum of (a) an amount per annum equal to $0.72 multiplied by the number of
square feet for office properties owned, directly or indirectly by any of the
Consolidated Businesses or Eligible Minority Holdings or Limited Minority
Holdings; and (b) an amount per annum equal to $0.28 multiplied by the number
of square feet for industrial properties owned, directly or indirectly by any
of the Consolidated Businesses or Eligible Minority Holdings or Limited
Minority Holdings and (ii) as of the first day of each calendar quarter, an
amount equal to the actual Capital Expenditures for the immediately preceding
consecutive four calendar quarters.
"Capital Lease" means any lease of any property (whether real,
-------------
personal or mixed) by a Person as lessee which, in conformity with GAAP, is
accounted for as a capital lease on the balance sheet of that Person.
"Capital Stock" means, with respect to any Person, any capital stock
-------------
of such Person, regardless of class or designation, and all warrants,
options, purchase rights, conversion or exchange rights, voting rights, calls
or claims of any character with respect thereto.
"Cash and Cash Equivalents" means unrestricted (i) cash, (ii)
-------------------------
marketable direct obligations issued or unconditionally guaranteed by the
United States government and backed by the full faith and credit of the
United States government; and (iii) domestic and Eurodollar certificates of
deposit and time deposits, bankers' acceptances and floating rate
certificates of deposit issued by any commercial bank organized under the
laws of the United States, any state thereof, the District of Columbia, any
foreign bank, or its branches or agencies (fully protected against currency
fluctuations), which, at the time of acquisition, are rated A-1 (or better)
by S&P or P-1 (or better) by Moody's provided that the
-------- ----
maturities of such Cash and Cash Equivalents shall not exceed one year.
"CERCLA" means the Comprehensive Environmental Response, Compensation
------
and Liability Act of 1980, 42 U.S.C. SectionSection 9601 et seq., any
-- ---
amendments thereto, any successor statutes, and any regulations or guidance
promulgated thereunder.
"Chase" means The Chase Manhattan Bank.
-----
"Claim" means any claim or demand, by any Person, of whatsoever kind
-----
or nature for any alleged Liabilities and Costs, whether based in contract,
tort, implied or express warranty, strict liability, criminal or civil
statute, Permit, ordinance or regulation, common law or otherwise.
"Closing Date" means January 2, 1998.
------------
"Combined Equity Value" means Total Value, less Total Outstanding
---------------------
Indebtedness.
"Commercial Letter of Credit" means any documentary letter of credit
---------------------------
issued by an Issuing Bank pursuant to Section 3.1 for the account of the
-----------
Borrower, which is drawable upon presentation of documents evidencing the
sale or shipment of goods purchased by the Borrower in the ordinary course of
its business.
"Commission" means the Securities and Exchange Commission and any
----------
Person succeeding to the functions thereof.
"Company" means Reckson Associates Realty Corp., a Maryland
-------
corporation.
"Compliance Certificate" is defined in Section 8.2(b).
"Consolidated" means consolidated, in accordance with GAAP.
------------
"Consolidated Businesses" means the Company, the Borrower, Reckson FS
-----------------------
Limited Partnership and their wholly-owned Subsidiaries.
"Construction Asset Cost" means, with respect to Property on which
-----------------------
construction of improvements has commenced (such commencement evidenced by
foundation excavation) but has not yet been completed (as such completion
shall be evidenced by a temporary or permanent certificate of occupancy
permitting use of such Property by the general public), the aggregate sums
expended on the construction of such improvements (including land acquisition
costs and other soft costs).
"Contaminant" means any waste, pollutant, hazardous substance, toxic
-----------
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, radioactive materials, asbestos containing materials (in
any form or condition), polychlorinated biphenyls (PCBs), or any constituent
of any such substance or waste, and includes, but is not limited to, these
terms as defined in federal, state or local laws or regulations.
"Contingent Obligation" as to any Person means, without duplication,
---------------------
(i) any contingent obligation of such Person required to be shown on such
Person's balance sheet in accordance with GAAP, and (ii) any obligation
required to be disclosed in the footnotes to such Person's financial
statements in accordance with GAAP, guaranteeing partially or in whole any
non-recourse Indebtedness, lease, dividend or other obligation, exclusive of
contractual indemnities (including, without limitation, any indemnity or
price-adjustment provision relating to the purchase or sale of securities or
other assets) and guarantees of non-monetary obligations (other than
guarantees of completion) which have not yet been called on or quantified, of
such Person or of any other Person. Notwithstanding the foregoing, any
litigation required to be disclosed in the footnotes to such Person's
financial statements in accordance with GAAP shall not be included as a
"Contingent Obligation" unless the same shall have been reserved for in
accordance with GAAP. The amount of any Contingent Obligation described in
clause (ii) shall be deemed to be (a) with respect to a guaranty of interest
or interest and principal, or operating income guaranty, the sum of all
payments required to be made thereunder (which in the case of an operating
income guaranty shall be deemed to be equal to the debt service for the note
secured thereby), calculated at the interest rate applicable to such
Indebtedness, through (i) in the case of an interest or interest and
principal guaranty, the stated date of maturity of the obligation (and
commencing on the date interest could first be payable thereunder), or (ii)
in the case of an operating income guaranty, the date through which such
guaranty will remain in effect, and (b) with respect to all guarantees not
covered by the preceding clause (a) an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
guaranty is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to
perform thereunder) as recorded on the balance sheet and on the footnotes to
the most recent financial statements of the applicable Borrower required to
be delivered pursuant hereto. Notwithstanding anything contained herein to
the contrary, guarantees of completion shall not be deemed to be Contingent
Obligations unless and until a claim for payment has been made thereunder, at
which time any such guaranty of completion shall be deemed to be a Contingent
Obligation in an amount equal to any such claim. Subject to the preceding
sentence, (i) in the case of a joint and several guaranty given by such
Person and another Person (but only to the extent such guaranty is recourse,
directly or indirectly to the applicable Borrower), the amount of the
guaranty shall be deemed to be 100% thereof unless and only to the extent
that (X) such other Person has delivered Cash or Cash Equivalents to secure
all or any part of such Person's guaranteed obligations or (Y) such other
Person holds an Investment Grade Credit Rating from either Moody's or S&P,
and (ii) in the case of a guaranty, (whether or not joint and several) of an
obligation otherwise constituting Debt of such Person, the amount of such
guaranty shall be deemed to be only that amount in excess of the amount of
the obligation constituting Indebtedness of such Person. Notwithstanding
anything contained herein to the contrary, "Contingent Obligations" shall not
be deemed to include guarantees of loan commitments or of construction loans
to the extent the same have not been drawn.
"Contractual Obligation", as applied to any Person, means any
----------------------
provision of any Securities issued by that Person or any indenture, mortgage,
deed of trust, security agreement, pledge agreement, guaranty, contract,
undertaking, agreement or instrument to which that Person is a party or by
which it or any of its properties is bound, or to which it or any of its
properties is subject.
"Corporate Level G&A" means total corporate general and
-------------------
administrative costs, less Property Level G&A.
"Credit Rating" means the publicly announced rating of a Person given
-------------
by Moody's or S&P.
"Cure Loans" is defined in Section 4.2(b)(v)(C).
----------
"Customary Permitted Liens" means
-------------------------
(c) Liens (other than Environmental Liens and Liens in favor of the
PBGC) with respect to the payment of taxes, assessments or governmental
charges or levies in all cases which are not yet due or which are being
contested in good faith by appropriate proceedings in accordance with
Section 9.4 and with respect to which adequate reserves or other
- -----------
appropriate provisions are being maintained in accordance with GAAP;
(d) statutory and common law Liens of landlords against any Property of
the Borrower or any of its Subsidiaries;
(e) Liens against any Property of the Borrower or any of its
Subsidiaries in favor of suppliers, mechanics, carriers, materialmen,
warehousemen or workmen and other Liens against any Property of the Borrower
or any of its Subsidiaries imposed by law created in the ordinary course of
business for amounts which could not reasonably be expected to result in a
Material Adverse Effect;
(f) Liens (other than any Lien in favor of the PBGC) incurred or
deposits made in the ordinary course of business in connection with worker's
compensation, unemployment insurance or other types of social security
benefits or to secure the performance of bids, tenders, sales, contracts
(other than for the repayment of borrowed money), surety, appeal and
performance bonds; provided that (A) all such Liens do not in the
-------- ----
aggregate materially detract from the value of the Borrower's or such
Subsidiary's assets or Property or materially impair the use thereof in the
operation of their respective businesses, and (B) all Liens of attachment or
judgment and Liens securing bonds to stay judgments or in connection with
appeals which do not secure at any time an aggregate amount of recourse
Indebtedness exceeding $10,000,000; and
(g) Liens against any Property of the Borrower or any Subsidiary of the
Borrower arising with respect to zoning restrictions, easements, licenses,
reservations, covenants, rights-of-way, utility easements, building
restrictions and other similar charges or encumbrances on the use of Real
Property which do not materially interfere with the ordinary conduct of the
business of the Borrower or any of its Subsidiaries;
(h) leases or subleases granted to other Persons not materially
interfering with the conduct of the business of the Borrower and its
Subsidiaries taken as a whole;
(i) Liens placed upon equipment or machinery used in the ordinary
course of business of the Borrower or any of its Subsidiaries at the time of
acquisition thereof by the Borrower or any such Subsidiary or within 180 days
thereafter to secure Indebtedness incurred to pay all or a portion of the
purchase price thereof, provided that the Lien encumbering
--------
the equipment or machinery so acquired does not encumber any other asset of
the Borrower or such Subsidiary;
(j) customary restrictions imposed by licensors of software or
trademarks on users thereof;
(k) interests of licensees and sublicensees in any trademarks or other
intellectual property license or sublicense by the Borrower or any of its
Subsidiaries; and
(l) Environmental Liens which are being contested in good faith by
appropriate proceedings.
"Designated Lender" is defined in Section 13.4.
-----------------
"DOL" means the United States Department of Labor and any Person
---
succeeding to the functions thereof.
"Dollars" and "$" mean the lawful money of the United States.
------- -
"Domestic Lending Office" means, with respect to any Lender, such
-----------------------
Lender's office, located in the United States, specified as the "Domestic
Lending Office" under its name on the signature pages hereof or on the
Assignment and Acceptance by which it became a Lender or such other United
States office of such Lender as it may from time to time specify by written
notice to the Borrower and the Administrative Agent.
"Eligible Assignee" means (i) a Lender or any Affiliate thereof;
-----------------
(ii) a commercial bank having total assets in excess of $5,000,000,000;
(iii) the central bank of any country which is a member of the Organization
for Economic Cooperation and Development having total assets in excess of
$10,000,000,000; or (iv) a finance company or other financial institution
reasonably acceptable to the Administrative Agent, which is regularly engaged
in making, purchasing or investing in loans and having total assets in excess
of $1,000,000,000 or is otherwise reasonably acceptable to the Administrative
Agent.
"Eligible Minority Holdings" means Minority Holdings in which (i) the
--------------------------
Company and/or the Borrower collectively have an ownership interest of fifty
percent (50%) or greater, (ii) the Borrower or the Company controls the
management of such Minority Holdings, whether as the general partner or
managing member of such Minority Holding, or otherwise, (iii) the Borrower or
the Company, as general partner, managing member or otherwise, has the
ability, in its sole discretion, to grant Liens on the assets of such
Minority Holding, and (iv) there are no restrictions on the ability of such
Minority Holding to declare distributions or dividends, as the case may be.
As used in this definition only, the term "control" shall mean the authority
to make major management decisions in its sole discretion and the management
of day-to-day operations of such entity.
"Environmental, Health or Safety Requirements of Law" means all
---------------------------------------------------
Requirements of Law derived from or relating to any federal, state or local
law, ordinance, rule, regulation, Permit, license or other binding
determination of any Governmental Authority relating to, imposing liability
or standards concerning, or otherwise addressing the environment, health
and/or safety, including, but not limited to the Clean Air Act, the Clean
Water Act, CERCLA, RCRA, any so-called "Superfund" or "Superlien" law, the
Toxic Substances Control Act and OSHA, and public health codes, each as from
time to time in effect.
"Environmental Lien" means a Lien in favor of any Governmental
------------------
Authority for any (i) liabilities under any Environmental, Health or Safety
Requirement of Law, or (ii) damages arising from, or costs incurred by such
Governmental Authority in response to, a Release or threatened Release of a
Contaminant into the environment.
"Environmental Property Transfer Act" means any applicable
-----------------------------------
Requirement of Law that conditions, restricts, prohibits or requires any
notification or disclosure triggered by the transfer, sale, lease or closure
of any Property or deed or title for any Property for environmental reasons,
including, but not limited to, any so-called "Environmental Cleanup
Responsibility Act" or "Responsible Property Transfer Act".
"Equipment" means equipment used in connection with the maintenance
---------
of Projects and Properties.
"ERISA" means the Employee Retirement Income Security Act of 1974, 29
-----
U.S.C. SectionSection 1000 et seq., any amendments thereto, any successor
statutes, and any regulations or guidance promulgated thereunder.
"ERISA Affiliate" means (i) any corporation which is a member of the
---------------
same controlled group of corporations (within the meaning of Section 414(b)
of the Internal Revenue Code) as the Borrower; (ii) a partnership or other
trade or business (whether or not incorporated) which is under common control
(within the meaning of Section 414(c) of the Internal Revenue Code) with the
Borrower; and (iii) a member of the same affiliated service group (within the
meaning of Section 414(m) of the Internal Revenue Code) as the Borrower, any
corporation described in clause (i) above or any partnership or trade or
business described in clause (ii) above.
"ERISA Termination Event" means (i) a Reportable Event with respect
-----------------------
to any Benefit Plan; (ii) the withdrawal of the Borrower or any ERISA
Affiliate from a Benefit Plan during a plan year in which the Borrower or
such ERISA Affiliate was a "substantial employer" as defined in Section
4001(a)(2) of ERISA or the cessation of operations which results in the
termination of employment of 20% of Benefit Plan participants who are
employees of the Borrower or any ERISA Affiliate; (iii) the imposition of an
obligation on the Borrower or any ERISA Affiliate under Section 4041 of ERISA
to provide affected parties written notice of intent to terminate a Benefit
Plan in a distress termination described in Section 4041(c) of ERISA; (iv)
the institution by the PBGC of proceedings to terminate a Benefit Plan; (v)
any event or condition which might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer,
any Benefit Plan; or (vi) the partial or complete withdrawal of the Borrower
or any ERISA Affiliate from a Multiemployer Plan.
"Eurodollar Affiliate" means, with respect to each Lender, the
--------------------
Affiliate of such Lender (if any) set forth below such Lender's name under
the heading "Eurodollar Affiliate" on the signature pages hereof or on the
Assignment and Acceptance by which it became a Lender or such Affiliate of a
Lender as it may from time to time specify by written notice to the Borrower
and the Administrative Agent.
"Eurodollar Interest Period" is defined in Section 5.2(b).
--------------------------
"Eurodollar Interest Rate Determination Date" is defined in Section
-------------------------------------------
5.2(c).
"Eurodollar Lending Office" means, with respect to any Lender, such
-------------------------
Lender's office (if any) specified as the "Eurodollar Lending Office" under
its name on the signature pages hereof or on the Assignment and Acceptance by
which it became a Lender or such other office or offices of such Lender as it
may from time to time specify by written notice to the Borrower and the
Administrative Agent.
"Eurodollar Rate" means, for any Eurodollar Interest Period, an
---------------
interest rate per annum equal to the rate per annum obtained by multiplying
(a) a rate per annum equal to the rate for U.S. dollar deposits with
maturities comparable to such Eurodollar Interest Period which appears on
Telerate Page 3750 as of 11:00 a.m., London time, two (2) Business Days prior
to the commencement of such Eurodollar Interest Period, provided, however,
that if such rate does not appear on Telerate Page 3750, the "Eurodollar
Rate" applicable to a particular Eurodollar Interest Period shall mean a rate
per annum equal to the rate at which U.S. dollar deposits in an amount
approximately equal to the principal balance (or the portion thereof which
will bear interest at a rate determined by reference to the Eurodollar Rate
during the Eurodollar Interest Period to which such Eurodollar Rate is
applicable in accordance with the provisions hereof), and with maturities
comparable to the last day of the Eurodollar Interest Period with respect to
which such Eurodollar Rate is applicable, are offered in immediately
available funds in the London Interbank Market to the London office of Chase
by leading banks in the Eurodollar market at 11:00 a.m., London time, two (2)
Business Days prior to the commencement of the Eurodollar Interest Period to
which such Eurodollar Rate is applicable, by (b) a fraction (expressed as a
decimal) the numerator of which shall be the number one and the denominator
of which shall be the number one minus the Eurodollar Reserve Percentage for
such Eurodollar Interest Period.
"Eurodollar Rate Loan" means (i) a Loan which bears interest at a
--------------------
rate determined by reference to the Eurodollar Rate and the Applicable Margin
for Eurodollar Rate Loans, as provided in Section 5.1(a) or (ii) an overdue
amount which was a Eurodollar Loan immediately before it became due.
"Eurodollar Reserve Percentage" means, for any day, that percentage
-----------------------------
which is in effect on such day, as prescribed by the Federal Reserve Board
for determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve
requirement) for a member bank of the Federal Reserve System in New York, New
York with deposits exceeding five billion Dollars in respect of "Eurocurrency
Liabilities" (or in respect of any other category of liabilities which
includes deposits by reference to which the interest rate on Eurodollar Rate
Loans is determined or any category of extensions of credit or other assets
which includes loans by a non-United States office of any bank to United
States residents).
"Event of Default" means any of the occurrences set forth in Section
----------------
11.1 after the expiration of any applicable grace period and the giving of
any applicable notice, in each case as expressly provided in Section 11.1.
"Existing Permitted Liens" shall mean each of the Liens set forth on
------------------------
SCHEDULE 1.1.1 hereto.
"FAD" means "funds available for distribution" and shall mean, for
---
any period, FFO less (i) Capital Expenditures, for such period, whether
payable or accrued as a liability, (ii) adjustments to account for rents on
an accrual (rather than GAAP) basis for such period, and (iii) free rent and
accrued rent with respect to tenants that are more than 90 days in arrears in
the payment of rent for such period.
"Federal Funds Rate" means, for any period, a fluctuating interest
------------------
rate per annum equal for each day during such period to the weighted average
of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published for
such day (or, if such day is not a Business Day in New York, New York, for
the next preceding Business Day) in New York, New York by the Federal Reserve
Bank of New York, or if such rate is not so published for any day which is a
Business Day in New York, New York, the average of the quotations for such
day on transactions by the Reference Bank, as determined by the
Administrative Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
---------------------
Reserve System or any Governmental Authority succeeding to its functions.
"FFO" means "funds from operations" as defined in the National
---
Association of Real Estate Investment Trusts ("NAREIT") White Paper on Funds
From Operations as approved by the NAREIT Board of Governors on March 3,
1995.
"Financial Statements" means (i) quarterly and annual consolidated
--------------------
statements of income and retained earnings, statements of cash flow, and
balance sheets, prepared in accordance with GAAP, consistently applied, and
(ii) such other financial statements of the Borrower, the Company and the
other Consolidated Businesses or Minority Holdings that the Company shall
routinely and regularly prepare and that the Arrangers or the Requisite
Lenders may from time to time reasonably request.
"Fiscal Year" means the fiscal year of the Company and the Borrower
-----------
for accounting and tax purposes, which shall be the 12-month period ending on
December 31 of each calendar year.
"Fixed Charges" means, with respect to any fiscal period, the sum of
-------------
(a) Total Interest Expense and (b) the aggregate of all scheduled principal
payments on Total Outstanding Indebtedness according to GAAP made or required
to be made during such fiscal period for the Consolidated Businesses and
Minority Holdings (but excluding balloon payments of principal due upon the
stated maturity of an Indebtedness), and (c) the aggregate of all dividends
payable on the Company's or any of its consolidated Subsidiaries' preferred
stock not owned by the Company or any of its Affiliates.
"Funding Date" means, with respect to any Loan, the date of funding
------------
of such Loan.
"GAAP" means generally accepted accounting principles set forth in
----
the opinions and pronouncements of the American Institute of Certified Public
Accountants' Accounting Principles Board and Financial Accounting Standards
Board or in such other statements by such other entity as may be in general
use by significant segments of the accounting profession as in effect on the
Closing Date (unless otherwise specified herein as in effect on another date
or dates).
"General Partner" means the Company and any successor general
---------------
partner(s) of the Borrower.
"Governmental Approval" means all right, title and interest in any
---------------------
existing or future certificates, licenses, permits, variances, authorizations
and approvals issued by any Governmental Authority having jurisdiction with
respect to any Project.
"Governmental Authority" means any nation or government, any federal,
----------------------
state, local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government.
"Guaranty" shall mean the Guaranty Agreement, dated as of the date
--------
hereof, made by the Company and Reckson FS Limited Partnership for the
benefit of the Lenders.
"Improvements" means all buildings, fixtures, structures, parking
------------
areas, landscaping and all other improvements whether existing now or
hereafter constructed, together with all machinery and mechanical,
electrical, HVAC and plumbing systems presently located thereon and used in
the operation thereof, excluding (a) any such items owned by utility service
providers, (b) any such items owned by tenants or other third-parties
unaffiliated with the Borrower and (c) any items of personal property.
"Indebtedness", as applied to any Person, means, at any time, without
------------
duplication, (a) all indebtedness, obligations or other liabilities of such
Person (whether consolidated or representing the proportionate interest in
any other Person) (i) for borrowed money (including construction loans) or
evidenced by debt securities, debentures, acceptances, notes or other similar
instruments, and any accrued interest and fees relating thereto, (ii) under
profit payment agreements or in respect of obligations to redeem, repurchase
or exchange any Securities of such Person or to pay dividends in respect of
any preferred stock (but only to the extent that such Person shall be
contractually obligated to pay the same), (iii) with respect to letters of
credit issued for such Person's account, (iv) to pay the deferred purchase
price of property or services, except accounts payable and accrued expenses
arising in the ordinary course of business, (v) in respect of Capital Leases,
(vi) which are Contingent Obligations or (vii) under indemnities but only at
such time as a claim shall have been made thereunder; (b) all indebtedness,
obligations or other liabilities of such Person or others secured by a Lien
on any property of such Person, whether or not such indebtedness, obligations
or liabilities are assumed by such Person, all as of such time; (c) all
indebtedness, obligations or other liabilities of such Person in respect of
interest rate contracts and foreign exchange contracts, net of liabilities
owed to such Person by the counterparties thereon; (d) all preferred stock
subject (upon the occurrence of any contingency or otherwise) to mandatory
redemption; and (e) all Contractual Obligations with respect to any of the
foregoing.
"Indemnified Matters" is defined in Section 14.3.
-------------------
"Indemnitees" is defined in Section 14.3.
-----------
"Initial Funding Date" means the date on or after the Closing Date,
--------------------
on which all of the conditions described in Section 6.1 have been satisfied
(or waived) in a manner satisfactory to the Administrative Agent and the
Lenders and on which the initial Loans under this Agreement are made by the
Lenders to the Borrower.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
---------------------
amended to the date hereof and from time to time hereafter, any successor
statute and any regulations or guidance promulgated thereunder.
"Investment" means, with respect to any Person, (i) any purchase or
----------
other acquisition by that Person of Securities, or of a beneficial interest
in Securities, issued by any other Person, (ii) any purchase by that Person
of all or substantially all of the assets of a business conducted by another
Person, (iii) any loan, advance (other than deposits with financial
institutions available for withdrawal on demand, prepaid expenses, accounts
receivable, advances to employees and similar items made or incurred in the
ordinary course of business) or capital contribution by that Person to any
other Person, including all Indebtedness to such Person arising from a sale
of property by such Person other than in the ordinary course of its business,
and (iv) any purchase or other acquisition by that Person of Real Property,
whether directly or indirectly. The amount of any Investment shall be the
original cost of such Investment, without any adjustments for increases or
decreases in value or write-ups, write-downs or write-offs with respect to
such Investment.
"Investment Grade" means (i) with respect to Moody's a Credit Rating
----------------
of Baa3 or higher and (ii) with respect to S&P, a Credit Rating of BBB- or
higher.
"IRS" means the Internal Revenue Service and any Person succeeding to
---
the functions thereof.
"Issuing Bank" means Chase and UBS and such alternative Lender
------------
selected to issue a Letter of Credit pursuant to Section 3.1(c)(ii) hereof.
"knowledge" with reference to the Company, the Borrower or any
---------
Subsidiary of the Borrower, means the actual knowledge of such Person after
reasonable inquiry (which reasonable inquiry shall include, without
limitation, interviewing and questioning such other Persons as the Company,
the Borrower or such Subsidiary of the Borrower, as applicable, deems
reasonably necessary).
"Lease" means a lease, license, concession agreement or other
-----
agreement providing for the use or occupancy of any portion of any Project,
including all amendments, supplements, modifications and assignments thereof
and all side letters or side agreements relating thereto.
"Lender" means each of the Arrangers, the Administrative Agent,
------
Documentation Agent, and each financial institution a signatory hereto as a
Lender as of the Closing Date and, at any other given time, each financial
institution which is a party hereto as a Arranger, Administrative Agent,
Documentation Agent or Lender, whether as a signatory hereto or pursuant to
an Assignment and Acceptance, and regardless of the capacity in which such
entity is acting (i.e. whether as Administrative Agent, Documentation Agent,
Arranger, or Lender).
"Letter of Credit" means any Commercial Letter of Credit or Standby
----------------
Letter of Credit.
"Letter of Credit Fee" is defined in Section 5.3(a).
--------------------
"Letter of Credit Obligations" means, at any particular time, the sum
----------------------------
of (i) all outstanding Reimbursement Obligations, and (ii) the aggregate
undrawn face amount of all outstanding Letters of Credit, and (iii) the
aggregate face amount of all Letters of Credit requested by the Borrower but
not yet issued.
"Letter of Credit Reimbursement Agreement" means, with respect to a
----------------------------------------
Letter of Credit, such form of application therefor and form of reimbursement
agreement therefor (whether in a single or several documents, taken together)
as an Issuing Bank may employ in the ordinary course of business for its own
account, with such modifications thereto as may be agreed upon by such
Issuing Bank and the Borrower and as are not materially adverse (in the
judgment of such Issuing Bank and the Administrative Agent) to the interests
of the Lenders; provided, however, in the event of any conflict between the
terms of any Letter of Credit Reimbursement Agreement and this Agreement, the
terms of this Agreement shall control.
"Leverage Ratio" means the ratio, expressed as a percentage, of the
--------------
Total Outstanding Indebtedness to the Total Value.
"Liabilities and Costs" means all liabilities, obligations,
---------------------
responsibilities, losses, damages, personal injury, death, punitive damages,
economic damages, consequential damages, treble damages, intentional, willful
or wanton injury, damage or threat to the environment, natural resources or
public health or welfare, costs and expenses (including, without limitation,
attorney, expert and consulting fees and costs of investigation, feasibility
or Remedial Action studies), fines, penalties and monetary sanctions,
interest, direct or indirect, known or unknown, absolute or contingent, past,
present or future.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
----
assignment, conditional sale agreement, deposit arrangement, security
interest, encumbrance, lien (statutory or other and including, without
limitation, any Environmental Lien), preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever in
respect of any property of a Person, whether granted voluntarily or imposed
by law, and includes the interest of a lessor under a Capital Lease or under
any financing lease having substantially the same economic effect as any of
the foregoing and the filing of any financing statement or similar notice
(other than a financing statement filed by a "true" lessor pursuant to
Section 9-408 of the Uniform Commercial Code), naming the owner of such
property as debtor, under the Uniform Commercial Code or other comparable law
of any jurisdiction.
"Limited Minority Holdings" means Minority Holdings which do not
-------------------------
qualify as Eligible Minority Holdings but for which (i) there are no
restrictions on the ability of such Minority Holding to declare distributions
or dividends, as the case may be, and (ii) an acceptable buy/sell agreement
exists, as determined by the Arrangers in their sole discretion. As used in
this definition, the term "acceptable buy/sell agreement" shall mean an
agreement whereby either party thereto may exercise the rights given therein
to buy or sell a percentage interest in the Minority Holding in whole, as the
case may be, for any reason, and the other party thereto must sell or buy,
for cash, the percentage interest in the Minority Holding in whole, upon the
terms and conditions set forth in the agreement.
"Limited Partners" means those Persons who from time to time are
----------------
limited partners of the Borrower; and "Limited Partner" means each of the
Limited Partners, individually.
"Loan Account" is defined in Section 4.3(b).
------------
"Loan Documents" means this Agreement, the Notes and the Guaranty.
--------------
"Loan" means a loan made by a Lender pursuant to Section 2.1;
----
provided that, if any such loan or loans (or portions thereof) are combined
or subdivided pursuant to a Notice of Conversion/Continuation, the term
"Loan" shall refer to the combined principal amount resulting from such
combination or to each of the separate principal amounts resulting from such
subdivision, as the case may be.
"Management Company" means, collectively (i) Reckson Management
------------------
Group, Inc., a Delaware corporation, and its wholly-owned or controlled
Subsidiaries and (ii) such other property management companies controlled
(directly or indirectly) by the Company or the Borrower and which property
management companies manage properties owned by the Company, the Borrower and
its Subsidiaries and for which the Borrower has previously provided the
Administrative Agent with: (1) notice of such property management company,
(2) evidence reasonably satisfactory to the Administrative Agent that such
property management company is controlled (directly or indirectly) by the
Company or the Borrower, and (3) evidence reasonably satisfactory to the
Administrative Agent that such property management company manages properties
owned, in whole or in part by the Company or the Borrower or its
Subsidiaries.
"Margin Stock" means "margin stock" as such term is defined in
------------
Regulation U and Regulation G.
"Material Adverse Effect" means a material adverse effect upon (i)
-----------------------
the financial condition or assets of the Company, the Borrower and its
Subsidiaries taken as a whole, (ii) the ability of the Borrower to perform
its material obligations under the Loan Documents, (iii) the ability of the
Company or Reckson FS Limited Partnership to perform its material obligations
under the Guaranty, or (iv) the ability of the Lenders or the Administrative
Agent to enforce any of the Loan Documents.
"Maximum Revolving Credit Amount" means, at any particular time, the
-------------------------------
Revolving Credit Commitments at such time.
"Minority Holdings" means any interests in partnerships, joint
-----------------
ventures, limited liability companies, trusts, associations and corporations
held or owned by the Borrower and/or the Company which are not wholly-owned
by the Borrower and/or the Company.
"Moody's" means Moody's Investor Services, Inc.
-------
"Multiemployer Plan" means a "multiemployer plan" as defined in
------------------
Section 4001(a)(3) of ERISA which is, or within the immediately preceding six
(6) years was, contributed to by either the Borrower or any ERISA Affiliate
or in respect of which the Borrower or any ERISA Affiliate has assumed any
liability.
"Net Cash Proceeds" means all cash when and as received in connection
-----------------
with the sale or refinancing of any asset, less reasonable costs and
expenses, repayment of secured indebtedness with respect to the applicable
asset, and net of an amount equal to taxable capital gains and real estate
transfer taxes payable in connection with any asset sale.
"Net Offering Proceeds" means all cash or other assets received by
---------------------
the Company as a result of the sale of common shares, preferred shares,
partnership interests, limited liability company interests, convertible
securities or other ownership or equity interests in the Company, less
customary costs, expenses and discounts of issuance paid by the Company.
"NOI" means (x) net operating income determined in accordance with
---
GAAP, adjusted, however, to exclude free rent and accrued rent with respect
to tenants that are more than 90 days in arrears in the payment of rent, and
further adjusted to omit the straight line treatment of rent, so as to
account for rent on an accrual basis, and further adjusted to deduct
management fees, less (y) Property Level G&A.
"Non Pro Rata Loan" is defined in Section 4.2 (b)(v).
-----------------
"Note" means a promissory note in the form attached hereto as EXHIBIT
----
B payable to a Lender, evidencing certain of the Obligations of the Borrower
to such Lender and executed by the Borrower as required by Section 4.3(a), as
the same may be amended, supplemented, modified or restated from time to
time; "Notes" means, collectively, all of such Notes outstanding at any given
time.
"Notice of Borrowing" means a notice substantially in the form of
-------------------
EXHIBIT C attached hereto and made a part hereof.
"Notice of Conversion/Continuation" means a notice substantially in
---------------------------------
the form of EXHIBIT D attached hereto and made a part hereof with respect to
a proposed conversion or continuation of a Loan pursuant to Section 5.1(c).
"Obligations" means all Loans, advances, debts, liabilities and
-----------
monetary obligations owing by the Borrower to the Administrative Agent, the
Documentation Agent, any other Lender, or any Person entitled to
indemnification pursuant to Section 15.3 of this Agreement, of any kind or
nature, arising under this Agreement, the Notes or any other Loan Document.
The term includes, without limitation, all interest, charges, reasonable
expenses, fees, reasonable attorneys' fees and disbursements and any other
sum chargeable to the Borrower under this Agreement or any other Loan
Document.
"Officer's Certificate" means, as to a corporation, a certificate
---------------------
executed on behalf of such corporation by the chairman of its board of
directors (if an officer of such corporation) or its chief executive officer,
president, any of its vice-presidents, its chief financial officer, or its
treasurer and, as to a partnership, a certificate executed on behalf of such
partnership by the chairman of the board of directors (if an officer of such
corporation) or chief executive officer, president, any vice-president, or
treasurer of the general partner of such partnership.
"Operating Account" is defined in Section 9.11 hereof.
-----------------
"Operating Lease" means, as applied to any Person, any lease of any
---------------
property (whether real, personal or mixed) by that Person as lessee which is
not a Capital Lease.
"Opportunity Fund" is defined in Section 10.4 hereof.
----------------
"Organizational Documents" means, with respect to any corporation,
------------------------
limited liability company, or partnership (i) the articles/certificate of
incorporation (or the equivalent organizational documents) of such
corporation or limited liability company, (ii) the partnership agreement
executed by the partners in the partnership, (iii) the by-laws (or the
equivalent governing documents) of the corporation, limited liability company
or partnership, and (iv) any document setting forth the designation, amount
and/or relative rights, limitations and preferences of any class or series of
such corporation's Capital Stock or such limited liability company's or
partnership's equity or ownership interests.
"OSHA" means the Occupational Safety and Health Act of 1970, 29
----
U.S.C. SectionSection 651 et seq., any amendments thereto, any successor
statutes and any regulations or guidance promulgated thereunder.
"Other Management Company" means property management companies
------------------------
controlled (directly or indirectly) by the Company or the Borrower which may
manage properties owned by third parties.
"PBGC" means the Pension Benefit Guaranty Corporation and any Person
----
succeeding to the functions thereof.
"Permits" means any permit, consent, approval, authorization license,
-------
variance, or permission required from any Person, including any Governmental
Approvals.
"Permitted Securities Options" means the subscriptions, options,
----------------------------
warrants, rights, convertible Securities and other agreements or commitments
relating to the issuance of the Borrower's Securities or the Company's
Capital Stock identified as such on SCHEDULE 1.1.2.
"Person" means any natural person, corporation, limited liability
------
company, limited partnership, general partnership, joint stock company, joint
venture, association, company, trust, bank, trust company, land trust,
business trust or other organization, whether or not a legal entity, and any
Governmental Authority.
"Plan" means an employee benefit plan defined in Section 3(3) of
----
ERISA in respect of which the Borrower or any ERISA Affiliate (i) is, or
within the immediately preceding six (6) years was, an "employer" as defined
in Section 3(5) of ERISA or (ii) has assumed or is otherwise subject to any
liability.
"Potential Event of Default" means an event which, with the giving of
--------------------------
notice or the lapse of time, or both, would constitute an Event of Default.
"Prepayment Date" is defined in Section 4.1(d).
---------------
"Project" means any office or industrial properties owned, directly
-------
or indirectly, by any of the Consolidated Businesses or Minority Holdings.
"Property" means any Real Property or personal property, plant,
--------
building, facility, structure, equipment, General Intangible, Receivable, or
other asset owned or leased by any Consolidated Business or any Minority
Holding. The definition of "Property" shall specifically exclude items of
Real Property or personal property owned or leased by members of the Reckler
family.
"Property Level G&A" means general and administrative expenses
------------------
allocated to the Properties.
"Pro Rata Share" means, with respect to any Lender, the percentage
--------------
obtained by dividing (i) the sum of such Lender's Revolving Credit Commitment
(in each case, as adjusted from time to time in accordance with the
provisions of this Agreement or any Assignment and Acceptance to which such
Lender is a party) by (ii) the aggregate amount of all of the Revolving
Credit Commitments.
"Qualified Lease" means any Lease (a) which is a direct ground lease
---------------
granted by the fee owner of real property, (b) which may be transferred
and/or assigned without the consent of the lessor (or as to which the Lease
expressly provides that (i) such Lease may be transferred and/or assigned
with the consent of the lessor and (ii) such consent shall not be
unreasonably withheld or delayed), (c) which has a remaining term (including
any renewal terms exercisable at the sole option of the lessee) of at least
forty (40) years, (d) under which no material default has occurred and is
continuing, (e) with respect to which a security interest may be granted
without the consent of the lessor, and (f) which contains lender protection
provisions reasonably acceptable to the Administrative Agent including,
without limitation, provisions to the effect that (i) the lessor shall notify
any holder of a security interest in such Lease of the occurrence of any
default by the lessee under such Lease and shall afford such holder the right
to cure such default, and (ii) in the event that such Lease is terminated,
such holder shall have the option to enter into a new lease having terms
substantially identical to those contained in the terminated Lease. Upon the
submission to the Administrative Agent of a written request to review the
lender protection provisions and other terms or a proposed Qualified Lease,
the Administrative Agent shall respond by accepting or rejecting such lease
as conforming to the terms of this definition within five (5) Business Days
following receipt of such request, such acceptance not to be unreasonably
withheld.
"Quarterly Capital Expenditure Reserve Amounts" means, as of the
---------------------------------------------
first day of any calendar quarter for the immediately preceding quarter, one
quarter of the Capital Expenditure Reserve Amounts.
"RCRA" means the Resource Conservation and Recovery Act of 1976, 42
----
U.S.C. SectionSection 6901 et seq., any amendments thereto, any successor
statutes, and any regulations or guidance promulgated thereunder.
"Real Property" means all of the Borrower's present and future right,
-------------
title and interest (including, without limitation, any leasehold estate) in
(i) any plots, pieces or parcels of land, (ii) any Improvements of every
nature whatsoever (the rights and interests described in clauses (i) and (ii)
above being the "Premises"), (iii) all easements, rights of way, gores of
land or any lands occupied by streets, ways, alleys, passages, sewer rights,
water courses, water rights and powers, and public places adjoining such
land, and any other interests in property constituting appurtenances to the
Premises, or which hereafter shall in any way belong, relate or be
appurtenant thereto and (iv) all other rights and privileges thereunto
belonging or appertaining and all extensions, additions, improvements,
betterments, renewals, substitutions and replacements to or of any of the
rights and interests described in clause (iii) above.
"Reckson" means Reckson Operating Partnership, L.P., a Delaware
-------
limited partnership.
"Recourse Secured Indebtedness Limitation" has the meaning set forth
----------------------------------------
in Section 10.11 hereof.
"Reference Bank" means Chase.
--------------
"Register" is defined in Section 14.1(c).
--------
"Regulation A" means Regulation A of the Federal Reserve Board as in
------------
effect from time to time.
"Regulation G" means Regulation G of the Federal Reserve Board as in
------------
effect from time to time.
"Regulation T" means Regulation T of the Federal Reserve Board as in
------------
effect from time to time.
"Regulation U" means Regulation U of the Federal Reserve Board as in
------------
effect from time to time.
"Regulation X" means Regulation X of the Federal Reserve Board as in
------------
effect from time to time.
"Reimbursement Date" is defined in Section 3.1(d)(i)(A).
------------------
"Reimbursement Obligations" means the aggregate non-contingent
-------------------------
reimbursement or repayment obligations of the Borrower with respect to
amounts drawn under Letters of Credit.
"REIT" means a domestic trust or corporation that qualifies as a real
----
estate investment trust under the provisions of Sections 856, et seq. of the
Internal Revenue Code.
"Release" means any release, spill, emission, leaking, pumping,
-------
pouring, dumping, injection, deposit, disposal, abandonment, or discarding of
barrels, containers or other receptacles, discharge, emptying, escape,
dispersal, leaching or migration into the indoor or outdoor environment or
into or out of any Property, including the movement of Contaminants through
or in the air, soil, surface water, groundwater or Property.
"Remedial Action" means actions required to (i) clean up, remove,
---------------
treat or in any other way address Contaminants in the indoor or outdoor
environment; (ii) prevent the Release or threat of Release or minimize the
further Release of Contaminants; or (iii) investigate and determine if a
remedial response is needed and to design such a response and post-remedial
investigation, monitoring, operation and maintenance and care.
"Reportable Event" means any of the events described in Section
----------------
4043(b) of ERISA and the regulations promulgated thereunder as in effect from
time to time but not including any such event as to which the thirty (30) day
notice requirement has been waived by applicable PBGC regulations.
"Requirements of Law" means, as to any Person, the charter and by
-------------------
laws or other organizational or governing documents of such Person, and any
law, rule or regulation, or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property
is subject including, without limitation, the Securities Act, the Securities
Exchange Act, Regulations G, T, U and X, ERISA, the Fair Labor Standards Act,
the Worker Adjustment and Retraining Notification Act, Americans with
Disabilities Act of 1990, and any certificate of occupancy, zoning ordinance,
building, environmental or land use requirement or Permit and Environmental,
Health or Safety Requirement of Law.
"Requisite Lenders" means Lenders whose Pro Rata Shares, in the
-----------------
aggregate, are greater than sixty-six and two-thirds percent (66.67%);
provided, however, that, in the event any of the Lenders shall have failed to
fund its Pro Rata Share of any Loan requested by the Borrower which such
Lenders are obligated to fund under the terms of this Agreement and any such
failure has not been cured as provided in Section 4.2(b)(v)(B), then for so
long as such failure continues, "Requisite Lenders" means Lenders (excluding
all Lenders whose failure to fund their respective Pro Rata Shares of such
Loans have not been so cured) whose Pro Rata Shares represent more than
sixty-six and two-thirds percent (66.67%) of the aggregate Pro Rata Shares of
such Lenders; provided, further, however, that, in the event that the
Revolving Credit Commitments have been terminated pursuant to the terms of
this Agreement, "Requisite Lenders" means Lenders (without regard to such
Lenders' performance of their respective obligations hereunder) whose
aggregate ratable shares (stated as a percentage) of the aggregate
outstanding principal balance of all Loans are greater than sixty six and two
thirds percent (66.67%).
"Revolving Credit Availability" means, at any particular time, the
-----------------------------
amount by which the Maximum Revolving Credit Amount at such time exceeds the
Revolving Credit Obligations at such time.
"Revolving Credit Commitment" means, with respect to any Lender, the
---------------------------
obligation of such Lender to make Loans and to participate in Letters of
Credit pursuant to the terms and conditions of this Agreement, and which
shall not exceed the principal amount set forth opposite such Lender's name
under the heading "Revolving Credit Commitment" on the signature pages hereof
or the signature page of the Assignment and Acceptance by which it became a
Lender, as modified from time to time pursuant to the terms of this Agreement
or to give effect to any applicable Assignment and Acceptance, and "Revolving
Credit Commitments" means the aggregate principal amount of the Revolving
Credit Commitments of all the Lenders, the maximum amount of which shall be
$200,000,000 as reduced from time to time pursuant to Section 4.1.
"Revolving Credit Obligations" means, at any particular time, the sum
----------------------------
of (i) the outstanding principal amount of the Loans at such time, plus (ii)
the Letter of Credit Obligations at such time.
"Revolving Credit Period" means the period from the Initial Funding
-----------------------
Date to the Business Day next preceding the Revolving Credit Termination
Date.
"Revolving Credit Termination Date" means the earlier to occur of (i)
---------------------------------
April 1, 1998 (or, if not a Business Day, the next preceding Business Day);
and (ii) the date of termination of the Revolving Credit Commitments pursuant
to the terms of this Agreement.
"S&P" means Standard & Poor's Ratings Services, a division of The
---
McGraw Hill Companies, Inc.
"Secured Indebtedness" means any Indebtedness secured by a Lien.
--------------------
"Secured Loan-to-Value Ratio" means, the ratio, expressed as a
---------------------------
percentage, of the aggregate amount of any Secured Indebtedness as of the
date of the determination to the value with respect to such Real Property
encumbered thereby as of such date, which value shall be determined by
reference to the formula set forth in the definition of "Total Value" with
respect to each such Real Property.
"Securities" means any stock, shares, voting trust certificates,
----------
partnership interests, bonds, debentures, notes or other evidences of
indebtedness, secured or unsecured, convertible, subordinated or otherwise,
or in general any instruments commonly known as "securities", including,
without limitation, any "security" as such term is defined in Section 8-102
of the Uniform Commercial Code, or any certificates of interest, shares, or
participations in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire any of the
foregoing, but shall not include the Notes or any other evidence of the
Obligations.
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time, and any successor statute.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
-----------------------
as amended from time to time, and any successor statute.
"Servicing EBITDA" means, with respect to the Management Company or
----------------
any other service company owned by the Borrower or the Company, as of the
first day of each fiscal quarter for the immediately preceding fiscal
quarter, an amount, determined in accordance with GAAP, equal to (i) total
revenues relating to such companies' operations adjusted to exclude amounts
that are more than 90 days delinquent, less (ii) total operating expenses
relating to such operations, including corporate marketing, general and
administrative expenses.
"Solvent", when used with respect to any Person, means that at the
-------
time of determination:
(i) the fair saleable value of its assets is in excess of the total
amount of its liabilities (including, without limitation, contingent
liabilities); and
(ii) the present fair saleable value of its assets is greater than its
probable liability on its existing debts as such debts become absolute and
matured; and
(iii) it is then able and expects to be able to pay its debts
(including, without limitation, contingent debts and other commitments) as
they mature; and
(iv) it has capital sufficient to carry on its business as conducted and
as proposed to be conducted.
"Standby Letter of Credit" means any letter of credit issued by an
------------------------
Issuing Bank pursuant to Section 3.1 for the account of the Borrower,
-----------
which is not a Commercial Letter of Credit.
"Subsidiary" of a Person means any corporation, limited liability
----------
company, general or limited partnership, or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions are
at the time directly or indirectly owned or controlled by such Person, one or
more of the other subsidiaries of such Person or any combination thereof.
"Taxes" is defined in Section 13.1(a).
-----
"Telerate Page 3750" means the display designated as "Page 3750" on
------------------
the Associated Press-Dow Jones Telerate Service (or such other page as may
replace Page 3750 on the Associated Press-Dow Jones Telerate Service or such
other service as may be nominated by the British Bankers' Association as the
information vendor for the purpose of displaying British Bankers' Association
interest settlement rates for U.S. Dollar deposits). Any Eurodollar Rate
determined on the basis of the rate displayed on Telerate Page 3750 in
accordance with the provisions hereof shall be displayed by the Associated
Press-Dow Jones Telerate Service within one hour of the time when such rate
is first displayed by such service.
"Tenant Allowance" means a cash allowance paid to a tenant by the
----------------
landlord pursuant to a Lease.
"TI Work" means any construction or other "build-out" of tenant
-------
leasehold improvements to the space demised to such tenant under Leases
(excluding such tenant's furniture, fixtures and equipment) performed
pursuant to the terms of such Leases, whether or not such tenant improvement
work is performed by or on behalf of the landlord or as part of a Tenant
Allowance.
"Total Adjusted EBITDA" means, for any period, the sum of (w) with
---------------------
respect to any office or industrial Project or Minority Holding, which is
owned by the Borrower or the Consolidated Businesses as of the first day of
each calendar quarter for the immediately preceding quarter, an amount equal
to NOI relating to such Project or Minority Holding for the immediately
preceding quarter, less Quarterly Capital Expenditure Reserve Amounts for
such period; (x) net income derived from interest on cash balances and notes
held by the Consolidated Businesses secured by Liens on Real Property; and
(y) Servicing EBITDA of the Management Company or other such service
companies for the immediately preceding quarter, less (z) general and
administrative expenses for such period.
"Total Interest Expense" means, for any period, the sum of (i)
----------------------
interest expense of the Consolidated Businesses paid during such period and
(ii) interest expense of the Consolidated Businesses accrued and/or
capitalized for such period and (iii) the portion of the interest expense of
Minority Holdings allocable to the Borrower in accordance with GAAP and paid
during such period and (iv) the portion of the interest expense of Minority
Holdings allocable to the Borrower in accordance with GAAP and accrued and/or
capitalized for such period, in each case including participating interest
expense but excluding extraordinary interest expense, and net of amortization
of deferred costs associated with new financings or refinancings of existing
Indebtedness.
"Total Outstanding Indebtedness" means, for any period, the sum of
------------------------------
(i) the amount of Indebtedness of the Consolidated Businesses set forth on
the then most recent quarterly financial statements of the Borrower, prepared
in accordance with GAAP, plus any additional Indebtedness incurred by the
Consolidated Businesses since the time of such statements, and (ii) the
outstanding amount of Minority Holding Indebtedness allocable in accordance
with GAAP to any of the Consolidated Businesses as of the time of
determination, plus any additional Minority Holding Indebtedness incurred by
the Minority Holdings allocable in accordance with GAAP to any of the
Consolidated Businesses as of the time of determination, and (iii) the
Contingent Obligations of the Consolidated Businesses and, to the extent
allocable to the Consolidated Businesses in accordance with GAAP, of the
Minority Holdings.
"Total Outstanding Indebtedness Limitation" has the meaning set forth
-----------------------------------------
in Section 10.11 hereof.
"Total Secured Outstanding Indebtedness Limitation" has the meaning
-------------------------------------------------
set forth in Section 10.11 hereof.
"Total Unsecured Outstanding Indebtedness" means that portion of
----------------------------------------
Total Outstanding Indebtedness that is not secured by a Lien.
"Total Value" means (A) the sum of (i) Valuation NOI divided by an
-----------
annual interest rate equal to 9.5%; (ii) the Investment in office and
industrial Projects owned by the Consolidated Businesses for less than four
fiscal quarters which have not achieved an occupancy rate of 85% for one
fiscal quarter; (iii) unrestricted Cash and Cash Equivalents; (iv)
Construction Asset Cost, which credit will be limited to ten percent (10%) of
Total Value; (v) Investments in notes secured by mortgages on the Property of
any Person; (vi) the Investments in Real Property not constituting Projects
or Minority Holdings; (vii) Servicing EBITDA of the Management Company or
other such service companies for the immediately preceding four consecutive
quarters divided by an annual interest rate equal to twenty percent (20%);
and (viii) any investment (based on the actual cash investment) in any
Opportunity Fund, less (B) the quotient of (x) the sum of the Capital
Expenditure Reserve Amounts for such period, and Corporate Level G&A for such
period, divided by (y) an annual interest rate equal to 9.5%. Notwithstanding
anything contained herein to the contrary, prior to the date which is ninety
(90) days from the date hereof, Total Value shall not be deemed to include
value attributable to the property commonly known as 538 Broadhollow Road,
Melville, New York.
"Treasury Rate" means, as of any date, a rate equal to the annual
-------------
yield to maturity on the U.S. Treasury Constant Maturity Series with a ten
year maturity, as such yield is reported in Federal Reserve Statistical
Release H.15 -- Selected Interest Rates, published most recently prior to the
date the applicable Treasury Rate is being determined. Such yield shall be
determined by straight line linear interpolation between the yields reported
in Release H.15, if necessary. In the event Release H.15 is no longer
published, the Administrative Agent shall select, in its reasonable
discretion, an alternate basis for the determination of Treasury yield for
U.S. Treasury Constant Maturity Series with ten year maturities.
"UBS" means Union Bank of Switzerland, New York Branch.
---
"Unencumbered Capital Expenditure Reserve Amounts" means, for any
------------------------------------------------
period, the aggregate of Capital Expenditures Reserve Amounts with respect to
Real Property that is not subject to or encumbered by Secured Indebtedness.
"Uniform Commercial Code" means the Uniform Commercial Code as
-----------------------
enacted in the State of New York, as it may be amended from time to time.
"Unsecured Interest Expense" means the interest expense paid, accrued
--------------------------
or capitalized on the Total Unsecured Outstanding Indebtedness for the
applicable period.
"Unused Commitment Fee" is defined in Section 5.3 (b).
---------------------
"Unused Commitment Fee Percentage" means the applicable percentage
--------------------------------
per annum determined, at any time, based on the range into which the Leverage
Ratio then falls, in accordance with the following table.
<TABLE>
<CAPTION>
Leverage Ratio Percentage Fee
<S> <C>
30% or less 0.15%
greater than 30%-35% 0.15%
greater than 35%-50% 0.20%
greater than 50% 0.25%
</TABLE>
"Unused Facility" shall mean the amount, calculated daily, by which
---------------
the Revolving Credit Commitments exceed the sum of (i) the outstanding
principal amount of the Loans, plus (ii) the outstanding Reimbursement
Obligations, plus (iii) the aggregate undrawn face amount of all outstanding
Letters of Credit.
"Valuation NOI" means, the sum of (x) with respect to any office or
-------------
industrial Project or Minority Holding, which has been owned by the Borrower
for not less than four consecutive quarters, as of the first day of each
fiscal quarter for the immediately preceding consecutive four fiscal
quarters, an amount equal to NOI relating to such Project or Minority Holding
for such period, and (y) with respect to any office or industrial Project or
Minority Holding, which has been owned by the Borrower for less than four
consecutive quarters but which has achieved an occupancy rate of not less
than 85% for the immediately preceding quarter (including new construction),
as of the first day of each quarter until such time as such Project or
Minority Holding shall qualify under clause (x) hereof, an amount equal to
the product of (i) the NOI relating to such Project or Minority Holding for
the immediately preceding quarter, and (ii) four (4). An example of the
foregoing calculation is set forth on EXHIBIT G hereto.
---------
Section 1.2 Computation of Time Periods . In this Agreement, in
----------------------------
the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and
"until" each mean "to but excluding". Periods of days referred to in this
Agreement shall be counted in calendar days unless Business Days are
expressly prescribed. Any period determined hereunder by reference to a
month or months or year or years shall end on the day in the relevant
calendar month in the relevant year, if applicable, immediately preceding the
date numerically corresponding to the first day of such period, provided that
if such period commences on the last day of
-------- ----
a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month during which such period is to end), such period
shall, unless otherwise expressly required by the other provisions of this
Agreement, end on the last day of the calendar month.
Section 1.3 Accounting Terms . Subject to Section 14.4, for
----------------- ------------
purposes of this Agreement, all accounting terms not otherwise defined herein
shall have the meanings assigned to them in conformity with GAAP.
Section 1.4 Other Terms . All other terms contained in this
------------
Agreement shall, unless the context indicates otherwise, have the meanings
assigned to such terms by the Uniform Commercial Code to the extent the same
are defined therein.
ARTICLE II.
AMOUNTS AND TERMS OF LOANS
Section 2.1 Loans .
------
(a) Availability . Subject to the terms and conditions set forth in
-------------
this Agreement, each Lender hereby severally and not jointly agrees to make
revolving loans, in Dollars (each individually, a "Loan" and,
----
collectively, the "Loans") to the Borrower from time to time during the
-----
Revolving Credit Period, in an amount not to exceed such Lender's Pro Rata
Share of the Revolving Credit Availability at such time. All Loans
comprising the same Borrowing under this Agreement shall be made by the
Lenders simultaneously and proportionately to their then respective Pro Rata
Shares, it being understood that no Lender shall be responsible for any
failure by any other Lender to perform its obligation to make a Loan
hereunder nor shall the Revolving Credit Commitment of any Lender be
increased or decreased as a result of any such failure. Subject to the
provisions of this Agreement, the Borrower may repay any outstanding Loan on
any day which is a Business Day and any amounts so repaid may be reborrowed,
up to the amount available under this Section 2.1(a) at the
--------------
time of such Borrowing, until the Business Day next preceding the Revolving
Credit Termination Date. Each requested Borrowing of Loans funded on any
Funding Date shall be in a principal amount of at least $3,000,000 and with
integral multiples of $500,000; provided, however, that if the aggregate
Revolving Credit Commitments outstanding at the time of such requested
Borrowing is less than $3,000,000, then the requested Borrowing shall be for
the total amount of such outstanding aggregate Revolving Credit Commitments.
(b) Notice of Borrowing . (i) When the Borrower desires to borrow
--------------------
under this Section 2.1, it shall deliver to the Administrative Agent a
-----------
Notice of Borrowing, signed by it (i) no later than 12:00 noon (New York
time) on the Business Day immediately preceding the proposed Funding Date, in
the case of a Borrowing of Base Rate Loans and (ii) no later than 11:00 a.m.
(New York time) at least three (3) Business Days in advance of the proposed
Funding Date, in the case of a Borrowing of Eurodollar Rate Loans; provided,
however, that no more than two (2) Borrowings may be made
-------- -------
within any five (5) Business Day period. Such Notice of Borrowing shall
specify (i) the proposed Funding Date (which shall be a Business Day), (ii)
the amount of the proposed Borrowing, (iii) the Revolving Credit Availability
as of the date of such Notice of Borrowing, (iv) whether the proposed
Borrowing will be of Base Rate Loans or Eurodollar Rate Loans, (v) in the
case of Eurodollar Rate Loans, the requested Eurodollar Interest Period and
(vi) instructions for the disbursement of the proceeds of the proposed
Borrowing. Any Notice of Borrowing (or telephonic notice in lieu thereof)
given pursuant to this Section 2.1(b) shall be irrevocable.
--------------
(c) Making of Loans . (i) Promptly after receipt of a Notice of
----------------
Borrowing under Section 2.1(b), the Administrative Agent shall notify each
--------------
Lender by facsimile transmission, or other similar form of transmission, of
the proposed Borrowing (which notice to the Lenders, in the case of a
Borrowing of Eurodollar Rate Loans, shall be at least three (3) Business Days
in advance of the proposed Funding Date for such Loans). Each Lender shall
deposit an amount equal to its Pro Rata Share of the Borrowing requested by
the Borrower with the Administrative Agent at its office in New York, New
York, in immediately available funds, not later than 12:00 noon. (New York
time) on the respective Funding Date therefor. Subject to the fulfillment of
the conditions precedent set forth in Section 6.1 or
-----------
Section 6.2, as applicable, the Administrative Agent shall make the
- -----------
proceeds of such amounts received by it available to the Borrower at the
Administrative Agent's office in New York, New York on such Funding Date (or
on the date received if later than such Funding Date) and shall disburse such
proceeds in accordance with the Borrower's disbursement instructions set
forth in the applicable Notice of Borrowing. The failure of any Lender to
deposit the amount described above with the Administrative Agent on the
applicable Funding Date shall not relieve any other Lender of its obligations
hereunder to make its Loan on such Funding Date. In the event the conditions
precedent set forth in Section 6.1 or
-----------
6.2 are not fulfilled as of the proposed Funding Date for any Borrowing,
- ---
the Administrative Agent shall promptly return, by wire transfer of
immediately available funds, the amount deposited by each Lender to such
Lender.
(ii) Unless the Administrative Agent shall have been notified by any
Lender on the Business Day immediately preceding the applicable Funding Date
in respect of any Borrowing that such Lender does not intend to fund its Loan
requested to be made on such Funding Date, the Administrative Agent may
assume that such Lender has funded its Loan and is depositing the proceeds
thereof with the Administrative Agent on the Funding Date therefor, and the
Administrative Agent in its sole discretion may, but shall not be obligated
to, disburse a corresponding amount to the Borrower on the applicable Funding
Date. If the Loan proceeds corresponding to that amount are advanced to the
Borrower by the Administrative Agent but are not in fact deposited with the
Administrative Agent by such Lender on or prior to the applicable Funding
Date, such Lender agrees to pay, and in addition the Borrower agrees to
repay, to the Administrative Agent forthwith on demand such corresponding
amount, together with interest thereon, for each day from the date such
amount is disbursed to or for the benefit of the Borrower until the date such
amount is paid or repaid to the Administrative Agent, at the interest rate
applicable to such Borrowing. If such Lender shall pay to the Administrative
Agent the corresponding amount, the amount so paid shall constitute such
Lender's Loan, and if both such Lender and the Borrower shall pay and repay
such corresponding amount, the Administrative Agent shall promptly pay to the
Borrower such corresponding amount. This Section 2.1(c)(ii) does not relieve
------------------
any Lender of its obligation to make its Loan on any applicable Funding Date.
Section 2.2 Use of Proceeds of Loans and Letters of Credit . The
-----------------------------------------------
proceeds of the Loans and the Letters of Credit issued for the account of the
Borrower hereunder may be used for the purposes of:
(a) investments in direct or indirect interests in industrial and
office Projects (and notes secured by such properties) similar to and
consistent with the types of Projects owned and/or operated by the Borrower
on the Closing Date, located in the northeastern and Mid-Atlantic regions;
(b) renovation and redevelopment of Properties owned and operated by
the Borrower;
(c) funding of TI Work and Tenant Allowances;
(d) financing expansions, renovations and new construction related to
Properties owned and operated by the Borrower;
(e) refinancing of existing Indebtedness for borrowed money secured by
Projects;
(f) funding, directly or indirectly, of investments in an Opportunity
Fund; and
(g) working capital needs of the Borrower, provided, however, that in
no event, shall more than 10% of the Loan Amount be advanced for working
capital.
Section 2.3 Revolving Credit Termination Date . (a) The
----------------------------------
Revolving Credit Commitments shall terminate, and all outstanding Revolving
Credit Obligations shall be paid in full (or, in the case of unmatured Letter
of Credit Obligations, provision for payment in cash shall be made to the
satisfaction of the Lenders actually issuing Letters of Credit and the
Requisite Lenders), on the Revolving Credit Termination Date. Each Lender's
obligation to make Loans shall terminate on the Business Day next preceding
the Revolving Credit Termination Date.
Section 2.4 Maximum Credit Facility . Notwithstanding anything in
------------------------
this Agreement to the contrary, in no event shall the aggregate principal
Revolving Credit Obligations exceed the Maximum Revolving Credit Amount.
Section 2.5 Authorized Agents . On the Closing Date and from time
------------------
to time thereafter, the Borrower shall deliver to the Administrative Agent an
Officer's Certificate setting forth the names of the employees and agents
authorized to request Loans and Letters of Credit and to request a
conversion/continuation of any Loan and containing a specimen signature of
each such employee or agent. The employees and agents so authorized shall
also be authorized to act for the Borrower in respect of all other matters
relating to the Loan Documents. The Administrative Agent, the Documentation
Agent, the Arrangers, the Lenders and any Issuing Bank shall be entitled to
rely conclusively on such employee's or agent's authority to request such
Loan or Letter of Credit or such conversion/continuation until the
Administrative Agent and the Arrangers receive written notice to the
contrary. None of the Administrative Agent or the Arrangers shall have any
duty to verify the authenticity of the signature appearing on any written
Notice of Borrowing or Notice of Conversion/Continuation or any other
document, and, with respect to an oral request for such a Loan or Letter of
Credit or such conversion/continuation, the Administrative Agent and the
Arrangers shall have no duty to verify the identity of any person
representing himself or herself as one of the employees or agents authorized
to make such request or otherwise to act on behalf of the Borrower. None of
the Administrative Agent, the Arrangers or the Lenders shall incur any
liability to the Borrower or any other Person in acting upon any telephonic
or facsimile notice referred to above which the Administrative Agent or the
Arrangers believes to have been given by a person duly authorized to act on
behalf of the Borrower and the Borrower hereby indemnifies and holds harmless
the Administrative Agent, each Arranger and each other Lender from any loss
or expense the Administrative Agent, the Arrangers or the Lenders might incur
in acting in good faith as provided in this Section 2.5; provided,
-----------
however, that Borrower shall not indemnify the applicable party for acts
resulting from its own gross negligence or wilful misconduct.
ARTICLE III.
LETTERS OF CREDIT
Section 3.1 Letters of Credit . Subject to the terms and
------------------
conditions set forth in this Agreement, including, without limitation,
Section 3.1(c)(ii), each Issuing Bank hereby severally agrees to issue for
- ------------------
the account of the Borrower one or more Letters of Credit, subject to the
following provisions:
(a) Types and Amounts . An Issuing Bank shall not have any
------------------
obligation to issue, amend or extend, and shall not issue, amend or extend,
any Letter of Credit at any time:
(i) if the aggregate Letter of Credit Obligations with respect to such
Issuing Bank, after giving effect to the issuance, amendment or extension of
the Letter of Credit requested hereunder, shall exceed any limit imposed by
law or regulation upon such Issuing Bank;
(ii) if, immediately after giving effect to the issuance, amendment or
extension of such Letter of Credit, (1) the Letter of Credit Obligations at
such time would exceed $10,000,000 or (2) the Revolving Credit Obligations at
such time would exceed the Maximum Revolving Credit Amount at such time, or
(3) one or more of the conditions precedent contained in Sections 6.1 or 6.2,
------------ ---
as applicable, would not on such date be satisfied, unless such conditions
are thereafter satisfied and written notice
of such satisfaction is given to such Issuing Bank by the Administrative
Agent (and such Issuing Bank shall not otherwise be required to determine
that, or take notice whether, the conditions precedent set forth in
Sections 6.1 or 6.2, as applicable, have been satisfied);
- ------------ ---
(iii) which has an expiration date later than the earlier of (A) the
date one (1) year after the date of issuance (without regard to any automatic
renewal provisions thereof) or (B) the Business Day next preceding the
scheduled Revolving Credit Termination Date; or
(iv) which is in a currency other than Dollars.
(b) Conditions . In addition to being subject to the satisfaction
-----------
of the conditions precedent contained in Sections 6.1 and 6.2, as
------------ ---
applicable, the obligation of an Issuing Bank to issue, amend or extend any
Letter of Credit is subject to the satisfaction in full of the following
conditions:
(i) if the Issuing Bank so requests, the Borrower shall have executed
and delivered to such Issuing Bank and the Administrative Agent a Letter of
Credit Reimbursement Agreement and such other documents and materials as may
be required pursuant to the terms thereof; and
(ii) the terms of the proposed Letter of Credit shall be satisfactory to
the Issuing Bank in its sole discretion.
(c) Issuance of Letters of Credit . (i) The Borrower shall give the
------------------------------
Administrative Agent written notice that it requires the issuance a Letter of
Credit not later than 11:00 a.m. (New York time) on the third (3rd) Business
Day preceding the requested date for issuance thereof under this Agreement.
Such notice shall be irrevocable unless and until such request is denied by
the Issuing Bank and shall specify (A) that the requested Letter of Credit is
either a Commercial Letter of Credit or a Standby Letter of Credit, (B) that
such Letter of Credit is solely for the account of the Borrower, (C) the
stated amount of the Letter of Credit requested, (D) the effective date
(which shall be a Business Day) of issuance of such Letter of Credit, (E) the
date on which such Letter of Credit is to expire (which shall be a Business
Day and no later than the Business Day immediately preceding the scheduled
Revolving Credit Termination Date), (F) the Person for whose benefit such
Letter of Credit is to be issued, (G) other relevant terms of such Letter of
Credit, (H) the Revolving Credit Availability at such time, and (I) the
amount of the then outstanding Letter of Credit Obligations.
(ii) The Arrangers shall jointly select one Arranger to act as Issuing
Bank with respect to such Letter of Credit, which selection shall be in the
sole discretion of the Arrangers. If such Arranger declines to issue the
Letter of Credit, the Arrangers shall jointly select an alternative Lender to
issue such Letter of Credit.
(iii) The selected Arranger (if not the Administrative Agent) shall
give the Administrative Agent written notice, or telephonic notice confirmed
promptly thereafter in writing, of the issuance, amendment or extension of a
Letter of Credit (which notice the Administrative Agent shall promptly
transmit by telegram, facsimile transmission, or similar transmission to the
Borrower and each Lender).
(d) Reimbursement Obligations; Duties of Issuing Banks and other
Lenders.
(i) Notwithstanding any provisions to the contrary in any Letter of
Credit Reimbursement Agreement:
(A) the Borrower shall reimburse the Issuing Bank for amounts
drawn under its Letter of Credit, in Dollars, no later than the
date (the "Reimbursement Date") which is the earlier of
------------------
(I) the time specified in the applicable Letter of Credit Reimbursement
Agreement and (II) three (3) Business Days after the Borrower receives
written notice from the Issuing Bank that payment has been made under such
Letter of Credit by the Issuing Bank; and
(B) all Reimbursement Obligations with respect to any Letter
of Credit shall bear interest at the rate applicable to Base Rate
Loans in accordance with Section 5.1(a) from the date
--------------
of the relevant drawing under such Letter of Credit until the Reimbursement
Date and thereafter at the rate applicable to Base Rate Loans in accordance
with Section 5.1(d).
--------------
(ii) The Issuing Bank shall give the Administrative Agent written
notice, or telephonic notice confirmed promptly thereafter in writing, of all
drawings under a Letter of Credit and the payment (or the failure to pay when
due) by the Borrower on account of a Reimbursement Obligation (which notice
the Administrative Agent shall promptly transmit by telegram, facsimile
transmission or similar transmission to each Lender).
(iii) Solely as between the Issuing Banks and the other Lenders, in
determining whether to pay under any Letter of Credit, the Issuing Bank shall
have no obligation to the other Lenders other than to confirm that any
documents required to be delivered under a respective Letter of Credit appear
to have been delivered and that they appear on their face to comply with the
requirements of such Letter of Credit.
(e) Participations . (i) Immediately upon issuance by an Issuing
---------------
Bank of any Letter of Credit in accordance with the procedures set forth in
this Section 3.1, each Lender shall be deemed to have irrevocably and
-----------
unconditionally purchased and received from that Issuing Bank, without
recourse or warranty, an undivided interest and participation in such Letter
of Credit to the extent of such Lender's Pro Rata Share, including, without
limitation, all obligations of the Borrower with respect thereto (other than
amounts owing to the Issuing Bank under Section 3.1(g)) and
--------------
any security therefor and guaranty pertaining thereto.
(ii) If any Issuing Bank makes any payment under any Letter of Credit
and the Borrower does not repay such amount to the Issuing Bank on the
Reimbursement Date, the Issuing Bank shall promptly notify the Administrative
Agent, which shall promptly notify each other Lender, and each Lender shall
promptly and unconditionally pay to the Administrative Agent for the account
of such Issuing Bank, in immediately available funds, the amount of such
Lender's Pro Rata Share of such payment (net of that portion of such payment,
if any, made by such Issuing Bank in its capacity as an issuer of a Letter of
Credit), and the Administrative Agent shall promptly pay to such Issuing Bank
such amounts received by it, and any other amounts received by the
Administrative Agent for such Issuing Bank's account, pursuant to this
Section 3.1(e). If a Lender does not make its Pro Rata Share of the
- --------------
amount of such payment available to the such Lender agrees to pay to
the Administrative Agent for the account of the Issuing Bank, forthwith
on demand, such amount together with interest thereon at the interest
rate then applicable to Base Rate Loans in accordance with Section 5.1(a).
--------------
The failure of any Lender to make available to the Administrative Agent
for the account of an Issuing Bank its Pro Rata Share of any such payment
shall neither relieve any other Lender of its obligation hereunder to make
available to the Administrative Agent for the account of such Issuing Bank
such other Lender's Pro Rata Share of any payment on the date such payment
is to be made nor increase the obligation of any other Lender to make such
payment to the Administrative Agent.
(iii) Whenever an Issuing Bank receives a payment on account of a
Reimbursement Obligation, including any interest thereon, as to which the
Administrative Agent has previously received payments from any other Lender
for the account of such Issuing Bank pursuant to this Section
-------
3.1(e), such Issuing Bank shall promptly pay to the Administrative Agent
- ------
and the Administrative Agent shall promptly pay to each other Lender an
amount equal to such other Lender's Pro Rata Share thereof. Each such
payment shall be made by such reimbursed Issuing Bank or the Administrative
Agent, as the case may be, on the Business Day on which such Person receives
the funds paid to such Person pursuant to the preceding sentence, if received
prior to 11:00 a.m. (New York time) on such Business Day, and otherwise on
the next succeeding Business Day.
(iv) The Issuing Banks shall furnish the Lenders copies of any Letter of
Credit, Letter of Credit Reimbursement Agreement, and related amendment to
which such Issuing Bank is party and such other documentation as may be
deemed reasonable.
(v) The obligations of a Lender to make payments to the Administrative
Agent for the account of any Issuing Bank with respect to a Letter of Credit
shall be irrevocable, shall not be subject to any qualification or exception
whatsoever except willful misconduct or gross negligence of such Issuing
Bank, and shall be honored in accordance with this Article III (irrespective
-----------
of the satisfaction of the conditions described in Sections 6.1 and 6.2,
------------ ---
as applicable) under all circumstances, including, without limitation,
any of the following circumstances:
(A) any lack of validity or enforceability of this Agreement or
any of the other Loan Documents;
(B) the existence of any claim, setoff, defense or other right
which the Borrower may have at any time against a beneficiary named
in a Letter of Credit or any transferee of a beneficiary named in a
Letter of Credit (or any Person for whom any such transferee may be
acting), any Lender, or any other Person, whether in connection
with this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any
underlying transactions between the account party and beneficiary
named in any Letter of Credit);
(C) any draft, certificate or any other document presented under
the Letter of Credit having been determined to be forged,
fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;
(D) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents;
(E) any failure by that Issuing Bank to make any reports required
pursuant to Section 3.1(h) or the inaccuracy of any such report; or
--------------
(F) the occurrence of any Event of Default or Potential Event of
Default.
(f) Payment of Reimbursement Obligations . (i) The Borrower
-------------------------------------
unconditionally agrees to pay to each Issuing Bank, in Dollars, the amount of
all Reimbursement Obligations, interest and other amounts payable to such
Issuing Bank under or in connection with the Letters of Credit when such
amounts are due and payable, irrespective of any claim, setoff, defense or
other right which the Borrower may have at any time against any Issuing Bank
or any other Person.
(ii) In the event any payment by the Borrower received by an Issuing
Bank with respect to a Letter of Credit and distributed by the Administrative
Agent to the Lenders on account of their participations is thereafter set
aside, avoided or recovered from such Issuing Bank in connection with any
receivership, liquidation or bankruptcy proceeding, each Lender which
received such distribution shall, upon demand by such Issuing Bank,
contribute such Lender's Pro Rata Share of the amount set aside, avoided or
recovered together with interest at the rate required to be paid by such
Issuing Bank upon the amount required to be repaid by it.
(g) Letter of Credit Fee Charges . In connection with each Letter
-----------------------------
of Credit, Borrower hereby covenants to pay to the Administrative Agent the
following fees each payable quarterly in arrears (on the first Banking Day of
each calendar quarter following the issuance of each Letter of Credit): (1)
a fee for the account of the Lenders, computed daily on the amount of the
Letter of Credit issued and outstanding at a rate per annum equal to the
"Banks' L/C Fee Rate" (as hereinafter defined) and (2) a fee, for the Issuing
Bank's own account, computed daily on the amount of the Letter of Credit
issued and outstanding at a rate per annum equal to 0.125%. For purposes of
this Agreement, the "Banks' L/C Fee Rate" shall mean, at any time, a rate per
annum equal to the Applicable Margin for Eurodollar Rate Loans less 0.125%
per annum. It is understood and agreed
----
that the last installment of the fees provided for in this paragraph (g) with
respect to any particular Letter of Credit shall be due and payable on the
first day of the fiscal quarter following the return, undrawn, or
cancellation of such Letter of Credit. In addition, the Borrower shall pay
to each Issuing Bank, solely for its own account, the standard charges
assessed by such Issuing Bank in connection with the issuance,
administration, amendment and payment or cancellation of Letters of Credit
and such compensation in respect of such Letters of Credit for the Borrower's
account as may be agreed upon by the Borrower and such Issuing Bank in
writing from time to time.
(h) Letter of Credit Reporting Requirements . Each Issuing Bank
----------------------------------------
shall, no later than the tenth (10th) Business Day following the last day of
each calendar quarter, provide to the Administrative Agent, the Borrower, and
each other Lender separate schedules for Commercial Letters of Credit and
Standby Letters of Credit issued as Letters of Credit, in form and substance
reasonably satisfactory to the Administrative Agent, setting forth the
aggregate Letter of Credit Obligations outstanding to it at the end of each
month and, to the extent not otherwise provided in accordance with the
provisions of Section 3.1(c)(ii), any information
------------------
requested by the Administrative Agent or the Borrower relating to the date of
issue, account party, amount, expiration date and reference number of each
Letter of Credit issued by it.
(i) Indemnification; Exoneration . (i) In addition to all other
-----------------------------
amounts payable to an Issuing Bank, the Borrower hereby agrees to defend,
indemnify, and save the Administrative Agent, each Issuing Bank, and each
other Lender harmless from and against any and all claims, demands,
liabilities, penalties, damages, losses (other than loss of profits),
reasonable costs, reasonable charges and reasonable expenses (including
reasonable attorneys' fees but excluding taxes) which the Administrative
Agent, the Issuing Banks, or such other Lender may incur or be subject to as
a consequence, direct or indirect, of (A) the issuance of any Letter of
Credit other than as a result of the gross negligence or willful misconduct
of the Issuing Bank, as determined by a court of competent jurisdiction, or
(B) the failure of the Issuing Bank to honor a drawing under such Letter of
Credit as a result of any act or omission, whether rightful or wrongful, of
any present or future de jure or de facto
-- ---- -- -----
government or Governmental Authority.
(ii) As between the Borrower on the one hand and the Lenders on the
other hand, the Borrower assumes all risks of the acts and omissions of, or
misuse of Letters of Credit by, the respective beneficiaries of the Letters
of Credit. In furtherance and not in limitation of the foregoing, subject to
the provisions of the Letter of Credit Reimbursement Agreements, the
Administrative Agent, the Issuing Banks and the other Lenders shall not be
responsible for: (A) the form, validity, legality, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in
connection with the application for and issuance of the Letters of Credit,
even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the validity, legality or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (C) failure of the beneficiary of a Letter of
Credit to duly comply with conditions required in order to draw upon such
Letter of Credit; (D) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (E) errors in interpretation of
technical terms; (F) any loss or delay in the transmission or otherwise of
any document required in order to make a drawing under any Letter of Credit
or of the proceeds thereof; (G) the misapplication by the beneficiary of a
Letter of Credit of the proceeds of any drawing under such Letter of Credit;
and (H) any consequences arising from causes beyond the control of the
Administrative Agent, the Issuing Banks or the other Lenders, other than any
of the foregoing resulting from the gross negligence or wilful misconduct of
the Issuing Bank.
Section 3.2 Obligations Several . The obligations of the
--------------------
Administrative Agent, each Issuing Bank, and each other Lender under this
Article III are several and not joint, and no Issuing Bank or other Lender
- -----------
shall be responsible for the obligation to issue Letters of Credit or
participation obligation hereunder, respectively, of any other Issuing Bank
or other Lender.
ARTICLE IV.
PAYMENTS AND PREPAYMENTS
Section 4.1 Prepayments; Reductions in Revolving Credit
-------------------------------------------
Commitments .
- ------------
(a) Voluntary Prepayments . The Borrower may, at any time and from
----------------------
time to time, prepay the Loans in part or in their entirety, subject to the
following limitations. The Borrower shall give at least five (5) Business
Days' prior written notice to the Administrative Agent (which the
Administrative Agent shall promptly transmit to each Lender) of any
prepayment in the entirety to be made prior to the occurrence of an Event of
Default, which notice of prepayment shall specify the date (which shall be a
Business Day) of prepayment. When notice of prepayment is delivered as
provided herein, the outstanding principal amount of the Loans on the
prepayment date specified in the notice shall become due and payable on such
prepayment date. Each voluntary partial prepayment of the Loans shall be in a
minimum amount of $1,000,000 and in integral multiples of $500,000 in excess
of that amount (or such lesser amount in the event the unpaid principal
amount of any Loan is less than such minimum prepayment amount). Eurodollar
Rate Loans may be prepaid in part or in their entirety only upon payment of
the amounts described in Section 5.2(f).
--------------
(b) Voluntary Reductions In Revolving Credit Commitments . The
-----------------------------------------------------
Borrower may, upon at least five (5) days' prior written notice to the
Administrative Agent (which the Administrative Agent shall promptly transmit
to each Lender), at any time and from time to time, terminate in whole or
permanently reduce in part the Revolving Credit Commitments,
provided that (i) the Borrower shall have made whatever payment may be
- -------- ----
required to reduce the Revolving Credit Obligations to an amount less than or
equal to the Revolving Credit Commitments as reduced, which amount shall
become due and payable on the date specified in such notice and (ii) in the
case of a reduction, the minimum Revolving Credit Commitments that shall
remain outstanding shall be $100,000,000. Any partial reduction of the
Revolving Credit Commitments shall be in an aggregate minimum amount of
$1,000,000 and integral multiples of $1,000,000 in excess of that amount, and
shall reduce the Revolving Credit Commitment of each Lender proportionately
in accordance with its Pro Rata Share. Any notice of termination or
reduction given to the Administrative Agent under this Section 4.1(b)
--------------
shall specify the date (which shall be a Business Day) of such termination or
reduction and, with respect to a partial reduction, the aggregate principal
amount thereof.
(c) No Penalty . The prepayments and payments in respect of
-----------
reductions and terminations described in clauses (a) and (b) of this
Section 4.1 may be made without premium or penalty (except as provided in
- -----------
Section 5.2(f)).
- ---------------
(d) Mandatory Prepayment . If at any time from and after the
---------------------
Closing Date, the Company, the Borrower, or any of its consolidated
Subsidiaries receives proceeds from the sale or refinancing of an
unencumbered Project, the Borrower shall be required to prepay a portion of
the Loan in an amount equal to the Net Cash Proceeds received.
Notwithstanding the foregoing, in no event shall the Borrower be required to
prepay any portion of the Loan in the event that the property commonly known
as 538 Broadhollow Road, Melville, New York is sold or refinanced on or
before the date which is ninety (90) days from the date hereof. If at any
time from and after the Closing Date: (i) the Company or the Borrower merges
or consolidates with another Person and the Company or Borrower, as the case
may be, is not the surviving entity, or (ii) the Company, the Borrower, any
of its Affiliates or consolidated Subsidiaries or the Management Company
ceases to provide property management and leasing services to at least 80% of
the total number of Projects in which the Borrower has an ownership interest
(the date any such event shall occur being the "Prepayment Date"), the
---------------
Borrower shall be required to prepay the Loans in their entirety as if
the Prepayment Date were the Revolving Credit Termination Date and, the
Revolving Credit Commitment thereupon shall be terminated. The Borrower
shall immediately make such prepayment together with interest accrued to
the date of the prepayment on the principal amount prepaid and shall
return or cause to be returned all Letters of Credit to the
applicable Lender. In connection with the prepayment of any Loan prior to
the maturity thereof, the Borrower shall also pay any applicable expenses
pursuant to Section 5.2(f). Each such prepayment shall be applied to
--------------
prepay ratably the Loans of the Lenders. Amounts prepaid pursuant
to this Section 4.1(d) (other than amounts
--------------
prepaid pursuant to the first sentence of this Section 4.1(d)) may not be
--------------
reborrowed. As used in this Section 4.1(d) only, the phrase "sells,
--------------
transfers, assigns or conveys" shall not include (i) sales or conveyances
among Borrower and any of its consolidated Subsidiaries, or (ii) mortgages or
other security interests secured by Real Property or other Property.
Section 4.2 Payments .
---------
(a) Manner and Time of Payment . All payments of principal of and
---------------------------
interest on the Loans and Reimbursement Obligations and other Obligations
(including, without limitation, fees and expenses) which are payable to the
Administrative Agent, the Arrangers or any other Lender shall be made without
condition or reservation of right, in immediately available funds, delivered
to the Administrative Agent not later than 12:00 noon (New York time) on the
date and at the place due, to such account of the Administrative Agent (or
such Arranger) as it may designate, for the account of the Administrative
Agent, an Arranger, or such other Lender, as the case may be; and funds
received by the Administrative Agent (or such Arranger), including, without
limitation, funds in respect of any Loans to be made on that date, not later
than 12:00 noon (New York time) on any given Business Day shall be credited
against payment to be made that day and funds received by the Administrative
Agent (or such Arranger) after that time shall be deemed to have been paid on
the next succeeding Business Day. Payments actually received by the
Administrative Agent for the account of the Documentation Agent and the
Lenders, or any of them, shall be paid to them by the Administrative Agent
promptly after receipt thereof.
(b) Apportionment of Payments . (i) Subject to the provisions of
--------------------------
Section 4.2(b)(v), all payments of principal and interest in respect of
- -----------------
outstanding Loans, all payments in respect of Reimbursement Obligations, all
payments of fees and all other payments in respect of any other Obligations,
shall be allocated among such of the Lenders as are entitled thereto, in
proportion to their respective Pro Rata Shares or otherwise as provided
herein. Subject to the provisions of Section 4.2(b)(ii), all
------------------
such payments and any other amounts received by the Administrative Agent from
or for the benefit of the Borrower shall be applied in the following order:
(A) to pay principal of and interest on any portion of the Loans
which the Administrative Agent may have advanced on behalf of any
Lender other than Chase for which the Administrative Agent has not
then been reimbursed by such Lender or the Borrower,
(B) to pay all other Obligations then due and payable, and
(C) as the Borrower so designates.
Unless otherwise designated by the Borrower, all principal payments in
respect of Loans shall be applied first, to repay outstanding Base Rate
-----
Loans, and then to repay outstanding Eurodollar Rate Loans with those
----
Eurodollar Rate Loans which have earlier expiring Eurodollar Interest Periods
being repaid prior to those which have later expiring Eurodollar Interest
Periods.
(ii) After the occurrence of an Event of Default and while the same is
continuing which results in an acceleration of the Obligations in accordance
with Section 11.2, the Administrative Agent shall apply all
------------
payments in respect of any Obligations in the following order:
(A) first, to pay principal of and interest on any portion of the
Loans which the Administrative Agent may have advanced on behalf of
any Lender other than Chase for which the Administrative Agent has
not then been reimbursed by such Lender or the Borrower;
(B) second, to pay Obligations in respect of any fees, expense
reimbursements or indemnities then due to the Administrative Agent;
(C) third, to pay principal of and interest on Letter of Credit
Obligations (or, to the extent such Obligations are contingent,
deposited with the Administrative Agent to provide cash collateral
in respect of such Obligations);
(D) fourth, to pay Obligations in respect of any fees, expense
reimbursements or indemnities then due to the Lenders;
(E) fifth, to pay interest due in respect of Loans;
(F) sixth, to the ratable payment or prepayment of principal
outstanding on Loans; and
(G) seventh, to the ratable payment of all other Obligations.
The order of priority set forth in this Section 4.2(b)(ii) and the related
------------------
provisions of this Agreement are set forth solely to determine the rights and
priorities of the Administrative Agent and the other Lenders as among
themselves. The order of priority set forth in clauses (A) and (B) of this
Section 4.2(b)(ii) may be changed only with the prior written consent
- ------------------
of the Administrative Agent.
(iii) The Administrative Agent, in its sole discretion subject only
to the terms of this Section 4.2(b)(iii), may pay from the proceeds
-------------------
of Loans made to the Borrower hereunder, whether made following a request by
the Borrower pursuant to Section 2.1 or a deemed request as provided in
-----------
this Section 4.2(b)(iii), all amounts payable by the Borrower hereunder,
-------------------
including, without limitation, amounts payable with respect to payments of
principal, interest, Reimbursement Obligations and fees. The Borrower hereby
irrevocably authorizes the Lenders to make Loans, which Loans shall be Base
Rate Loans, in each case, upon notice from the Administrative Agent as
described in the following sentence for the purpose of paying principal,
interest, Reimbursement Obligations and fees due from the Borrower, and
agrees that all such Loans so made shall be deemed to have been requested by
it pursuant to Section 2.1 as of the date of the
-----------
aforementioned notice. The Administrative Agent shall request Loans on
behalf of the Borrower as described in the preceding sentence by notifying
the Lenders by facsimile transmission or other similar form of transmission
(which notice the Administrative Agent shall thereafter promptly transmit to
the Borrower), of the amount and Funding Date of the proposed Borrowing and
that such Borrowing is being requested on the Borrower's behalf pursuant to
this Section 4.2(b)(iii). On the proposed
-------------------
Funding Date, the Lenders shall make the requested Loans in accordance with
the procedures and subject to the conditions specified in Section 2.1.
-----------
(iv) Subject to Section 4.2(b)(v), the Administrative Agent shall
-----------------
promptly distribute to each Arranger and each other Lender at its primary
address set forth on the appropriate signature page hereof or the signature
page to the Assignment and Acceptance by which it became a Lender, or at such
other address as a Lender may request in writing, such funds as such Person
may be entitled to receive, subject to the provisions of
Article XII; provided that the Administrative Agent shall under no
- ----------- --------
circumstances be bound to inquire into or determine the validity, scope or
priority of any interest or entitlement of any Lender and may suspend all
payments or seek appropriate relief (including, without limitation,
instructions from the Requisite Lenders or an action in the nature of
interpleader) in the event of any doubt or dispute as to any apportionment or
distribution contemplated hereby.
(v) In the event that any Lender fails to fund its Pro Rata Share of
any Loan requested by the Borrower which such Lender is obligated to fund
under the terms of this Agreement (the funded portion of such Loan being
hereinafter referred to as a "Non Pro Rata Loan"), until the earlier of
-----------------
such Lender's cure of such failure and the termination of the Revolving
Credit Commitments, the proceeds of all amounts thereafter repaid to the
Administrative Agent by the Borrower and otherwise required to be applied to
such Lender's share of all other Obligations pursuant to the terms of this
Agreement shall be advanced to the Borrower by the Administrative Agent on
behalf of such Lender to cure, in full or in part, such failure by such
Lender, but shall nevertheless be deemed to have been paid to such Lender in
satisfaction of such other Obligations. Notwithstanding anything in this
Agreement to the contrary:
(A) the foregoing provisions of this Section 4.2(b)(v) shall
-----------------
apply only with respect to the proceeds of payments of Obligations and shall
not affect the conversion or continuation of Loans pursuant to
Section 5.1(c);
- --------------
(B) a Lender shall be deemed to have cured its failure to fund its
Pro Rata Share of any Loan at such time as an amount equal to such
Lender's original Pro Rata Share of the requested principal portion
of such Loan is fully funded to the Borrower, whether made by such
Lender itself or by operation of the terms of this
Section 4.2(b)(v), and whether or not the Non Pro Rata
-----------------
Loan with respect thereto has been repaid, converted or continued;
(C) amounts advanced to the Borrower to cure, in full or in part,
any such Lender's failure to fund its Pro Rata Share of any Loan
("Cure Loans") shall bear interest at the Base Rate in
----------
effect from time to time, and for all other purposes of this
Agreement shall be treated as if they were Base Rate Loans; and
(D) regardless of whether or not an Event of Default has occurred
or is continuing, and notwithstanding the instructions of the
Borrower as to its desired application, all repayments of principal
which, in accordance with the other terms of this
Section 4.2, would be applied to the outstanding Base Rate Loans
-----------
shall be applied first, ratably to all Base Rate Loans
-----
constituting Non Pro Rata Loans, second, ratably to Base Rate
------
Loans other than those constituting Non Pro Rata Loans or Cure
Loans and, third, ratably to Base Rate Loans constituting Cure Loans.
-----
(c) Payments on Non-Business Days . Whenever any payment to be made
------------------------------
by the Borrower hereunder or under the Notes is stated to be due on a day
which is not a Business Day, the payment shall instead be due on the next
succeeding Business Day (or, as set forth in Section 5.2(b)(iii), the next
-------------------
preceding Business Day).
Section 4.3 Promise to Repay; Evidence of Indebtedness .
-------------------------------------------
(a) Promise to Repay . The Borrower hereby agrees to pay when due
-----------------
the principal amount of each Loan which is made to it, and further agrees to
pay all unpaid interest accrued thereon, in accordance with the terms of this
Agreement and the Notes. The Borrower shall execute and deliver to each
Lender on the Closing Date, a promissory note, in the form of Exhibit B
---------
attached hereto with blanks appropriately completed, evidencing
the Loans and thereafter shall execute and deliver such other promissory
notes as are necessary to evidence the Loans owing to the Lenders after
giving effect to any assignment thereof pursuant to Section 14.1, all in
------------
the form of Exhibit B attached hereto with blanks appropriately completed
---------
(all such promissory notes and all amendments thereto, replacements thereof
and substitutions therefor being collectively referred to as the
"Notes"; and "Note" means any one of the Notes).
----- ----
(b) Loan Account. Each Lender shall maintain in accordance with
------------
its usual practice an account or accounts (a "Loan Account") evidencing the
------------
Indebtedness of the Borrower to such Lender resulting from each Loan owing to
such Lender from time to time, including the amount of principal and interest
payable and paid to such Lender from time to time hereunder and under the
Notes.
(c) Control Account. The Register maintained by the Administrative
---------------
Agent pursuant to Section 14.1(c) shall include a control account, and a
---------------
subsidiary account for each Lender, in which accounts (taken together) shall
be recorded (i) the date and amount of each Borrowing made hereunder, the
type of Loan comprising such Borrowing and any Eurodollar Interest Period
applicable thereto, (ii) the effective date and amount of each Assignment and
Acceptance delivered to and accepted by it and the parties thereto, (iii) the
amount of any principal or interest due and payable or to become due and
payable from the Borrower to each Lender hereunder or under the Notes and
(iv) the amount of any sum received by the Administrative Agent from the
Borrower hereunder and each Lender's share thereof.
(d) Entries Binding. The entries made in the Register and each Loan
---------------
Account shall be conclusive and binding for all purposes, absent manifest
error.
(e) No Recourse. Notwithstanding anything contained in this
-----------
Agreement, any Note, or the Guaranty to the contrary, it is expressly
understood and agreed that nothing herein or therein shall be construed as
creating any liability on any Limited Partner or the general partner of
Reckson FS Limited Partnership, or any partner, officer, shareholder or
director of any Limited Partner or the general partner of Reckson FS Limited
Partnership or any officer, director, or employee of the Borrower or either
Guarantor, to pay any of the Obligations other than liability arising under
applicable law from or in connection with (i) its own fraud or (ii) the
misappropriation or misapplication by it of proceeds of the Loans; but
nothing contained in this Section 4.3(e) shall be construed to
--------------
prevent the exercise of any remedy allowed to the Administrative Agent, the
Arrangers or the Lenders by law or by the terms of this Agreement or the
other Loan Documents which does not relate to or result in such an obligation
by any Limited Partner or the general partner of Reckson FS Limited
Partnership or such other Persons to pay money.
ARTICLE V.
INTEREST AND FEES
Section 5.1 Interest on the Loans and other Obligations .
--------------------------------------------
(a) Rate of Interest. All Loans and the outstanding principal
----------------
balance of all other Obligations shall bear interest on the unpaid principal
amount thereof from the date such Loans are made and such other Obligations
are due and payable until paid in full, except as otherwise provided in
Section 5.1(d), as follows:
- --------------
(i) If a Base Rate Loan or such other Obligation, at a rate per annum
equal to the sum of (A) the Base Rate, as in effect from time to time as
interest accrues, plus (B) the then Applicable Margin for Base Rate Loans; and
----
(ii) If a Eurodollar Rate Loan, at a rate per annum equal to the sum of
(A) the Eurodollar Rate determined for the applicable Eurodollar Interest
Period, plus (B) the then Applicable Margin for Eurodollar Loans.
----
The applicable basis for determining the rate of interest on the Loans shall
be selected by the Borrower at the time a Notice of Borrowing or a Notice of
Conversion/Continuation is delivered by the Borrower to the Administrative
Agent; provided, however, the Borrower may not select the
------- -------
Eurodollar Rate as the applicable basis for determining the rate of interest
on such a Loan if at the time of such selection an Event of Default has
occurred and is continuing. If on any day any Loan is outstanding with
respect to which notice has not been timely delivered to the Administrative
Agent in accordance with the terms of this Agreement specifying the basis for
determining the rate of interest on that day, then for that day interest on
that Loan shall be determined by reference to the Base Rate.
(b) Interest Payments. (i) Interest accrued on each Loan, whether
-----------------
a Base Rate Loan or a Eurodollar Loan shall be calculated on the last day of
each calendar month and shall be payable in arrears (A) on the first day of
each calendar month, commencing on the first such day following the making of
such Loan, (B) upon the payment or prepayment thereof in full or in part, and
(C) if not theretofore paid in full, at maturity (whether by acceleration or
otherwise) of such Loan.
(ii) Interest accrued on the principal balance of all other Obligations
shall be calculated on the last day of each calendar month and shall be
payable in arrears (A) on the first day of each calendar month, commencing on
the first such day following the incurrence of such Obligation, (B) upon
repayment thereof in full or in part, and (C) if not theretofore paid in
full, at the time such other Obligation becomes due and payable (whether by
acceleration or otherwise).
(c) Conversion or Continuation. (i) The Borrower shall have the
--------------------------
option (A) to convert at any time all or any part of outstanding Base Rate
Loans to Eurodollar Rate Loans; (B) to convert all or any part of outstanding
Eurodollar Rate Loans having Eurodollar Interest Periods which expire on the
same date to Base Rate Loans on such expiration date; or (C) to continue all
or any part of outstanding Eurodollar Rate Loans having Eurodollar Interest
Periods which expire on the same date as Eurodollar Rate Loans, and the
succeeding Eurodollar Interest Period of such continued Loans shall commence
on such expiration date; provided, however,
-------- -------
no such outstanding Loan may be continued as, or be converted into, a
Eurodollar Rate Loan (i) if the continuation of, or the conversion into,
would violate any of the provisions of Section 5.2 or (ii) if an Event of
-----------
Default has occurred and is continuing. Any conversion into or continuation
of Eurodollar Rate Loans under this Section 5.1(c) shall be
--------------
in a minimum amount of $3,000,000 and in integral multiples of $500,000 in
excess of that amount, except in the case of a conversion into or a
continuation of an entire Borrowing of Non Pro Rata Loans.
(ii) To convert or continue a Loan under Section 5.1(c)(i), the
-----------------
Borrower shall deliver a Notice of Conversion/Continuation to the
Administrative Agent no later than 11:00 a.m. (New York time) at least three
(3) Business Days in advance of the proposed conversion/continuation date. A
Notice of Conversion/Continuation shall specify (A) the proposed
conversion/continuation date (which shall be a Business Day), (B) the
principal amount of the Loan to be converted/continued, (C) whether such Loan
shall be converted and/or continued, and (D) in the case of a conversion to,
or continuation of, a Eurodollar Rate Loan, the requested Eurodollar Interest
Period. Promptly after receipt of a Notice of Conversion/Continuation under
this Section 5.1(c)(ii), the Administrative
------------------
Agent shall notify each Lender by facsimile transmission, or other similar
form of transmission, of the proposed conversion/continuation. Any Notice of
Conversion/Continuation for conversion to, or continuation of, a Loan (or
telephonic notice in lieu thereof) given pursuant to this Section 5.1(c)(ii)
------------------
shall be irrevocable, and the Borrower shall be bound to convert or continue
in accordance therewith. In the event no Notice of Conversion/Continuation is
delivered as and when specified in this Section 5.1(c)(ii) with respect to
------------------
outstanding Eurodollar Rate Loans, upon the expiration of the Eurodollar
Interest Period applicable thereto, such Loans shall automatically be
converted to a Base Rate Loan.
(d) Default Interest. Notwithstanding the rates of interest
----------------
specified in Section 5.1(a) or elsewhere in this Agreement, effective
--------------
immediately upon the occurrence of an Event of Default, and for as long
thereafter as such Event of Default shall be continuing, the principal
balance of all Loans and other Obligations shall bear interest at a rate
equal to (A) in the case of any Eurodollar Rate Loans outstanding as of the
date of occurrence of any Event of Default, the sum of (x) the applicable
Eurodollar Rate, plus (y) six percent (6.0%) per annum, and (B)
----
in the case of any Base Rate Loan (including any Eurodollar Loan that is
converted to a Base Rate Loan at maturity) the sum of (x) the Base Rate, as
in effect from time to time as interest accrues, plus (y) five percent
----
(5.0%) per annum.
(e) Computation of Interest. Interest on all Obligations shall be
-----------------------
computed on the basis of the actual number of days elapsed in the period
during which interest accrues and a year of 360 days. In computing interest
on any Loan, the date of the making of the Loan or the first day of a
Eurodollar Interest Period, as the case may be, shall be included and the
date of payment or the expiration date of a Eurodollar Interest Period, as
the case may be, shall be excluded; provided, however, if a
-------- -------
Loan is repaid on the same day on which it is made, one (1) day's interest
shall be paid on such Loan.
(f) Eurodollar Rate Information. Upon the request of the Borrower,
---------------------------
the Administrative Agent shall promptly provide to the Borrower such
information with respect to the applicable Eurodollar Rate as may be so
requested.
Section 5.2 Special Provisions Governing Eurodollar Rate Loans.
--------------------------------------------------
(a) Amount of Eurodollar Rate Loans. Each Eurodollar Rate Loan
-------------------------------
shall be in a minimum principal amount of $3,000,000 and in integral
multiples of $500,000 in excess of that amount.
(b) Determination of Eurodollar Interest Period. By giving notice
-------------------------------------------
as set forth in Section 2.1(b) (with respect to a Borrowing of Eurodollar
--------------
Rate Loans) or Section 5.1(c) (with respect to a conversion into or
--------------
continuation of Eurodollar Rate Loans), the Borrower shall have the option,
subject to the other provisions of this Section 5.2, to select an
-----------
interest period (each, a "Eurodollar Interest Period") to apply to the
--------------------------
Loans described in such notice, subject to the following provisions:
(i) The Borrower may only select, as to a particular Borrowing of
Eurodollar Rate Loans, a Eurodollar Interest Period of one, two or three
months in duration;
(ii) In the case of immediately successive Eurodollar Interest Periods
applicable to a Borrowing of Eurodollar Rate Loans, each successive
Eurodollar Interest Period shall commence on the day on which the next
preceding Eurodollar Interest Period expires;
(iii) If any Eurodollar Interest Period would otherwise expire on a
day which is not a Business Day, such Eurodollar Interest Period shall be
extended to expire on the next succeeding Business Day if the next succeeding
Business Day occurs in the same calendar month, and if there will be no
succeeding Business Day in such calendar month, the Eurodollar Interest
Period shall expire on the immediately preceding Business Day;
(iv) The Borrower may not select a Eurodollar Interest Period as to any
Loan if such Eurodollar Interest Period terminates later than the Revolving
Credit Termination Date;
(v) The Borrower may not select a Eurodollar Interest Period with
respect to any portion of principal of a Loan which extends beyond a date on
which the Borrower is required to make a scheduled payment of such portion of
principal of which the Borrower is aware on the date of such
request, in the case of a payment pursuant to Section 4.1(d) hereof; and
--------------
(vi) There shall be no more than seven (7) Eurodollar Interest Periods
in effect at any one time with respect to Eurodollar Rate Loans.
(c) Determination of Eurodollar Interest Rate. As soon as
-----------------------------------------
practicable on the second Business Day prior to the first day of each
Eurodollar Interest Period (the "Eurodollar Interest Rate Determination
--------------------------------------
Date"), the Administrative Agent shall determine (pursuant to the
- ----
procedures set forth in the definition of "Eurodollar Rate") the interest
rate which shall apply to the Eurodollar Rate Loans for which an interest
rate is then being determined for the applicable Eurodollar Interest Period
and shall promptly give notice thereof (in writing or by telephone or by
facsimile confirmed in writing) to the Borrower and to each Lender. The
Administrative Agent's determination shall be presumed to be correct, absent
manifest error, and shall be binding upon the Borrower.
(d) Interest Rate Unascertainable, Inadequate or Unfair. In the
---------------------------------------------------
event that at least one (1) Business Day before the Eurodollar Interest Rate
Determination Date:
(i) the Administrative Agent is advised by the Reference Bank that
deposits in Dollars (in the applicable amounts) are not being offered by the
Reference Bank in the London interbank market for such Eurodollar Interest
Period; or
(ii) the Administrative Agent determines that adequate and fair means do
not exist for ascertaining the applicable interest rates by reference to
which the Eurodollar Rate then being determined is to be fixed; or
(iii) the Requisite Lenders advise the Administrative Agent that the
Eurodollar Rate for Eurodollar Rate Loans comprising such Borrowing will not
adequately reflect the cost to such Requisite Lenders of obtaining funds in
Dollars in the London interbank market in the amount substantially equal to
such Lenders' Eurodollar Rate Loans in Dollars and for a period equal to such
Eurodollar Interest Period; then the Administrative Agent shall forthwith
give notice thereof to the Borrower, whereupon (until the Administrative Agent
notifies the Borrower that the circumstances giving rise to such suspension no
longer exist) the right of the Borrower to elect to have Loans bear interest
based upon the Eurodollar Rate shall be suspended and each outstanding
Eurodollar Rate Loan shall be converted into a Base Rate Loan on the last day
of the then current Eurodollar Interest Period therefor, notwithstanding any
prior election by the Borrower to the contrary.
(e) Illegality. (i) If at any time any Lender determines (which
----------
determination shall, absent manifest error, be final and conclusive and
binding upon all parties) that the making or continuation of any Eurodollar
Rate Loan has become unlawful or impermissible by compliance by that Lender
with any law, governmental rule, regulation or order of any Governmental
Authority (whether or not having the force of law and whether or not failure
to comply therewith would be unlawful or would result in costs or penalties),
then, and in any such event, such Lender may give notice of that
determination, in writing, to the Borrower and the Administrative Agent, and
the Administrative Agent shall promptly transmit the notice to each other
Lender.
(ii) When notice is given by a Lender under Section 5.2(e)(i),
-----------------
(A) the Borrower's right to request from such Lender and such Lender's
obligation, if any, to make Eurodollar Rate Loans shall be immediately
suspended, and such Lender shall make a Base Rate Loan as part of any
requested Borrowing of Eurodollar Rate Loans and (B) if the affected
Eurodollar Rate Loan or Loans are then outstanding, the Borrower shall
immediately, or if permitted by applicable law, no later than the date
permitted thereby, upon at least one (1) Business Day's prior written notice
to the Administrative Agent and the affected Lender, convert each such Loan
into a Base Rate Loan.
(iii) If at any time after a Lender gives notice under Section
-------
5.2(e)(i) such Lender determines that it may lawfully make Eurodollar Rate
- ---------
Loans, such Lender shall promptly give notice of that determination, in
writing, to the Borrower and the Administrative Agent, and the Administrative
Agent shall promptly transmit the notice to each other Lender. The
Borrower's right to request, and such Lender's obligation, if any, to make
Eurodollar Rate Loans shall thereupon be restored.
(f) Compensation. In addition to all amounts required to be paid by
------------
the Borrower pursuant to Section 5.1 and Article XIII, the Borrower shall
----------- ------------
compensate each Lender, upon demand, for all losses, expenses and liabilities
(including, without limitation, any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such
Lender to fund or maintain such Lender's Eurodollar Rate Loans to the
Borrower but excluding any loss of Applicable Margin on the relevant Loans)
which that Lender may sustain (i) if for any reason a Borrowing, conversion
into or continuation of Eurodollar Rate Loans does not occur on a date
specified therefor in a Notice of Borrowing or a Notice of
Conversion/Continuation given by the Borrower or in a telephonic request by
it for borrowing or conversion/continuation or a successive Eurodollar
Interest Period does not commence after notice therefor is given pursuant to
Section 5.1(c), other than pursuant to Sections 5.2(d)
- -------------- ---------------
or (e), or (ii) if for any reason any Eurodollar Rate Loan is prepaid (other
than pursuant to Section 4.1(d) or Section 5.2(d) or (e)) on a date
-------------- ---------------------
which is not the last day of the applicable Eurodollar Interest Period or
(iii) as a consequence of any failure by the Borrower to repay a Eurodollar
Rate Loan when required by the terms of this Agreement. The Lender making
demand for such compensation shall deliver to the Borrower concurrently with
such demand a written statement in reasonable detail as to such losses,
expenses and liabilities, and this statement shall be conclusive as to the
amount of compensation due to that Lender, absent manifest error.
(g) Booking of Eurodollar Rate Loans. Any Lender may make, carry or
--------------------------------
transfer Eurodollar Rate Loans at, to, or for the account of, its Eurodollar
Lending Office or Eurodollar Affiliate or its other offices or Affiliates.
No Lender shall be entitled, however, to receive any greater amount under
Sections 4.2 or 5.2(f) or Article XIII as a result of the
- ------------ ------ ------------
transfer of any such Eurodollar Rate Loan to any office (other than such
Eurodollar Lending Office) or any Affiliate (other than such Eurodollar
Affiliate) than such Lender would have been entitled to receive immediately
prior thereto, unless (i) the transfer occurred at a time when circumstances
giving rise to the claim for such greater amount did not exist and (ii) such
claim would have arisen even if such transfer had not occurred.
(h) Affiliates Not Obligated. No Eurodollar Affiliate or other
------------------------
Affiliate of any Lender shall be deemed a party to this Agreement or shall
have any liability or obligation under this Agreement.
(i) Adjusted Eurodollar Rate. Any failure by any Lender to take
------------------------
into account the Eurodollar Reserve Percentage when calculating interest due
on Eurodollar Rate Loans shall not constitute, whether by course of dealing
or otherwise, a waiver by such Lender of its right to collect such amount for
any future period.
(j) Application of Mandatory Prepayments. The principal amount of
------------------------------------
any mandatory prepayment pursuant to Section 4.1(d) hereof, shall be
--------------
applied, first, to the outstanding Base Rate Loans and then, to the
outstanding Eurodollar Rate Loans. The Administrative Agent shall hold such
principal amounts allocated for prepayment of Eurodollar Rate Loans until the
end of the applicable Eurodollar Interest Period(s) and, during the interim
period, shall invest said sums in Cash Equivalents. Interest earned thereon
shall be forwarded to the Borrower upon the payment of the Eurodollar Rate
Loans at the end of said Eurodollar Interest Period.
Section 5.3 Fees.
----
(a) Letter of Credit Fee. The Borrower shall pay to the
--------------------
Administrative Agent, for the account of the Lenders in proportion to their
interests in respective undrawn Letters of Credit, a Letter of Credit Fee as
more particularly set forth in Section 3.1(g) hereof.
(b) Unused Commitment Fee. The Borrower shall pay to the
---------------------
Administrative Agent, for the account of the Lenders based on their
respective Pro Rata Shares, a fee (the "Unused Commitment Fee"), accruing
---------------------
at a per annum rate equal to the then applicable Unused Commitment Fee
Percentage on the Unused Facility, such fee being payable monthly, in
arrears, commencing on the first day of the fiscal month next succeeding the
Closing Date, and on the first day of each fiscal month thereafter.
Notwithstanding the foregoing, in the event that any Lender fails to fund its
Pro Rata Share of any Loan requested by the Borrower which such Lender is
obligated to fund under the terms of this Agreement, (A) such Lender shall
not be entitled to any portion of the Unused Commitment Fee with respect to
its Revolving Credit Commitment until such failure has been cured in
accordance with Section 4.2(b)(v)(B) and (B) until such time, the
--------------------
Unused Commitment Fee shall accrue in favor of the Lenders which have funded
their respective Pro Rata Shares of such requested Loan, shall be allocated
among such performing Lenders ratably based upon their relative Revolving
Credit Commitments, and shall be calculated based upon the average amount by
which the aggregate Revolving Credit Commitments of such performing Lenders
exceeds the sum of (I) the outstanding principal amount of the Loans owing to
such performing Lenders, and (II) the outstanding Reimbursement Obligations
owing to such performing Lenders, and (III) the aggregate participation
interests of such performing Lenders arising pursuant to Section 3.1(e) with
--------------
respect to undrawn and outstanding Letters of Credit.
(c) Calculation and Payment of Fees. All fees shall be calculated
-------------------------------
on the basis of the actual number of days elapsed in a 360-day year. All
fees shall be payable in addition to, and not in lieu of, interest,
compensation, expense reimbursements, indemnification and other Obligations.
Fees shall be payable to the Administrative Agent at its office in New York,
New York in immediately available funds unless otherwise set forth herein.
All fees shall be fully earned and nonrefundable when paid. All fees due to
any Arranger or any other Lender, including, without limitation, those
referred to in this Section 5.3, shall bear interest, if not paid when due,
-----------
at the interest rate specified in Section 5.1(d) and shall constitute
--------------
Obligations.
ARTICLE VI.
CONDITIONS TO LOANS AND LETTERS OF CREDIT
Section 6.1 Conditions Precedent to the Initial Loans and Letters
-----------------------------------------------------
of Credit . The obligation of each Lender on the Initial Funding Date to
- ----------
make any Loan requested to be made by it, and to issue Letters of Credit,
shall be subject to the satisfaction of all of the following conditions
precedent:
(a) Documents. The Administrative Agent shall have received on or
---------
before the Initial Funding Date all of the following:
(i) this Agreement, the Notes, and, to the extent not otherwise
specifically referenced in this Section 6.1(a), all other Loan Documents
--------------
and agreements, documents and instruments described in the List of Closing
Documents attached hereto as EXHIBIT E and made a part hereof, each duly
---------
executed, and in form and substance satisfactory to the Agents; without
limiting the foregoing, the Borrower hereby directs its counsel, Brown & wood
LLP to prepare and deliver to the Agents, the Lenders, and Skadden, Arps,
Slate, Meagher & Flom LLP the legal opinions referred to in such List of
Closing Documents; and
(ii) such additional documentation as the Agents may reasonably request.
(b) No Legal Impediments. No law, regulation, order, judgment or
--------------------
decree of any Governmental Authority shall, and the Administrative Agent
shall not have received any notice that litigation is pending or threatened
which is likely to (i) enjoin, prohibit or restrain the making of the Loans
and/or the issuance of Letters of Credit on the Initial Funding Date or (ii)
impose or result in the imposition of a Material Adverse Effect.
(c) No Change in Condition. No change in the business, assets,
----------------------
management, operations, financial condition or prospects of the Borrower or
any of its Properties shall have occurred since September 30, 1997 which
change, in the judgment of the Administrative Agent and the Documentation
Agent, will have a Material Adverse Effect.
(d) Interim Liabilities and Equity. Except as disclosed to the
------------------------------
Arrangers and the Lenders, since September 30, 1997, neither the Borrower nor
the Company shall have (i) entered into any (as determined in good faith by
the Administrative Agent and the Documentation Agent) commitment or
transaction, including, without limitation, transactions for borrowings and
capital expenditures, which are not in the ordinary course of the Borrower's
business, (ii) declared or paid any dividends or other distributions, (iii)
established compensation or employee benefit plans, or (iv) redeemed or
issued any equity Securities.
(e) No Loss of Material Agreements and Licenses. Since September
-------------------------------------------
30, 1997, no agreement or license relating to the business, operations or
employee relations of the Borrower or any of its Real Properties shall have
been terminated, modified, revoked, breached or declared to be in default,
the termination, modification, revocation, breach or default under which, in
the reasonable judgment of the Administrative Agent and the Documentation
Agent, would result in a Material Adverse Effect.
(f) No Market Changes. Since the Closing Date no material adverse
-----------------
change shall have occurred in the conditions in the capital markets.
(g) No Default. No Event of Default or Potential Event of Default
----------
shall have occurred and be continuing or would result from the making of the
Loans or the issuance of any Letter of Credit.
(h) Representations and Warranties. All of the representations and
------------------------------
warranties contained in Section 7.1 and in any of the other Loan Documents
-----------
shall be true and correct in all material respects on and as of the Initial
Funding Date.
(i) Termination of Existing Credit Agreement. Simultaneously with
----------------------------------------
the making of the Initial Loan, the following existing credit agreement of
Borrower (A) shall have been terminated, all amounts due to the lenders
thereunder shall have been paid in full and all collateral held by the
lenders thereunder (if any) released and reconveyed or (B) the termination,
release and reconveyance documents shall have been executed and delivered to
the Title Company to be held in escrow pending receipt of pay-off amounts by
such Lender: the Amended and Restated Loan Agreement, dated as of February
22, 1996, by and among Borrower and the institutions parties thereto as
lender and collateral agent.
(j) Fees and Expenses Paid. There shall have been paid to the
----------------------
Administrative Agent, for the accounts of the Agents and the other Lenders,
as applicable, all fees due and payable on or before the Initial Funding Date
and all expenses due and payable on or before the Initial Funding Date,
including, without limitation, reasonable attorneys' fees and expenses, and
other costs and expenses incurred in connection with the Loan Documents.
Section 6.2 Conditions Precedent to All Subsequent Loans and
------------------------------------------------
Letters of Credit . The obligation of each Lender to make any Loan
- -----------------
requested to be made by it on any date after the Initial Funding Date and the
agreement of each Lender to issue any Letter of Credit on any date after the
Initial Funding Date is subject to the following conditions precedent as of
each such date:
(a) Representations and Warranties. As of such date, both before
------------------------------
and after giving effect to the Loans to be made or the Letter of Credit to be
issued on such date, all of the representations and warranties of the
Borrower contained in Section 7.1 and in any other Loan Document (other
-----------
than representations and warranties which expressly speak as of a different
date) shall be true and correct in all material respects.
(b) No Defaults. No Event of Default or Potential Event of Default
-----------
shall have occurred and be continuing or would result from the making of the
requested Loan or issuance of the requested Letter of Credit.
(c) No Legal Impediments. No law, regulation, order, judgment or
--------------------
decree of any Governmental Authority shall, and the Administrative Agent
shall not have received from such Lender notice that, in the reasonable
judgment of such Lender, litigation is pending or threatened which is likely
to, enjoin, prohibit or restrain such Lender's making of the requested Loan
or participation in or issuance of the requested Letter of Credit.
(d) No Material Adverse Effect. The Borrower has not received
--------------------------
written notice from the Requisite Lenders that an event has occurred since
the date of this Agreement which has had and continues to have, or is
reasonably likely to have, a Material Adverse Effect.
Each submission by the Borrower to the Administrative Agent of a Notice of
Borrowing with respect to a Loan, each acceptance by the Borrower of the
proceeds of each Loan made hereunder, each submission by the Borrower to a
Lender of a request for issuance of a Letter of Credit and the issuance of
such Letter of Credit, shall constitute a representation and warranty by the
Borrower as of the Funding Date in respect of such Loan and the date of
issuance of such Letter of Credit, that all the conditions contained in this
Section 6.2 have been satisfied or waived in accordance with Section
- -----------
14.7 (it being understood that with respect to the condition set forth in
Section 6.2(c), the same shall constitute a representation and warranty by
- --------------
the Borrower only to the extent that the Borrower shall have knowledge of any
of the events set forth therein).
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES
Section 7.1 Representations and Warranties of the Borrower . In
-----------------------------------------------
order to induce the Lenders to enter into this Agreement and to make the
Loans and the other financial accommodations to the Borrower and to issue the
Letters of Credit described herein, the Borrower hereby represents and
warrants to each Lender that the following statements are true, correct and
complete:
(a) Organization; Powers. (i) The Borrower (A) is a limited
--------------------
partnership duly organized, validly existing and in good standing under the
laws of the State of Delaware, (B) is duly qualified to do business and is in
good standing under the laws of each jurisdiction in which failure to be so
qualified and in good standing will have a Material Adverse Effect, (C) has
all requisite power and authority to own, operate and encumber its Property
and to conduct its business as presently conducted and as proposed to be
conducted in connection with and following the consummation of the
transactions contemplated by this Agreement, and (D) is a partnership for
federal income tax purposes.
(ii) The Company (A) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Maryland (B) is duly
authorized and qualified to do business and is in good standing under the
laws of each jurisdiction in which failure to be so qualified and in good
standing will have a Material Adverse Effect, and (C) has all requisite
corporate power and authority to own, operate and encumber its Property and
to conduct its business as presently conducted.
(iii) True, correct and complete copies of the Organizational
Documents of the Borrower and the Company identified on SCHEDULE 7.1-A
--------------
have been delivered to the Administrative Agent, each of which is in full
force and effect, has not been modified or amended except to the extent set
forth indicated therein or as otherwise permitted hereby and, to the best of
the Borrower's knowledge, there are no defaults under such Organizational
Documents and no events which, with the passage of time or giving of notice
or both, would constitute a default under such Organizational Documents.
Borrower shall update SCHEDULE 7.1-A from time to time in order to keep
--------------
said Schedule true and correct.
(iv) Neither the Borrower nor the Company are "foreign persons" within
the meaning of Section 1445 of the Internal Revenue Code.
(b) Authority. (i) The Company has the requisite power and
---------
authority to execute and deliver this Agreement on behalf of the Borrower and
each of the other Loan Documents which are required to be executed on behalf
of the Borrower as required by this Agreement. The Company is the Person who
has executed this Agreement and such other Loan Documents on behalf of the
Borrower and is the sole general partner of the Borrower.
(ii) The execution, delivery and performance of each of the Loan
Documents which must be executed in connection with this Agreement by the
Borrower and to which the Borrower is a party and the consummation of the
transactions contemplated thereby are within the Borrower's partnership
powers, have been duly authorized by all necessary partnership action (and,
in the case of the Company acting on behalf of the Borrower in connection
therewith, all necessary corporate action of the Company) and such
authorization has not been rescinded. No other partnership or corporate
action or proceedings on the part of the Borrower or the Company is necessary
to consummate such transactions.
(iii) Each of the Loan Documents to which the Borrower is a party
has been duly executed and delivered on behalf of the Borrower and
constitutes the Borrower's legal, valid and binding obligation, enforceable
against the Borrower in accordance with its terms, except as may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally or by general principles
of equity regardless of whether enforcement is considered in a proceeding at
law or in equity. Each of the Loan Documents to which Borrower is a party is
in full force and effect and all the terms, provisions, agreements and
conditions set forth therein and required to be performed or complied with by
the Company, the Borrower and the Borrower's Subsidiaries on or before the
Initial Funding Date have been performed or complied with, and no Potential
Event of Default, Event of Default exists hereunder.
(c) Subsidiaries; Ownership of Capital Stock and Partnership
--------------------------------------------------------
Interests. (i)SCHEDULE 7.1-C (A) contains a diagram indicating the
- --------- --------------
corporate structure of the Company, the Borrower, and any other Person in
which the Company or the Borrower holds a direct or indirect partnership,
joint venture or other equity interest indicating the nature of such interest
with respect to each Person included in such diagram; and (B) accurately sets
forth (1) the correct legal name of such Person, the jurisdiction of its
incorporation or organization and the jurisdictions in which it is qualified
to transact business as a foreign corporation, or otherwise, and (2) the
authorized, issued and outstanding shares or interests of each class of
equity Securities of the Company, the Borrower and the Subsidiaries of the
Borrower, and (3) the ownership interest of the Borrower, the Company and the
Subsidiaries of the Borrower in all Minority Holdings. None of such issued
and outstanding Securities is subject to any vesting, redemption, or
repurchase agreement, and there are no warrants or options (other than
Permitted Securities Options) outstanding with respect to such Securities,
except as noted on SCHEDULE 7.1-C. The outstanding Capital Stock of the
--------------
Company is duly authorized, validly issued, fully paid and nonassessable and
the outstanding Securities of the Borrower and its Subsidiaries are duly
authorized and validly issued. Attached hereto as part of SCHEDULE 7.1-C
--------------
is a true, accurate and complete copy of the Borrower Partnership Agreement
as in effect on the Closing Date and such Partnership Agreement has not been
amended, supplemented, replaced, restated or otherwise modified in any
respect since the Closing Date, except as otherwise permitted hereby.
Borrower shall update SCHEDULE 7.1-C as of the first day of each
--------------
fiscal quarter, and shall deliver the same together with the Quarterly
Compliance Certificates, to the extent required, in order to keep said
Schedule true and correct.
(ii) Except where failure would not have a Material Adverse Effect on
the Borrower, each Subsidiary: (A) is a corporation or partnership, as
indicated on SCHEDULE 7.1-C, duly organized, validly existing and, if
--------------
applicable, in good standing under the laws of the jurisdiction of its
organization, (B) is duly qualified to do business and, if applicable, is in
good standing under the laws of each jurisdiction in which failure to be so
qualified and in good standing would have a Material Adverse Effect, and (C)
has all requisite power and authority to own, operate and encumber its
Property and to conduct its business as presently conducted and as proposed
to be conducted hereafter.
(d) No Conflict. The execution, delivery and performance of each of
-----------
the Loan Documents to which the Borrower is a party do not and will not (i)
conflict with the Organizational Documents of the Borrower or the Company,
(ii) conflict with, result in a breach of or constitute (with or without
notice or lapse of time or both) a default under any Requirement of Law or
material Contractual Obligation of the Borrower or the Company, or require
termination of any such material Contractual Obligation which would subject
the Administrative Agent or any of the other Lenders to any liability,
(iii) result in or require the creation or imposition of any Lien whatsoever
upon any of the Property or assets of the Borrower or the Company, or
(iv) require any approval of shareholders of the Company.
(e) Governmental Consents. The execution, delivery and performance
---------------------
of each of the Loan Documents to which the Borrower is a party do not and
will not require any registration with, consent or approval of, or notice to,
or other action to, with or by any Governmental Authority, except filings,
consents or notices which have been made, obtained or given.
(f) Governmental Regulation. Neither the Borrower nor the Company
-----------------------
is subject to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act, the Interstate Commerce Act, or the Investment
Company Act of 1940, or any other federal or state statute or regulation
which limits its ability to incur indebtedness as contemplated by this
Agreement.
(g) Financial Position. Complete and accurate copies of the
------------------
following financial statements and materials have been delivered to the
Administrative Agent: annual unaudited financial statements of the Borrower
and annual audited financial statements of the Company for the fiscal year
ended December 31, 1996. All annual financial statements of the Borrower
shall be accompanied by an Officer's Certificate of the Borrower, and shall
be certified by the Chief Financial Officer of the Borrower as fairly
presenting in all material respects the financial position of the Borrower.
All financial statements included in such materials were prepared in all
material respects in conformity with GAAP, except as otherwise noted therein,
and fairly present in all material respects the respective consolidated
financial positions, and the consolidated results of operations and cash
flows for each of the periods covered thereby of the Borrower and the Company
as at the respective dates thereof. Neither the Borrower nor the Company has
any Contingent Obligation, contingent liability or liability for any taxes,
long-term leases or commitments, not reflected in its financial statements
delivered to the Administrative Agent on or prior to the Closing Date or
otherwise disclosed to the Administrative Agent and the Lenders in writing on
or prior to the Closing Date, which will have a Material Adverse Effect.
(h) Indebtedness. SCHEDULE 7.1-H sets forth, as of December 31,
------------ --------------
1997, all Indebtedness for borrowed money of each of the Borrower, Company
and their respective Subsidiaries and, except as set forth on SCHEDULE
--------
7.1-H, there are no defaults in the payment of principal or interest on
- -----
any such Indebtedness and no payments thereunder have been deferred or
extended beyond their stated maturity and there has been no material change
in the type or amount of such Indebtedness (except for the repayment of
certain Indebtedness) since December 31, 1997.
(i) Litigation; Adverse Effects. Except as set forth in
---------------------------
SCHEDULE 7.1-I, as of the Closing Date, there is no action, suit,
- --------------
proceeding, investigation or arbitration before or by any Governmental
Authority or private arbitrator pending or, to the knowledge of the Borrower,
threatened against the Company, the Borrower, or any of their respective
Subsidiaries, or any Property of any of them (i) challenging the validity or
the enforceability of any of the Loan Documents, (ii) which will result in
any Material Adverse Effect, or (iii) under the Racketeering Influenced and
Corrupt Organizations Act or any similar federal or state statute where such
Person is a defendant in a criminal indictment that provides for the
forfeiture of assets to any Governmental Authority as a potential criminal
penalty. There is no material loss contingency within the meaning of GAAP
which has not been reflected in the consolidated financial statements of the
Company and the Borrower. None of the Company, the Borrower or any
Subsidiary of the Borrower is (A) in violation of any applicable Requirements
of Law which violation will have or is reasonably likely to have a Material
Adverse Effect, or (B) in default with respect to any final judgment, writ,
injunction, restraining order or order of any nature, decree, rule or
regulation of any court or Governmental Authority which will have a Material
Adverse Effect.
(j) No Material Adverse Effect. Since September 30, 1997, there has
--------------------------
occurred no event which has had a Material Adverse Effect.
(k) Intentionally Omitted.
(l) Payment of Taxes. All material tax returns, reports and similar
----------------
statements or filings the Company, the Borrower and its Subsidiaries required
to be filed have been timely filed (or extensions to file have been
obtained), and, except for Customary Permitted Liens, all material taxes,
assessments, fees and other charges of Governmental Authorities thereupon and
upon or relating to their respective Properties, assets, receipts, sales,
use, payroll, employment, income, licenses and franchises which are shown in
such returns or reports to be due and payable have been paid, except to the
extent (i) such taxes, assessments, fees and other charges of Governmental
Authorities are being contested in good faith by an appropriate proceeding
diligently pursued as permitted by the terms of Section 9.4 and (ii) such
-----------
taxes, assessments, fees and other charges of
Governmental Authorities pertain to Property of the Borrower or any of its
Subsidiaries and the non-payment of the amounts thereof would not,
individually or in the aggregate, result in a Material Adverse Effect. All
other material taxes (including, without limitation, real estate taxes),
assessments, fees and other governmental charges upon or relating to the
respective Properties of the Borrower and its Subsidiaries which are due and
payable have been paid, except for Customary Permitted Liens and except to
the extent described in clauses (i) and (ii) hereinabove. The Borrower has
no knowledge of any proposed tax assessment against the Borrower, any of its
Subsidiaries, or any of the Projects that will have or is reasonably likely
to have a Material Adverse Effect.
(m) Performance. To the knowledge of the Borrower, neither the
-----------
Company, the Borrower nor any of their Subsidiaries has received any written
notice or citation, nor has actual knowledge, that (i) it is in default in
the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any Contractual Obligation applicable to
it, or (ii) any condition exists which, with the giving of notice or the
lapse of time or both, would constitute a default with respect to any such
Contractual Obligation, in each case, except where such default or defaults,
if any, will not have a Material Adverse Effect.
(n) Disclosure. The representations and warranties of the Borrower
----------
contained in the Loan Documents, and all certificates and other documents
delivered to the Administrative Agent pursuant to the terms thereof, do not
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements contained herein or therein,
in light of the circumstances under which they were made, taken as a whole,
not misleading. Notwithstanding the foregoing, the Lenders acknowledge that
the Borrower shall not have liability under this clause (n) with respect to
its projections of future events or for any financial projections.
(o) Requirements of Law. The Borrower and each of its Subsidiaries
-------------------
is in compliance with all Requirements of Law applicable to it and its
respective businesses and Properties, in each case where the failure to so
comply individually or in the aggregate will have a Material Adverse Effect.
(p) Environmental Matters.
---------------------
(i) Except as disclosed on SCHEDULE 7.1-P (the Borrower shall update
--------------
SCHEDULE 7.1-P as of the first day of each fiscal quarter, and deliver the
- --------------
same together with the Quarterly Compliance Certificates, to the extent
required, in order to keep said Schedule true and correct):
(A) the operations of the Borrower, each of its Subsidiaries, and
their respective Properties comply with all applicable
Environmental, Health or Safety Requirements of Law, except to the
extent any failure to do so would not have a Material Adverse
Effect;
(B) the Borrower and each of its Subsidiaries have obtained all
material environmental, health and safety Permits necessary for
their respective operations, and all such Permits are in good
standing and the holder of each such Permit is currently in
compliance with all terms and conditions of such Permits, except to
the extent any failure to do so would not have a Material Adverse
Effect;
(C) to the knowledge of the Borrower, neither the Borrower nor any
of its Subsidiaries or any of their respective present or past
Property or operations are subject to or are the subject of any
investigation of any Governmental Authority, judicial or
administrative proceeding, order, judgment or decree,
negotiations, agreement or settlement respecting (I) any Remedial
Action, (II) any Claims or Liabilities and Costs arising from the
Release or threatened Release of a Contaminant into the
environment, or (III) any violation of or liability under any
Environmental, Health or Safety Requirement of Law, except to the
extent none of the foregoing would have a Material Adverse Effect;
(D) none of Borrower or any of its Subsidiaries has filed any
notice under any applicable Requirement of Law (I) reporting a
Release of a Contaminant; (II) indicating past or present
treatment, storage or disposal of a hazardous waste, as that term
is defined under 40 C.F.R. Part 261 or any state equivalent; or
(III) reporting a violation of any applicable Environmental, Health
or Safety Requirement of Law with respect to any of the foregoing,
the substance of which would have a Material Adverse Effect;
(E) none of the Borrower's or any of its Subsidiaries' present or
past Property is listed or, to the knowledge of the Borrower,
proposed for listing on the National Priorities List ("NPL")
---
pursuant to CERCLA or on the Comprehensive Environmental Response
Compensation Liability Information System List ("CERCLIS") or any similar
-------
state list of sites requiring Remedial Action;
(F) to the knowledge of the Borrower, neither the Borrower nor any
of its Subsidiaries has sent or directly arranged for the transport
of any waste to any site listed or proposed for listing on the NPL,
CERCLIS or any similar state list;
(G) to the best of Borrower's knowledge, there is not now, and to
Borrower's knowledge there has never been on or in any Project, (I)
any treatment, recycling, storage away from the site of generation
or disposal of any hazardous waste, as that term is defined under
40 C.F.R. Part 261 or any state equivalent, (II) any solid waste
management facility, (III) any underground storage tanks the
presence or use of which is in violation of applicable
Environmental, Health or Safety Requirements of Law, (IV) any
asbestos-containing material which, in its present state, such
Person has any reason to believe could subject such Person or its
Property to Liabilities and Costs arising out of or relating to
environmental, health or safety matters that would result in a
Material Adverse Effect; or (V) any polychlorinated biphenyls (PCB)
used in hydraulic oils, electrical transformers or other Equipment,
which, in any such case, would subject the Borrower or its Property
to Liabilities and Costs arising out of or relating to
environmental, health or safety matters that would result in a
Material Adverse Effect;
(H) to the knowledge of the Borrower, neither the Borrower nor any
of its Subsidiaries has received any notice or Claim to the effect
that any of such Persons is or may be liable to any Person as a
result of the Release or threatened Release of a Contaminant into
the environment which would result in a Material Adverse Effect;
(I) neither the Borrower nor any of its Subsidiaries has any
contingent liability in connection with any Release or threatened
Release of any Contaminants into the environment which will result
in a Material Adverse Effect;
(J) no Environmental Lien has attached to any Property of the
Borrower or any Subsidiary of the Borrower (other than those
otherwise permitted hereunder) or which do not constitute an Event
of Default; and
(K) no Property of the Borrower or any Subsidiary of the Borrower
is subject to any Environmental Property Transfer Act, or to the
extent such acts are applicable to any such Property, the Borrower
and/or such Subsidiary whose Property is subject thereto has
complied in all material respects with the requirements of such
acts.
(q) ERISA. Neither the Borrower nor any ERISA Affiliate maintains
-----
or contributes to any Benefit Plan or Multiemployer Plan other than those
listed on SCHEDULE 7.1-Q hereto. Each Plan which is intended to be
--------------
qualified under Section 401(a) of the Internal Revenue Code as currently in
effect has been determined by the IRS to be so qualified, and each trust
related to any such Plan has been determined to be exempt from federal income
tax under Section 501(a) of the Internal Revenue Code as currently in effect.
Except as disclosed in SCHEDULE 7.1-Q, neither the
--------------
Borrower nor any of its Subsidiaries maintains or contributes to any employee
welfare benefit plan within the meaning of Section 3(1) of ERISA that
provides benefits to employees after termination of employment other than as
required by Section 601 of ERISA. The Borrower and each of its Subsidiaries
is in compliance in all material respects with the responsibilities,
obligations and duties imposed on it by ERISA, the Internal Revenue Code and
regulations promulgated thereunder with respect to all Plans. No Benefit
Plan has incurred any accumulated funding deficiency (as defined in Sections
302(a)(2) of ERISA and 412(a) of the Internal Revenue Code) whether or not
waived. Neither the Borrower nor any ERISA Affiliate nor any fiduciary of
any Plan which is not a Multiemployer Plan (i) has engaged in a nonexempt
prohibited transaction described in Sections 406 of ERISA or 4975 of the
Internal Revenue Code or (ii) has taken or failed to take any action which
would constitute or result in a Termination Event. Neither the Borrower nor
any ERISA Affiliate is subject to any liability under Sections 4063, 4064, or
4204 of ERISA which would have a Material Adverse Effect. Neither the
Borrower nor any ERISA Affiliate is subject to any liability under Sections
4069 or 4212(c) of ERISA or has incurred any liability to the PBGC which
remains outstanding other than the payment of premiums, and there are no
premium payments which have become due which are unpaid. Schedule B to the
most recent annual report filed with the IRS with respect to each Benefit
Plan and has been furnished to the Administrative Agent and is complete and
accurate in all material respects. Since the date of each such Schedule B,
there has been no material adverse change in the funding status or financial
condition of the Benefit Plan relating to such Schedule B. Neither the
Borrower nor any ERISA Affiliate has (i) failed to make a required
contribution or payment to a Multiemployer Plan or (ii) made a complete or
partial withdrawal under Sections 4203 or 4205 of ERISA from a Multiemployer
Plan which would have a Material Adverse Effect. Neither the Borrower nor
any ERISA Affiliate has failed to make a required installment or any other
required payment under Section 412 of the Internal Revenue Code on or before
the due date for such installment or other payment. Neither the Borrower nor
any ERISA Affiliate is required to provide security to a Benefit Plan under
Section 401(a)(29) of the Internal Revenue Code due to a Benefit Plan
amendment that results in an increase in current liability for the plan year.
Except as disclosed on SCHEDULE 7.1-Q, which shall be updated by Borrower as
--------------
of the first day of each fiscal quarter, to the extent required, neither the
Borrower nor any of its Subsidiaries has, by reason of the transactions
contemplated hereby, any obligation to make any payment to any employee
pursuant to any Plan or existing contract or arrangement.
(r) Securities Activities. The Borrower is not engaged in the
---------------------
business of extending credit for the purpose of purchasing or carrying Margin
Stock.
(s) Solvency. After giving effect to the Loans to be made on the
--------
Initial Funding Date or such other date as Loans requested hereunder are
made, and the disbursement of the proceeds of such Loans pursuant to the
Borrower's instructions, the Borrower is Solvent.
(t) Insurance. SCHEDULE 7.1-T accurately sets forth as of the
--------- --------------
Closing Date all insurance policies and programs currently in effect with
respect to the respective Property and assets and business of the Borrower
and its Subsidiaries, specifying for each such policy and program, (i) the
amount thereof, (ii) the risks insured against thereby, (iii) the name of the
insurer and each insured party thereunder, (iv) the policy or other
identification number thereof, and (v) the expiration date thereof. The
Borrower has delivered to the Administrative Agent copies of all insurance
policies set forth on SCHEDULE 7.1-T. Such insurance policies and
--------------
programs are currently in full force and effect, in compliance with the
requirements of Section 9.5 hereof and, together with payment by the
-----------
insured of scheduled deductible payments, are, to the knowledge of the
Borrower, in amounts which should reasonably be expected to be sufficient to
cover the replacement value of the respective Property and assets of the
Borrower and/or its Subsidiaries. Borrower shall update SCHEDULE 7.1
------------
T, which shall be updated by Borrower annually, to the extent required, in
- -
order to keep said Schedule true and correct (or more frequently if an
insurance policy or program shall be terminated and/or replaced).
(u) REIT Status. The Company qualifies as a REIT under the Internal
-----------
Revenue Code.
(v) Ownership of Projects, Minority Holdings and Property.
-----------------------------------------------------
Ownership of all wholly owned Projects, Minority Holdings and other Property
of the Consolidated Businesses is held by the Borrower and its Subsidiaries
and is not held directly by the Company.
ARTICLE VIII.
REPORTING COVENANTS
The Borrower covenants and agrees that so long as any Revolving Credit
Commitments are outstanding and thereafter until payment in full of all of
the Obligations (other than indemnities pursuant to Section 14.3
------------
not yet due), unless the Requisite Lenders shall otherwise give prior written
consent thereto:
Section 8.1 Borrower Accounting Practices . The Borrower shall
------------------------------
maintain, and cause each of its consolidated Subsidiaries to maintain, a
system of accounting established and administered in accordance with sound
business practices to permit preparation of consolidated financial statements
in conformity with GAAP.
Section 8.2 Financial Reports . The Borrower shall deliver or
------------------
cause to be delivered to the Administrative Agent (with copies for each of
the Lenders):
(a) Quarterly Reports.
-----------------
(i) Borrower Quarterly Financial Reports. As soon as practicable,
------------------------------------
and in any event within forty-five (45) days after the end of each fiscal
quarter in each Fiscal Year (other than the last fiscal quarter in each
Fiscal Year), a consolidated balance sheet of the Borrower and the related
consolidated statements of income and cash flow of the Borrower (to be
prepared and delivered quarterly in conjunction with the other reports
delivered hereunder at the end of each fiscal quarter) for each such fiscal
quarter, and, in comparative form, the corresponding figures for the
corresponding periods of the previous Fiscal Year, certified by an Authorized
Financial Officer of the Borrower as fairly presenting in all material
respects the consolidated financial position of the Borrower as of the dates
indicated and the results of their operations and cash flow for the months
indicated in accordance with GAAP, subject to normal quarterly adjustments.
(ii) Company Quarterly Financial Reports. As soon as practicable, and
-----------------------------------
in any event within forty-five (45) days after the end of each fiscal quarter
in each Fiscal Year (other than the last fiscal quarter in each Fiscal Year),
the Financial Statements of the Company and its consolidated Subsidiaries on
Form 10-Q as at the end of such period and a report setting forth in
comparative form the corresponding figures for the corresponding period of
the previous Fiscal Year, certified by an Authorized Financial Officer of the
Company as fairly presenting in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as at the
date indicated and the results of their operations and cash flow for the
period indicated in accordance with GAAP, subject to normal adjustments.
(iii) Quarterly Compliance Certificates. Together with each
---------------------------------
delivery of any quarterly report pursuant to paragraph (a)(i) of this
Section 8.2, the Borrower shall deliver Officer's Certificates of the
- -----------
Borrower and the Company (the "Quarterly Compliance Certificates"), signed
---------------------------------
by the Borrower's and the Company's respective Authorized Financial Officers
representing and certifying (1) that the Authorized Financial Officer
signatory thereto has reviewed the terms of the Loan Documents, and has made,
or caused to be made under his/her supervision, a review in reasonable detail
of the consolidated financial condition of the Company and its Consolidated
Subsidiaries, for the fiscal quarter covered by such reports, that such
review has not disclosed the existence during or at the end of such fiscal
quarter, and that such officer does not have knowledge of the existence as at
the date of such Officer's Certificate, of an Event of Default or Potential
Event of Default or mandatory prepayment event, or, if any such condition or
event existed or exists, the nature and period of existence thereof and what
action the Company and/or the Borrower or any of its Subsidiaries has taken,
is taking and proposes to take with respect thereto; (2) the calculations in
the form of Exhibit G
---------
hereto for the period then ended which demonstrate compliance with the
covenants and financial ratios set forth in Sections 9.9, 9.11, 10.2,
-------------------------
10.3, 10.6, 10.7, 10.11, and 10.12 hereof and, when applicable, that no
- ----------------------------------
Event of Default described in Section 11.1 exists, (3) a schedule of the
------------
Borrower's outstanding Indebtedness, including the amount, maturity, interest
rate and amortization requirements, as well as such other information
regarding such Indebtedness as may be reasonably requested by the
Administrative Agent, (4) a schedule of Total Adjusted EBITDA, and (5) a
schedule of Adjusted Unencumbered NOI.
(b) Annual Reports.
--------------
(i) Borrower Financial Statements. As soon as practicable, and in
-----------------------------
any event within ninety (90) days after the end of each Fiscal Year, the
Financial Statements of the Borrower and its Subsidiaries as at the end of
such Fiscal Year, accompanied by an Officer's Certificate of the Borrower,
certified by the Chief Financial Officer of the Borrower that the Financial
Statements fairly present in all material respects the consolidated financial
position of each of the Borrower and its Subsidiaries as of the dates
indicated and the results of their operations and cash flow for the periods
indicated in conformity with GAAP consistently applied, and which Officer's
Certificate shall explain any inconsistencies between the Financial
Statements of the Borrower and the Financial Statements of the Company.
(ii) Company Financial Statements. As soon as practicable, and in
----------------------------
any event within ninety (90) days after the end of each Fiscal Year, (i) the
Financial Statements of the Company and its consolidated Subsidiaries on Form
10-K as at the end of such Fiscal Year and a report setting forth in
comparative form the corresponding figures from the consolidated Financial
Statements of the Company and its Subsidiaries for the prior Fiscal Year;
(ii) a report with respect thereto of Ernst & Young LLP or other independent
certified public accountants acceptable to the Administrative Agent (it being
understood that any "Big Six" certified public accountants are acceptable to
the Administrative Agent), which report shall be unqualified and shall state
that such financial statements fairly present the consolidated financial
position of each of the Company and its consolidated Subsidiaries as at the
dates indicated and the results of their operations and cash flow for the
periods indicated in conformity with GAAP (except for changes with which
Ernst & Young LLP or any such other independent certified public accountants,
if applicable, shall concur and which shall have been disclosed in the notes
to the financial statements)(which report shall be subject to the
confidentiality limitations set forth herein); and (iii) in the event that
the report referred to in clause (ii) above is qualified, a copy of the
management letter or any similar report delivered to the Company or to any
officer or employee thereof by such independent certified public accountants
in connection with such financial statements. The Administrative Agent and
each Lender (through the Administrative Agent) may, with the consent of the
Company (which consent shall not be unreasonably withheld), communicate
directly with such accountants, with any such communication to occur together
with a representative of the Company, at the expense of the Administrative
Agent (or the Lender requesting such communication), upon reasonable notice
and at reasonable times during normal business hours.
(iii) Annual Compliance Certificates. Together with each
------------------------------
delivery of any annual report pursuant to clauses (i) and (ii) of this
Section 8.2(b), the Borrower shall deliver Officer's Certificates of the
- --------------
Borrower and the Company (the "Annual Compliance Certificates" and,
------------------------------
collectively with the Quarterly Compliance Certificates, the "Compliance
----------
Certificates"), signed by the Borrower's and the Company's respective
- ------------
Authorized Financial Officers, representing and certifying (1) that the
officer signatory thereto has reviewed the terms of the Loan Documents, and
has made, or caused to be made under his/her supervision, a review in
reasonable detail of the consolidated financial condition of the Company and
its consolidated Subsidiaries, for the accounting period covered by such
reports, that such review has not disclosed the existence at the end of such
accounting period, and that such officer does not have knowledge of the
existence as at the date of such Officer's Certificate, of an Event of
Default or Potential Event of Default or mandatory prepayment event, or, if
any such condition or event existed or exists, the nature and period of
existence thereof and what action the Company and/or the Borrower or any of
its Subsidiaries has taken, is taking and proposes to take with respect
thereto; (2) the calculations in the form of Exhibit G
---------
hereto for the period then ended which demonstrate compliance with the
covenants and financial ratios set forth in Sections 9.9, 9.11, 10.2,
-------------------------
10.3, 10.6, 10.7, 10.11, and 10.12 hereof and, when applicable, that no
- ----------------------------------
Event of Default described in Section 11.1 exists, (3) a schedule of the
------------
Borrower's outstanding Indebtedness including the amount, maturity, interest
rate and amortization requirements, as well as such other information
regarding such Indebtedness as may be reasonably requested by the
Administrative Agent, (4) a schedule of Total Adjusted EBITDA and (5) a
schedule of Adjusted Unencumbered NOI.
(iv) Tenant Bankruptcy Reports. As soon as practicable, and in any
-------------------------
event within ninety (90) days after the end of each Fiscal Year, the Borrower
shall deliver a written report, in form reasonably satisfactory to the
Administrative Agent, of all bankruptcy proceedings filed by or against any
tenant of any of the Projects, which tenant occupies three and one half
percent (3.5%) or more of the gross leasable area in the Projects in the
aggregate. The Borrower shall deliver to the Administrative Agent and the
Lenders, immediately upon the Borrower's learning thereof, of any bankruptcy
proceedings filed by or against, or the cessation of business or operations
of, any tenant of any of the Projects which tenant occupies three and one
half percent (3.5%) or more of the gross leasable area in the Projects in the
aggregate.
(v) Property Reports. Simultaneously with the delivery of the
----------------
Compliance Certificates, a rent roll.
Section 8.3 Events of Default . Promptly upon the Borrower
------------------
obtaining knowledge (a) of any condition or event which constitutes an Event
of Default or Potential Event of Default; (b) that any Person has given any
notice to the Borrower or any Subsidiary of the Borrower or taken any other
action with respect to a claimed default or event or condition of the type
referred to in Section 11.1(e); or (c) or of any
---------------
condition or event which has a Material Adverse Effect, the Borrower shall
deliver to the Administrative Agent (with copies for each of the Lenders) an
Officer's Certificate specifying (i) the nature and period of existence of
any such claimed default, Event of Default, Potential Event of Default,
condition or event, (ii) the notice given or action taken by such Person in
connection therewith, and (iii) what action the Borrower has taken, is taking
and proposes to take with respect thereto.
Section 8.4 Lawsuits . (i) Promptly upon the Borrower's obtaining
---------
knowledge of the institution of, or written threat of, any action, suit,
proceeding, governmental investigation or arbitration against or affecting
the Borrower or any of its Subsidiaries not previously disclosed pursuant to
Section 7.1(i), which action, suit, proceeding, governmental
- --------------
investigation or arbitration exposes, or in the case of multiple actions,
suits, proceedings, governmental investigations or arbitrations arising out
of the same general allegations or circumstances which expose, in the
Borrower's reasonable judgment, the Borrower or any of its Subsidiaries to
liability in an amount aggregating $1,000,000 or more and is not covered by
the Borrower's or such Subsidiary's insurance, the Borrower shall give
written notice thereof to the Administrative Agent (with copies for each of
the Lenders) and provide such other information as may be reasonably
available to enable each Lender and the Administrative Agent and its counsel
to evaluate such matters; (ii) as soon as practicable and in any event within
forty-five (45) days after the end of each fiscal quarter of the Borrower,
the Borrower shall provide a written quarterly report to the Administrative
Agent and the Lenders covering the institution of, or written threat of, any
action, suit, proceeding, governmental investigation or arbitration in an
amount equal to or in excess of $50,000,000 to the extent not previously
reported) against or affecting the Borrower or any of its Subsidiaries or any
Property of the Borrower or any of its Subsidiaries not previously disclosed
by the Borrower to the Administrative Agent and the Lenders, and shall
provide such other information at such time as may be reasonably available to
enable each Lender and the Administrative Agent and its counsel to evaluate
such matters; and (iii) in addition to the requirements set forth in
clauses (i) and (ii) of this Section 8.4, the Borrower upon request of the
-----------
Administrative Agent or the Requisite Lenders shall promptly give written
notice of the status of any action, suit, proceeding, governmental
investigation or arbitration covered by a report delivered pursuant to
clause (i) or (ii) above and provide such other information as may be
reasonably requested and available to it to enable each Lender and the
Administrative Agent and its counsel to evaluate such matters.
Notwithstanding the foregoing, the Borrower shall not be required to disclose
any information which is subject to the attorney-client privilege.
Section 8.5 Insurance . As soon as practicable and in any event
----------
by January 31st of each calendar year, the Borrower shall deliver to the
Administrative Agent (with copies for each of the Lenders) (i) a report in
form and substance reasonably satisfactory to the Administrative Agent
outlining all insurance coverage maintained as of the date of such report by
the Borrower and its Subsidiaries and the duration of such coverage and (ii)
an Officer's Certificate of signed by an Authorized Financial Officer of the
Borrower certifying that all premiums with respect to such coverage have been
paid when due.
Section 8.6 ERISA Notices . The Borrower shall deliver or cause
--------------
to be delivered to the Administrative Agent (with copies for each of the
Lenders), at the Borrower's expense, the following information and notices as
soon as reasonably possible, and in any event:
(a) within fifteen (15) Business Days after the Borrower or any ERISA
Affiliate knows or has reason to know that a Termination Event has occurred,
a written statement of an Authorized Financial Officer of the Borrower
describing such Termination Event and the action, if any, which the Borrower
or any ERISA Affiliate has taken, is taking or proposes to take with respect
thereto, and when known, any action taken or threatened by the IRS, DOL or
PBGC with respect thereto;
(b) within fifteen (15) Business Days after the Borrower knows or has
reason to know that a non-exempt prohibited transaction (defined in Sections
406 of ERISA and Section 4975 of the Internal Revenue Code) has occurred with
respect to the Borrower, any ERISA Affiliate or any Plan, a statement of an
Authorized Financial Officer of the Borrower describing such transaction with
respect to the Borrower, any ERISA Affiliate or any Plan and the action which
the Borrower or any ERISA Affiliate has taken, is taking or proposes to take
with respect thereto;
(c) within fifteen (15) Business Days after the filing of the same with
the DOL, IRS or PBGC, copies of each annual report (form 5500 series),
including Schedule B thereto, filed with respect to each Benefit Plan;
(d) within fifteen (15) Business Days after receipt by the Borrower or
any ERISA Affiliate of each actuarial report for any Benefit Plan or
Multiemployer Plan and each annual report for any Multiemployer Plan, copies
of each such report;
(e)within fifteen (15) Business Days after the filing of the same with
the IRS, a copy of each funding waiver request filed with respect to any
Benefit Plan and all written communications received by the Borrower or any
ERISA Affiliate with respect to such request;
(f) within fifteen (15) Business Days after the occurrence any material
increase in the benefits of any existing Benefit Plan or Multiemployer Plan
or the establishment of any new Benefit Plan or the commencement of
contributions to any Benefit Plan or Multiemployer Plan to which the Borrower
or any ERISA Affiliate to which the Borrower or any ERISA Affiliate was not
previously contributing, notification of such increase, establishment or
commencement;
(g) within fifteen (15) Business Days after the Borrower or any ERISA
Affiliate receives notice of the PBGC's intention to terminate a Benefit Plan
or to have a trustee appointed to administer a Benefit Plan, copies of each
such notice;
(h) within fifteen (15) Business Days after the Borrower or any of its
Subsidiaries receives notice of any unfavorable determination letter from the
IRS regarding the qualification of a Plan under Section 401(a) of the
Internal Revenue Code, copies of each such letter to the extent any of the
foregoing would have a Material Adverse Effect;
(i) within fifteen (15) Business Days after the Borrower or any ERISA
Affiliate receives notice from a Multiemployer Plan regarding the imposition
of withdrawal liability, copies of each such notice;
(j) within fifteen (15) Business Days after the Borrower or any ERISA
Affiliate fails to make a required installment or any other required payment
under Section 412 of the Internal Revenue Code on or before the due date for
such installment or payment which failure has not been cured, a notification
of such failure; and
(k) within fifteen (15) Business Days after the Borrower or any ERISA
Affiliate knows or has reason to know (i) a Multiemployer Plan has been
terminated, (ii) the administrator or plan sponsor of a Multiemployer Plan
intends to terminate a Multiemployer Plan, or (iii) the PBGC has instituted
or has given written notice that it will institute proceedings under Section
4042 of ERISA to terminate a Multiemployer Plan, notification of such
termination, intention to terminate, or institution of proceedings.
(l) For purposes of this Section 8.6, the Borrower and any ERISA
-----------
Affiliate shall be deemed to know all facts known by the "Administrator" of
any Plan of which the Borrower or any ERISA Affiliate is the plan sponsor.
Section 8.7 Environmental Notices . The Borrower shall notify the
----------------------
Administrative Agent (with copies for each of the Lenders) in writing,
promptly upon any Officer of the Borrower responsible for the environmental
matters at any Property of the Borrower learning thereof, of any of the
following (together with any material documents and correspondence received
or sent in connection therewith):
(a) notice or claim to the effect that the Borrower or any of its
Subsidiaries is or may be liable to any Person as a result of the Release or
threatened Release of any Contaminant into the environment, if such liability
would result in a Material Adverse Effect;
(b) notice that the Borrower or any of its Subsidiaries is subject to
investigation by any Governmental Authority evaluating whether any Remedial
Action is needed to respond to the Release or threatened Release of any
Contaminant into the environment which would have a Material Adverse Effect;
(c) notice that any Property of the Borrower or any of its Subsidiaries
is subject to an Environmental Lien if the claim to which such Environmental
Lien relates would result in a Material Adverse Effect;
(d) notice of violation by the Borrower or any of its Subsidiaries of
any Environmental, Health or Safety Requirement of Law which violation would
have a Material Adverse Effect;
(e) commencement or written threat of any judicial or administrative
proceeding alleging a violation by the Borrower or any of its Subsidiaries of
any Environmental, Health or Safety Requirement of Law, which would result in
a Material Adverse Effect; or
(f) any proposed acquisition of stock, assets, real estate, or leasing
of Property by the Borrower or any of its Subsidiaries that would subject the
Borrower or any of its Subsidiaries to environmental, health or safety
Liabilities and Costs which would result in a Material Adverse Effect.
Section 8.8 Labor Matters . The Borrower shall notify the
--------------
Administrative Agent (with copies for each of the Lenders) in writing,
promptly upon the Borrower's learning thereof, of any labor dispute to which
the Borrower or any of its Subsidiaries is reasonably expected to become a
party (including, without limitation, any strikes, lockouts or other disputes
relating to any Property of such Persons' and other facilities) which would
result in a Material Adverse Effect.
Section 8.9 Notices of Asset Sales and/or Acquisitions . The
-------------------------------------------
Borrower shall deliver to the Administrative Agent and the Lenders written
notice of each of the following not less than five (5) Business Days prior to
the occurrence thereof: (a) a sale, transfer or other disposition of assets,
in a single transaction or series of related transactions, (b) an acquisition
of assets, in a single transaction or series of related transactions, for
consideration in excess of $50,000,000, and (c) the grant of a Lien with
respect to assets, in a single transaction or series of related transactions.
In addition, simultaneously with delivery of any such notice, the Borrower
shall deliver to the Administrative Agent a certificate of an Authorized
Officer certifying that Borrower is in compliance with this Agreement and the
other Loan Documents both on a historical basis and on a pro forma basis,
exclusive of the property sold, transferred and/or encumbered and inclusive
of the property to be acquired or the indebtedness to be incurred.
To the extent such proposed transaction would result in a failure to comply
with the financial covenants set forth herein, proceeds of such transaction
(together with such additional amounts as may be required), in an amount, as
determined by the Administrative Agent, equal to that which would be required
to reduce the Obligations so that Borrower will be in compliance with the
covenants set forth herein upon the consummation of the contemplated
transaction, shall be applied to prepay the Obligations.
Section 8.10 Tenant Notifications . The Borrower shall promptly
---------------------
notify the Administrative Agent upon obtaining knowledge of the bankruptcy or
cessation of operations of any tenant to which greater than three and one
half percent (3.5%) of the Borrower's share of consolidated minimum rent is
attributable to such tenant.
Section 8.11 Other Reports . The Borrower shall deliver or cause
--------------
to be delivered to the Administrative Agent (with copies for each of the
other Lenders) copies of all financial statements and reports, if any, sent
or made available generally by the Company and/or the Borrower to its
respective Securities holders, including, without limitation, supplemental
quarterly forms, or (to the extent not otherwise provided hereunder), all
press releases made available generally by the Company and/or the Borrower or
any of its Subsidiaries to the public concerning material adverse
developments in the business of the Company, the Borrower or any such
Subsidiary and all material notifications received by the Company, the
Borrower or its Subsidiaries pursuant to the Securities Exchange Act and the
rules promulgated thereunder.
Section 8.12 Other Information . Promptly upon receiving a request
------------------
therefor from the Administrative Agent or any Arranger, the Borrower shall
prepare and deliver to the Administrative Agent (with copies for each of the
other Lenders) such other information with respect to the Company, the
Borrower, or any of its Subsidiaries, as from time to time may be reasonably
requested by the Administrative Agent or any Arranger.
ARTICLE IX.
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that so long as any Revolving Credit
Commitments are outstanding and thereafter until payment in full of all of
the Obligations (other than indemnities pursuant to Section 14.3 not yet
------------
due), unless the Requisite Lenders shall otherwise give prior written
consent:
Section 9.1 Existence, Etc. The Borrower shall, and shall cause
----------------
each of its Subsidiaries to, at all times maintain its corporate existence or
existence as a limited partnership or joint venture, as applicable, and
preserve and keep, or cause to be preserved and kept, in full force and
effect its rights and franchises material to its businesses, except where the
loss or termination of such rights and franchises will not have a Material
Adverse Effect.
Section 9.2 Powers; Conduct of Business . The Borrower shall
----------------------------
remain qualified, and shall cause each of its Subsidiaries to qualify and
remain qualified, to do business and maintain its good standing in each
jurisdiction in which the nature of its business and the ownership of its
Property requires it to be so qualified and in good standing if the failure
to do so will have a Material Adverse Effect.
Section 9.3 Compliance with Laws, Etc. The Borrower shall, and
---------------------------
shall cause each of its Subsidiaries to, (a) comply with all Requirements of
Law and all restrictive covenants affecting such Person or the business,
Property or operations of such Person, and (b) obtain and maintain as needed
all Permits necessary for its operations (including, without limitation, the
operation of the Projects) and maintain such Permits in good standing, except
where noncompliance with either clause (a) or (b) above will not have a
---------- ---
Material Adverse Effect.
Section 9.4 Payment of Taxes and Claims . (a) The Borrower shall
----------------------------
pay, and cause each of its Subsidiaries to pay, (i) all material taxes,
assessments and other governmental charges imposed upon it or on any of its
Property or assets or in respect of any of its franchises, licenses,
receipts, sales, use, payroll, employment, business, income or Property
before any penalty or interest accrues thereon, and (ii) all material Claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and which by law have or
may become a Lien (other than a Lien permitted by Section 10.2 or a Customary
------------
Permitted Lien for property taxes and
assessments not yet due upon any of the Borrower's or any of the Borrower's
Subsidiaries' Property, prior to the time when any penalty or fine shall be
incurred with respect thereto; provided, however, that no
-------- -------
such taxes, assessments, fees and governmental charges referred to in clause
(i) above or Claims referred to in clause (ii) above need be paid if being
contested in good faith by appropriate proceedings diligently instituted and
conducted and if such reserve or other appropriate provision, if any, as
shall be required in conformity with GAAP shall have been made therefor.
Section 9.5 Insurance . The Borrower shall maintain for itself
---------
and its Subsidiaries, or shall cause each of its Subsidiaries to maintain in
full force and effect the insurance policies and programs listed on SCHEDULE
7.1-T or substantially similar policies and programs or other policies and
programs as are reasonably acceptable to the Administrative Agent. All such
policies and programs shall be maintained with insurers having an Alfred M.
Best Company, Inc. rating of "A" or better and a financial size category of
not less than IX.
Section 9.6 Inspection of Property; Books and Records; Discussions . The
-------------------------------------------------------
Borrower shall permit, and cause each of its Subsidiaries and the Company to
permit, any authorized representative(s) designated by the Administrative
Agent or any Arranger or other Lender to visit and inspect any of the
Projects, to examine, audit, and check their respective financial and
accounting records, books, journals, orders, receipts and any correspondence
and other data relating to their respective businesses or the transactions
contemplated hereby (including, without limitation, in connection with
environmental compliance, hazard or liability), and to discuss their affairs,
finances and accounts with their officers and independent certified public
accountants, all with a representative of the Borrower present, upon
reasonable notice and at such reasonable times during normal business hours,
as often as may be reasonably requested. Each such visitation and inspection
shall be at such visitor's expense. The Borrower shall keep and maintain,
and cause its Subsidiaries to keep and maintain, in all material respects
proper books of record and account in which entries in conformity with GAAP.
Section 9.7 ERISA Compliance . The Borrower shall, and shall
-----------------
cause each of its Subsidiaries and ERISA Affiliates to, establish, maintain
and operate all Plans to comply in all material respects with the provisions
of ERISA, the Internal Revenue Code, all other applicable laws, and the
regulations and interpretations thereunder and the respective requirements of
the governing documents for such Plans.
Section 9.8 Maintenance of Property . The Borrower shall, and
------------------------
shall cause each of its Subsidiaries to, maintain in all material respects
all of their respective owned and leased Property in good, safe and insurable
condition and repair (ordinary wear and tear excepted), and not permit,
commit or suffer any waste or abandonment of any such Property and from time
to time shall make or cause to be made all material repairs, renewal and
replacements thereof, including, without limitation, any capital improvements
which may be required to maintain the same; provided, however, that such
-------- -------
Property may be altered or renovated in the ordinary course of business of the
Borrower or such applicable Subsidiary. Without any limitation on the foregoing,
the Borrower shall maintain the Projects in a manner such that each Project can
be used in the manner and substantially for the purposes such Project is used
on the Closing Date, including, without limitation, maintaining all utilities,
access rights, zoning and necessary Permits for such Project.
Section 9.9 Company Status . The Company shall at all times (1)
---------------
remain a publicly traded company listed on the New York Stock Exchange; (2)
maintain its status as a REIT under the Internal Revenue Code, and (3) retain
direct or indirect management and control of the Borrower.
Section 9.10 Ownership of Projects, Minority Holdings and Property
------------------------------------------------------
. The ownership of substantially all wholly owned Projects, Minority Holdings
and other Property of the Consolidated Businesses shall be held by the
Borrower and its Subsidiaries and shall not be held directly by the Company.
Section 9.11 Maintenance of Operating Account . The Borrower shall
---------------------------------
at all times during the Revolving Credit Period maintain a demand deposit
account held by Administrative Agent (the "Operating Account") and shall
cause funds to be deposited therein in an amount sufficient to permit the
Administrative Agent to automatically deduct therefrom the interest payments
on the Obligations at 12:00 p.m. on the first day of each month.
ARTICLE X.
NEGATIVE COVENANTS
Borrower covenants and agrees that it shall comply with the following
covenants so long as any Revolving Credit Commitments are outstanding and
thereafter until payment in full of all of the Obligations (other than
indemnities pursuant to Section 15.3 not yet due), unless the Requisite
------------
Lenders shall otherwise give prior written consent:
Section 10.1 Intentionally Omitted .
Section 10.2 Liens . Neither the Borrower nor any of its
------
Subsidiaries shall directly or indirectly create, incur, assume or permit to
exist any Lien on or with respect to any Property, except:
(a) Liens with respect to Capital Leases of Equipment entered into in
the ordinary course of business of the Borrower pursuant to which the
aggregate Indebtedness under such Capital Leases does not exceed $1,000,000
for any Project;
(b) Existing Permitted Liens;
(c) Liens securing permitted Secured Indebtedness; and
(d) Customary Permitted Liens.
Section 10.3 Investments . From and after the date hereof, the
------------
Company may not make any Investments other than Investments in the Borrower.
The Borrower shall, and shall cause its Subsidiaries to make, or own
Investments which comply with the limitations set forth herein:
(a) Investments in Cash Equivalents;
(b) Investments in Real Property;
(c) Investments in the Management Company;
(d) Investments (including loans) in the Borrower's Subsidiaries, the
Borrower's Affiliates and the Other Management Company;
(e) Investments in Minority Holdings;
(f) Investments in notes secured by mortgages on any Real Property of
any Person;
(g) Investments in one or more Opportunity Funds; and
(h) Investments in Real Property in which Borrower or a Subsidiary does
not own a fee simple interest but does own the leasehold position under a
Qualified Lease.
Notwithstanding the foregoing, the Investments set forth above shall be
limited in the following manner: (i) the aggregate Investments of the types
set forth in clauses (d) through (h), exclusive of the Borrower's investment
in the property located at 333 Earl Ovington Boulevard, Hempstead, New York
(the "Omni"), shall not exceed 20% of Total Value;
----
(ii) the aggregate Investments of the types set forth in clauses (d), (g) and
(h) above shall not exceed 10% of Total Value; and (iii) the aggregate
Investments by the Borrower and its consolidated Subsidiaries in Properties
which are not office or industrial in nature shall not exceed seven and one
half percent (7.5%) of Total Value.
Section 10.4 Conduct of Business . Neither the Borrower nor any of
--------------------
its Subsidiaries shall engage in any business, enterprise or activity other
than (a) the businesses of acquiring, developing, re-developing and managing
predominantly office and industrial Projects and portfolios of like Projects
and (b) any business or activities which are substantially similar, related
or incidental thereto. Notwithstanding anything to the contrary set forth in
Section 10.3 hereof or this Section 10.4, Borrower
------------
shall be permitted to make an Investment in an "Opportunity Fund" investment
vehicle (directly or indirectly) in which Scott Reckler or Scott Reckler and
one or more persons who are officers of the Company directly or indirectly
controls or has veto power over (whether through ownership of the general
partner or managing member or otherwise) all decisions with respect to
acquisitions, sales and financings (an "Opportunity Fund").
----------------
Section 10.5 Transactions with Partners and Affiliates . Neither
------------------------------------------
the Borrower nor any of its Subsidiaries shall directly or indirectly enter
into or permit to exist any transaction (including, without limitation, the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any holder or holders of more than five percent (5%) of any
class of equity Securities of the Borrower, or with any Affiliate of the
Borrower which is not its Subsidiary, unless such transaction is determined
by the respective Boards of Directors of the Company to be no less favorable
to the Borrower or any of its Subsidiaries, as applicable, than those that
might be obtained in an arm's length transaction at the time from Persons who
are not such a holder or Affiliate. Nothing contained in this Section 10.5
------------
shall prohibit (a) increases in compensation and benefits for officers and
employees of the Borrower or any of its Subsidiaries; (b) payment of
officers', directors', partners' and other similar indemnities; or (c)
performance of any obligations arising under the Loan Documents.
Section 10.6 Restriction on Fundamental Changes . The Borrower
-----------------------------------
shall not enter into any merger or consolidation, or liquidate, wind-up or
dissolve (or suffer any liquidation or dissolution), or convey, lease, sell,
transfer or otherwise dispose of, in one transaction or series of
transactions, all or substantially all of the Borrower's business or
Property, whether now or hereafter acquired, except in connection with
issuance, transfer, conversion or repurchase of limited partnership interests
in the Borrower. Notwithstanding the foregoing, the Borrower shall be
permitted to merge with another Person so long as the Borrower is the
surviving Person following such merger.
Section 10.7 Margin Regulations; Securities Laws . Neither the
------------------------------------
Borrower nor any of its Subsidiaries, shall use all or any portion of the
proceeds of any credit extended under this Agreement to purchase or carry
Margin Stock.
Section 10.8 ERISA . The Borrower shall not and shall not permit
------
any of its Subsidiaries or ERISA Affiliates to:
(a) engage in any prohibited transaction described in Sections 406 of
ERISA or 4975 of the Internal Revenue Code for which a statutory or class
exemption is not available or a private exemption has not been previously
obtained from the DOL, except to the extent engaging in such transaction
would not have a Material Adverse Effect;
(b) permit to exist any accumulated funding deficiency (as defined in
Sections 302 of ERISA and 412 of the Internal Revenue Code), with respect to
any Benefit Plan, whether or not waived;
(c) fail to pay timely required contributions or annual installments
due with respect to any waived funding deficiency to any Benefit Plan;
(d) terminate any Benefit Plan which would result in any liability of
Borrower or any ERISA Affiliate under Title IV of ERISA;
(e) fail to make any contribution or payment to any Multiemployer Plan
which Borrower or any ERISA Affiliate may be required to make under any
agreement relating to such Multiemployer Plan, or any law pertaining thereto,
except to the extent such failure would not have a Material Adverse Effect;
(f) fail to pay any required installment or any other payment required
under Section 412 of the Internal Revenue Code on or before the due date for
such installment or other payment; or
(g) amend a Benefit Plan resulting in an increase in current liability
for the plan year such that the Borrower or any ERISA Affiliate is required
to provide security to such Plan under Section 401(a)(29) of the Internal
Revenue Code.
Section 10.9 Organizational Documents . Neither the Company nor
-------------------------
the Borrower shall amend, modify or otherwise change any of the terms or
provisions in any of their respective Organizational Documents as in effect
on the Closing Date, except amendments to effect (a) a change of name of the
Borrower, provided that the Borrower shall have provided the
-------- ----
Administrative Agent with thirty (30) days prior written notice of any such
name change, or (b) changes that would not affect such Organizational
Documents in any material manner not otherwise permitted under this
Agreement.
Section 10.10 Fiscal Year . Neither the Company, the Borrower nor
------------
any of its Subsidiaries shall change its Fiscal Year for accounting or tax
purposes from a period consisting of the 12-month period ending on December
31 of each calendar year.
Section 10.11 Financial Covenants .
-------------------
(a) Indebtedness. Neither the Borrower nor any of its Subsidiaries
------------
shall directly or indirectly create, incur, assume or otherwise become or
remain directly or indirectly liable with respect to any Indebtedness, except
Indebtedness which, when aggregated with Indebtedness of the Borrower or any
of its Subsidiaries and Minority Holdings Indebtedness allocable in
accordance with GAAP to the Borrower or any Subsidiary of the Borrower as of
the time of determination, would not exceed (i) fifty five percent (55%) of
Total Value as of the date of incurrence ("Total
-----
Outstanding Indebtedness Limitation"), (ii) in the case of Secured
- -----------------------------------
Indebtedness of the Consolidated Businesses and the Borrower's proportionate
share of Secured Indebtedness of its Minority Holdings, as well as unsecured
recourse Indebtedness of the consolidated Subsidiaries, thirty-five percent
(35%) of the Total Value ("Total Secured Outstanding
-------------------------
Indebtedness Limitation") or (iii) in the case of recourse Secured
- -----------------------
Indebtedness of the Consolidated Businesses, ten percent (10%) of the Total
Value ("Recourse Secured Indebtedness Limitation").
----------------------------------------
(b) Minimum Combined Equity Value. The Combined Equity Value shall
-----------------------------
at no time be less than $375,000,000, plus an amount equal to seventy percent
(70%) of all Net Offering Proceeds received by the Company after the date
hereof.
(c) Minimum Consolidated Interest Coverage Ratio. As of the first
--------------------------------------------
day of each calendar quarter for the immediately preceding calendar quarter,
the ratio of (i) the sum of Total Adjusted EBITDA less Servicing EBITDA, to
(ii) Total Interest Expense for such quarter shall not be less than 2.0 to 1.0.
(d) Minimum Unsecured Interest Coverage Ratio. As of the first day
-----------------------------------------
of each calendar quarter for the immediately preceding calendar quarter, the
ratio of (i) Adjusted Unencumbered NOI to (ii) Unsecured Interest Expense
shall not be less than 2.0 to 1.0.
(e) Minimum Unsecured Debt Yield. As of the first day of each
----------------------------
calendar quarter for the immediately preceding calendar quarter, the ratio of
Adjusted Unencumbered NOI for such calendar quarter, multiplied by 4 to Total
Outstanding Unsecured Indebtedness shall not be less than the greater of (i)
(a) 14.5%, if Adjusted Unencumbered NOI is derived from the office and
industrial properties wholly-owned by the Borrower and its Subsidiaries, and
(b) 16%, if Adjusted Unencumbered NOI is derived from both office and
industrial properties wholly-owned by the Borrower and the Consolidated
Businesses and Minority Holdings; and (ii) a percentage equal to an interest
rate constant equal to the product of (x) the sum of the then Treasury Rate
and two percent (2%), and a thirty year mortgage-style amortization schedule,
and (y) 125%.
(f) Minimum Adjusted Unencumbered NOI. As of the first day of each
---------------------------------
calendar quarter, the Adjusted Unencumbered NOI for the immediately preceding
calendar quarter multiplied by 4 shall not be less than $17,500,000.
(g) Minimum Fixed Charge Coverage Ratio. As of the first day of
-----------------------------------
each calendar quarter for the immediately preceding calendar quarter, the
ratio of (i) Total Adjusted EBITDA, to (ii) Fixed Charges shall not be less
than 2.0 to 1.0.
(h) Maximum Dividend Payout Ratio. The Company shall not make any
-----------------------------
Restricted Payment during any of its fiscal quarters, which, when added to
all Restricted Payments made during the three immediately preceding fiscal
quarters, exceeds the greater of (i) 95% of FFO, and 110% of FAD, and (ii)
the amounts required to maintain its status as a REIT under the Internal
Revenue Code, and, provided an Event of Default shall not have occurred and
be continuing, to avoid federal income and excise tax liability. For
purposes of this provision, "Restricted Payment" means (i) any dividend or
other distribution on any shares of the Company's capital stock (except
dividends payable solely in shares of its capital stock or in rights to
subscribe for or purchase shares of its capital stock), or (ii) any payment
on account of the purchase, redemption, retirement or acquisition of (a) any
shares of the Company's capital stock, or (b) any option, warrant or other
right to acquire shares of the Company's capital stock.
(i) Recourse Secured Indebtedness. The Secured Loan-to-Value Ratio
-----------------------------
with respect to any Project for which the Consolidated Businesses shall
create or assume recourse Secured Indebtedness, shall at no time exceed
seventy five percent (75%).
(j) Negative Pledge. From and after the date hereof, neither the
---------------
Borrower nor the Company will, and will not permit any Subsidiary, to enter
into any agreement containing any provision prohibiting the creation or
assumption of any Lien upon its properties (other than with respect to
prohibitions on subordinate liens set forth in a mortgage on a particular
property), revenues or assets, whether now owned or hereafter acquired, or
restricting the ability of the Borrower to amend or modify this Agreement or
any other Loan Document.
(k) Pro Forma Calculations. The Borrower shall comply with the
----------------------
financial ratios set forth in this Section 10.11 as of the date of each
-------------
Borrowing. The Borrower shall recalculate the financial ratios by adding the
deemed amount equal to the Borrowing to the Indebtedness reflected on the
most recently available financial statements, and adding thereto any
Indebtedness incurred since the date of such financial statement and adding
thereto the value of such assets (determined at cost) acquired with such
Indebtedness to Total Value. The Borrower shall deliver an Officer's
Certificate, signed by the Borrower representing and certifying that the
pro forma calculations as of the date of the draw demonstrate Borrower's
- --- -----
compliance with the covenants and financial ratios set forth in this
Section 10.11.
- -------------
Section 10.12 Negative Covenants with respect to the Company .
-----------------------------------------------
(a) From and after the date hereof, the Company will not acquire any
assets of any nature whatsoever other than additional units in the Borrower.
(b) From and after the date hereof, the Company will not incur any
Indebtedness or any other obligations or liabilities except (x) as the
general partner of the Borrower in connection with trade payable incurred in
the ordinary course of business, (y) Indebtedness, the net proceeds of which
are contributed to the Borrower simultaneously with the incurrence thereof by
the Company, and (z) guarantees of Indebtedness which is recourse to the
Borrower.
(c) From and after the date hereof, the Company will not retain any Net
Offering Proceeds, and the same will be contributed by the Company to the
Borrower simultaneously with receipt thereof by the Company.
(d) The Company shall not enter into any merger or consolidation, or
liquidate, wind-up or dissolve (or suffer any liquidation or dissolution), or
convey, lease, sell, transfer or otherwise dispose of, in one transaction or
series of transactions, any of its business or assets, including its
interests in the Borrower. Notwithstanding the foregoing, the Company shall
be permitted to merge with another Person so long as the Company is the
surviving Person following such merger.
ARTICLE XI.
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
Section 11.1 Events of Default . Each of the following occurrences
------------------
shall constitute an Event of Default under this Agreement:
(a) Failure to Make Payments When Due. The Borrower shall fail to
---------------------------------
pay (i) when due any principal payment on the Obligations which is due on the
Revolving Credit Termination Date or pursuant to the terms of Section
-------
2.1(a), Section 2.3, Section 4.1(a), or Section 4.1(d) or (ii) when due,
- ------ ----------- ------------- --------------
any interest payment on the Obligations, provided, however, that the Borrower
shall be entitled to a five (5) day grace period with respect to any interest
payment but not more than one time in any twelve (12) month period during the
term hereof, or (iii) when due, any principal payment on the Obligations not
referenced in clauses (i) or (ii) hereinabove or (iv) when due, any fees due
pursuant to the terms of Section 5.3 and such default shall continue for five
(5) days.
(b) Breach of Certain Covenants. The Borrower shall fail duly and
---------------------------
punctually to perform or observe any agreement, covenant or obligation
binding on such Person under Sections 9.1, 9.4, 9.5, 9.10, 9.11 or
------------ --- --- ---- ----
Article X.
- ---------
(c) Breach of Representation or Warranty. Any representation or
------------------------------------
warranty made by the Borrower to the Administrative Agent, any Arranger or
any other Lender herein or by the Borrower or any of its Subsidiaries in any
of the other Loan Documents or in any statement or certificate at any time
given by any such Person pursuant to any of the Loan Documents shall be false
or misleading in any material respect on the date as of which made.
(d) Other Defaults. The Borrower shall default in the performance
--------------
of or compliance with any term contained in this Agreement (other than as
identified in paragraphs (a), (b) or (c) of this Section 11.1), or any
------------
default or event of default shall occur under any of the other Loan
Documents, and such default or event of default shall continue for thirty
(30) days after receipt of written notice from the Administrative Agent
thereof.
(e) Acceleration of Other Indebtedness. Any breach, default or
----------------------------------
event of default shall occur and be continuing, or any other condition shall
exist under any instrument, agreement or indenture pertaining to any recourse
Indebtedness (other than the Obligations) of the Company, the Borrower or its
Subsidiaries aggregating more than $10,000,000, and the effect thereof is to
cause an acceleration, mandatory redemption or other required repurchase of
such Indebtedness, or permit the holder(s) of such Indebtedness to accelerate
the maturity of any such Indebtedness or require a redemption or other
repurchase of such Indebtedness; or any such Indebtedness shall be otherwise
declared to be due and payable (by acceleration or otherwise) or required to
be prepaid, redeemed or otherwise repurchased by the Borrower or any of its
Subsidiaries (other than by a regularly scheduled required prepayment) prior
to the stated maturity thereof.
(f) Involuntary Bankruptcy; Appointment of Receiver, Etc.
(i) An involuntary case shall be commenced against the Company, the
Borrower, or any of its Subsidiaries to which $25,000,000 or more of the
Combined Equity Value is attributable, and the petition shall not be
dismissed, stayed, bonded or discharged within sixty (60) days after
commencement of the case; or a court having jurisdiction in the premises
shall enter a decree or order for relief in respect of the Company, the
Borrower or any such Subsidiaries of the Borrower in an involuntary case,
under any applicable bankruptcy, insolvency or other similar law now or
hereinafter in effect; or any other similar relief shall be granted under any
applicable federal, state, local or foreign law; or the respective board of
directors of the Company or Limited Partners of the Borrower or the board of
directors or partners of any such Subsidiaries of the Borrower (or any
committee thereof) adopts any resolution or otherwise authorizes any action
to approve any of the foregoing.
(ii) A decree or order of a court having jurisdiction in the premises
for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over the Company, the
Borrower, or any of its Subsidiaries to which $25,000,000 or more of the
Combined Equity Value is attributable, or over all or a substantial part of
the Property of the Company, the Borrower or any of such Subsidiaries shall
be entered; or an interim receiver, trustee or other custodian of the
Company, the Borrower or any of such Subsidiaries or of all or a substantial
part of the Property of the Company, the Borrower or any of such Subsidiaries
shall be appointed or a warrant of attachment, execution or similar process
against any substantial part of the Property of any of the Company, the
Borrower or any of such Subsidiaries shall be issued and any such event shall
not be stayed, dismissed, bonded or discharged within sixty (60) days after
entry, appointment or issuance; or the respective board of directors of any
of the Company or Limited Partners of the Borrower or the board of directors
or partners of any of Borrower's Subsidiaries (or any committee thereof)
adopts any resolution or otherwise authorizes any action to approve any of
the foregoing.
(g) Voluntary Bankruptcy; Appointment of Receiver, Etc. The Company,
--------------------------------------------------
the Borrower, or any of its Subsidiaries to which $25,000,000 or more of the
the Combined Equity Value is attributable, shall commence a voluntary case
under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
shall consent to the entry of an order for relief in an involuntary case, or
to the conversion of an involuntary case to a voluntary case, under any such
law, or shall consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a substantial part of its
Property; or the Company, the Borrower or any of such Subsidiaries shall make
any assignment for the benefit of creditors or shall be unable or fail, or
admit in writing its inability, to pay its debts as such debts become due.
(h) Judgments and Unpermitted Liens.
(i) Any money judgment (other than a money judgment covered by
insurance as to which the insurance company has acknowledged coverage), writ
or warrant of attachment, or similar process against the Borrower or any of
its Subsidiaries or any of their respective assets involving in any case an
amount in excess of $5,000,000 (other than with respect to Claims arising out
of non-recourse Indebtedness) is entered and shall remain undischarged,
unvacated, unbonded or unstayed for a period of sixty (60) days or in any
event later than five (5) days prior to the date of any proposed sale
thereunder.
(ii) A federal, state, local or foreign tax Lien is filed against the
Borrower which is not discharged of record, bonded over or otherwise secured
to the satisfaction of the Administrative Agent within sixty (60) days after
the filing thereof or the date upon which the Administrative Agent receives
actual knowledge of the filing thereof for an amount which, either separately
or when aggregated with the amount of any judgments described in clause (i)
above, equals or exceeds $5,000,000.
(iii) An Environmental Lien is filed against any Project with
respect to Claims in an amount which, either separately or when aggregated
with the amount of all other such Environmental Liens, equals or exceeds
$5,000,000.
(i) Dissolution. Any order, judgment or decree shall be entered
-----------
against the Borrower decreeing its involuntary dissolution or split up; or
the Borrower shall otherwise dissolve or cease to exist except as
specifically permitted by this Agreement.
(j) Loan Documents. At any time, for any reason, any Loan Document
--------------
ceases to be in full force and effect or the Borrower seeks to repudiate its
obligations thereunder.
(k) ERISA Termination Event. Any ERISA Termination Event occurs
-----------------------
which the Administrative Agent believes could subject either the Borrower or
any ERISA Affiliate to liability in excess of $500,000.
(l) Waiver Application. The plan administrator of any Benefit Plan
------------------
applies under Section 412(d) of the Code for a waiver of the minimum funding
standards of Section 412(a) of the Internal Revenue Code and the
Administrative Agent believes that the substantial business hardship upon
which the application for the waiver is based could subject either the
Borrower or any ERISA Affiliate to liability in excess of $500,000.
(m) Material Adverse Effect. An event shall occur which has a
-----------------------
Material Adverse Effect.
(n) Certain Defaults Pertaining to the Company. The Company shall
------------------------------------------
fail to comply with Sections 9.9, 7.1(a)(ii), (b), (d), (l), and (o).
(o) Merger or Liquidation of the Company or the Borrower. The
----------------------------------------------------
Company shall merge or liquidate with or into any other Person and, as a
result thereof and after giving effect thereto, (i) the Company is not the
surviving Person or (ii) such merger or liquidation would effect an
acquisition of or Investment in any Person not otherwise permitted under the
terms of this Agreement. The Borrower shall merge or liquidate with or into
any other Person and, as a result thereof and after giving effect thereto,
(i) the Borrower is not the surviving Person or (ii) such merger or
liquidation would effect an acquisition of or Investment in any Person not
otherwise permitted under the terms of this Agreement.
An Event of Default shall be deemed "continuing" until cured or waived in
writing in accordance with Section 14.7.
------------
Section 11.2 Rights and Remedies .
--------------------
(a) Acceleration and Termination. Upon the occurrence of any Event
----------------------------
of Default described in Sections 11.1(f) or 11.1(g), the Revolving Credit
---------------- -------
Commitments shall automatically and immediately terminate and the unpaid
principal amount of, and any and all accrued interest on, the Obligations and
all accrued fees shall automatically become immediately due and payable,
without presentment, demand, or protest or other requirements of any kind
(including, without limitation, valuation and appraisement, diligence,
presentment, notice of intent to demand or accelerate and of acceleration),
all of which are hereby expressly waived by the Borrower; and upon the
occurrence and during the continuance of any other Event of Default, the
Administrative Agent shall at the request, or may with the consent, of the
Lenders whose Pro Rata Shares, in the aggregate, are greater than fifty-one
percent (51%), by written notice to the Borrower, (i) declare that the
Revolving Credit Commitments are terminated, whereupon the Revolving Credit
Commitments and the obligation of each Lender to make any Loan hereunder and
of each Lender to issue or participate in any Letter of Credit not then
issued shall immediately terminate, and/or (ii) declare the unpaid principal
amount of and any and all accrued and unpaid interest on the Obligations to
be, and the same shall thereupon be, immediately due and payable, without
presentment, demand, or protest or other requirements of any kind (including,
without limitation, valuation and appraisement, diligence, presentment,
notice of intent to demand or accelerate and of acceleration), all of which
are hereby expressly waived by the Borrower.
(b) Rescission. If at any time after termination of the Revolving
----------
Credit Commitments and/or acceleration of the maturity of the Loans, the
Borrower shall pay all arrears of interest and all payments on account of
principal of the Loans and Reimbursement Obligations which shall have become
due otherwise than by acceleration (with interest on principal and, to the
extent permitted by law, on overdue interest, at the rates specified in this
Agreement) and all Events of Default and Potential Events of Default (other
than nonpayment of principal of and accrued interest on the Loans due and
payable solely by virtue of acceleration) shall be remedied or waived
pursuant to Section 14.7, then upon the written consent of the Requisite
------------
Lenders and written notice to the Borrower, the termination of the Revolving
Credit Commitments
and/or the acceleration and their consequences may be rescinded and annulled;
but such action shall not affect any subsequent Event of Default or Potential
Event of Default or impair any right or remedy consequent thereon. The
provisions of the preceding sentence are intended merely to bind the Lenders
to a decision which may be made at the election of the Requisite Lenders;
they are not intended to benefit the Borrower and do not give the Borrower
the right to require the Lenders to rescind or annul any acceleration
hereunder, even if the conditions set forth herein are met.
(c) Enforcement. The Borrower acknowledges that in the event the
-----------
Borrower or any of its Subsidiaries fails to perform, observe or discharge
any of their respective obligations or liabilities under this Agreement or
any other Loan Document, any remedy of law may prove to be inadequate relief
to the Administrative Agent, the Arrangers and the other Lenders; therefore,
the Borrower agrees that the Administrative Agent, the Arrangers and the
other Lenders shall be entitled to temporary and permanent injunctive relief
in any such case without the necessity of proving actual damages.
ARTICLE XII.
THE AGENTS
Section 12.1 Appointment . (a) Each Lender hereby designates and
------------
appoints Chase as the Administrative Agent, UBS as the Documentation Agent
and the Arrangers as the Arrangers of such Lender under this Agreement, and
each Lender hereby irrevocably authorizes the Administrative Agent and the
Arrangers to take such actions on its behalf under the provisions of this
Agreement and the Loan Documents and to exercise such powers as are set forth
herein or therein together with such other powers as are reasonably
incidental thereto. The Administrative Agent and the Arrangers each agrees to
act as such on the express conditions contained in this Article XII.
-----------
(b) The provisions of this Article XII are solely for the benefit of
-----------
the Administrative Agent, the Documentation Agent, the Arrangers and the
other Lenders, and neither the Borrower, the Company nor any Subsidiary of
the Borrower shall have any rights to rely on or enforce any of the
provisions hereof (other than as expressly set forth in Section 12.7). In
------------
performing its respective functions and duties under this Agreement, the
Administrative Agent, the Documentation Agent and each Arranger shall act
solely as agents of the Lenders and do not assume and shall not be deemed to
have assumed any obligation or relationship of agency, trustee or fiduciary
with or for the Company, the Borrower or any Subsidiary of the Borrower. The
Administrative Agent, the Documentation Agent and each Arranger may perform
any of their respective duties hereunder, or under the Loan Documents, by or
through their respective agents or employees.
Section 12.2 Nature of Duties . The Administrative Agent, the
-----------------
Documentation Agent and the Arrangers shall not have any duties or
responsibilities except those expressly set forth in this Agreement or in the
Loan Documents. The duties of the Administrative Agent, the Documentation
Agent and the Arrangers shall be mechanical and administrative in nature.
None of the Administrative Agent, the Documentation Agent or any Arranger
shall have by reason of this Agreement a fiduciary relationship in respect of
any Lender. Nothing in this Agreement or any of the Loan Documents,
expressed or implied, is intended to or shall be construed to impose upon the
Administrative Agent, the Documentation Agent or any Arranger any obligations
in respect of this Agreement or any of the Loan Documents except as expressly
set forth herein or therein. The Administrative Agent, the Documentation
Agent and each Arranger each hereby agrees that its duties shall include
providing copies of documents received by such Agent from the Borrower which
are reasonably requested by any Lender, furnishing copies of documents to
each Lender, upon request, of documents sent by such Agent to the Borrower
and promptly notifying each Lender upon its obtaining actual knowledge of the
occurrence of any Event of Default hereunder.
Section 12.3 Right to Request Instructions . The Administrative
------------------------------
Agent, the Documentation Agent and each Arranger may at any time request
instructions from the Lenders with respect to any actions or approvals which
by the terms of any of the Loan Documents such Agent is permitted or required
to take or to grant, and such Agent shall be absolutely entitled to refrain
from taking any action or to withhold any approval and shall not be under any
liability whatsoever to any Person for refraining from any action or
withholding any approval under any of the Loan Documents until it shall have
received such instructions from those Lenders from whom such Agent is
required to obtain such instructions for the pertinent matter in accordance
with the Loan Documents. Without limiting the generality of the foregoing,
such Agent shall take any action, or refrain from taking any action, which is
permitted by the terms of the Loan Documents upon receipt of instructions
from those Lenders from whom such Agent is required to obtain such
instructions for the pertinent matter in accordance with the Loan Documents,
provided, that no Lender shall have
- --------
any right of action whatsoever against the Administrative Agent, the
Documentation Agent or any Arranger as a result of such Agent acting or
refraining from acting under the Loan Documents in accordance with the
instructions of the Requisite Lenders or, where required by the express terms
of this Agreement, a greater proportion of the Lenders.
Section 12.4 Reliance . The Administrative Agent, the
---------
Documentation Agent and each Arranger shall each be entitled to rely upon any
written notices, statements, certificates, orders or other documents believed
by it in good faith to be genuine and correct and to have been signed, sent
or made by the proper Person, and with respect to all matters pertaining to
this Agreement or any of the Loan Documents and its duties hereunder or
thereunder, upon advice of legal counsel (including counsel for the
Borrower), independent public accountants and other experts selected by it.
Section 12.5 Indemnification . To the extent that the
----------------
Administrative Agent, the Documentation Agent or any Arranger is not
reimbursed and indemnified by the Borrower, the Lenders will reimburse and
indemnify such Agent for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, and reasonable costs,
expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against it in any way relating to or
arising out of the Loan Documents or any action taken or omitted by such
Agent under the Loan Documents, in proportion to each Lender's Pro Rata
Share. Notwithstanding anything to the contrary contained herein, the
Administrative Agent, the Documentation Agent or any Arranger shall not be
indemnified to the extent such liabilities, obligations, losses, damages,
penalties, actions, judgments, suite, costs and expenses result from such
Person's gross negligence, willful misconduct or breach of this Article XII.
Such Agent agrees to refund to the Lenders any of the foregoing amounts paid
to it by the Lenders which amounts are subsequently recovered by such Agent
from the Borrower or any other Person on behalf of the Borrower. The
obligations of the Lenders under this Section 12.5 shall survive the
------------
payment in full of the Loans, the Reimbursement Obligations and all other
Obligations and the termination of this Agreement.
Section 12.6 Agents Individually . With respect to their
--------------------
respective Pro Rata Share of the Revolving Credit Commitments hereunder, if
any, and the Loans made by them, if any, the Administrative Agent, the
Documentation Agent and the Arrangers shall have and may exercise the same
rights and powers hereunder and are subject to the same obligations and
liabilities as and to the extent set forth herein for any other Lender. The
terms "Lenders" or "Requisite Lenders" or any similar terms shall, unless the
context clearly otherwise indicates, include Chase and UBS, and each other
Arranger in its respective individual capacity as a Lender or as one of the
Requisite Lenders. Chase and UBS and each other Arranger and each of their
respective Affiliates may accept deposits from, lend money to, and generally
engage in any kind of banking, trust or other business with the Borrower or
any of its Subsidiaries as if Chase and UBS were not respectively acting as
the Administrative Agent and the Documentation Agent and the other Arrangers
were not acting as Arrangers pursuant hereto.
Section 12.7 Successor Agents .
-----------------
(a) Resignation. Any Agent may resign from the performance of all
-----------
its functions and duties hereunder at any time by giving at least thirty (30)
Business Days' prior written notice to the Borrower and the other Lenders,
unless applicable law requires a shorter notice period or that there be no
notice period, in which instance such applicable law shall control. Such
resignation shall take effect upon the acceptance by a successor Agent of
appointment pursuant to this Section 12.7.
------------
(b) Appointment by Requisite Lenders. Upon any such resignation
--------------------------------
becoming effective, (i) if a Arranger shall then be acting with respect to
this Agreement, such Arranger shall become the Administrative Agent or (ii)
if no Arranger shall then be acting with respect to this Agreement, the
Requisite Lenders shall have the right to appoint a successor Administrative
Agent selected from among the Lenders with the prior written consent of the
Borrower which shall not be unreasonably withheld.
(c) Appointment by Retiring Agent. If a successor Administrative
-----------------------------
Agent shall not have been appointed within the thirty (30) Business Day or
shorter period provided in paragraph (a) of this Section 12.7, the
------------- ------------
retiring Agent shall then appoint a successor Agent who shall serve as
Administrative Agent until such time, if any, as the Requisite Lenders
appoint a successor Agent as provided above with the prior written consent of
the Borrower which shall not be unreasonably withheld.
(d) Rights of the Successor and Retiring Agents. Upon the
-------------------------------------------
acceptance of any appointment as Administrative Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Article XII shall
-----------
inure to its benefit as to any actions taken or omitted to be taken by it
while it was the Agent under this Agreement.
Section 12.8 Relations Among the Lenders . Each Lender agrees
----------------------------
that it will not take any legal action, nor institute any actions or
proceedings, against the Borrower or any other obligor hereunder with respect
to any of the Obligations, without the prior written consent of the Lenders.
Without limiting the generality of the foregoing, no Lender may accelerate or
otherwise enforce its portion of the Obligations, or unilaterally terminate
its Revolving Credit Commitment except in accordance with Section 11.2(a).
---------------
Section 12.9 Standard of Care . The Administrative Agent, the
-----------------
Documentation Agent and each Arranger shall administer the Loans in the same
manner that such Agent administers loans made for its own account.
ARTICLE XIII.
YIELD PROTECTION
Section 13.1 Taxes .
------
(a) Payment of Taxes. Any and all payments by the Borrower
----------------
hereunder or under any Note or other document evidencing any Obligations
shall be made, in accordance with Section 4.2, free and clear of and
-----------
without reduction for any and all present or future taxes, levies, imposts,
deductions, charges, withholdings, and all stamp or documentary taxes, excise
taxes, ad valorem taxes and other taxes which arise from the execution,
delivery or registration, or from payment or performance under, or otherwise
with respect to, any of the Loan Documents or the Revolving Credit
Commitments and all other liabilities with respect thereto excluding, in the
case of each Lender, taxes imposed on or measured by net income or overall
gross receipts and capital and franchise taxes imposed on it by (i) the
United States, (ii) the Governmental Authority of the jurisdiction in which
such Lender's Applicable Lending Office is located or any political
subdivision thereof or (iii) the Governmental Authority in which such Person
is organized, managed and controlled or any political subdivision thereof
(all such non-excluded taxes, levies, imposts, deductions, charges and
withholdings being hereinafter referred to as "Taxes"). Except as otherwise
-----
provided herein, if the Borrower shall be
required by law to withhold or deduct any Taxes from or in respect of any sum
payable hereunder or under any such Note or document to any Lender, (x) the
sum payable to such Lender shall be increased as may be necessary so that
after making all required withholding or deductions (including withholding or
deductions applicable to additional sums payable under this Section 13.1)
------------
such Lender receives an amount equal to the sum it would
have received had no such withholding or deductions been made, (y) the
Borrower shall make such withholding or deductions, and (z) the Borrower
shall pay the full amount withheld or deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) Indemnification. Except as otherwise provided herein, the
---------------
Borrower will indemnify each Lender against, and reimburse each within ten
(10) Business Days after written demand for, the full amount of all Taxes
(including, without limitation, any Taxes imposed by any Governmental
Authority on amounts payable under this Section 13.1 and any additional
------------
income or franchise taxes resulting therefrom) incurred or paid by such
Lender and any liability (including penalties, interest, and out-of-pocket
expenses paid to third parties) arising therefrom or with respect thereto,
whether or not such Taxes were lawfully payable, to the extent not paid by
the Borrower pursuant to Section 13.1 hereof. A certificate as to any
------------
additional amount payable to any Person under this Section 13.1 submitted
------------
by it to the Borrower shall, absent manifest error, be final, conclusive and
binding upon all parties hereto. Each Lender agrees, within a reasonable
time after receiving a written request from the Borrower, to provide the
Borrower and the Administrative Agent with such certificates and other
documents as are reasonably required, and take such other actions as are
reasonably necessary to claim such exemptions as such Lender may be entitled
to claim in respect of all or a portion of any Taxes which are otherwise
required to be paid or deducted or withheld pursuant to this Section 13.1 in
------------
respect of any payments under this Agreement or under the other Loan
Documents. If any Lender receives any refund with respect to any Taxes, such
Lender shall promptly remit such refund to the Borrower.
(c) Receipts. Within thirty (30) days after the date of any payment
--------
of Taxes by the Borrower, it will furnish to the Administrative Agent, at its
address referred to in Section 14.8, the original or a certified copy
------------
of a receipt evidencing payment thereof.
(d) Foreign Bank Certifications. (i) Each Lender that is not
---------------------------
created or organized under the laws of the United States or a political
subdivision thereof shall deliver to the Borrower and the Administrative
Agent on the Closing Date or the date on which such Lender becomes a Lender
pursuant to Section 14.1 hereof a true and accurate certificate
------------
executed in duplicate by a duly authorized officer of such Lender to the
effect that such Lender is eligible to receive payments hereunder and under
the Notes without deduction or withholding of United States federal income
tax (I) under the provisions of an applicable tax treaty concluded by the
United States (in which case the certificate shall be accompanied by two duly
completed copies of IRS Form 1001 (or any successor or substitute form or
forms)) or (II) under Sections 1442(c)(1) and 1442(a) of the Internal Revenue
Code (in which case the certificate shall be accompanied by two duly
completed copies of IRS Form 4224 (or any successor or substitute form or
forms)).
(ii) Each Lender further agrees to deliver to the Borrower and the
Administrative Agent from time to time, a true and accurate certificate
executed in duplicate by a duly authorized officer of such Lender before or
promptly upon the occurrence of any event requiring a change in the most
recent certificate previously delivered by it to the Borrower and the
Administrative Agent pursuant to this Section 13.1(d). Each certificate
---------------
required to be delivered pursuant to this Section 13.1(d)(ii) shall
-------------------
certify as to one of the following:
(A) that such Lender can continue to receive payments
hereunder and under the Notes without deduction or withholding of United
States federal income tax;
(B) that such Lender cannot continue to receive payments
hereunder and under the Notes without deduction or withholding of United
States federal income tax as specified therein but does not require
additional payments pursuant to Section 13.1(a) because it is entitled to
---------------
recover the full amount of any such deduction or withholding from
a source other than the Borrower; or
(C) that such Lender is no longer capable of receiving
payments hereunder and under the Notes without deduction or withholding
of United States federal income tax as specified therein and that it is
not capable of recovering the full amount of the same from a source
other than the Borrower.
Each Lender agrees to deliver to the Borrower and the Administrative Agent
further duly completed copies of the above-mentioned IRS forms on or before
the earlier of (x) the date that any such form expires or becomes obsolete or
otherwise is required to be resubmitted as a condition to obtaining an
exemption from withholding from United States federal income tax and (y)
fifteen (15) days after the occurrence of any event requiring a change in the
most recent form previously delivered by such Lender to the Borrower and
Administrative Agent, unless any change in treaty, law, regulation, or
official interpretation thereof which would render such form inapplicable or
which would prevent the Lender from duly completing and delivering such form
has occurred prior to the date on which any such delivery would otherwise be
required and the Lender promptly advises the Borrower that it is not capable
of receiving payments hereunder and under the Notes without any deduction or
withholding of United States federal income tax.
(iii) Notwithstanding anything to the contrary contained in this
Section 13.1, the Borrower will not be required to make any additional
- ------------
payment to or for the account of any Lender under Section 13.1(a) or (b)
----------------------
by reason of (x) a breach by such Lender of any certification or
representation set forth in any form furnished to the Borrower under Section
13.1(d), or (y) such Lender's failure or inability to furnish
- ---------------
under Section 13.1(d) an original of an extension or renewal of a Form
---------------
1001 or Form 4224 (or successor form), as applicable, unless such failure or
inability results from a change (after the date such Lender became a Lender
party hereto) in any applicable law or regulation or in the interpretation
thereof by any regulatory authority (including without limitation any change
in any applicable tax treaty).
Section 13.2 Increased Capital . If after the date hereof any
------------------
Lender determines that (i) the adoption or implementation of or any change in
or in the interpretation or administration of any law or regulation or any
guideline or request from any central bank or other Governmental Authority or
quasi-governmental authority exercising jurisdiction, power or control over
any Lender or banks or financial institutions generally (whether or not
having the force of law), compliance with which affects the amount of capital
required or expected to be maintained by such Lender or any corporation
controlling such Lender and (ii) the amount of such capital is increased by
or based upon (A) the making or maintenance by any Lender of its Loans, any
Lender's participation in or obligation to participate in the Loans, Letters
of Credit or other advances made hereunder or the existence of any Lender's
obligation to make Loans or (B) the issuance or maintenance by any Lender of,
or the existence of any Lender's obligation to issue, Letters of Credit,
then, in any such case, within ten (10) Business Days after written demand by
such Lender (with a copy of such demand to the Administrative Agent), the
Borrower shall immediately pay to the Administrative Agent for the account of
such Lender, from time to time as specified by such Lender, additional
amounts sufficient to compensate such Lender or such corporation therefor.
Such demand shall be accompanied by a statement as to the amount of such
compensation and include a brief summary of the basis for such demand. Such
statement shall be conclusive and binding for all purposes, absent manifest
error.
Section 13.3 Changes; Legal Restrictions . If after the date
----------------------------
hereof any Lender determines that the adoption or implementation of or any
change in or in the interpretation or administration of any law or regulation
or any guideline or request from any central bank or other Governmental
Authority or quasi-governmental authority exercising jurisdiction, power or
control over any Lender, or over banks or financial institutions generally
(whether or not having the force of law), compliance with which:
(a) subjects a Lender (or its Applicable Lending Office or Eurodollar
Affiliate) to charges (other than taxes) of any kind which such Lender
reasonably determines to be applicable to the Revolving Credit Commitments of
the Lenders to make Eurodollar Rate Loans or issue and/or participate in
Letters of Credit or change the basis of taxation of payments to that Lender
of principal, fees, interest, or any other amount payable hereunder with
respect to Eurodollar Rate Loans or Letters of Credit (other than taxes
excluded in Section 13.1(a) hereof); or
---------------
(b) imposes, modifies, or holds applicable, in the determination of a
Lender, any reserve, special deposit, compulsory loan, FDIC insurance or
similar requirement against assets held by, or deposits or other liabilities
(including those pertaining to Letters of Credit) in or for the account of,
advances or loans by, commitments made, or other credit extended by, or any
other acquisition of funds by, a Lender or any Applicable Lending Office or
Eurodollar Affiliate of that Lender in respect of Eurodollar Loans or Letters
of Credit;
and the result of any of the foregoing is to increase the cost to that Lender
of making, renewing or maintaining the Loans or its Revolving Credit
Commitment or issuing or participating in the Letters of Credit or to reduce
any amount receivable thereunder; then, in any such case, within ten (10)
Business Days after written demand by such Lender (with a copy of such demand
to the Administrative Agent), the Borrower shall immediately pay to the
Administrative Agent for the account of such Lender, from time to time as
specified by such Lender, such amount or amounts as may be necessary to
compensate such Lender or its Eurodollar Affiliate for any such additional
cost incurred or reduced amount received. Such demand shall be accompanied
by a statement as to the amount of such compensation and include a brief
summary of the basis for such demand. Such statement shall be conclusive and
binding for all purposes, absent manifest error.
Section 13.4 Replacement of Certain Lenders . In the event a
-------------------------------
Lender (a "Designated Lender") shall have (i) requested additional
-----------------
compensation from the Borrower under Section 13.1 or under Section 13.2 or
------------ ------------
under Section 13.3, (ii) failed to make its Pro Rata Share of any Loan
------------
requested to be made hereby or (iii) failed to make any Loan at the
Eurodollar Rate, the Borrower may, at its sole election, make written demand
on such Designated Lender (with a copy to the Administrative Agent) for the
Designated Lender to assign, and such Designated Lender shall assign pursuant
to one or more duly executed Assignment and Acceptances to one or more
Eligible Assignees which the Borrower or the Administrative Agent shall have
identified for such purpose, all of such Designated Lender's right and
obligations under this Agreement, the Notes and the other Loan Documents
(including, without limitation, its Revolving Credit Commitment, all Loans
owing to it, and all of its participation interests in Letters of Credit) in
accordance with Section 14.1. All out-of-pocket
------------
expenses incurred by the Administrative Agent in connection with the
foregoing shall be for the sole account of the Borrower and shall constitute
Obligations hereunder. In no event shall Borrower's election under the
provisions of this Section 13.4 affect its obligation to pay the
------------
additional compensation required under either Section 13.1, Section 13.2
------------ ------------
or Section 13.3.
------------
Section 13.5 Mitigation . Each Lender shall notify the Borrower of
-----------
any event occurring after the date of this Agreement entitling such Lender to
compensation under Sections 13.1, 13.2 or 13.3 as promptly as practicable,
but in any event, within 45 days, after such Lender obtains actual knowledge
thereof; provided that (i) if any Lender fails to give
--------
such notice within 45 days after it obtains actual knowledge of such an
event, such Lender shall, with respect to compensation payable pursuant to
Sections 13.1, 13.2 or 13.3 in respect of any costs resulting from such
event, only be entitled to payment under Sections 13.1, 13.2 or 13.3 for
costs incurred from and after the date 45 days prior to the date that such
Lender does give such notice and (ii) each Lender will designate a different
Applicable Lending Office for the Loans of such Lender affected by such event
if such designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the reasonable judgment of such Lender, be
disadvantageous to such Lender.
ARTICLE XIV.
MISCELLANEOUS
Section 14.1 Assignments and Participations.
------------------------------
(a) Assignments. No assignments or participations of any Lender's
-----------
rights or obligations under this Agreement shall be made except in accordance
with this Section 14.1. Each Lender may assign to one or more
------------
Eligible Assignees all or a portion of its rights and obligations under this
Agreement (including all of its rights and obligations with respect to the
Loans and the Letters of Credit) in accordance with the provisions of this
Section 14.1.
- ------------
(b) Limitations on Assignments. For so long as no Event of Default
--------------------------
has occurred and is continuing, each assignment shall be subject to the
following conditions: (i) each assignment shall be of a constant, and not a
varying, ratable percentage of all of the assigning Lender's rights and
obligations under this Agreement and, in the case of a partial assignment,
shall be in a minimum principal amount of $10,000,000 (and the assignor shall
maintain a minimum amount of $10,000,000 for its own account unless the
assignor shall assign or participate its entire interest), (ii) each such
assignment shall be to an Eligible Assignee, (iii) each assignment shall be
subject to the reasonable approval of the Agent and the Borrower, (iv) the
parties to each such assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance, and (v) each Agent shall maintain a minimum
Revolving Credit Commitment in an amount greater than the Revolving Credit
Commitment of any other Lender (other than the other Arrangers) or an amount
sufficient to maintain such Arranger's Pro Rata Share as of the Closing Date,
whichever is less. Upon the occurrence and continuance of an Event of
Default, none of the foregoing restrictions on assignments shall apply,
provided, however, that while an Event of Default (other than an Event of
Default that shall have required that the Administrative Agent shall have
delivered a notice of the underlying default) shall be continuing but prior
to acceleration of the Loans, the applicable Lender shall give the Borrower
five (5) days' written notice by telecopy of its intention to assign any or
all of its interest in this Agreement. Upon such execution, delivery,
acceptance and recording in the Register, from and after the effective date
specified in each Assignment and Acceptance and agreed to by the
Administrative Agent, (A) the assignee thereunder shall, in addition to any
rights and obligations hereunder held by it immediately prior to such
effective date, if any, have the rights and obligations hereunder that have
been assigned to it pursuant to such Assignment and Acceptance and shall, to
the fullest extent permitted by law, have the same rights and benefits
hereunder as if it were an original Lender hereunder, (B) the assigning
Lender shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of
such assigning Lender's rights and obligations under this Agreement, the
assigning Lender shall cease to be a party hereto) and (C) the Borrower shall
execute and deliver to the assignee thereunder a Note evidencing its
obligations to such assignee with respect to the Loans.
(c) The Register. The Administrative Agent shall maintain at its
address referred to in Section 14.8 a copy of each Assignment and
------------
Acceptance delivered to and accepted by it and a register (the "Register")
-------
for the recordation of the names and addresses of the Lenders, the Revolving
Credit Commitment of, and the principal amount of the Loans under the
Revolving Credit Commitments owing to, each Lender from time to time and
whether such Lender is an original Lender or the assignee of another Lender
pursuant to an Assignment and Acceptance. The entries in the Register shall
be conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Administrative Agent and the other Lenders and each other party
to a Loan Document may treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower or any Lender at
any reasonable time and from time to time upon reasonable prior notice.
(d) Fee. Upon its receipt of an Assignment and Acceptance executed
---
by the assigning Lender and an Assignee and a processing and recordation fee
of $3,500 (payable by the assignee to the Administrative Agent), the
Administrative Agent shall, if such Assignment and Acceptance has been
completed and is in compliance with this Agreement and in substantially the
form of EXHIBIT A hereto, (i) accept such Assignment and Acceptance,
---------
(ii) record the information contained therein in the Register and (iii) give
prompt notice thereof to the Borrower and the other Lenders.
(e) Participations. Each Lender may sell participations to one or
-------------
more other financial institutions in or to all or a portion of its rights and
obligations under and in respect of any and all facilities under this
Agreement (including, without limitation, all or a portion of any or all of
its Revolving Credit Commitment hereunder and the Loans owing to it and its
undivided interest in the Letters of Credit); provided, however, that
-------- ------
(i) such Lender's obligations under this Agreement (including, without
limitation, its Revolving Credit Commitment hereunder) shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) the Borrower,
the Administrative Agent and the other Lenders shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement, (iv) each participation shall be in a
minimum amount of $10,000,000, and (v) such participant's rights to agree or
to restrict such Lender's ability to agree to the modification, waiver or
release of any of the terms of the Loan Documents, to consent to any action
or failure to act by any party to any of the Loan Documents or any of their
respective Affiliates, or to exercise or refrain from exercising any powers
or rights which any Lender may have under or in respect of the Loan
Documents, shall be limited to the right to consent to (A) increase in the
Revolving Credit Commitment of the Lender from whom such participant
purchased a participation, (B) reduction of the principal of, or rate or
amount of interest on the Loans subject to such participation (other than by
the payment or prepayment thereof), (C) postponement of any date fixed for
any payment of principal of, or interest on, the Loan(s) subject to such
participation and (D) release of any guarantor of the Obligations.
(f) Information Regarding the Borrower. Any Lender may, subject to
----------------------------------
the provisions of Section 14.22, in connection with any assignment or
-------------
participation or proposed assignment or participation pursuant to this
Section 14.1, disclose to the assignee or participant or proposed assignee
- ------------
or participant, any information relating to the Borrower or its Subsidiaries
furnished to such Lender by the Administrative Agent or by or on behalf of
the Borrower.
(g) Payment to Participants. Anything in this Agreement to the
-----------------------
contrary notwithstanding, in the case of any participation, all amounts
payable by the Borrower under the Loan Documents shall be calculated and made
in the manner and to the parties required hereby as if no such participation
had been sold.
(h) Lenders' Creation of Security Interests. Notwithstanding any
---------------------------------------
other provision set forth in this Agreement, any Lender may at any time
create a security interest in all or any portion of its rights under this
Agreement (including, without limitation, Obligations owing to it and any
Note held by it) in favor of any Federal Reserve bank in accordance with
Regulation A of the Federal Reserve Board.
Section 14.2 Expenses.
-------
(a) Generally. The Borrower agrees promptly upon demand to pay, or
--------
reimburse the Administrative Agent for the reasonable fees, expenses and
disbursements of Skadden, Arps, Slate, Meagher & Flom LLP (but not of other
legal counsel) and for all other reasonable out-of-pocket costs and expenses
incurred by the Administrative Agent or each Arranger in connection with (i)
the preparation, negotiation, and execution of the Loan Documents; (ii) the
preparation, negotiation, execution and interpretation of this Agreement
(including, without limitation, the satisfaction or attempted satisfaction of
any of the conditions set forth in Article VI), the Loan Documents, and the
making of the Loans hereunder; -----------
(iii) any amendments, consents, waivers, assignments, restatements, or
supplements to any of the Loan Documents and the preparation, negotiation,
and execution of the same; and (iv) any other amendments, modifications,
agreements, assignments, restatements or supplements to any of the Loan
Documents requested by Borrower and the preparation, negotiation, and
execution of the same.
(b) After Default. The Borrower further agrees to pay or reimburse
------------
the Administrative Agent, the Arrangers and each of the Lenders upon demand
for all reasonable out-of-pocket costs and expenses, including, without
limitation, reasonable attorneys' fees (including allocated costs of internal
counsel and costs of settlement) incurred by the such entity after the
occurrence and during the continuance of an Event of Default (i) in enforcing
any Loan Document or Obligation, the collection of any Obligation or
exercising or enforcing any other right or remedy available by reason of such
Event of Default; or (ii) in connection with any refinancing or restructuring
of the credit arrangements provided under this Agreement in the nature of a
"work-out" or in any insolvency or bankruptcy proceeding; (iii) in
commencing, defending or intervening in any litigation or in filing a
petition, complaint, answer, motion or other pleadings in any legal
proceeding relating to the Obligations, a Project, any of the Consolidated
Businesses and related to or arising out of the transactions contemplated
hereby or by any of the other Loan Documents; and (iv) in taking any other
action in or with respect to any suit or proceeding (bankruptcy or otherwise)
described in clauses (i) through (iii) above.
Section 14.3 Indemnity. The Borrower further agrees (a) to defend,
---------
protect, indemnify, and hold harmless the Administrative Agent, the Arrangers
and each and all of the other Lenders and each of their respective officers,
directors, employees, attorneys and agents (collectively, the "Indemnitees")
-----------
from and against any and all
liabilities, obligations, losses (other than loss of profits), damages,
penalties, actions, judgments, suits, claims, reasonable costs, reasonable
expenses and reasonable disbursements (excluding any taxes and including,
without limitation, the reasonable fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding, whether or not such Indemnitees shall be designated a party
thereto), imposed on, incurred by, or asserted against such Indemnitees in
any manner relating to or arising out of (i) this Agreement or the other Loan
Documents, the making of the Loans and the issuance of and participation in
Letters of Credit hereunder, the use or intended use of the proceeds of the
Loans or Letters of Credit hereunder, or any of the other transactions
contemplated by the Loan Documents, or (ii) any Liabilities and Costs
relating to violation of any Environmental, Health or Safety Requirements of
Law, the past, present or future operations of the Borrower, any of its
Subsidiaries or any of their respective predecessors in interest, or, the
past, present or future environmental, health or safety condition of any
respective Property of the Borrower or any of its Subsidiaries, the presence
of asbestos-containing materials at any respective Property of the Borrower
or any of its Subsidiaries, or the Release or threatened Release of any
Contaminant into the environment (collectively, the "Indemnified Matters");
provided, however, the Borrower --------------------
- -------- -------
shall have no obligation to an Indemnitee hereunder with respect to
Indemnified Matters caused by or resulting from the willful misconduct or
gross negligence of such Indemnitee, as determined by a court of competent
jurisdiction in a non-appealable final judgment; and (b) not to assert any
claim against any of the Indemnitees, on any theory of liability, for
consequential or punitive damages arising out of, or in any way in connection
with, the Revolving Credit Commitments, the Revolving Credit Obligations, or
the other matters governed by this Agreement and the other Loan Documents.
To the extent that the undertaking to indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because it is violative
of any law or public policy, the Borrower shall contribute the maximum
portion which it is permitted to pay and satisfy under applicable law, to the
payment and satisfaction of all Indemnified Matters incurred by the
Indemnitees.
Section 14.4 Change in Accounting Principles. If any change in
-------------------------------
the accounting principles used in the preparation of the most recent
financial statements referred to in Sections 8.1 or 8.2 are hereafter
-------- --- ---
required or permitted by the rules, regulations, pronouncements and opinions
of the Financial Accounting Standards Board or the American Institute of
Certified Public Accountants (or successors thereto or agencies with similar
functions) and are adopted by any Company or the Borrower, as applicable,
with the agreement of its independent certified public accountants and such
changes result in a change in the method of calculation of any of the
covenants, standards or terms found in Article X, the parties hereto agree to
enter into negotiations in order to amend such provisions so as to equitably
reflect such changes with the desired result that the criteria for evaluating
compliance with such covenants, standards and terms by the Borrower shall be
the same after such changes as if such changes had not been made; provided,
however, no change in GAAP that would affect the method of calculation of any
of the covenants, standards or terms shall be given effect in such
calculations until such provisions are amended, in a manner satisfactory to
the Administrative Agent and the Borrower, to so reflect such change in
accounting principles.
Section 14.5 Intentionally Omitted.
-------------------
Section 14.6 Ratable Sharing. The Lenders agree among themselves
---------------
that (i) with respect to all amounts received by them which are applicable to
the payment of the Obligations (excluding the fees described in Sections
3.1(g), 5.2(f), and 5.3 and Article XIII) equitable adjustment will be made
so that, in effect, all such amounts will be shared among them ratably in
accordance with their Pro Rata Shares, whether received by voluntary payment,
by the exercise of the right of setoff or banker's lien, by counterclaim or
cross-action or by the enforcement of any or all of the Obligations
(excluding the fees described in Sections 3.1(g), 5.2(f), and 5.3 and Article
XIII), (ii) if any of them shall by voluntary payment or by the exercise of
any right of counterclaim, setoff, banker's lien or otherwise, receive
payment of a proportion of the aggregate amount of the Obligations held by
it, which is greater than the amount which such Lender is entitled to receive
hereunder, the Lender receiving such excess payment shall purchase, without
recourse or warranty, an undivided interest and participation (which it shall
be deemed to have done simultaneously upon the receipt of such payment) in
such Obligations owed to the others so that all such recoveries with respect
to such Obligations shall be applied ratably in accordance with their Pro
Rata Shares; provided, however, that if all or part of such excess payment
received by the purchasing party is thereafter recovered from it, those
purchases shall be rescinded and the purchase prices paid for such
participations shall be returned to such party to the extent necessary to
adjust for such recovery, but without interest except to the extent the
purchasing party is required to pay interest in connection with such
recovery. The Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to this Section 14.6 may, to the fullest extent
permitted by law, exercise all its rights of payment with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
Section 14.7 Amendments and Waivers.
----------------------
(a) General Provisions. Unless otherwise provided for or required
------------------
in this Agreement, no amendment or modification of any provision of this
Agreement or any of the other Loan Documents shall be effective without the
written agreement of the Requisite Lenders (which the Requisite Lenders shall
have the right to grant or withhold in their sole discretion) and the
Borrower; provided, however, that the Borrower's
-------- ------
agreement shall not be required for any amendment or modification of
Sections 12.1 through 12.8 (other than Section 12.7). In the event that
- ------------- --- -----------
the Administrative Agent shall request the agreement of the Lenders to any
amendment, modification or waiver, if any Lender shall fail to respond to any
such request within fifteen (15) days after receipt of such request, such
Lender's approval thereto shall be deemed to have been given. No termination
or waiver of any provision of this Agreement or any of the other Loan
Documents, or consent to any departure by the Borrower therefrom, shall be
effective without the written concurrence of the Requisite Lenders, which the
Requisite Lenders shall have the right to grant or withhold in their sole
discretion. All amendments, waivers and consents not specifically reserved
to the Administrative Agent, the Arrangers or the other Lenders in Section
14.7(b), 14.7(c), and in other -------
- ------ ------
provisions of this Agreement shall require only the approval of the Requisite
Lenders. Any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given. No notice to or
demand on the Borrower in any case shall entitle the Borrower to any other or
further notice or demand in similar or other circumstances.
(b) Amendments, Consents and Waivers by Affected Lenders. Any
----------------------------------------------------
amendment, modification, termination, waiver or consent with respect to any
of the following provisions of this Agreement shall be effective only by a
written agreement, signed by each Lender affected thereby as described below:
(i) waiver of any of the conditions specified in Sections 6.1 and 6.2
(except with respect to a condition based upon another provision of this
Agreement, the waiver of which requires only the concurrence of the Requisite
Lenders),
(ii) increase in the amount of such Lender's Revolving Credit
Commitment,
(iii) reduction of the principal of, rate or amount of interest on
the Loans, the Reimbursement Obligations, or any fees or other amounts
payable to such Lender (other than by the payment or prepayment thereof), and
(iv) postponement or extension of any date (other than the Revolving
Credit Termination Date postponement or extension of which is governed by
Section 14.7(c)(i)) fixed for any payment of principal of, or interest on,
the Loans, the Reimbursement Obligations or any fees or other amounts payable
to such Lender (except with respect to any modifications of the application
provisions relating to prepayments of Loans and other Obligations which are
governed by Section 4.2(b)).
---------------
(c) Amendments, Consents and Waivers by All Lenders. Any amendment,
-----------------------------------------------
modification, termination, waiver or consent with respect to any of the
following provisions of this Agreement shall be effective only by a written
agreement, signed by each Lender:
(i) postponement of the Revolving Credit Termination Date, or increase
in the Maximum Revolving Credit Amount to any amount in excess of
$200,000,000,
(ii) change in the definition of Requisite Lenders or in the aggregate
Pro Rata Share of the Lenders which shall be required for the Lenders or any
of them to take action hereunder or under the other Loan Documents,
(iii) amendment of Section 14.6 or this Section 14.7,
------------ ------------
(iv) assignment of any right or interest in or under this Agreement or
any of the other Loan Documents by the Borrower,
(v) waiver of any Event of Default under Section 11.1(a), Section
--------------- -------
11.1(g) or Section 11.1(f), and
- ------- ---------------
(vi) amendment or release of the Guaranty.
(d) Administrative Agent Authority. The Administrative Agent may, but
------------------------------
shall have no obligation to, with the written concurrence of any Lender,
execute amendments, modifications, waivers or consents on behalf of that
Lender. Notwithstanding anything to the contrary contained in this Section
-------
14.7, no amendment, modification, waiver or consent shall affect the rights or
- ----
duties of the Administrative Agent under this Agreement and the other Loan
Documents, unless made in writing and signed by the Administrative Agent in
addition to the Lenders required above to take such
action. Notwithstanding anything herein to the contrary, in the event that
the Borrower shall have requested, in writing, that any Lender agree to an
amendment, modification, waiver or consent with respect to any particular
provision or provisions of this Agreement or the other Loan Documents, and
such Lender shall have failed to state, in writing, that it either agrees or
disagrees (in full or in part) with all such requests (in the case of its
statement of agreement, subject to satisfactory documentation and such other
conditions it may specify) within thirty (30) days after such request, then
such Lender hereby irrevocably authorizes the Administrative Agent to agree
or disagree, in full or in part, and in the Administrative Agent's sole
discretion, to such requests on behalf of such Lender as such Lenders'
attorney-in-fact and to execute and deliver any writing approved by the
Administrative Agent which evidences such agreement as such Lender's duly
authorized agent for such purposes.
Section 14.8 Notices. Unless otherwise specifically provided herein,
-------
any notice or other communication herein required or permitted to be given
shall be in writing and may be personally
served, sent by facsimile transmission or by courier service or United States
certified mail and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of a facsimile transmission, or
four (4) Business Days after deposit in
the United States mail with postage prepaid and properly addressed. Notices
to the Administrative Agent pursuant to Articles II, IV or XII shall not be
----------- -- ---
effective until received by the Administrative Agent. For the purposes hereof,
the addresses of the parties hereto (until notice of a change thereof is
delivered as provided in this Section 14.8) shall be as set forth below each
------------
party's name on the signature pages hereof or the signature page of any
applicable Assignment and Acceptance, or, as to each party, at such other
address as may be designated by such party in a written notice to all of the
other parties to this Agreement.
Section 14.9 Survival of Warranties and Agreements. All
-------------------------------------
representations and warranties made herein and all obligations of the Borrower
in respect of taxes, indemnification and expense reimbursement shall survive
the execution and delivery of this Agreement and the other Loan Documents, the
making and repayment of the Loans, the issuance and discharge of Letters of
Credit hereunder and, except for the representations and warranties, the
termination of this Agreement other than any of the foregoing set forth in
Section 13.1 or Section 13.2 or Section 13.3 or Section 5.2(f) shall survive
- ------------ ------------ ------------ --------------
for thirty (30) days after termination of this Agreement.
Section 14.10 Failure or Indulgence Not Waiver; Remedies Cumulative.
-----------------------------------------------------
No failure or delay on the part of the Administrative Agent or any other
Lender in the exercise of any power, right or privilege under any of the
Loan Documents shall impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege. All rights and remedies existing under the Loan
Documents are cumulative to and not exclusive of any rights or remedies
otherwise available.
Section 14.11 Payments Set Aside. To the extent that the Borrower
------------------
makes a payment or payments to the Administrative Agent, any Arranger or any
other Lender or any such Person exercises its rights of setoff, and such
payment or payments or the proceeds of such enforcement or setoff or any part
thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
to be repaid to a trustee, receiver or any other party, then to the extent of
such recovery, the obligation or part thereof originally intended to be
satisfied, and all right and remedies therefor, shall be revived and
continued in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.
Section 14.12 Severability. In case any provision in or obligation
------------
under this Agreement or the other Loan Documents shall be invalid, illegal or
unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
Section 14.13 Headings. Section headings in this Agreement are
--------
included herein for convenience of reference only and shall not constitute a
part of this Agreement or be given any substantive effect.
Section 14.14 Governing Law. THIS AGREEMENT SHALL BE INTERPRETED, AND
-------------
THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS CONFLICT
OF LAWS PRINCIPLES.
Section 14.15 Limitation of Liability. No claim may be made by any
-----------------------
Lender, any Arranger, the Administrative Agent, or any other Person against
any Lender (acting in any capacity
hereunder) or the Affiliates, directors, officers, employees, attorneys or
agents of any of them for any consequential or punitive damages in respect of
any claim for breach of contract or any other theory of liability arising out
of or related to the transactions contemplated by this Agreement, or any act,
omission or event occurring in connection therewith; and each Lender, each
Arranger and the Administrative Agent hereby waives, releases and agrees not
to sue upon any such claim for any such damages, whether or not accrued and
whether or not known or suspected to exist in its favor.
Section 14.16 Successors and Assigns. This Agreement and the other
----------------------
Loan Documents shall be binding upon the parties hereto and their respective
successors and assigns and shall inure to
the benefit of the parties hereto and the successors and permitted assigns of
the Lenders. Except as otherwise provided in Section 10.7, the rights
hereunder of the Borrower, or any interest therein, may not be assigned
without the written consent of all Lenders.
Section 14.17 Certain Consents and Waivers of the Borrower.
--------------------------------------------
(a) Personal Jurisdiction. (i) EACH OF THE AGENTS, THE LENDERS AND
---------------------
THE BORROWER IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS
PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT
SITTING IN NEW YORK, NEW YORK, AND ANY COURT HAVING JURISDICTION OVER APPEALS
OF MATTERS HEARD IN SUCH COURTS, IN ANY ACTION OR PROCEEDING ARISING OUT OF,
CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
AMONG THEM IN CONNECTION WITH THIS AGREEMENT, WHETHER ARISING IN CONTRACT,
TORT, EQUITY OR OTHERWISE, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT,
AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT
ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH
FEDERAL COURT. EACH OF THE AGENTS, THE LENDERS AND THE BORROWER AGREES THAT
A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY
BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW. EACH OF THE AGENTS, THE LENDERS AND THE BORROWER
WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE
COURT CONSIDERING THE DISPUTE.
(ii) THE BORROWER AGREES THAT THE ADMINISTRATIVE AGENT SHALL HAVE THE
RIGHT TO PROCEED AGAINST THE BORROWER OR ITS PROPERTY IN A COURT IN ANY
LOCATION NECESSARY OR APPROPRIATE TO ENABLE THE ADMINISTRATIVE AGENT AND THE
OTHER LENDERS TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
THE ADMINISTRATIVE AGENT OR ANY OTHER LENDER. THE BORROWER WAIVES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE
ADMINISTRATIVE AGENT OR ANY LENDER MAY COMMENCE A PROCEEDING DESCRIBED IN
THIS SECTION.
(b) Service of Process. THE BORROWER IRREVOCABLY CONSENTS TO
------------------
THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO THE PROCESS AGENT OR THE BORROWER'S NOTICE ADDRESS
SPECIFIED BELOW, SUCH SERVICE TO BECOME EFFECTIVE UPON RECEIPT. THE BORROWER
IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY
OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
----- ---
CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
- ----------
SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT IN ANY
JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE
ADMINISTRATIVE AGENT OR THE OTHER LENDERS TO BRING PROCEEDINGS AGAINST THE
BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
(c) WAIVER OF JURY TRIAL. EACH OF THE AGENTS AND THE OTHER LENDERS AND
--------------------
THE BORROWER IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
Section 14.18 Counterparts; Effectiveness; Inconsistencies. This
--------------------------------------------
Agreement and any amendments, waivers, consents, or supplements hereto may be
executed in counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument. This Agreement
shall become effective against the Borrower and each Agent and Lender on the
Closing Date. This Agreement and each of the other Loan Documents shall be
construed to the extent reasonable to be consistent one with the other, but
to the extent that the terms and conditions of this Agreement are actually
inconsistent with the terms and conditions of any other Loan Document, this
Agreement shall govern.
Section 14.19 Limitation on Agreements. All agreements between the
------------------------
Borrower, the Administrative Agent, each Arranger and each Lender in the Loan
Documents are hereby expressly limited
so that in no event shall any of the Loans or other amounts payable by the
Borrower under any of the Loan Documents be directly or indirectly secured
(within the meaning of Regulation U) by Margin Stock.
Section 14.20 Disclaimers. The Administrative Agent, the Arrangers
-----------
and the other Lenders shall not be liable to any
contractor, subcontractor, supplier, laborer, architect, engineer, tenant or
other party for services performed or materials supplied in connection with
any work performed on the Projects, including any TI Work. The
Administrative Agent, the Arrangers and the other Lenders shall not be liable
for any debts or claims accruing in favor of any such parties against the
Borrower or others or against any of the Projects. The Borrower is not and
shall not be an agent of any Agent, the Arrangers or the other Lenders for
any purposes and none of the Lenders, the Arrangers, or the Agents shall be
deemed partners or joint venturers with Borrower. None of the Administrative
Agent, the Arrangers or the other Lenders shall be deemed to be in privity of
contract with any contractor or provider of services to any Project, nor
shall any payment of funds directly to a contractor or subcontractor or
provider of services be deemed to create any third party beneficiary status
or recognition of same by any of the Administrative Agent, the Arrangers or
the other Lenders and the Borrower agrees to hold the Administrative Agent,
the Arrangers and the other Lenders harmless from any of the damages and
expenses resulting from such a construction of the relationship of the parties
or any assertion thereof.
Section 14.21 Entire Agreement. This Agreement, taken together with
----------------
all of the other Loan Documents, embodies the entire agreement and
understanding among the parties hereto and
supersedes all prior agreements and understandings, written and oral,
relating to the subject matter hereof.
Section 14.22 Confidentiality. Each of the Agents, the Arrangers and
---------------
the Lenders agrees to keep confidential all non-public information provided
to it by the Borrower pursuant to this Agreement
that is designated by the Borrower as confidential; provided that nothing
herein shall prevent the Agents or the Lenders from disclosing any such
information (a) to the Agents, any other Lender or any Affiliate of any
Lender (provided such Affiliate is made aware of the confidentiality of such
information and agrees to keep such information confidential), (b) to any
Assignee, Participant or prospective Assignee or Participant (provided such
Person is made aware of the confidentiality of such information and agrees to
keep such information confidential), (c) to the employees, directors, agents,
attorneys, accountants and other professional advisors of any Lender,
Assignee, Participant, prospective Assignee or Participant who are advised of
the provisions of this Section, (d) upon the request or demand of any
Governmental Authority having or asserting jurisdiction over either Agent or
any Lender, (e) in response to any order of any court or other Governmental
Authority or as may otherwise be required pursuant to any Requirement of Law,
(f) if requested or required to do so in connection with the exercise of any
remedy hereunder or under any other Loan Document or (i) upon the advice of
counsel that such disclosure is required by law.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first above written.
BORROWER:
--------
RECKSON OPERATING PARTNERSHIP, L.P.
a Delaware limited partnership
By: RECKSON ASSOCIATES REALTY CORP.
By:
---------------------------------
Name:
Title:
Notice Address:
DOCUMENTATION AGENT
- -------------------
AND ARRANGER:
- ------------
UNION BANK OF SWITZERLAND, NEW YORK
BRANCH
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Notice Address, Domestic Lending Office and
EuroDollar Lending Office:
Union Bank of Switzerland
299 Park Avenue
New York, New York 10171
Attn: Ms. Xiomara Martez
Telecopy: (212) 821-4138
Pro Rata Share: 50%
Revolving Credit Commitment: $100,000,000
ADMINISTRATIVE AGENTS
- --------------------- THE CHASE MANHATTAN BANK
AND ARRANGER:
- ------------ By:
------------------------
Name: Fran Nuchims
Title: Vice President
Notice Address, Domestic and
----------------------------
Eurodollar Lending Office:
-------------------------
The Chase Manhattan Bank
380 Madison Avenue, 10th floor
New York, New York 10017
Attention: Louella Johnson
Telecopy: 212-622-3395
Reference:
with copy of all Notices to:
---------------------------
The Chase Manhattan Bank
380 Madison Avenue, 10th floor
New York, New York 10017
Attention: Marc Costantino
Telecopy: 212-622-3395
Reference:
Pro Rata Share: 50%
Revolving Credit Commitment: $100,000,000
EXHIBIT A
to
Credit Agreement dated as of January 2, 1998
FORM OF ASSIGNMENT AND ACCEPTANCE
- -----------------------------------------------------------------------------
ASSIGNMENT AND ACCEPTANCE
This ASSIGNMENT AND ACCEPTANCE dated as of , 199 , among (Names
------- --
of Assignor Lenders) (each, an "Assignor" and collectively, the "Assignors")
and , , , (etc.) (each, an "Assignee" and collectively, the
------ ------ -------
"Assignees").
PRELIMINARY STATEMENTS
A. Reference is made to the Credit Agreement dated as of January 2,
1998 (as the same may be amended, supplemented, restated or otherwise
modified from time to time, the "Credit Agreement") among Reckson Operating
Partnership, L.P., the institutions from time to time party thereto as
Lenders, and The Chase Manhattan Bank, as Arranger and Administrative Agent,
and Union Bank of Switzerland, New York Branch, as Arranger and Documentation
Agent. Capitalized terms used herein and not otherwise defined herein are
used as defined in the Credit Agreement.
B. The Assignors are Lenders under the Credit Agreement and each
desires to sell and assign to the Assignees a portion of such Assignor's
existing Revolving Credit Commitment, as set forth on Schedule 2 attached
hereto (each, an "Assigned Commitment") in the aggregate amount of $ of
-----
the Revolving Credit Commitments (the "Aggregate Assigned Amount"), and each
Assignee desires to purchase and assume from each
Assignor, on terms and conditions set forth below, an interest in such
Assignor's respective Assigned Commitment and related outstanding Loans (the
"Assigned Percentages"), together with the Assignors' respective rights and
obligations under the Credit Agreement with respect to the Assigned
Percentages, such that each Assignee shall, from and after the Effective Date
(as defined below), become a Lender under the Credit Agreement with the
respective Revolving Credit Commitment and Pro Rata Share listed on the
signature pages attached hereto.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Assignors and the Assignees
hereby agree as follows:
a. In consideration of the payments of each Assignee to each Assignor,
to be made by wire transfer to the Administrative Agent of immediately
available funds on the Effective Date in accordance with Schedule 3 attached
hereto, each Assignor hereby sells and assigns to each Assignee, and each
Assignee hereby purchases and assumes from such Assignor, the Assigned
Percentage set forth on Schedule 1 attached hereto, together with such
Assignor's rights and obligations under the Credit Agreement and all of the
other Loan Documents with respect to the Assigned Percentages as of the date
hereof (after giving effect to any other assignments thereof made prior to
the date hereof, whether or not such assignments have become effective, but
without giving effect to any other assignments thereof also made on the date
hereof), including, without limitation, the obligation to make Loans and the
obligation to participate in Letters of Credit.
b. Each Assignor (i) represents and warrants that as of the date
hereof its Revolving Credit Commitment is as set forth on Schedule 2 attached
hereto (in each case, after giving effect to any other assignments thereof
made prior to the date hereof, whether or not such assignments have become
effective, but without giving effect to any other assignments thereof made as
of the date hereof); (ii) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim and that such Assignor is
legally authorized to enter into this Assignment and Acceptance; (iii) makes
no representation or warranty and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection with
the Credit Agreement or any of the other Loan Documents or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Credit Agreement or any of the other Loan Documents or any other instrument
or document furnished pursuant thereto; and (iv) makes no representation or
warranty and assumes no responsibility with respect to the financial
condition of the Borrower or the performance or observance by the Borrower of
any obligations under the Credit Agreement or any of the other Loan Documents
or any other instrument or document furnished pursuant thereto.
c. Each Assignee (i) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (ii) confirms that
it has received a copy of the Credit Agreement, together with copies of such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Acceptance;
(iii) agrees that it shall have no recourse against the Assignor with respect
to any matter relating to the Credit Agreement, any of the other Loan
Documents, or this Assignment and Acceptance (except with respect to the
representations or warranties made by the Assignors in clauses (i) and (ii)
----------- ----
of paragraph 2 above); (iv) agrees that it will, independently and without
reliance upon the Administrative Agent, the Assignors or any other Lender
and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking
action under the Credit Agreement; (v) confirms that it is an Eligible
Assignee; (vi) appoints and authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers under the Credit
Agreement as are delegated to the Administrative Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; (vii) agrees
that it will perform in accordance with their terms all of the obligations
which by the terms of the Credit Agreement are required to be performed by it
as a Lender; (viii) confirms that, to the best of its knowledge, as of the
date hereof, it is not subject to any law, regulation or guideline from any
central bank or other Governmental Authority or quasi-governmental authority
exercising jurisdiction, power or control over it, which would subject the
Borrower to the payment of additional compensation under Section 13.2 or
under Section 13.3 of the Credit Agreement; (ix) specifies as its Domestic
Lending Office (and address for notices)
and Eurodollar Lending Office(s) the offices set forth beneath its name on
the signature pages hereof; (x) if such Assignee is organized under the laws
of a jurisdiction outside the United States, attaches the forms described in
Section 13.1(d) of the Credit Agreement or any successor forms prescribed by
the Internal Revenue Service of the United States certifying as to the
Assignee's exemption from United States withholding taxes with respect to all
payments to be made to the Assignee under the Credit Agreement and the Notes
or such other documents as are necessary to indicate that all such payments
are subject to such rates at a rate reduced by an applicable tax treaty; and
(xi) represents and warrants that none of the funds, monies, assets or other
consideration being used to purchase pursuant to this Assignment and
Acceptance are "plan assets" as defined under ERISA and that its rights,
benefits, and interests in and under the Loan Documents will not be "plan
assets" under ERISA.
d. Following the execution of this Assignment and Acceptance by each
of the Assignors and the Assignees, it will be delivered to the
Administrative Agent for acceptance and recording by the Administrative
Agent. The effective date of this Assignment and Acceptance shall be
, 199 (the "Effective Date").
- --------- --
e. As of the Effective Date, (i) each Assignee shall be a party to the
Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder and (ii)
each Assignor shall, to the extent provided in this Assignment and
Acceptance, relinquish its rights and be released from its obligations under
the Credit Agreement with respect to its Assigned Commitment.
f. From and after the Effective Date, the Administrative Agent shall
make all payments under the Credit Agreement and the Notes in respect of the
Aggregate Assigned Amount (including, without limitation, all payments of
principal, interest and fees with respect thereto) to the appropriate
Assignees. The Administrative Agent shall make all appropriate adjustments
in payments under the Credit Agreement and the Notes for periods prior to the
Effective Date.
g. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
h. This Assignment and Acceptance may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument.
(i. The Assignor represents and warrants that it has given the Borrower
five (5) days written notice by telecopy of its intention to enter into this
Assignment and Acceptance in accordance with the provisions of
Section 14.1(b) of the Credit Agreement.)/F1/
- ---------------
/F1/ Applies only during the continuance of an Event of Default and prior to
an acceleration of the Loans.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
ASSIGNORS:
------------------------------
By:
---------------------------
Name:
-------------------------
Title:
------------------------
By:
--------------------------
Name:
-------------------------
Title:
------------------------
Notice Address, Domestic Lending Office
---------------------------------------
and EuroDollar Lending Office:
-----------------------------
Adjusted Pro Rata Share: %
----
Adjusted Revolving Credit Commitment: $
----------
ASSIGNEES:
------------------------------
By:
---------------------------
Name:
-------------------------
Title:
------------------------
By:
--------------------------
Name:
-------------------------
Title:
------------------------
Notice Address, Domestic Lending Office
---------------------------------------
and EuroDollar Lending Office:
-----------------------------
Adjusted Pro Rata Share: %
----
Adjusted Revolving Credit Commitment: $
----------
Accepted as of this day
---
of , 199
--------- --
THE CHASE MANHATTAN BANK,
as Administrative Agent
By:
------------------------
Name:
----------------------
Title:
---------------------
Consented and agreed to
as of this day of , 199
------ ------- --
RECKSON OPERATING PARTNERSHIP, L.P.,/**/
a Delaware limited partnership
By: RECKSON ASSOCIATES REALTY CORP.,
a Maryland corporation, its
general partner
By:
-----------------------------------
Name:
Title:
/**/ Consent not required if the circumstances described in Section 14.1(b)
---------------
of the Credit Agreement have occurred and are continuing.
SCHEDULE 1
Assignee Assigned New Pro
- -------- Percentage Rata Share
---------- ----------
SCHEDULE 2
EXISTING REVOLVING CREDIT COMMITMENTS AND
PRO RATA SHARES OF ASSIGNORS
<TABLE>
<CAPTION>
Assignor Existing Existing Assigned
Revolving Credit Pro Rata Commitment
Commitment Share
------------------------------------------- -----------
<S> <C> <C> <C>
</TABLE>
SCHEDULE 3
PAYMENTS/***/
<TABLE>
<CAPTION>
Fee to
Lender Facility Funding Amount/Repay Administrative
Fee ment to Assignors Agent/****/
-------- -------------------- --------------
<S> <C> <C> <C>
</TABLE>
/***/ Payments to the Lenders are shown without parentheses; payments from
the Lenders to the Administrative Agent, on its own behalf or on behalf of the
Lenders, are shown in parentheses.
/****/ Pursuant to Section 14.1(d) of the Credit Agreement.
EXHIBIT B
to
Credit Agreement dated as of January 2, 1998
FORM OF PROMISSORY NOTE
- ------------------------------------------------------------------------------
$ ______________ New York, New York
January 2, 1998
For value received, Reckson Operating Partnership, L.P., a Delaware
limited partnership (the "Borrower"), promises to pay to the order of
-------- ----------
(the "Lender"),the unpaid principal amount of
------
each Loan made by the Lender to the Borrower pursuant to the Credit Agreement
referred to below on the Revolving Credit Termination Date (as such term is
defined in the Credit Agreement). The Borrower promises to pay interest on
the unpaid principal amount of each such Loan on the dates and at the rate or
rates provided for in the Credit Agreement. All such payments of principal
and interest shall be made in lawful money of the United States in Federal or
other immediately available funds at the office of the Administrative Agent
(as such term is defined in the Credit Agreement).
All Loans made by the Lender, the respective types and maturities
thereof and all repayments of the principal thereof shall be recorded by the
Lender and, if the Lender so elects in connection with any transfer or
enforcement hereof, appropriate notations to evidence the foregoing
information with respect to each such Loan then outstanding may be endorsed
by the Lender on the schedule attached hereto, or on a continuation of such
schedule attached to and made a part hereof; provided that the failure of
--------
the Lender to make any such recordation or endorsement shall not affect the
obligations of the Borrower hereunder or under the Credit Agreement.
This note is one of the Notes referred to in the Credit Agreement, dated
as of January 2, 1998, among the Borrower, the institutions from time to time
party thereto, The Chase Manhattan Bank, as Arranger and Administrative Agent
and Union Bank of Switzerland, New York Branch, as Arranger and Documentation
Agent (as the same may be amended, supplemented, restated, or otherwise
modified from time to time, the "Credit Agreement"). Terms defined in the
----------------
Credit Agreement are used herein with the same meanings. Reference is made to
the Credit Agreement for provisions for the prepayment hereof and the
acceleration of the maturity hereof upon the happening of certain events.
THIS NOTE SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE
PARTIES HERETO DETERMINED, IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
BORROWER:
--------
RECKSON OPERATING PARTNERSHIP, L.P.
a Delaware limited partnership
By: RECKSON ASSOCIATES REALTY CORP.
a Maryland corporation, its
general partner
By:
---------------------------------
Name:
Title:
LOANS AND PAYMENTS OF PRINCIPAL
- ------------------------------------------------------------------------------
Date Amount of Type of Amount of Maturity Notation
Loan Loan Principal Repaid Date
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
EXHIBIT C
to
Credit Agreement dated as of January 2, 1998
- ------------------------------------------------------------------------------
FORM OF NOTICE OF BORROWING
_______, 199_
The Chase Manhattan Bank, as Administrative Agent
for the Lenders party to the Credit Agreement
referred to below
380 Madison Avenue
New York, New York 10017
Attention: Marc Costantino
Ladies and Gentlemen:
Reference is hereby made to that certain Credit Agreement dated as of
January 2, 1998 (as the same may be amended, supplemented, restated or
otherwise modified from time to time, the "Credit Agreement", the terms
defined therein being used herein as therein defined), among Reckson
Operating Partnership, L.P., a Delaware limited partnership (the "Borrower"),
the institutions from time to time party thereto as Lenders, and The Chase
Manhattan Bank, as Arranger and Administrative Agent, and Union Bank of
Switzerland, New York Branch, as Arranger and Documentation Agent.
The Borrower hereby gives you notice, irrevocably, pursuant to
Section 2.1(b) of the Credit Agreement that the Borrower
- --------------
hereby requests a Borrowing under the Credit Agreement and, in that connection,
sets forth below the information relating
to such Borrowing (the "Proposed Borrowing") as required pursuant to the
terms of the Credit Agreement:
The Funding Date (which shall be a Business Day) of the Proposed
Borrowing is , 199 .
---------- -
The amount of the Proposed Borrowing is $ ./*/
-----------
The Revolving Credit Availability as of the date of this Notice of
Borrowing is $ .
-------------
/*/ Such amount must be in a minimum amount of $3,000,000 and in integral
multiples of $500,000 in excess of that amount.
The Proposed Borrowing will be of (Eurodollar Rate Loans) (Base
Rate Loans).
The requested Eurodollar Interest Period for
the Proposed Borrowing is from and
------------
ending (for a total of months)./**/
----------- -------
The Borrower hereby directs the Administrative Agent to disburse the
proceeds of the Loans comprising the Proposed Borrowing on the Funding Date
therefor as set forth on Schedule 1 attached hereto and made a part hereof,
----------
whereupon the proceeds of such Loans shall be deemed received by or for the
benefit of the Borrower.
The Borrower hereby certifies that the conditions precedent contained in
Section (6.1) (6.2) are satisfied on the date hereof and will be satisfied on
- -------------------
the Funding Date of the Proposed Borrowing.
RECKSON OPERATING PARTNERSHIP, L.P.,
a Delaware limited partnership
By: RECKSON ASSOCIATES REALTY CORP.,
a Maryland corporation,
its general partner
By:
--------------------------
Name:
------------------------
Title:
-----------------------
/**/ To be specified if the Proposed Borrowing is of Eurodollar Rate Loans.
Such Eurodollar Interest Period must comply with the provisions of
Section 5.2(b) of the Credit Agreement.
- --------------
SCHEDULE 1
to
Notice of Borrowing
-------------------
dated , 199
------ --
(Insert disbursement directions)
EXHIBIT D
to
Credit Agreement dated as of January 2, 1998
- -----------------------------------------------------------------------------
FORM OF NOTICE OF CONVERSION/CONTINUATION
________, 199_
The Chase Manhattan Bank, as Administrative Agent
for the Lenders party to the Credit Agreement
referred to below
380 Madison Avenue
New York, New York 10017
Attention: Marc Costantino
Ladies and Gentlemen:
Reference is hereby made to that certain Credit Agreement dated as of
January 2, 1998 (as the same may be amended, supplemented, restated or
otherwise modified from time to time, the "Credit Agreement", the terms
defined therein being used herein as therein defined), among Reckson
Operating Partnership, L.P., a Delaware limited partnership (the "Borrower"),
the institutions from time to time party thereto as Lenders, The Chase
Manhattan Bank, as Arranger and Administrative Agent, and Union Bank of
Switzerland, New York Bank, as Arranger and Documentation Agent.
The Borrower hereby gives you notice pursuant to Section 5.1(c)(ii) of
the Credit Agreement that the Borrower hereby elects to/*/:
1. Convert $ /**/ in aggregate principal amount of Base
---------
Rate Loans from Base Rate Loans to Eurodollar Rate Loans on ,
---------------
199 /***/. The Eurodollar Interest Period for such Eurodollar Rate Loans is
-
requested to be month(s)./****/
------
2. Convert $ in aggregate principal amount of Eurodollar Rate
--------
Loans with a current Eurodollar Interest Period ending , 199 /*****/
---------- -
to Base Rate Loans.
/*/ Include those items that are applicable, completed appropriately for
the circumstances.
/**/ Such amount of conversion to or continuation of Eurodollar Rate Loans
must be in a minimum amount of $3,000,000 and in integral multiples of
$500,000 in excess of that amount, except in the case of a conversion into or
a conversion of an entire Borrowing of Non Pro Rata Loans.
/***/ Date of conversion must be a Business Day.
/****/ Such Eurodollar Interest Period must comply with the provisions of
Section 5.2(b) of the Credit Agreement.
- --------------
/*****/ The conversion of Eurodollar Rate Loans to Base Rate Loans shall be made
on, and only on, the last day of the Eurodollar Interest Period for such
Eurodollar Rate Loans.
3. Continue as Eurodollar Rate Loans $ /******/ in aggregate
--------
principal amount of Eurodollar Rate Loans with a current Eurodollar Interest
Period from and ending , 199 . The succeeding
------------- ------------- -
Eurodollar Interest period for such Eurodollar Rate Loans is requested to be
_______ month(s)./*******/
The Borrower hereby certifies that on the date hereof there are no
prohibitions under the Credit Agreement to the requested
conversion/continuation, and no such prohibitions will exist on the date of
the requested conversion/continuation.
RECKSON OPERATING PARTNERSHIP, L.P.,
a Delaware limited partnership
By: RECKSON ASSOCIATES REALTY CORP.,
a Maryland corporation,
its general partner
By:
----------------------------------
Name:
Title:
/******/ See footnote 2.
/*******/ See footnote 4.
EXHIBIT E
to
Credit Agreement dated as of January 2, 1998
- ------------------------------------------------------------------------------
LIST OF CLOSING DOCUMENTS
$200,000,000
REVOLVING CREDIT FACILITY
among
RECKSON OPERATING PARTNERSHIP, L.P.,
THE LENDERS,
THE CHASE MANHATTAN BANK, AND
UNION BANK OF SWITZERLAND, NEW YORK BRANCH
JANUARY 2, 1998
LIST OF CLOSING DOCUMENTS/*/
- -------------------------
1. Credit Agreement (the "Credit Agreement"), among Reckson Operating
----------------
Partnership, L.P. (the "Borrower"), certain financial institutions
--------
listed on the signature pages thereof as lenders (collectively
referred to herein, together with their respective successors and
assigns, as the "Lenders"), The Chase Manhattan Bank, as Arranger
-------
and Administrative Agent ("Chase") and Union Bank of Switzerland,
-----
New York Branch, as Arranger and Documentation Agent ("UBS").
---
2. Exhibits and Schedules to the Credit Agreement as described on
Schedule 1 attached hereto.
----------
/*/ Capitalized terms used herein but not otherwise defined herein have
the meanings assigned to such terms in the Credit Agreement.
3. Promissory Notes (the "Notes") executed by the Borrower and
-----
payable to each Lender evidencing the Loans made by such Lender
under the Credit Agreement.
4. Guaranty Agreement by Reckson Associates Realty Corp. (the "Company")
-------
and Reckson FS Limited Partnership ("Reckson FS") for the benefit of
----------
Chase and UBS.
5. Certificate of the Company dated the Closing Date (a) in its capacity as
general partner of the Borrower certifying (1) the names and true
signatures of the incumbent officers of the Company authorized to sign
the Credit Agreement, the Notes, and the other Loan Documents on behalf
of the Borrower, (2) the resolutions of the Company's Board of Directors
approving and authorizing the execution, delivery and performance of the
Credit Agreement, the Notes and all other Loan Documents executed by the
General Partner on behalf of the Borrower, and (3) a copy of the
Partnership Agreement of the Borrower as in effect on the date of such
certification, and (2) a copy of the Certificate of Incorporation of the
Company, together with all amendments thereto, if any, certified by the
Secretary of State of Maryland.
6. Copy of the Certificate of Limited Partnership of the Borrower, together
with all amendments thereto, if any certified by the Secretary of State of
Delaware.
7. Copy of the Articles of Incorporation of the Company, together with all
amendments thereto, if any certified by the Secretary of State of
Maryland.
8. Certificate of Reckson FS, Inc. dated the Closing Date (a) in its
capacity as general partner of Reckson FS certifying (1) the names and
true signatures of the incumbent officers of Reckson FS, Inc. authorized
to sign the Guaranty Agreement on behalf of Reckson FS, (2) the
resolutions of Reckson FS, Inc.'s Board of Directors approving and
authorizing the execution, delivery and performance of the Guaranty
Agreement executed by Reckson FS, Inc. on behalf of the Borrower, and
(3) a copy of the Partnership Agreement of the Reckson FS as in effect
on the date of such certification, and (2) a copy of the Certificate of
Incorporation of Reckson FS, Inc., together with all amendments thereto,
if any, certified by the Secretary of State of Delaware.
9. Good Standing Certificates of the Borrower, the Company, Reckson FS and
Reckson FS, Inc.
10. Opinion of Brown & Wood LLP, counsel for the Borrower and the Company.
11. Notice of Borrowing executed by the Borrower with respect to the Loans
to be made on the Initial Funding Date.
12. Disbursement Direction Authorization executed by the Borrower pursuant
to which Chase is directed to disburse the proceeds of the Loans to be
made on the Initial Funding Date as described therein.
13. Officer's Certificate of the General Partners dated the Initial Funding
Date, signed by the President of the Company, ------certifying, among
other things, satisfaction of the conditions precedent to funding set
forth in Section 6.1 of the Credit Agreement.
EXHIBIT F
to
Credit Agreement dated as of January 2, 1998
- ------------------------------------------------------------------------------
FORM OF (QUARTERLY/ANNUAL) COMPLIANCE CERTIFICATE TO
ACCOMPANY REPORTS
, 199
------------- --
The Chase Manhattan Bank, as Administrative Agent
for the Lenders party to the Credit Agreement
referred to below
380 Madison Avenue
New York, New York 10017
Attention: Marc Costantino
Ladies and Gentlemen:
Pursuant to Section (8.2(a)(iii))(8.2(b)(iii)) of that certain Credit
Agreement dated as of January 2, 1998 (as the same may be amended,
supplemented, restated or otherwise modified from time to time, the "Credit
Agreement", the terms defined therein being used herein as therein defined)
among Reckson Operating Partnership, L.P., a Delaware limited partnership
(the "Borrower"), the institutions from time to time party thereto as
Lenders, and The Chase Manhattan Bank, as Arranger and Administrative Agent,
and Union Bank of Switzerland, New York Branch, as Arranger and
Administrative Agent, the undersigned, , the of
---------------- -----------
(Reckson Operating Partnership, L.P., a Delaware limited partnership) (Reckson
Associates Realty Corp., a Maryland corporation (the "Company")), hereby
-------
certifies that:
1. The undersigned has reviewed the terms of the Loan Documents, and has
made, or caused to be made under (his/her) supervision, a review in
reasonable detail of the consolidated financial condition of the Company and
its consolidated Subsidiaries during the accounting period covered by the
financial statements identified below. To the best of the undersigned's
knowledge, such review has not disclosed the existence during or at the end
of such accounting period, and as of the date hereof the undersigned does not
have knowledge, of the existence of any condition or event which constitutes
an Event of Default or Potential Event of Default./*/
/*/ If such condition or event exists or existed, specify (i) the nature and
period of such condition or event and (ii) the action taken, being taken or
proposed to be taken with respect thereto.
2. The financial statements, reports and copies of certain instruments and
documents attached hereto, namely,
A. Compliance Certificate, dated
-----------------
B. , dated
---------------------- -----------------
C. , dated
---------------------- -----------------
D. , dated
---------------------- -----------------
are true and complete copies of the aforesaid which constitute part of or are
based upon the customary books and records of the Company, and, to the best
of the undersigned's knowledge and belief, there exist no facts or
circumstances which would have a Material Adverse Effect.
-------------------------
Name:
Title:
LIST OF EXHIBITS AND SCHEDULES
------------------------
Exhibit A-- Form of Assignment and Acceptance
Exhibit B-- Form of Note
Exhibit C-- Form of Notice of Borrowing
Exhibit D-- Form of Notice of Conversion/Continuation
Exhibit E-- List of Closing Documents
Exhibit F-- Form of Officer's Certificate
Exhibit G-- Sample Calculations of Financial Covenants
Schedule 1.1.1-- Existing Permitted Liens
Schedule 1.1.2-- Permitted Securities Options
Schedule 7.1-A-- Organizational Documents
Schedule 7.1-C-- Corporate Structure; Outstanding Capital Stock and
Partnership Interests; Partnership Agreement
Schedule 7.1-H-- Indebtedness for Borrowed Money; Contingent Obligations
Schedule 7.1-I-- Pending Actions
Schedule 7.1-P-- Environmental Matters
Schedule 7.1-Q-- ERISA Matters
Schedule 7.1-T-- Insurance Policies
EXHIBIT 10.23
________________________________________________________________
________________________________________________________________
RECKSON OPERATING PARTNERSHIP, L.P.
Senior Unsecured Notes due 2007
Unconditionally Guaranteed
by
Reckson FS Limited Partnership
NOTE PURCHASE AGREEMENT
___________________
Dated August 27, 1997
________________________________________________________________
________________________________________________________________
TABLE OF CONTENTS
Section Page
- ------- ----
1. AUTHORIZATION OF NOTES AND GUARANTEES . . . . . . . . . . . . . . . 1
2. PURCHASE AND SALE OF NOTES . . . . . . . . . . . . . . . . . . . . . 1
3. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4. CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . 2
4.1. Representations and Warranties . . . . . . . . . . . . . . . . 3
4.2. Performance; No Default . . . . . . . . . . . . . . . . . . . . 3
4.3. Compliance Certificates . . . . . . . . . . . . . . . . . . . . 3
4.4. Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . 3
4.5. Documents Required . . . . . . . . . . . . . . . . . . . . . . 3
4.6. Private Placement Number . . . . . . . . . . . . . . . . . . . 4
4.7. Change in Structure . . . . . . . . . . . . . . . . . . . . . . 4
4.8. Payment of Counsel Fees . . . . . . . . . . . . . . . . . . . . 4
5. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . 4
5.1. Organization, Power and Authority . . . . . . . . . . . . . . . 4
5.2. Authorization, Validity and Enforceability . . . . . . . . . . 5
5.3. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.4. Ownership of Shares of Subsidiaries . . . . . . . . . . . . . . 5
5.5. Financial Statements . . . . . . . . . . . . . . . . . . . . . 6
5.6. Compliance with Laws, Other Instruments, etc. . . . . . . . . . 6
5.7. Governmental Authorizations, etc. . . . . . . . . . . . . . . . 6
5.8. Litigation; Observance of Agreements, Statutes and Orders . . . 6
5.9. Title to Property; Leases and Mortgages . . . . . . . . . . . . 7
5.10. Licenses and Approvals . . . . . . . . . . . . . . . . . . . . 7
5.11. Private Offering . . . . . . . . . . . . . . . . . . . . . . . 7
5.12. Status under Certain Statutes . . . . . . . . . . . . . . . . 7
5.13. Environmental Matters . . . . . . . . . . . . . . . . . . . . 8
5.14. Compliance with ERISA . . . . . . . . . . . . . . . . . . . . 8
5.15. Existing Debt . . . . . . . . . . . . . . . . . . . . . . . . 10
5.16. Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.17. Material Adverse Change . . . . . . . . . . . . . . . . . . . 10
5.18. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6. REPRESENTATIONS OF THE PURCHASER . . . . . . . . . . . . . . . . . . 11
6.1. Acquisition for Investment . . . . . . . . . . . . . . . . . . 11
7. SUBSEQUENT INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 12
7.1. Financial and Business Information . . . . . . . . . . . . . . 12
7.2. Officer's Certificate . . . . . . . . . . . . . . . . . . . . . 15
7.3. Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8. REDEMPTION AND REPAYMENT OF THE NOTES . . . . . . . . . . . . . . . 16
8.1. Required Payments . . . . . . . . . . . . . . . . . . . . . . . 16
8.2. Optional Redemption by Issuer . . . . . . . . . . . . . . . . . 16
8.3. Allocation of Partial Redemptions . . . . . . . . . . . . . . . 17
8.4. Maturity; Surrender, Etc. . . . . . . . . . . . . . . . . . . . 17
8.5. Purchase of Notes . . . . . . . . . . . . . . . . . . . . . . . 18
9. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 18
9.1. Compliance with Law . . . . . . . . . . . . . . . . . . . . . . 18
9.2. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9.3. Maintenance of Properties . . . . . . . . . . . . . . . . . . . 19
9.4. Payment of Taxes and Claims . . . . . . . . . . . . . . . . . . 19
9.5. Partnership Existence, etc. . . . . . . . . . . . . . . . . . . 19
10. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.1. Merger, Consolidation, etc. . . . . . . . . . . . . . . . . . 20
10.2. Limitations on Incurrence of Debt. . . . . . . . . . . . . . . 21
10.3. Maintenance of Total Unencumbered Assets . . . . . . . . . . . 22
10.4. Limitations on Restricted Payments During an Event of
Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.5. Limitation on Amendments to Partnership Agreements
and Charters During an Event of Default . . . . . . . . . . . 23
10.6. Use of Proceeds; Margin Regulations . . . . . . . . . . . . . 23
10.7. Nature of Business . . . . . . . . . . . . . . . . . . . . . . 23
10.8. Transactions with Affiliates . . . . . . . . . . . . . . . . . 24
10.9. Sales of Assets . . . . . . . . . . . . . . . . . . . . . . . 24
11. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . 25
12. REMEDIES ON DEFAULT, ETC. . . . . . . . . . . . . . . . . . . . . . 28
12.1. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . 28
12.2. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . 29
12.3. Rescission . . . . . . . . . . . . . . . . . . . . . . . . . . 29
12.4. No Waivers or Election of Remedies . . . . . . . . . . . . . . 30
13. REGISTRATION; TRANSFER AND EXCHANGE; REPLACEMENT OF NOTES . . . . . 30
13.1. Registration of Notes. . . . . . . . . . . . . . . . . . . . . 30
13.2. Transfer and Exchange of Notes . . . . . . . . . . . . . . . . 30
13.3. Replacement of Notes . . . . . . . . . . . . . . . . . . . . . 31
14. PAYMENTS ON NOTES . . . . . . . . . . . . . . . . . . . . . . . . . 31
14.1. Place of Payment . . . . . . . . . . . . . . . . . . . . . . . 31
14.2. Home Office Payment . . . . . . . . . . . . . . . . . . . . . 32
15. EXPENSES, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
15.1. Transaction Expenses . . . . . . . . . . . . . . . . . . . . . 32
15.2. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . 33
15.3. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
17. AMENDMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . . . . . 35
17.1. Requirements . . . . . . . . . . . . . . . . . . . . . . . . . 35
17.2. Binding Effect, etc. . . . . . . . . . . . . . . . . . . . . . 35
17.3. Notes held by Issuer Affiliates . . . . . . . . . . . . . . . 35
17.4. Solicitation of Holders of Notes . . . . . . . . . . . . . . . 36
18. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
19. CONFIDENTIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . 37
20. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
20.1. Successors and Assigns . . . . . . . . . . . . . . . . . . . . 38
20.2. Payments Due on Non-Business Days . . . . . . . . . . . . . . 38
20.3. Severability . . . . . . . . . . . . . . . . . . . . . . . . . 38
20.4. Construction . . . . . . . . . . . . . . . . . . . . . . . . . 39
20.5. Reproduction of Documents . . . . . . . . . . . . . . . . . . 39
20.6. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 39
20.7. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 39
SCHEDULE A -- Information Relating To Purchasers
SCHEDULE B -- Defined Terms
EXHIBIT 1 -- Form of Senior Unsecured Note due 2007
EXHIBIT 4.4 -- Form of Opinion of Counsel for the Issuer
and the Guarantor
EXHIBIT 5.15 -- Schedule of Debt of the Issuer, the Guarantor and their
Respective Consolidated Subsidiaries
RECKSON OPERATING PARTNERSHIP, L.P.
225 Broadhollow Road
Melville, New York 11747
Senior Unsecured Notes due 2007
Unconditionally Guaranteed
by
Reckson FS Limited Partnership
August 27, 1997
TO THE PURCHASERS LISTED ON
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
Each of Reckson Operating Partnership, L.P., a Delaware limited
partnership (the "ISSUER"), and Reckson FS Limited Partnership, a Delaware
limited partnership (the "GUARANTOR"), agrees with you as follows:
1. AUTHORIZATION OF NOTES AND GUARANTEES.
The Issuer has duly authorized the issuance of $150,000,000 aggregate
principal amount of its Senior Unsecured Notes due 2007 in substantially the
form set forth in Exhibit 1, with such changes therefrom, if any, as may be
approved by you and the Issuer (the "NOTES"). The Notes shall include any
such Note issued pursuant to Section 13 of this Agreement. The Guarantor has
duly authorized the issuance of its Guarantees in respect of each Note issued
by the Issuer in substantially the form set forth in Exhibit 1, with such
changes therefrom, if any, as may be approved by you and the Guarantor (the
"GUARANTEES"). Certain capitalized terms used in this Agreement are defined
in Schedule B hereto.
2. PURCHASE AND SALE OF NOTES.
Subject to the terms and conditions of this Agreement, the Issuer will
issue and sell to you, severally, and you, severally, will purchase from the
Issuer, at the Closing provided for in Section 3, Notes in the principal
amount specified opposite your name in Schedule A hereto at a price of 100%
of the principal amount thereof. Your obligation hereunder and the
obligations of the other Purchasers hereunder and under the Notes, the
Guarantees and other documents related thereto (collectively, the "Other
Agreements") are several and not joint obligations and you shall have no
obligation hereunder or under any Other Agreement and no liability to any
person for the performance or nonperformance by any other Purchaser
hereunder.
3. CLOSING.
The delivery of the Notes to be acquired by you shall occur at the
offices of Brown & Wood LLP, One World Trade Center, New York, New York
10048, at or about 10:00 a.m., New York City time, at a closing (the
"CLOSING") on August 28, 1997, or such other date as may be agreed upon by
the Issuer and you. At the Closing, the Issuer will deliver to each of you a
single Note in the principal amount specified opposite your name on Schedule
A hereto (or such greater number of Notes in denominations of at least
$500,000 and integral multiples of $1,000 in excess thereof as you may
request), which will be dated the date of the Closing and registered in your
name (or in the name of your nominee), and you shall simultaneously deliver
to the Issuer (by wire transfer to the Issuer's Account No. 304-220396, The
Chase Manhattan Bank, 380 Madison Avenue, New York, New York 10017, Account
Name: Reckson Operating Partnership, L.P.-Acquisition Account, ABA No.:
021000021), in immediately available funds, the purchase price for such Note
or Notes specified in Section 2.
If at the Closing the Issuer shall fail to tender any Notes as provided
above, or any of the conditions specified in Section 4 shall not have been
fulfilled, you shall, at your election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights you may
have by reason of such failure or nonfulfillment. If, however, at the
Closing you shall fail to pay for the Notes in full as provided above, the
Issuer shall, at its election, be relieved of all further obligations under
this Agreement, without thereby waiving any rights the Issuer may have by
reason of such failure.
4. CONDITIONS TO CLOSING.
Your obligation to acquire the Notes at the Closing is subject to the
fulfillment of the following conditions prior to or at the Closing:
4.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Issuer and the Guarantor in
this Agreement shall be correct when made and at the time of the Closing.
4.2. PERFORMANCE; NO DEFAULT.
The Issuer and the Guarantor shall have performed and complied with all
agreements and conditions contained in this Agreement required to be
performed or complied with by them prior to or at the Closing and, after
giving effect to the issuance and sale of the Notes, no Default or Event of
Default shall have occurred and be continuing.
4.3. COMPLIANCE CERTIFICATES.
(a) Officer's Certificate. Each of the Issuer and the
---------------------
Guarantor shall have delivered to you a certificate of an officer of its
general partner, dated the date of the Closing, certifying that the
conditions specified in Section 4 have been fulfilled.
(b) Officer's Certificate. Each of the Issuer and the
---------------------
Guarantor shall have delivered to you a certificate of the secretary,
assistant secretary, executive vice president or president of its general
partner certifying as to the resolutions of such general partner and other
partnership proceedings relating to the authorization, execution and delivery
of this Agreement and the Notes and the Guarantees, as the case may be.
4.4. OPINION OF COUNSEL.
You shall have received an opinion dated the date of the Closing from
Brown & Wood LLP, counsel for the Issuer and the Guarantor, substantially in
the form set forth in Exhibit 4.4, and an opinion of Shearman & Sterling,
counsel to the Purchasers.
4.5. DOCUMENTS REQUIRED.
You shall have received the following documents, each dated as of the
Closing Date (except as otherwise specified below) and in the form of the
respective Exhibit attached hereto, if any, or otherwise in form and
substance reasonably satisfactory to you:
(a) the Note, duly executed by the Issuer;
(b) the Guarantee, duly executed by the Guarantor; and
(c) the documents contemplated in Section 4.3 and Section 4.4
hereof.
4.6. PRIVATE PLACEMENT NUMBER.
A private placement number issued by Standard & Poor's CUSIP Service
Bureau (in cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained for the
Notes.
4.7. CHANGE IN STRUCTURE.
Neither the Issuer nor the Guarantor shall have changed its jurisdiction
of organization or been a party to any merger or consolidation and shall not
have succeeded to all or any substantial part of the liabilities of any other
entity, in each case at any time following December 31, 1996.
4.8. PAYMENT OF COUNSEL FEES.
The Issuer shall have paid on the date of the Closing the fees and
disbursements of Shearman & Sterling, counsel to the Purchasers.
5. REPRESENTATIONS AND WARRANTIES.
Each of the Issuer, as to itself, and the Guarantor, as to itself,
represents and warrants to you as of the date hereof that:
5.1. ORGANIZATION, POWER AND AUTHORITY.
It is a limited partnership duly organized, validly existing and in good
standing under the laws of the State of Delaware and is duly qualified as a
foreign limited partnership and is in good standing in each jurisdiction in
which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. It has the partnership power and authority to own, lease and
operate its properties, to transact its business, to execute and deliver this
Agreement and the Notes or the Guarantees, as the case may be, and to perform
its obligations contained herein and therein.
5.2. AUTHORIZATION, VALIDITY AND ENFORCEABILITY.
This Agreement and the Notes or the Guarantees, as the case may be, have
been duly authorized by all necessary partnership action on its part, and
this Agreement constitutes, and upon execution and delivery therefor and
payment of the consideration thereof each Note and Guarantee, as the case may
be, will constitute, its legal, valid and binding obligation enforceable
against it in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting the enforcement of creditors'
rights generally or general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
5.3. DISCLOSURE.
The Issuer, through its agent, Goldman, Sachs & Co., has delivered to
you a copy of the Confidential Private Placement Memorandum, dated July 1997
(such Private Placement Memorandum, including the documents incorporated
therein by reference, is herein referred to as the "MEMORANDUM"), relating to
the offering of the Notes. The Memorandum does not include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein in the light of the circumstances under
which they were made, not misleading.
5.4. OWNERSHIP OF SHARES OF SUBSIDIARIES.
(a) All of the outstanding shares of capital stock or similar
equity interests of each of its Subsidiaries have been validly issued, are
fully paid and nonassessable and are owned by the Issuer, directly or
indirectly.
(b) Each of its Subsidiaries is a corporation or other legal
entity duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization and is duly qualified as a foreign
corporation or other legal entity and is in good standing in each
jurisdiction in which such qualification is required by law, other than those
jurisdictions as to which the failure to be so qualified or in good standing
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Each such Subsidiary has the corporate or other
power and authority to own, lease or operate its properties and to transact
its business.
(c) No Subsidiary of the Issuer is a party to, or otherwise
subject to, any legal restriction or any agreement (other than this Agreement
or applicable law) restricting the ability of such Subsidiary to pay
dividends out of profits or make any other similar distributions of profits
to the Issuer or any other Subsidiary that owns outstanding shares of its
capital stock, partnership interests or similar interests.
5.5. FINANCIAL STATEMENTS.
The Issuer has delivered to you copies of the consolidated financial
statements of the General Partner and its Subsidiaries incorporated by
reference in the Memorandum. All of said financial statements fairly present
in all material respects the consolidated financial position of the General
Partner and its Subsidiaries as of the respective dates specified therein and
the consolidated results of their operations and cash flows for the
respective periods so specified and have been prepared in accordance with
GAAP consistently applied throughout the periods involved (subject, in the
case of any interim financial statements, to normal recurring adjustments).
5.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
The execution, delivery and performance by it of this Agreement and the
Notes or the Guarantees, as the case may be, will not (i) contravene, result
in any breach of, or constitute a default under, or result in the creation of
any Lien in respect of any of its property under, any indenture, mortgage,
deed of trust, loan, purchase or credit agreement, lease, charter or by-laws,
or any other agreement or instrument to which it is bound or by which it or
any of its properties may be bound or affected, (ii) conflict with or result
in a breach of any of the terms, conditions or provisions of any order,
judgment, decree, or ruling of any court, arbitrator or Governmental
Authority applicable to it or (iii) violate any provision of any statute or
other rule or regulation of any Governmental Authority applicable to it.
5.7. GOVERNMENTAL AUTHORIZATIONS, ETC.
No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with
its execution, delivery or performance of this Agreement, the Notes or the
Guarantees.
5.8. LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.
(a) Except as otherwise stated in the Memorandum, there are no
actions, suits or proceedings pending or, to its knowledge, threatened
against or affecting it or any of its property in any court or before any
arbitrator of any kind or before or by any Governmental Authority that would,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(b) It is not in default under any term of any agreement or
instrument to which it is a party or by which it is bound or any order,
judgment, decree or ruling of any court, arbitrator or Governmental Authority
or in violation of any applicable law, ordinance, rule or regulation
(including, without limitation, Environmental Laws) of any Governmental
Authority, which default or violation would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
5.9. TITLE TO PROPERTY; LEASES AND MORTGAGES.
It has good and marketable title to its properties that, individually or
in the aggregate, are Material. All leases and mortgages that individually
or in the aggregate are Material are valid and subsisting and are in full
force and effect in all material respects.
5.10. LICENSES AND APPROVALS.
It has all necessary licenses, permits and governmental authorizations
from Governmental Authorities to own, lease and operate its properties and to
transact its business, the absence of which would have a Material Adverse
Effect.
5.11. PRIVATE OFFERING.
Neither it nor anyone acting on its behalf has offered the Notes or any
similar securities for sale to, or solicited any offer to buy any of the same
from, or otherwise approached or negotiated in respect thereof with, such
type or number (which did not exceed 70) of persons or in such manner so as
to require registration of the Notes under the Securities Act.
5.12. STATUS UNDER CERTAIN STATUTES.
(a) It is not subject to regulation under the Investment Company
Act, the Public Utility Holding Company Act of 1935, as amended, or the
Federal Power Act, in each case, as amended.
(b) Neither the issue and sale of the Notes by the Issuer nor the
use of the proceeds therefrom will violate the Trading with the Enemy Act, as
amended, or any of the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended), or
any enabling legislation or executive order relating thereto.
5.13. ENVIRONMENTAL MATTERS.
Except as otherwise stated in the Memorandum and except such violations
as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect, to its knowledge, after due inquiry,
(A) it is not in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance or code, including any judicial or
administrative order, consent, decree of judgment, relating to pollution or
protection of human health or safety, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) including, without limitation, laws and regulations
relating to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum or
petroleum products (collectively, "Hazardous Materials") or to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (collectively, "Environmental
Laws"),
(B) it has all permits, authorizations and approvals required
under any applicable Environmental Laws and is in compliance with its
requirements,
(C) there are no pending or threatened administrative, regulatory
or judicial actions, suits, demands, demand letters, claims, liens, notices
of noncompliance or violation, investigation or proceedings relating to any
Environmental Law against it, and
(D) there are no events or circumstances that might reasonably be
expected to form the basis of an order for clean-up or remediation, or an
action, suit or proceeding by any private party or governmental body or
agency, against or affecting it relating to any Hazardous Materials or the
violation of any Environmental Law.
5.14. COMPLIANCE WITH ERISA.
(a) Except as has not had and would not be reasonably expected to
have, either individually or in the aggregate, a Material Adverse Effect:
(i) The Issuer and each ERISA Affiliate have operated and
administered each ERISA Plan in compliance with its terms and with the
provisions of ERISA and all other applicable laws;
(ii) During the immediately preceding five-year period, (A)
no event causing the termination of any Plan under the terms of ERISA has
occurred or, to the best knowledge of the Issuer, could reasonably be
expected to occur with respect to any Plan, (B) no "accumulated funding
deficiency" (as such term is defined in Section 302 of ERISA and Section 412
of the Code), whether or not waived, has occurred with respect to any Plan
and (C) no Lien in favor of the PBGC or a Plan has arisen or could reasonably
be expected to arise on account of any Plan;
(iii) Neither any Issuer nor any ERISA Affiliate has incurred
any liability pursuant to Title I or IV or ERISA or the penalty or excise tax
provisions of the Internal Revenue Code relating to ERISA Plans, and no
event, transaction or condition has occurred or exists that could reasonably
be expected to result in the incurrence of any such liability by any Issuer
or any ERISA Affiliate, or in the imposition of any Lien on any of the
rights, properties or assets of any Issuer or any ERISA Affiliate, in either
case pursuant to Title I or IV of ERISA, to such penalty or excise tax
provisions or to Section 401(a)(29) or 412 of the Internal Revenue Code;
(iv) Neither any Issuer nor any ERISA Affiliate (A) has
incurred or, to the best knowledge of the Issuer, could reasonably be
expected to incur any withdrawal liability in respect of any Multiemployer
Plan or (B) would become subject to any withdrawal liability if any such
Issuer or any such ERISA Affiliate were to withdraw completely from all
Multiemployer Plans as of the most recent valuation date of each such Plan;
and
(v) No prohibited transaction (within the meaning of Section
406 of the Code) or breach of fiduciary responsibility has occurred with
respect to any ERISA Plan which has subjected or may subject any Issuer or
any ERISA Affiliate to any liability under Section 406, 409, 502(i) or 502(1)
of ERISA or Section 4975 of the Code, or under any agreement or other
instrument pursuant to which any Issuer or any ERISA Affiliate has agreed or
is required to indemnify any Person against any such liability.
(b) The actuarial present value of all "benefit liabilities" (as
defined in Section 4001 of ERISA) under all of the Plans (other than
Multiemployer Plans), determined as of the end of each such Plan's most
recently completed plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial valuation
report, whether or not vested, did not exceed the aggregate current value of
the assets of all such Plans allocable to such benefit liabilities by more
than $5,000,000 in the aggregate.
(c) Neither any Issuer nor any ERISA Affiliate has been notified
that any Multiemployer Plan is in reorganization (within the meaning of
Section 4241 of ERISA), is insolvent (within the meaning of Section 4245 of
ERISA) or is being terminated (with the meaning of Title IV of ERISA), and,
to the best knowledge of the Issuer, no Multiemployer Plan would reasonably
be expected to be in reorganization, insolvent or terminated.
(d) None of the execution and delivery of this Agreement, the
issuance and sale of the Notes hereunder or the consummation of any aspect of
the transactions contemplated by this Agreement will involve any transaction
that is subject to the prohibitions of Section 406 of ERISA or in connection
with which a tax could be imposed pursuant to Section 4975 of the Code. The
representation by the Issuer in the first sentence of this subsection (d) is
made in reliance upon, and is subject to the accuracy of, your representation
in Section 6.1 as to the sources of the funds used to pay the purchase price
of the Notes to be purchased by you.
5.15. EXISTING DEBT.
(a) Schedule 5.15 attached hereto sets forth a complete and
correct list of all outstanding Debt of the Issuer, the Guarantor and their
respective Consolidated Subsidiaries as of the Closing Date. Neither the
Issuer, the Guarantor nor any of their respective Consolidated Subsidiaries
is in default and no waiver of default is currently in effect in the payment
of any principal of or interest on any Debt of the Issuer, the Guarantor or
any such Subsidiary, and no event or condition exists with respect to any
Debt of the Issuer, the Guarantor or any such Subsidiary that would permit
(or that with notice or the lapse of time, or both, would permit) one or more
Persons to cause such Debt to become due and payable before its stated
maturity or before its regularly scheduled dates of payment.
5.16. SOLVENCY.
Each of the Issuer and the Guarantor is, and upon giving effect to the
issuance and sale of the Notes will be, Solvent.
5.17. MATERIAL ADVERSE CHANGE.
Since December 31, 1996, there has been (i) no material adverse change
in the condition (financial or otherwise), operations, business or management
of the Issuer and its Subsidiaries, taken as a whole, and (ii) no development
or event relating to or affecting the Issuer or any of its Subsidiaries that,
either individually or in the aggregate, has had or would reasonably be
expected to have a Material Adverse Effect.
5.18. TAXES.
The Issuer and its Subsidiaries have filed all tax returns (or received
extensions therefor) that are required to have been filed in any
jurisdiction, and have paid all taxes shown to be due and payable on such
returns and all other taxes and assessments levied upon them or their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become
delinquent, except for any taxes and assessments (i) the amount of which is
not individually or in the aggregate Material or (ii) the amount,
applicability or validity of which is currently being contested in good faith
by appropriate proceedings and with respect to which the Issuer or a
Subsidiary, as the case may be, has established adequate reserves in
accordance with GAAP. The Issuer knows of no basis for any other tax or
assessment that could reasonably be expected to have a Material Adverse
Effect. The charges, accruals and reserves on the books of the Issuer and
its Subsidiaries in respect of Federal, state or other taxes for all fiscal
periods are adequate.
6. REPRESENTATIONS OF THE PURCHASER.
6.1. ACQUISITION FOR INVESTMENT.
(a) Each of you represents that you are acquiring the Notes for
your own account or for one or more separate accounts maintained by you and
not with a view to the distribution thereof, provided that the
--------
disposition of your or their property shall at all times be within your or
their control, as the case may be. You understand that the Notes have not
been registered under the Securities Act and may be resold only if registered
pursuant to the provisions of the Securities Act or if an exemption from such
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Issuer is
not required to register the Notes.
(b) Each of you and each subsequent holder of Notes represents and
warrants that it is an institutional investor that qualifies as an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
(c) Each of you is aware that you (or any investor account on
whose behalf you are purchasing the Notes) must bear the economic risk of
investment in the Notes for an indefinite period of time, and each of you
represent and warrant that you (or such accounts) are able to bear such risk
for an indefinite period.
(d) Each of you acknowledges that neither the Issuer or its
Subsidiaries nor any person representing the Issuer or its Subsidiaries has
made any representation to you with respect to the Issuer or the offering or
sale of any Notes other than as set forth herein or in the Memorandum, which
has been delivered to you, and upon which you are relying solely in making
your investment decision with respect to the Notes.
(e) Each of you represents and warrants that, in the normal course
of your business, you invest in or purchase securities similar to the Notes,
and you have such knowledge and experience in financial and business matters
that you are capable of evaluating the merits and risks of purchasing Notes.
(f) Each of you represents and warrants that you have had access
to such financial and other information concerning the Issuer and its
Subsidiaries as you have deemed necessary in connection with your decision to
purchase any of the Notes.
7. SUBSEQUENT INFORMATION.
7.1. FINANCIAL AND BUSINESS INFORMATION.
The Issuer shall provide to each holder of Notes:
(a) Quarterly Statements -- within 60 calendar days after the
--------------------
end of each quarterly fiscal period in each fiscal year of the General
Partner (other than the last quarterly fiscal period of each such fiscal
year), duplicate copies of,
(i) a consolidated balance sheet of the General Partner and
its Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income and cash flows of the
General Partner and its Subsidiaries for such quarter and (in the case of the
second and third quarters) for the portion of the fiscal year ending with
such quarter, setting forth in each case in comparative form the figures for
the corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly financial
statements generally, and certified by a Senior Financial Officer as fairly
presenting, in all material respects, the financial position of the General
Partner and its Subsidiaries and their results of operations and cash flows,
subject to changes resulting from normal recurring adjustments; it being
understood that delivery within the time period specified above of copies of
the General Partner's Quarterly Report on Form 10-Q for such quarter prepared
in accordance with the requirements therefor and filed with the Securities
and Exchange Commission shall be deemed to satisfy the requirements of this
Section 7.1(a);
(b) Annual Statements -- within 105 calendar days after the end
-----------------
of each fiscal year of the General Partner, duplicate copies of,
(i) a consolidated balance sheet of the General Partner and
its Subsidiaries as at the end of such year, and
(ii) consolidated statements of income and cash flows of the
General Partner and its Subsidiaries for such year, setting forth in each
case in comparative form the figures for the previous fiscal year, all in
reasonable detail, prepared in accordance with GAAP, and accompanied by
(A) an opinion thereon of independent certified public accountants
of recognized national standing, which opinion shall state that such
financial statements present fairly, in all material respects, the financial
position of the General Partner and its Subsidiaries and their results of
operations and cash flows and have been prepared in conformity with GAAP, and
that the examination by such accountants in connection with such financial
statements has been made in accordance with generally accepted auditing
standards, and that such audit provides a reasonable basis for such opinion
in the circumstances, and
(B) a certificate of such accountants stating that they have
reviewed Sections 10.2 and 10.3 of this Agreement and setting forth
computations, in reasonable detail, showing compliance by the Issuer with the
covenants of such Sections; it being understood that the delivery within the
time period specified above of the General Partner's Annual Report on Form
10-K for such fiscal year prepared in accordance with the requirements
therefor and filed with the Securities and Exchange Commission, together with
the accountant's certificate described above in this clause (B), shall be
deemed to satisfy the requirements of this Section 7.1(b);
(c) Publicly Available Reports -- promptly upon their becoming
--------------------------
available, one copy of (i) each report, notice or proxy statement sent by the
General Partner of the Issuer or its Subsidiaries to public securities
holders generally, and (ii) upon request, each regular or periodic report,
each registration statement (without exhibits except as expressly requested
by such holder), and each prospectus and all amendments thereto filed by the
General Partner of the Issuer or its Subsidiaries with the Securities and
Exchange Commission;
(d) Notice of Default or Event of Default -- promptly, and in
-------------------------------------
any event within five Business Days after a Responsible Officer's becoming
aware of the existence of any Default or Event of Default or that any Person
has given any notice or taken any action with respect to a claimed default
hereunder or that any Person has given any notice or taken any action with
respect to a claimed default of the type referred to in Section 11(e), a
written notice specifying the nature and period of existence thereof and what
action the Issuer is taking or proposes to take with respect thereto;
(e) Notices from Governmental Authority -- promptly, and in any
-----------------------------------
event within five Business Days of receipt thereof, copies of any notice to
the Issuer from any Governmental Authority relating to any order, ruling,
statute or other law or regulation that would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect;
(f) ERISA Matters promptly, and in any event within five
-------------
Business Days after a Responsible Officer becoming aware of any of the
following events, a written notice setting forth the nature thereof and the
action, if any, that the Issuer or an ERISA Affiliate proposes to take with
respect thereto:
(i) with respect to any Plan, a reportable event, as defined
in section 4043(b) of ERISA and the regulations thereunder, for
which notice thereof has not been waived pursuant to such
regulations as in effect on the date hereof, and which could be
reasonably expected to have a Material Adverse Effect; or
(ii) the taking by the Pension Benefit Guaranty Corporation
(the "PBGC") of steps to institute, or the threatening by the PBGC
of the institution of, proceedings under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer,
any Plan, or the receipt by the Issuer or any ERISA Affiliate of a
notice from a Multiemployer Plan that such action has been taken by
the PBGC with respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that could result
in the incurrence of any liability by the Issuer or any ERISA
Affiliate pursuant to Title I or Title IV of ERISA or the penalty
or excise tax provisions of the Internal Revenue Code of 1986, as
amended from time to time (and the rules and regulations
promulgated thereunder from time to time) relating to employee
benefit plans, or in the imposition of any Lien on any of the
rights, properties or assets of the Issuer or any ERISA Affiliate
pursuant to Title I or Title IV of ERISA or such penalty or excise
tax provisions, if such liability or Lien, taken together with any
other such liabilities or Liens then existing, could be reasonably
expected to have a Material Adverse Effect; and
(g) Requested Information -- with reasonable promptness, such
---------------------
other data and information relating to (i) the financial condition or results
of operations of the Issuer or the Guarantor, (ii) the ability of the Issuer
or the Guarantor to perform its obligations hereunder and under the Notes or
the Guarantees, as the case may be, and (iii) the quarterly computations
supporting the Issuer's compliance with the covenants contained herein, in
each case as may be reasonably requested from time to time by any such holder
of Notes.
7.2. OFFICER'S CERTIFICATE.
The certificate of a Senior Financial Officer accompanying each set of
financial statements delivered to a holder of Notes pursuant to Section
7.1(a) or Section 7.1(b) hereof shall state that such officer has reviewed
the relevant terms hereof and has made, or caused to be made under his or her
supervision, a review of the transactions and the financial condition and
results of operations of the Issuer and its Subsidiaries from the beginning
of the quarterly or annual period covered by the statements then being
furnished to the date of the certificate and that such review shall not have
disclosed the occurrence and continuance of any condition or event that
constitutes a Default or an Event of Default or, if any such condition or
event exists, specifying the nature and period of existence thereof and what
action the Issuer shall have taken or proposes to take with respect thereto.
7.3. INSPECTION.
The Issuer shall permit the representatives of each holder of Notes:
(a) No Default -- if no Default or Event of Default then
----------
exists, at the expense of such holder and upon reasonable prior notice to the
Issuer, to visit the principal office of the Issuer, to discuss the financial
condition, results of operations and business of the Issuer and its
Subsidiaries with the Issuer's representatives and (with the consent of the
General Partner, which shall not be unreasonably withheld) the General
Partner's independent public accountants, and (with the consent of the
Issuer, which shall not be unreasonably withheld) to visit the other offices
and properties of the Issuer and its Subsidiaries, all at such reasonable
times and as often as may be reasonably requested in writing; and
(b) Default -- if a Default or Event of Default then exists, at
-------
the expense of the Issuer to visit and inspect any of the offices or
properties of the Issuer or its Subsidiaries, to examine all their respective
books of account, records, reports and other papers, to make copies and
extracts therefrom, and to discuss their respective financial conditions,
results of operations and businesses with their respective representatives
and present and former independent public accountants (including those of the
General Partner) (which shall not require any further consent), all at such
times and as often as may be requested.
8. REDEMPTION AND REPAYMENT OF THE NOTES.
8.1. REQUIRED PAYMENTS.
The Issuer shall pay interest on the unpaid principal amount of the
outstanding Notes semiannually in arrears at the rate of 7.20% per annum
(computed on the basis of a 360-day year of twelve 30-day months), on the
28th day of each February and August of each year, commencing on February 28,
1998 until the principal amount of the outstanding Notes shall have been paid
in full. The aggregate outstanding principal amount of the Notes, together
with all interest accrued and unpaid thereon, if any, shall be due and
payable by the Issuer on August 28, 2007.
8.2. OPTIONAL REDEMPTION BY ISSUER.
(a) The Issuer may, at its option, upon notice as provided in
Section 8.2(b), redeem at any time all, or from time to time any part of, the
Notes, in an aggregate principal amount of not less than $500,000 or integral
multiples of $1,000 in excess thereof (or, if less, the remaining aggregate
principal amount of the Notes outstanding at such time), at 100% of the
aggregate principal amount of the Notes so redeemed, plus the Make-Whole
Amount determined for the redemption date with respect to such principal
amount, plus all accrued and unpaid interest thereon, if any, to the date of
such redemption.
(b) The Issuer will give each holder of Notes notice of each
optional redemption under this Section 8.2 not less than 30 days and not more
than 60 days prior to the date fixed for such redemption. Each such notice
shall specify the date fixed for such redemption, the aggregate principal
amount of the Notes to be redeemed on such date, the principal amount of each
Note held by such holder to be redeemed (determined in accordance with
Section 8.3) and the interest, if any, to be paid on the redemption date with
respect to such principal amount being redeemed, and shall state that such
redemption is to be made pursuant to this Section 8.2. Any notice delivered
to the holders of Notes pursuant to this Section 8.2(b) shall be accompanied
by a certificate of a Senior Financial Officer as to the estimated Make-Whole
Amount due in connection with such redemption (calculated as if the date of
such notice were the date of the redemption), setting forth the details of
such computation. Two Business Days prior to the date of any such
redemption, the Issuer shall deliver, by facsimile confirmed the same day by
overnight courier service, to each holder of Notes a certificate of a Senior
Financial Officer specifying the calculation of such Make-Whole Amount as of
the specified redemption date, which certificate shall be conclusive and
binding for all purposes, absent demonstrable error.
(c) The Notes will not be subject to repayment at the option of
the holders thereof prior to their maturity.
8.3. ALLOCATION OF PARTIAL REDEMPTIONS.
In the case of each partial redemption of the Notes, the principal
amount of the Notes to be redeemed shall be allocated among all of the Notes
at the time outstanding in proportion, as nearly as practicable, to the
respective unpaid principal amounts thereof not theretofore called for
redemption.
8.4. MATURITY; SURRENDER, ETC.
On August 28, 2007, or any earlier redemption date of the Notes pursuant
to this Section 8, the principal amount of each Note matured or to be
redeemed shall become due and payable on such date, together with interest on
such principal amount accrued to such date and applicable Make-Whole Amount.
From and after August 28, 2007 or any earlier redemption date, unless
the Issuer shall fail to pay the principal amount when so due and payable,
together with the interest and the Make-Whole Amount, if any, as aforesaid,
interest on such principal amount shall cease to accrue. Any Note paid or
redeemed in full shall be surrendered to the Issuer and cancelled and shall
not be reissued, as no Note shall be issued in lieu of any matured or
redeemed principal amount of any Note.
8.5. PURCHASE OF NOTES.
The Issuer will not and will not permit any of its Subsidiaries or
Affiliates to purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of the outstanding Notes except upon the payment, redemption
or repurchase of the Notes in accordance with the terms of this Agreement and
the Notes. The Issuer will promptly cancel all Notes acquired by it pursuant
to any payment, redemption or purchase of Notes in accordance with the terms
of this Agreement and the Notes, and no Notes may be issued in substitution
or exchange for any such Notes.
9. AFFIRMATIVE COVENANTS.
The Issuer covenants that so long as any of the Notes are outstanding:
9.1. COMPLIANCE WITH LAW.
The Issuer will comply, and will cause each of its Subsidiaries to
comply, with all laws, ordinances or governmental rules or regulations to
which each of them is subject, including, without limitation, Environmental
Laws, and will obtain and maintain in effect all licenses, certificates,
permits, franchises and other governmental authorizations necessary to the
ownership of their respective properties or to the conduct of their
respective businesses, in each case to the extent necessary to ensure that
non-compliance with such laws, ordinances or governmental rules or
regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
9.2. INSURANCE.
The Issuer will maintain or cause to be maintained, and will cause each
of its Subsidiaries to maintain or cause to be maintained, with financially
sound and reputable insurers, insurance (i) on all insurable properties owned
by the Issuer or any of its Subsidiaries or on which the Issuer or any of its
Subsidiaries holds a mortgage and (ii) against all liability claims which may
be incurred by the Issuer or any of its Subsidiaries, all to the extent, in
such amounts, and against such risks (including deductibles, co-insurance and
self-insurance, if adequate reserves are maintained with respect thereto) as
is or are customary in the case of entities engaged in the same or a similar
business.
9.3. MAINTENANCE OF PROPERTIES.
With respect to all of the properties used or useful in the conduct of
the Issuer's business or the business of any of its Subsidiaries, the Issuer
will, and will cause each of its Subsidiaries to, (i) maintain and keep, or
cause to be maintained and kept, all such properties in good repair, working
order and condition (other than ordinary wear and tear), (ii) supply or cause
to be supplied all such properties with all necessary equipment and (iii)
make, or cause to be made, all necessary repairs, renewals, replacements,
betterments and improvements to such properties, all as in the judgment of
the Issuer may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times;
provided, however that this covenant shall not
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prevent the Issuer or any of its Subsidiaries from selling or otherwise
disposing of any of their respective properties for value and as otherwise
permitted in this Agreement.
9.4. PAYMENT OF TAXES AND CLAIMS.
The Issuer and each of its Subsidiaries will file, or will cause to be
filed, all tax returns required to be filed in any jurisdiction and will pay
and discharge, or will cause to be paid and discharged, all taxes shown to be
due and payable on such returns and all other taxes, assessments,
governmental charges, or levies imposed on them or any of the properties,
assets, income or franchises, to the extent such taxes, assessments and
governmental charges have become due and payable and before they have become
delinquent and all claims for which sums have become due and payable that
have or might become a Lien on properties or assets of the Issuer or its
Subsidiaries; provided, however that neither
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the Issuer nor any of its Subsidiaries need pay any such tax, assessment or
charges if (i) the amount, applicability or validity thereof is contested on
a timely basis in good faith and in appropriate proceedings and adequate
reserves therefor have been established in accordance with GAAP or (ii) the
nonpayment of all such taxes, assessments and charges in the aggregate would
not reasonably be expected to have a Material Adverse Effect.
9.5. PARTNERSHIP EXISTENCE, ETC.
The Issuer will at all times preserve and keep in full force and effect
its partnership existence. Subject to Sections 10.1 and 10.9, the Issuer
will at all times preserve and keep in full force and effect the corporate,
partnership or other entity existence of each of its Subsidiaries (unless
merged into the Issuer or a Subsidiary) and all rights and franchises of the
Issuer and its Subsidiaries unless, in the good faith judgment of the Issuer,
the termination of or failure to preserve and keep in full force and effect
such corporate, partnership or other entity existence, right or franchise
would not reasonably be expected to have a Material Adverse Effect.
10. NEGATIVE COVENANTS.
The Issuer covenants that so long as any of the Notes are outstanding:
10.1. MERGER, CONSOLIDATION, ETC.
Neither the Issuer nor the Guarantor shall consolidate with or merge
with any other Person or convey, transfer or lease all or substantially all
of its assets in a single transaction or series of transactions to any Person
unless (i) the continuing entity or the successor formed by such
consolidation or the survivor of such merger or the Person that acquires by
conveyance, transfer or lease all or substantially all of the assets of the
Issuer, as the case may be, is organized and existing under the laws of the
United States or any State thereof (including the District of Columbia), and
such entity (if other than the Issuer or the Guarantor, as the case may be)
assumes the due and punctual performance and observance of each covenant of
this Agreement and the Notes or the Guarantees, as the case may be, to each
holder of Notes, (ii) each holder of Notes shall have received an opinion of
nationally recognized independent counsel to the effect that all agreements
or instruments effecting such assumption (to the extent required) are
enforceable in accordance with their terms and comply with the terms hereof
and (iii) after taking such transaction(s) into account, no Default (other
than one relating to Section 11(c) or 11(k)) or Event of Default shall have
occurred and be continuing. Upon any consolidation by the Issuer or the
Guarantor, as the case may be, with or merger of the Issuer or the Guarantor,
as the case may be, into any other Person or any conveyance, transfer or
lease of all or substantially all of the assets of the Issuer or the
Guarantor, as the case may be, or any Person in accordance with this Section
10.1, the successor Person formed by such consolidation or into which the
Issuer is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be submitted for, and may exercise every right and power of,
the Issuer or the Guarantor, as the case may be, under this Agreement and the
Notes or the Guarantees, as the case may be, with the same effect as if such
successor Person had been named herein; and thereafter, except in the case of
a lease, the predecessor Person shall be released from all covenants under
this Agreement and the Notes or the Guarantees, as the case may be.
10.2. LIMITATIONS ON INCURRENCE OF DEBT.
(a) The Issuer will not, and will not permit any Subsidiary to,
incur any Debt, other than Permitted Debt, if, immediately after giving
effect to the incurrence of such additional Debt, the aggregate principal
amount of all outstanding Debt of the Issuer, and of its Subsidiaries
determined at the applicable proportionate interest of the Issuer in each
such Subsidiary, determined in accordance with GAAP is greater than 60% of
the sum of (i) the Total Assets as of the end of the calendar quarter covered
in the General Partner's Annual Report on Form 10-K or Quarterly Report on
Form 10-Q, as the case may be, most recently filed with the Securities and
Exchange Commission prior to the incurrence of such additional Debt or, if
the General Partner is not then subject to the reporting requirements of the
Exchange Act, as of its most recent calendar quarter and (ii) any increase in
the Total Assets since the end of such quarter, including, without
limitation, any increase in Total Assets resulting from the incurrence of
such additional Debt (the Total Assets adjusted by such increase are referred
to as the "Adjusted Total Assets");
(b) In addition to the limitation set forth in subsection (a) of
this Section 10.2, the Issuer will not, and will not permit any Subsidiary
to, incur any Debt, other than Permitted Debt, if, for the period consisting
of the four consecutive fiscal quarters most recently ended prior to the date
on which such additional Debt is to be incurred, the ratio of Consolidated
Income Available for Debt Service to the Annual Service Charge shall have
been less than 1.5 to 1, on a pro forma basis after giving effect to the
incurrence of such Debt and to the application of the proceeds therefrom, and
calculated on the assumption that (i) such Debt and any other Debt incurred
by the Issuer or its Subsidiaries since the first day of such four-quarter
period and the application of the proceeds therefrom, including to refinance
other Debt, had occurred at the beginning of such period, (ii) the repayment
or retirement of any other Debt by the Issuer or its Subsidiaries since the
first day of such four-quarter period had been incurred, repaid or retained
at the beginning of such period (except that, in making such computation, the
amount of Debt under any revolving credit facility shall be computed based
upon the average daily balance of such debt during such period), (iii) any
income earned as a result of any increase in Adjusted Total Assets since the
end of such four-quarter period had been earned, on an annualized basis, for
such period, and (iv) in the case of an acquisition or disposition by the
Issuer or any of its Subsidiaries of any asset or group of assets since the
first day of such four-quarter period, including, without limitation, by
merger, stock purchase sale, or asset purchase or sale, such acquisition or
disposition or any related repayment of Debt has occurred as of the first day
of such period with the appropriate adjustments with respect to such
acquisition being included in such pro forma calculation in such pro forma
calculation of income Available for Debt Service to the Annual Service
Charge.
(c) In addition to the limitations set forth in subsections (a)
and (b) of this Section 10.2, the Issuer will not, and will not permit any
Subsidiary to, incur any Debt secured by any Lien of any kind upon any of the
property of the Issuer or any of its Subsidiaries (the "Secured Debt") if,
immediately after giving effect to the incurrence of such additional Secured
Debt, the aggregate principal amount of all outstanding Secured Debt of the
Issuer, and of its Subsidiaries determined at the applicable proportionate
interest of the Issuer in each such Subsidiary, is greater than 40% of the
Adjusted Total Assets.
(d) For purposes of this Section 10.2, Debt shall be deemed to be
"incurred" by the Issuer or its Subsidiaries on a consolidated basis whenever
the Issuer and its Subsidiaries on a consolidated basis shall create, assume,
guarantee or otherwise become liable in respect thereof.
10.3. MAINTENANCE OF TOTAL UNENCUMBERED ASSETS.
The Issuer will maintain Total Unencumbered Assets of not less than 150%
of the aggregate principal amount of all outstanding Unsecured Debt.
10.4. LIMITATIONS ON RESTRICTED PAYMENTS DURING AN EVENT OF DEFAULT.
If an Event of Default, or a Default described in Section 11(a) or
11(b), shall have occurred and be continuing, the Issuer will not make any
Restricted Payments (other than distributions payable in securities
evidencing interests in the Issuer's capital for the purpose of acquiring
interests in real property or otherwise); provided, however, that the
foregoing limitation shall not apply to any distribution to partners made
during the final week of a calendar year in the minimum amount reasonably
projected to be necessary or other action which is necessary to maintain the
General Partner's status as a REIT under the Code, to the extent that the
General Partner continues to elect to be treated as a REIT for Federal income
tax purposes; provided, further, that in the event that the Issuer redeems
any interests of a senior officer or director of the General Partner or
member of the Rechler family in the Issuer's capital for cash (without a
concurrent exchange for shares of capital stock in the General Partner), the
Issuer shall notify the Purchasers thereof as soon as practicable thereafter.
10.5. LIMITATION ON AMENDMENTS TO PARTNERSHIP AGREEMENTS AND CHARTERS
DURING AN EVENT OF DEFAULT.
If an Event of Default shall have occurred and be continuing, none of
the Issuer, the Guarantor or their Subsidiaries may restate, amend or
otherwise revise their respective partnership agreements, charters or similar
documents in any Material respect.
10.6. USE OF PROCEEDS; MARGIN REGULATIONS.
(a) The proceeds received from the sale of the Notes to you and
the Other Purchasers will not be used for any purpose other than to pay at
least $134,500,000 of the principal amount outstanding under the Unsecured
Facility and thereafter to pay fees and expenses incurred in connection with
the consummation of this Agreement and for other general corporate purposes.
(b) No part of the proceeds from the sale of the Notes will be
used, directly or indirectly, for the purpose of purchasing or carrying any
"margin stock" (within the meaning of Regulation G or Regulation U) or for
the purpose of purchasing, carrying or trading in any securities under such
circumstances as to involve the Issuer in a violation of Regulation X or to
involve any broker or dealer in a violation of Regulation T. Upon your
request, the Issuer will furnish you with a statement to the foregoing effect
in conformity with the requirements of FR Form U-1 referred to in Regulation
U. No indebtedness being reduced or retired out of the proceeds of the Notes
was incurred for the purpose of purchasing or carrying any "margin stock"
(within the meaning of Regulation U) or any "margin security" (within the
meaning of Regulation T). Margin stock does not constitute more than 25% of
the value of the consolidated property and assets of the Issuer and its
Subsidiaries. None of the transactions contemplated by this Agreement
(including, without limitation, the direct and indirect use of proceeds of
the Notes) will violate or result in a violation of the Securities Act or the
Exchange Act or any of the rules and regulations promulgated thereunder or
Regulation G, Regulation T, Regulation U or Regulation X.
10.7. NATURE OF BUSINESS.
None of the Issuer, the Guarantor or any of their Subsidiaries shall
engage in any business, enterprise or activity other than (a) the businesses
of acquiring, developing, owning, re-developing, managing and operating real
estate and any business, enterprise or activity substantially similar,
related or incidental thereto or (b) any business, enterprise or activity
other than as described in clause (a), which in the aggregate does not exceed
30% of Total Assets. Notwithstanding anything to the contrary set forth in
this Section 10.7, Issuer shall be permitted to (i) make one or more
investments (directly or indirectly) in Reckson Strategic Inc. prior to any
spin-off thereof in an aggregate amount not to exceed $175,000,000 and (ii)
spin-off (directly or indirectly) Reckson Strategic Inc. or any portion
thereof.
10.8. TRANSACTIONS WITH AFFILIATES.
The Issuer will not, and will not permit any Subsidiary to, enter into
directly or indirectly any Material transaction or Material group of related
transactions (including, without limitation, the purchase, lease, sale or
exchange of properties of any kind or the rendering of any service) with any
of its Subsidiaries or Affiliates, except in the ordinary course of business
and upon terms substantially as favorable to the Issuer or such Subsidiary as
would be obtainable in a comparable arm's length transaction with a Person
not an Affiliate thereof; provided that
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the foregoing restrictions of this Section 10.8 shall not apply to:
(a) one or more investments (directly or indirectly) in Reckson
Strategic Inc. prior to any spin-off thereof in an aggregate amount not to
exceed $175,000,000;
(b) any spin-off (directly or indirectly) of Reckson Strategic
Inc.;
(c) any transaction approved by a majority of the members of the
Board of Directors of the Issuer or such Subsidiary, as the case may be, who
do not have any Material direct or indirect financial interest in or with
respect to such transaction;
(d) any transaction deemed in writing to be fair to the Issuer or
such Subsidiary, as the case may be, by a nationally recognized investment
banking, appraisal or other expert firm;
(e) increases in compensation and benefits for officers and
employees of the Issuer or any of its Subsidiaries; and
(f) payment of officers', directors', partners', and other similar
indemnities.
10.9. SALES OF ASSETS.
The Issuer will not, and will not permit any of its Subsidiaries to,
sell, transfer or otherwise dispose of (whether in one transaction or a
series of transactions) any property or assets (whether now owned or
hereafter acquired) if after giving effect to such sale, the Book Value of
all assets of the Issuer or its Subsidiaries sold within the twelve months
immediately preceding such sale or disposition exceeds 15% of the Book Value
of all of the assets of the Issuer and its Subsidiaries as of the
commencement of such twelve month period; provided that the foregoing
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restrictions shall not apply to: (a) sales of properties or assets in the
ordinary course of business determined at the time of the relevant sale,
which includes, without limitation, sales consistent with the Issuer's then
current business plan; (b) sales of properties or assets purchased as part of
a larger portfolio within 18 months after the related purchase the proceeds
of which are used to make payments in respect of any indebtedness incurred in
connection with the purchase of such portfolio or secured indebtedness in
respect of any properties in such portfolio; (c) sales of properties or
assets the proceeds of which are used to make payments in respect of the
Notes within twelve months thereafter; (d) sales of properties or assets the
proceeds of which are reinvested in the real estate business of the Issuer
and its Subsidiaries within twelve months thereafter; (e) one or more
investments (directly or indirectly) in Reckson Strategic Inc. prior to any
spin-off thereof in an aggregate amount not to exceed $175,000,000; or (f)
any spin-off (directly or indirectly) of Reckson Strategic Inc.
11. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following conditions or
events shall occur and be continuing:
(a) default in the payment of any interest payable in respect of
the Notes when such interest becomes due and payable, and continuance of such
default for a period of five (5) Business Days; or
(b) default in the payment of the principal of or any Make-Whole
Amount on the Notes when due and payable, whether at stated maturity, upon
redemption, acceleration of maturity or otherwise; or
(c) any representation or warranty of the Issuer or the Guarantor
in this Agreement or in any writing furnished to you pursuant to this
Agreement proves to have been inaccurate in any Material respect on the date
as of which it was made; or
(d) (i) default in the performance of or compliance with Section
7.1(d), Section 9.5, or any provision of Section 10, (ii) default in the
performance of or compliance with Section 7.1(a), Section 7.1(b) or Section
7.1(e) which default shall remain unremedied for as least five (5) Business
Days after the earlier of the first date on which (1) a Responsible Officer
becomes aware of such default or (2) the Company receives notice of such
default from any holder of a Note or (iii) default in the performance of or
compliance with any term, covenant or agreement contained herein or in a Note
or Guarantee not otherwise referred to in this Section 11 which default shall
remain unremedied for at least 30 calendar days after the earlier of the
first date on which (1) a Responsible Officer becomes aware of such default
and (2) the Company receives notice of such default from any holder of a
Note; or
(e) the Issuer or any of its Consolidated Subsidiaries shall fail
to pay any principal of, premium or interest on or any other amount payable
in respect of, any recourse Debt that is outstanding in a principal or
notional amount of at least $20,000,000 (or the equivalent thereof in one or
more other currencies), either individually or in the aggregate (but
excluding Debt outstanding hereunder), of the Issuer and its Consolidated
Subsidiaries, taken as a whole, when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such failure shall continue after the applicable grace
period, if any, specified in any agreement or instrument relating to such
Debt; or any other event shall occur or condition shall exist under any
agreement or instrument evidencing, securing or otherwise relating to any
such Debt and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity of
such Debt or otherwise to cause, or to permit the holder or holders thereof
(or a trustee or agent on behalf of such holders) to cause such Debt to
mature prior to its stated maturity; or
(f) the Issuer, the Guarantor or one or more Subsidiaries that
alone or, contemporaneously, in the aggregate comprise more than 10% of the
Total Assets or the net operating income of the Issuer and its Subsidiaries
on a consolidated basis shall admit in writing its inability to pay its debts
generally or shall make a general assignment for the benefit of creditors; or
(g) the entry by a court having competent jurisdiction of:
(i) a decree or order for relief in respect of the Issuer,
the Guarantor or one or more Subsidiaries that alone or, contemporaneously,
in the aggregate comprise more than 10% of the Total Assets or the net
operating income of the Issuer and its Subsidiaries on a consolidated basis
in an involuntary proceeding under any applicable bankruptcy, insolvency,
reorganization or other similar law and such decree or order shall remain
unstayed and in effect for a period of 60 consecutive calendar days; or
(ii) a decree or order adjudging the Issuer, the Guarantor or
one or more Subsidiaries that alone or, contemporaneously, in the aggregate
comprise more than 10% of the Total Assets or the net operating income of the
Issuer and its Subsidiaries on a consolidated basis to be insolvent, or
approving a petition seeking reorganization, arrangement, adjustment or
composition of the Issuer, the Guarantor or such Subsidiary or Subsidiaries
and such decree or order shall remain unstayed and in effect for a period of
60 consecutive calendar days; or
(iii) a final and non-appealable order appointing a
custodian, receiver, liquidator, assignee, trustee or other similar official
of the Issuer, the Guarantor or one or more Subsidiaries that alone or,
contemporaneously, in the aggregate comprise more than 10% of the Total
Assets or the net operating income of the Issuer and its Subsidiaries on a
consolidated basis, or of any substantial part of the property of the Issuer,
the Guarantor or such Subsidiary or Subsidiaries, as the case may be, or
ordering the winding up or liquidation of the affairs of the Issuer, the
Guarantor or such Subsidiary or Subsidiaries; or
(h) the commencement by the Issuer, the Guarantor or one or more
Subsidiaries that alone or, contemporaneously, in the aggregate comprise more
than 10% of the Total Assets or the net operating income of the Issuer and
its Subsidiaries on a consolidated basis of a voluntary proceeding under any
applicable bankruptcy, insolvency, reorganization or other similar law or of
a voluntary proceeding seeking to be adjudicated insolvent or the consent by
the Issuer, the Guarantor or such Subsidiary or Subsidiaries to the entry of
a decree or order for relief in an involuntary proceeding under any applica-
ble bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any insolvency proceedings against it, or the filing by the
Issuer, the Guarantor or such Subsidiary or Subsidiaries of a petition or
answer or consent seeking reorganization or relief under any applicable law,
or the consent by the Issuer, the Guarantor or such Subsidiary or
Subsidiaries to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator, assignee, trustee or
similar official of the Issuer, the Guarantor or such Subsidiary or
Subsidiaries or any substantial part of the property of the Issuer, the
Guarantor or such Subsidiary or Subsidiaries or the taking of partnership or
corporate action by the Issuer, the Guarantor or such Subsidiary or
Subsidiaries in furtherance of any such action; or
(i) one or more final, non-appealable judgments or orders for the
payment of money aggregating $20,000,000 (or the equivalent thereof in one or
more other currencies) or more are rendered against one or more of the
Issuer, the Guarantor and their Consolidated Subsidiaries and remain
unsatisfied and either (i) enforcement proceedings shall have been commenced
by any creditor upon any such judgment or order or (ii) there shall be a
period of at least 60 days after entry thereof during which a stay of
enforcement of any such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; provided, however, that any such judgment
or order shall not give rise to an Event of Default under this subsection (i)
if and for so long as (A) the amount of such judgment or order is covered by
a valid and binding policy of insurance between the defendant and the insurer
covering full payment thereof and (B) such insurer has been notified, and has
not disputed the claim made for payment, of the amount of such judgment or
order; or
(j) any provision of the Note or the Guarantee after delivery
thereof shall for any reason (other than pursuant to the express terms
thereof) cease to be valid and binding on or enforceable against the Issuer
or Guarantor, respectively, or shall cease to give you any of the rights,
powers or privileges purported to be created thereunder, or the Issuer or the
Guarantor shall so state or assert any of the foregoing in writing; or
(k) except as otherwise permitted by this Agreement, (i) the
General Partner shall cease to be the general partner of the Issuer or (ii)
the Guarantor shall cease to be a Subsidiary of the Issuer unless all of the
remaining assets of the Guarantor at such time are transferred to the Issuer;
or
(l) a Default shall have occurred and be continuing and the Issuer
shall redeem any interests in the Issuer's capital, individually or,
contemporaneously, in the aggregate, for cash (without a concurrent exchange
for shares of capital stock in the General Partner) in excess of $10,000,000.
12. REMEDIES ON DEFAULT, ETC.
12.1. ACCELERATION.
(a) If an Event of Default described in paragraphs (f), (g) or (h)
of Section 11 has occurred, all of the Notes then outstanding shall
automatically become immediately due and payable.
(b) If an Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder of Notes at the time
outstanding affected by such Event of Default may, at its option, by notice
to the Issuer and the Guarantor, declare all of the Notes held by such holder
to be immediately due and payable.
(c) If any Event of Default other than one referred to in clause
(a) or (b) of this Section 12.1 has occurred and is continuing, the Required
Holders may, at their option, by notice to the Issuer and the Guarantor,
declare all of the Notes then outstanding to be immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus all accrued and unpaid
interest thereon and the Make-Whole Amount, if any, shall be immediately due
and payable, in each and every case without presentment, demand, protest or
further notice, all of which are hereby waived. The Issuer acknowledges, and
the parties hereto agree, that each holder of a Note has the right to
maintain its investment in the Notes free from repayment by the Issuer
(except as otherwise provided herein) and that the provision for payment of
the Make-Whole Amount by the Issuer in the event that the Notes are prepaid
or accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.
12.2. OTHER REMEDIES.
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared
immediately due and payable under Section 12.1, the holder of any Note at the
time outstanding may proceed to protect and enforce the rights of such holder
by an action at law, suit in equity or other appropriate proceeding, whether
for the specific performance of any agreement contained herein or in any
Note, or for an injunction against a violation of any of the terms hereof or
thereof, or in aid of the exercise of any power granted hereby or thereby or
by law or otherwise.
12.3. RESCISSION.
At any time after any Notes have been declared due and payable pursuant
to clause (b) or (c) of Section 12.1, the applicable holder or the Required
Holders, as the case may be, by written notice to the Issuer, as the case may
be, may rescind and annul any such declaration and its consequences if (a)
the Issuer has paid all overdue interest on the Notes, the principal of and
any Make-Whole Amount on any Note that is due and payable and is unpaid other
than by reason of such declaration, and all interest on such overdue
principal and any Make-Whole Amount and (to the extent permitted by
applicable law) on any overdue interest in respect of the Notes at the
Default Rate, (b) all Events of Default and Defaults, other than non-payment
of amounts that have become due solely by reason of such declaration, have
been cured or have been waived pursuant to Section 17 and (c) no judgment or
decree has been entered for the payment of any monies due in respect of the
Notes. No rescission and annulment under this Section 12.3 will extend to or
affect any subsequent Default or Event of Default or impair any right
consequent thereon.
12.4. NO WAIVERS OR ELECTION OF REMEDIES.
No course of dealing and no delay on the part of any holder of any Note
in exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right,
power or remedy conferred upon the holder of any Note shall be exclusive of
any other right, power or remedy referred to herein or therein or now or
hereafter available at law, in equity, by statute or otherwise.
13. REGISTRATION; TRANSFER AND EXCHANGE; REPLACEMENT OF NOTES.
13.1. REGISTRATION OF NOTES.
The Issuer shall keep at its principal office a register for the
registration and registration of transfers of Notes. The name and address of
each holder of one or more Notes, each transfer thereof and the name and
address of each transferee of one or more Notes shall be registered in such
register. Prior to due presentment for registration of transfer, the Person
in whose name any Note shall be registered shall be deemed and treated as the
owner and holder thereof for all purposes hereof, and the Issuer shall not be
affected by any notice or knowledge to the contrary. The Issuer shall give
to any holder of a Note promptly upon request therefor a complete and correct
copy of the names and addresses of all registered holders of the Notes.
13.2. TRANSFER AND EXCHANGE OF NOTES.
Upon surrender of any Note at the principal office of the Issuer for
registration of transfer or exchange (and, in the case of a surrender for
registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the holder of such Note or his or her
attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such Note or part thereof), the Issuer shall
execute and deliver, at the Issuer's expense (except as provided below), one
or more new Notes (as requested by the holder thereof) in exchange therefor,
in an aggregate principal amount equal to the unpaid principal amount of the
surrendered Note, and the Guarantor shall execute the Guarantee upon such
Note. Each such new Note shall be payable to such Person as such holder may
request and shall be substantially in the form of Exhibit 1. Each such new
Note shall be dated and bear interest from the date to which interest shall
then have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Issuer may
require payment of a sum sufficient to cover any stamp tax or other
governmental charge imposed in respect of any such transfer of Notes. Notes
shall not be issued or transferred in denominations of less than $500,000 and
integral multiples thereof unless necessary to enable registration of
transfer by a holder of its entire holding of Notes. Any transferee, by its
acceptance of a Note registered in its name (or the name of its nominee),
shall be deemed to have made the representations set forth in Section 6.1.
If a request is made to remove the private placement legend on a Note, such
legend shall not be removed unless there is delivered to the Issuer such
satisfactory evidence as may be reasonably required (which may include a
legal opinion of in-house counsel of an institutional holder) by the Issuer
that neither the private placement legend nor any transfer restrictions are
required to ensure that transfers thereof comply with the relevant provisions
of the Securities Act or that such Notes are not "restricted securities"
within the meaning of Rule 144 under the Securities Act.
13.3. REPLACEMENT OF NOTES.
Upon receipt by the Issuer of evidence reasonably satisfactory to it of
the ownership of, and the loss, theft, destruction or mutilation of, any Note
and (a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it, or (b) in the case of mutilation, upon surrender and
cancellation thereof, the Issuer, at its own expense, shall execute and
deliver, in lieu thereof, a new Note, dated and bearing interest from the
date to which interest shall have been paid on such lost, stolen, destroyed
or mutilated Note or dated the date of such lost, stolen, destroyed or
mutilated Note if no interest shall have been paid thereon, and the Guarantor
shall execute the Guarantee upon such Note.
14. PAYMENTS ON NOTES.
14.1. PLACE OF PAYMENT.
Subject to Section 14.2, payments of principal, Make-Whole Amount and
interest becoming due and payable on the Notes shall be made at the principal
office of the Issuer or at the principal office of any fiscal or paying agent
designated by the Issuer. The Issuer may at any time, by notice to each
holder of a Note, change the place of payment of the Notes so long as such
place of payment shall be either the principal office of the Issuer in such
jurisdiction or the principal office of such fiscal or paying agent in such
jurisdiction.
14.2. HOME OFFICE PAYMENT.
So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 14.1 or in such Note to the
contrary, the Issuer will pay all sums becoming due on such Note for
principal, Make-Whole Amount and interest by the method and at the address
specified for such purpose below your name in Schedule A, or by such other
method or at such other address as you shall have from time to time specified
to the Issuer in writing for such purpose, without the presentation or
surrender of such Note or the making of any notation thereon, except that
upon written request of the Issuer made concurrently with or reasonably
promptly after payment or redemption in full of any Note, you shall surrender
such Note for cancellation, reasonably promptly after any such request, to
the Issuer at its principal office or at the place of payment most recently
designated by the Issuer pursuant to Section 14.1. Prior to any sale or
other disposition of any Note held by you or your nominee, you will, at your
election, either endorse thereon the amount of principal paid thereon and the
last date to which interest has been paid thereon or surrender such Note to
the Issuer in exchange for a new Note or Notes pursuant to Section 13.2. The
Issuer will afford the benefits of this Section 14.2 to the transferee of any
Note that has made the same agreement relating to such Note as you have made
in this Section 14.2.
15. EXPENSES, ETC.
15.1. TRANSACTION EXPENSES.
The Issuer will pay all costs and expenses incurred by you (including
the reasonable fees and disbursements of counsel) in connection with any
amendments, waivers or consents solicited by it under or in respect of this
Agreement or the Notes (whether or not such amendment, waiver or consent
becomes effective), including, without limitation: (a) the costs and expenses
incurred in enforcing or defending (or determining whether or how to enforce
or defend) any rights under this Agreement or the Notes or in responding to
any subpoena or other legal process or informal investigative demand issued
in connection with this Agreement or the Notes, or by reason of being a
holder of any Note, and (b) the costs and expenses incurred in connection
with the insolvency or bankruptcy of the Issuer or in connection with any
work-out or restructuring of the transactions contemplated hereby and by the
Notes. The Issuer will pay, and will save you harmless from, all claims in
respect of any fees, costs or expenses, if any, of brokers and finders (other
than those retained by you).
15.2. INDEMNITY.
In addition to the payment of expenses pursuant to Section 15.1, the
Issuer agrees to indemnify, pay and hold you, and each other Person who is or
was at any time a Holder and each other Person in whose name or for whose
benefit such Person holds or at any time held Notes, and your and their
affiliates and your and their respective officers, directors and employees
(each, an "Indemnified Party"), harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits and claims, and all reasonable out-of-pocket costs, expenses and
disbursements, of any kind or nature whatsoever (including, without
limitation, reasonable fees and disbursements of counsel for such Indemnified
Parties) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of, or in connection with the preparation for a defense of, any
investigation, litigation or proceeding arising out of, related to, or in
connection with (a) this Agreement, the Notes or any of the other
transactions contemplated hereby or thereby, (b) any use or intended use of
the proceeds of any of the Notes or (c) the actual or alleged presence of
Hazardous Materials on any property of the Issuer or any of its Subsidiaries
or any action involving Environmental Law relating in any way to the Issuer
or any of its Subsidiaries, in each case whether or not such investigation,
litigation or proceeding is brought by the Issuer, any of its Subsidiaries,
it directors, shareholders or creditors or an Indemnified Party or any
Indemnified Party is otherwise a party thereto (collectively, the
"Indemnified Liabilities"); provided that the
--------
Issuer shall not have any obligation to any Indemnified Party hereunder with
respect to Indemnified Liabilities arising from (a) the gross negligence or
willful misconduct of such Indemnified Party or (b) such Indemnified Party
not being authorized or permitted to enter into this Agreement or consummate
the transactions contemplated hereby. The Issuer also agrees not to assert
any claim against you, any other Person who is or was at any time a Holder or
any other Person in whose name or for whose benefit such Person holds or at
any time held Notes, or any of your or their affiliates, or any of your or
their respective officers, directors and employees, on any theory of
liability, for special, indirect, consequential or punitive damages arising
out of or otherwise relating to (a) this Agreement or the Notes or any of the
other transactions contemplated hereby or thereby, or (b) any use or intended
use of the proceeds of any of the Notes, except to the extent contemplated in
the proviso of the first sentence of this Section 15.2. To the extent that
the undertaking to indemnify, pay and hold harmless the Indemnified Parties
set forth in the immediately preceding two sentences may be unenforceable
because it is violative of any law or public policy, the Issuer shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by the Indemnified Parties or any of them, except to the extent
contemplated in the proviso of the first sentence of this Section 15.2. THE
FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH INDEMNIFIED
LIABILITIES ARE IN ANY WAY OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY
ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY YOU OR ANY OTHER HOLDER;
PROVIDED THAT NEITHER YOU NOR ANY OTHER HOLDER SHALL BE ENTITLED UNDER THIS
SECTION 15.2 TO RECEIVE INDEMNIFICATION FOR THAT PORTION, IF ANY, OF ANY
INDEMNIFIED LIABILITIES THAT ARISE FROM (A) YOUR OR ITS OWN INDIVIDUAL GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OR (B) SUCH INDEMNIFIED PARTY NOT BEING
AUTHORIZED OR PERMITTED TO ENTER INTO THIS AGREEMENT OR CONSUMMATE THE
TRANSACTIONS CONTEMPLATED HEREBY.
15.3. SURVIVAL.
The obligations of the Issuer under this Section 15 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement or the Notes, and the termination of this
Agreement.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement, the Notes and the Guarantees, the
exchange or transfer by you of any Note or portion thereof or interest
therein and the payment of any Note, and may be relied upon by any subsequent
holder of a Note, regardless of any investigation made at any time by or on
behalf of you or any other holder of a Note. All statements contained in any
certificate or other instrument delivered by or on behalf of the Issuer or
the Guarantor pursuant to this Agreement shall be deemed representations and
warranties of the Issuer or the Guarantor, as the case may be, under this
Agreement. Subject to the preceding sentence, this Agreement, the Notes and
the Guarantees embody the entire agreement and understanding among each of
you, the Issuer and the Guarantor and supersede all prior agreements and
understandings relating to the subject matter hereof.
17. AMENDMENT AND WAIVER.
17.1. REQUIREMENTS.
This Agreement, the Notes and the Guarantees may be amended, and the
observance of any term hereof or thereof may be waived (either retroactively
or prospectively), with (and only with) the written consent of the Issuer,
the Guarantor (solely with respect to this Agreement and the Guarantees) and
the Required Holders, except that (a) no amendment or waiver of any of the
provisions of Section 1, 2, 3, 4, 5 or 6 hereof or of any defined term (as it
is used therein) will be effective as to you unless consented to by you in
writing, and (b) no such amendment or waiver may, without the written consent
of the holder of each Note at the time outstanding affected thereby, (i)
subject to the provisions of Section 12 relating to acceleration or
rescission, change the amount or time of any payment of principal of, or
reduce the rate of interest or the amount of any redemption premium on, the
Notes or change the timing of payments in respect of the Notes, (ii) change
the percentage of the aggregate principal amount of the Notes the holders of
which are required to consent to any such amendment or waiver, or (iii) amend
Sections 8, 11(a), 11(b), 12, 17 or 19.
17.2. BINDING EFFECT, ETC.
Any amendment or waiver consented to as provided in Section 17.1 applies
equally to all holders of Notes and is binding upon them and upon each future
holder of any Note and upon the Issuer and the Guarantor without regard to
whether such Note has been marked to indicate such amendment or waiver. No
such amendment or waiver will extend to or affect any obligation, covenant,
agreement, Default or Event of Default not expressly amended or waived or
impair any right consequent thereon. No course of dealing between the Issuer,
the Guarantor and the holder of any Note nor any delay in exercising any
rights hereunder or thereunder shall operate as a waiver of any such rights.
As used herein, the term "this Agreement" and references thereto shall mean
this Note Purchase Agreement as it may from time to time be amended.
17.3. NOTES HELD BY ISSUER AFFILIATES.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then
outstanding approved or consented to any amendment, waiver or consent to be
given under this Agreement, the Notes or the Guarantees, or have directed the
taking of any action provided herein or therein to be taken upon the
direction of the holders of a specified percentage of the aggregate principal
amount of Notes then outstanding, Notes directly or indirectly owned by the
Issuer or any of their respective Affiliates shall be deemed not to be
outstanding.
17.4. SOLICITATION OF HOLDERS OF NOTES.
(a) Solicitation. The Issuer will provide each holder of the
------------
Notes (irrespective of the amount of Notes then owned or otherwise held by it
at the time) with sufficient information, reasonably far in advance of the
date a decision is required, to enable such holder to make an informed and
considered decision with respect to any proposed amendment, waiver or consent
in respect of any of the provisions hereof or of any Note, Guarantee or other
documents related thereto. The Issuer will deliver executed or true and
correct copies of each amendment, waiver or consent effected pursuant to the
provisions of this Section 17 to each holder of outstanding Notes promptly
following the date on which it is executed and delivered by, or receives the
consent or approval of, the requisite holders of Notes.
(b) Payment. The Issuer will not directly or indirectly pay or
-------
cause to be paid or remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any security, to any holder
of Notes as consideration for or as an inducement to the entering into by any
holder of Notes of any waiver or amendment of any of the terms and provisions
hereof or any Note, Guarantee or other documents related thereto, unless such
remuneration is concurrently paid, or security is concurrently granted, on
the same terms, ratably to each holder of Notes then outstanding even if such
holder did not consent to such waiver or amendment.
18. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery
service (with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other address as
you or it shall have specified to the Issuer in writing,
(ii) if to any other holder of any Note, to such holder at
such address as such other holder shall have specified to the Issuer in
writing, or
(iii) if to the Issuer or the Guarantor, to the Issuer at its
address set forth at the beginning hereof to the attention of the President
of the General Partner, or at such other address as the Issuer shall have
specified to the holder of each Note in writing.
Notices under this Section 18 will be deemed given only when actually
received.
19. CONFIDENTIAL INFORMATION.
For the purposes of this Section 19, "CONFIDENTIAL INFORMATION" means
information delivered to you by or on behalf of the Issuer, the Guarantor or
any of their respective Affiliates in connection with the transactions
contemplated by or otherwise pursuant to this Agreement that is proprietary
in nature and that was clearly marked or labeled or otherwise adequately
identified in writing when received by you as being confidential, provided
that such term does not include information that
--------
(a) was publicly known prior to the time of such disclosure, (b) subsequently
becomes publicly known through no act or omission by you or any Person acting
on your behalf, (c) otherwise becomes known to you other than through their
disclosure to you or (d) constitutes financial statements delivered to you
under Section 7.1 that are otherwise publicly available. You will maintain
the confidentiality of such Confidential Information in accordance with
procedures adopted by you in good faith to protect confidential information
of third parties delivered to you, provided that you may deliver or disclose
Confidential Information to (i) your directors, officers, employees, agents,
attorneys and affiliates (to the extent such disclosure reasonably relates to
the administration of the investment represented by your Notes), (ii) your
financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with
the terms of this Section 19, (iii) any other holder of any Note, (iv) any
institutional accredited investor to which you sell or offer to sell such Note
or any part thereof or any participation therein (if such Person has agreed in
writing prior to its receipt of such Confidential Information to be bound by
the provisions of this Section 19), (v) any Person from which you offer to
purchase any security of the Issuer or the Guarantor (if such Person has agreed
in writing prior to its receipt of such Confidential Information to be bound by
the provisions of this Section 19), (vi) any federal or state regulatory
authority having jurisdiction over you, (vii) any other Person to which such
delivery or disclosure may be necessary or appropriate (w) to effect
compliance with any law, rule, regulation or order applicable to you, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which you are a party or (z) if an Event of Default has
occurred and is continuing, to the extent you may reasonably determine such
delivery and disclosure to be necessary or appropriate in the enforcement or
for the protection of the rights and remedies under your Notes and this
Agreement or (viii) the National Association of Insurance Commissioners.
Each holder of a Note, by its acceptance of a Note, will be deemed to have
agreed to be bound by and to be entitled to the benefits of this Section 19
as though it were a party to this Agreement. On request by the Issuer in
connection with the delivery to any holder of a Note of information required
to be delivered to such holder under this Agreement or requested by such
holder (other than a holder that is a party to this Agreement or its
nominee), such holder will enter into an agreement with the Issuer embodying
the provisions of this Section 19.
20. MISCELLANEOUS.
20.1. SUCCESSORS AND ASSIGNS.
All covenants and other agreements contained in this Agreement by or on
behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any
subsequent holder of a Note) whether so expressed or not.
20.2. PAYMENTS DUE ON NON-BUSINESS DAYS.
Anything in this Agreement, the Notes or the Guarantees to the contrary
notwithstanding, any payment of principal of, or Make-Whole Amount or
interest on, any Note that is due on a date other than a Business Day shall
be made on the next succeeding Business Day without including the additional
days elapsed in the computation of the interest payable on such next
succeeding Business Day.
20.3. SEVERABILITY.
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the fullest extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
20.4. CONSTRUCTION.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant
contained herein, so that compliance with any one covenant shall not (absent
such an express contrary provision) be deemed to excuse compliance with any
other covenant. Where any provision herein refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provision
shall be applicable whether such action is taken directly or indirectly by
such Person.
20.5. REPRODUCTION OF DOCUMENTS.
This Agreement, each Note, Guarantee and all other documents relating
thereto, including, without limitation, (a) amendments, waivers and consents
of the foregoing that may hereafter be executed, (b) documents received by
you at the Closing (except the Notes themselves) and (c) financial
statements, certificates and other information previously or hereafter
furnished to you, may be reproduced by you by any photographic, photostatic,
microfilm, microcard, miniature photographic or other similar process. The
Issuer agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself
in any judicial or administrative proceeding (whether or not the original is
in existence and whether or not such reproduction was made by you in the
regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
This Section 20.5 shall not prohibit the Issuer or any other holder of Notes
from contesting any such reproduction to the same extent that it could
contest the original, or from introducing evidence to demonstrate the
inaccuracy of any such reproduction.
20.6. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
20.7. GOVERNING LAW.
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of New York.
If you are in agreement with the foregoing, please sign this Agreement
on the accompanying counterpart and return it to the Issuer, whereupon the
foregoing shall become a binding agreement among you, the Issuer and the
Guarantor.
Very truly yours,
RECKSON OPERATING PARTNERSHIP, L.P.
By: Reckson Associates Realty Corp.,
its general partner
By:
--------------------------------
Name:
Title:
RECKSON FS LIMITED PARTNERSHIP
By: Reckson FS Inc.,
its general partner
By:
--------------------------------
Name:
Title:
The foregoing is hereby
agreed to as of the date
hereof.
American Maturity Life Insurance Company
By:
--------------------------
Name:
Title:
Hartford Fire Insurance Company
By: Hartford Investment Services, Inc.
Its Agent and Attorney-in-Fact
By:
--------------------------
Name:
Title:
Hartford Life Insurance Company
By: Hartford Investment Services, Inc.
Its Agent and Attorney-in-Fact
By:
--------------------------
Name:
Title:
Hartford Life and Accident Insurance Company
By: Hartford Investment Services, Inc.
Its Agent and Attorney-in-Fact
By:
--------------------------
Name:
Title:
Provident Mutual Life Insurance Company
By:
--------------------------
Name:
Title:
ProvidentMutual Life and Annuity Insurance Company
of America
By:
--------------------------
Name:
Title:
United Services Automobile Association
By:
--------------------------
Name:
Title:
Delaware American Life Insurance Company
By:
--------------------------
Name:
Title:
American International Life Assurance Company
of New York
By:
--------------------------
Name:
Title:
AIG Life Insurance Company
By:
--------------------------
Name:
Title:
The Northwestern Mutual Life Insurance Company
By:
--------------------------
Name:
Title:
The Minnesota Mutual Life Insurance Company
By: MIMLIC Asset
Management Company
By:
--------------------------
Name:
Title:
Mutual Trust Life Insurance Company
By: MIMLIC Asset
Management Company
By:
--------------------------
Name:
Title:
Farm Bureau Life Insurance Company of Michigan
By: MIMLIC Asset
Management Company
By:
--------------------------
Name:
Title:
National Life Insurance Company
By:
--------------------------
Name:
Title:
Life Insurance Company of the Southwest
By:
--------------------------
Name:
Title:
PPM America, Inc. as attorney in fact,
on behalf of Jackson National Life Insurance Company
By:
--------------------------
Name:
Title:
SCHEDULE A
INFORMATION RELATING TO PURCHASER
Principal Amount of
Name and Address of Purchaser Note to be Issued
- ----------------------------- -------------------
American Maturity Life Insurance Company $4,000,000.00
(Address)
Hartford Fire Insurance Company $5,000,000.00
(Address)
Hartford Life Insurance Company $6,000,000.00
(Address)
Hartford Life and Accident Insurance Company $4,000,000.00
(Address)
Hartford Life Insurance Company $4,000,000.00
(Address)
Provident Mutual Life Insurance Company $1,000,000.00
(Address)
ProvidentMutual Life and Annuity Company
of America $2,000,000.00
(Address)
United States Automobile Association $35,000,000.00
Payments:
- --------
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as
"Reckson Operating Partnership, L.P. Senior Notes due 8/ /07, PPN ,
principal or interest") to:
Bankers Trust Company/USAA
(ABA #021001033)
Private Placement Processing
AC #99 911 145
for credit to: USAA
Account Number 99715
Notices:
- -------
All notices with respect to payments and written confirmation of each such
payment, to be addressed to:
USAA
c/o Asset Accounting
USAA Building, B-1-W
9800 Fredericksburg Road
San Antonio, Texas 78288
All other communications:
Insurance Company Portfolios
USAA IMCO
USAA Building, BK D04N
9800 Fredericksburg Road
San Antonio, Texas 78288
Delivery of Notes:
- -----------------
Bankers Trust Company
16 Wall Street
4th Floor, Window 44
Re: USAA #99715
New York, NY 10015
Name of Nominee in which Notes are to be issued: Salkeld & Co.
- -----------------------------------------------
Taxpayer I.D. Number: 74-0959140
- --------------------
Delaware American Life Insurance Company $1,000,000.00
(Address)
American International Life Assurance Company
of New York $6,000,000.00
(Address)
AIG Life Insurance Company $3,000,000.00
(Address)
The Northwestern Mutual Life Insurance
Company $ ,000,000.00
--
(Address)
The Minnesota Mutual Life Insurance Company $8,000,000.00
400 Robert Street North
St. Paul, Minnesota 55101
Attention: MIMLIC Asset Management Company
Fax No.: (612) 223-5959
Tax ID: #41-0417830
All payments on account of the Note shall be made by wire transfer of
immediately available funds to:
First Bank National Association
Minneapolis, Minnesota
ABA #091000022
BNF The Minnesota Mutual Life Insurance Company
Account #1801-10-00600-4
(with sufficient information to identify the source and application of such
funds.)
Mutual Trust Life Insurance Company $1,000,000.00
The Notes being purchased for Mutual Trust Life Insurance Company should be
registered in the nominee name of "ELL & Co.". The Notes should be forwarded
to the following address:
Northern Trust Company of New York
80 Broad Street, 19th Floor
New York, NY 10004
Attn: Settlements
for Account #26-00621, Mutual Trust Life Ins. Company
Tax ID: #36-1516780
All notices and statements should be sent to the following address:
Mutual Trust Life Insurance Company
c/o MIMLIC Asset Management Company
400 Robert Street North
St. Paul, MN 55101
Attn: Client Administrator
All payments on account of the Notes shall be made by wire transfer of
immediately available funds to :
The Northern Chgo/Trust
ABS #071-00-152
For credit to: Account Number: 5186041000
For further credit to: Mutual Trust Life Insurance Company
Account Number: 26-00621
Attn: MBS Department
Also, please reference sufficient information to identify the source and
application of such funds.
Farm Bureau Life Insurance Company
of Michigan $3,000,000.00
Forward Notes to:
Comerica Bank
Trust Securities Services MC 3404
411 West Lafayette
Detroit, MI 48275-3404
Reference: Farm Bureau Life Insurance Company of Michigan
Internal Account Number: 84-550
Attn: Dan Molnar (313) 222-7946
Tax ID: 38-6053670
All notices and statements should be sent to the following address:
Farm Bureau Life Insurance Company of Michigan
c/o MIMLIC Asset Management Company
400 Robert Street North
St. Paul,MN 55101
Attn: Client Administrator
All payments on account of the Notes shall be made by wire transfer of
immediately available funds to:
Comerica Bank
Detroit, MI
ABA #072-000-096
For credit to: Trust Operation - Fixed Income
Unit Cost Center 98530
Account Number: 21585-98530
For further credit to: Farm Bureau Life Insurance Company
of Michigan - Account Number: 84-550
Also, please reference sufficient information to identify the source and
application of such funds.
National Life Insurance Company $5,000,000.00
Wire instructions:
Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, NY 10081
ABA #021000021
Account No. 910-4-017752
Notice Instructions:
National Life Insurance Company
One National Life Drive
Montpelier, VT 05604
Attention: Private Placements
Tax I.D.# 03-0144090
Fax No. (802) 223-9329
Life Insurance Company of the Southwest $4,500,000.00
Wire Instructions:
Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, NY 10081
ABA# 021000021
Account No. 910-2-754349
Notice Instructions:
Life Insurance Company of the Southwest
c/o National Life Insurance Company
One National Life Drive
Montpelier, VT 05604
Attention: Private Placements
Tax I.D. #75-0953004
Fax No.# (802) 223-9329
(1) All payments by wire
transfer to a Purchaser
or the Purchaser's designated
agent in New York Clearing
House Funds (i.e., next day
funds) on the Closing Day
(2) All notices of payments and
written confirmations of
such wire transfers:
(3) All other communications:
SCHEDULE B
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DEFINED TERMS
-------------
As used herein, the following terms have the respective meanings set
forth below:
"AFFILIATE" means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control
with, such first Person, and (b) any Person beneficially owning or holding,
directly or indirectly, 10% or more of any class of voting or equity
interests of the Issuer or any Subsidiary or any corporation of which the
Issuer and its Subsidiaries beneficially own or hold, in the aggregate,
directly or indirectly, 10% or more of any class of voting or equity
interests. As used in this definition, "CONTROL" means the possession,
directly or indirectly, of the power to direct or cause the-direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise. Unless the context otherwise clearly
requires, any reference to an "Affiliate" is a reference to an Affiliate of
the Issuer.
"ANNUAL SERVICE CHARGE" as of any date means the amount which is
expensed or capitalized in any 12-month period for interest on Debt.
"BOOK VALUE" means, with respect to (a) any property or assets of any
Person (other than any shares of capital stock of (or other ownership or
profit interest in) any other Person) as of any date of determination, the
value of such property or assets shown on such Person's balance sheet at such
date and (b) any shares of capital stock of (or other ownership or profit
interest in) any other Person as of any date of determination, the equity and
net intercompany debt interest of the Issuer or any of its Subsidiaries in
such property and assets shown on such Person's balance sheet at such date.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day
on which commercial banks in The City of New York are required or authorized
to be closed.
"CAPITAL LEASE" means, at any time, a lease with respect to which the
lessee is required concurrently to recognize the acquisition of an asset and
the incurrence of a liability in accordance with GAAP.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"CONSOLIDATED INCOME AVAILABLE FOR DEBT SERVICE" for any period means
Consolidated Net Income of the Issuer and its Subsidiaries (i) plus amounts
which have been deducted for (a) interest on Debt of the Issuer and its
Subsidiaries, (b) provision for taxes of the Issuer and its Subsidiaries
based on income, (c) amortization of debt discount, (d) depreciation and
amortization, (e) the effect of any noncash charge resulting from a change in
accounting principles in determining Consolidated Net Income for such period,
(f) amortization of deferred charges, and (g) provisions for or realized
losses on properties and (ii) less amounts which have been included for gains
on properties.
"CONSOLIDATED NET INCOME" for any period means the amount of
consolidated net income (or loss) of the Issuer and its Subsidiaries for such
period determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED SUBSIDIARY" means, for any Person at any date, any
Subsidiary or other entity the accounts of which would be consolidated with
those of such Person in its consolidated financial statements if such
statements were prepared as of such date.
"DEBT" means, for any Person, any indebtedness, whether or not
contingent, in respect of (i) borrowed money evidenced by bonds, notes,
debentures or similar instruments, (ii) indebtedness secured by any mortgage,
pledge, lien, charge, encumbrance or any security interest existing on
property, (iii) obligations, contingent or otherwise, in connection with any
letters of credit or similar facilities actually issued, or amounts
representing the balance deferred and unpaid of the purchase price of any
property in which such Person has a firm, non-contingent purchase obligation,
except any such balance that management reasonably anticipates will be paid
in ownership or other equity interests, or proceeds from the sale of
ownership or other equity interests, of such Person, or any Affiliate
thereof, until payment is actually paid or that constitutes an accrued
expense or trade payable, (iv) any lease of property as lessee which would be
reflected on a balance sheet as capitalized lease in accordance with GAAP,
(v) all obligations to purchase, redeem, retire, defease or otherwise make
any payment in respect of any shares of capital stock of (or other ownership
or profit interest in) any Person, or any warrants, rights or options to
acquire such shares (or such other ownership or profit interests), other than
(i) any such obligations for accrued and unpaid dividends thereon and (ii)
any such obligations in respect of such Person's limited partnership
interests, (vi) all obligations of such Person in respect of Swaps in the
case of items of indebtedness under (i) through (iv) above to the extent that
any such items (other than letters of credit) would appear as a liability on
a balance sheet in accordance with GAAP, and also includes, to the extent
not otherwise included, any obligation to be liable for, or to pay, as
obligor, guarantor or otherwise (other than for purposes of collection in the
ordinary course of business), indebtedness of another person.
"DEFAULT" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become
an Event of Default.
"DEFAULT RATE" means 2% per annum above the rate of interest stated in
clause (a) of the first paragraph of the Notes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated
thereunder from time to time in effect.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under Section 414 of the Code.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"GENERAL PARTNER" means Reckson Associates Realty Corp. as the sole
general partner of the Issuer.
"GOVERNMENTAL AUTHORITY" means
(a) the government of
(i) the United States of America or any State or
other political subdivision thereof, or
(ii) any jurisdiction in which the Issuer or any
Subsidiary conducts all or any part of its business, or which
asserts jurisdiction over any properties of the Issuer or any
Subsidiary, or
(b) any entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or
pertaining to, any such government.
"HOLDER" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Issuer pursuant to
Section 13.1.
"INCUR" means, with respect to any Debt, to incur, create, issue,
assume, guarantee or otherwise become liable for or with respect to, or
become responsible for, the payment of, contingently or otherwise, such Debt,
provided that neither the accrual of interest (whether such interest is
payable in cash or kind) nor the accretion of original issue discount will be
considered an incurrence of Debt. The terms "incurrence" and "incurred" have
corresponding meanings.
"INTEREST EXPENSE" means for any period the interest expense appearing
on the face of an income statement (without deduction of interest income) of
the Issuer for such period, including without limitation the amortization of
debt discounts, deferred debt costs and interest component of capitalized
leases.
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as
amended from time to time.
"LIABILITIES" means, as of any date, all items that would be shown as
liabilities on a consolidated balance sheet of the Issuer and its
Subsidiaries prepared in accordance with GAAP as of such date, except any
items of deferred income, including capital gains.
"LIEN" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of
any vendor, lessor, lender or other secured party to or of such Person under
any conditional sale or other title retention agreement or Capital Lease,
upon or with respect to any property or asset of such Person.
"MAKE-WHOLE AMOUNT" means, with respect to any Note, an amount equal to
the excess, if any, of the Discounted Value of the Remaining Scheduled
Payments with respect to the Called Principal of such Note over the amount of
such Called Principal, provided that the Make-Whole Amount may in no
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event be less than zero. For the purposes of this definition, the following
terms have the following meanings:
"CALLED PRINCIPAL" means, with respect to any Note, the principal
of such Note that is to be redeemed pursuant to Section 8.2 or has
become or is declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.
"DISCOUNTED VALUE" means, with respect to the Called Principal of
any Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a
discount factor (applied semiannually) equal to the Reinvestment Yield
with respect to such Called Principal.
"REINVESTMENT YIELD" means, with respect to the Called Principal of
any Note, .25% (one quarter of one percent) over the yield to maturity
implied by (i) the yields reported, as of 10:00 A.M. (New York City
time) on the second Business Day preceding the Settlement Date with
respect to such Called Principal, on the display designated as "Page
678" on the Telerate Access Service (or such other display as may
replace Page 678 on Telerate Access Service) for actively traded U.S.
Treasury securities having a maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date, or (ii) if
such yields are not reported as of such time or the yields reported as
of such time are not ascertainable, the Treasury Constant Maturity
Series Yields reported, for the latest day for which such yields have
been so reported as of the second Business Day preceding the Settlement
Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication)
for actively traded U.S. Treasury securities having a constant maturity
equal to the Remaining Average Life of such Called Principal as of such
Settlement Date. Such implied yield will be determined, if necessary,
by (a) converting U.S. Treasury bill quotations to bond-equivalent
yields in accordance with accepted financial practice and (b)
interpolating linearly between (1) the actively traded U.S. Treasury
security with the duration closest to and greater than the Remaining
Average Life and (2) the actively traded U.S. Treasury security with the
duration closest to and less than the Remaining Average Life.
"REMAINING AVERAGE LIFE" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (i) such Called Principal into (ii) the sum
of the products obtained by multiplying (a) the principal component of
each Remaining Scheduled Payment with respect to such Called Principal
by (b) the number of years (calculated to the nearest one-twelfth year)
that will elapse between the Settlement Date with respect to such Called
Principal and the scheduled due date of such Remaining Scheduled
Payment.
"REMAINING SCHEDULED PAYMENTS" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and
interest thereon that would be due after the Settlement Date with
respect to such Called Principal if no payment of such Called Principal
were made prior to its scheduled due date, provided that if such
Settlement Date is not a date on which interest payments are due to be
made under the terms of the Notes, then the amount of the next succeeding
scheduled interest payment will be reduced by the amount of interest
accrued to such Settlement Date and required to be paid on such Settlement
Date pursuant to Section 8.2 or 12.1.
"SETTLEMENT DATE" means, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be redeemed
pursuant to Section 8.2 or has become or is declared to be immediately
due and payable pursuant to Section 12.1 as the context requires.
"MATERIAL" means material in relation to the financial condition,
results of operations or business of the Issuer and its Subsidiaries taken as
a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
financial condition, results of operations or business of the Issuer and its
Subsidiaries taken as a whole, or (b) the ability of the Issuer or the
Guarantor to perform its obligations under this Agreement and the Notes or
the Guarantees, as the case may be, or (c) the validity or enforceability of
this Agreement, the Notes or the Guarantees, as the case may be.
"MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer plan" (as
such term is defined in Section 4001(a)(3) of ERISA).
"OFFICER'S CERTIFICATE" means a certificate of a Senior Financial
Officer or other officer whose responsibilities extend to the subject matter
of such certificate.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"PERMITTED DEBT" means Debt of the Issuer or any Subsidiary owing to any
Subsidiary or the Issuer; provided that any such Debt is made pursuant to an
intercompany note and is subordinated in right of payment to the Notes;
provided further that any disposition, pledge or transfer of any such Debt to
a Person (other than the Issuer or another Subsidiary) shall be deemed to be
an incurrence of such Debt by the Issuer or a Subsidiary, as the case may be,
and not Permitted Debt as defined herein.
"PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"PLAN" means an "employee benefit plan" (as defined in Section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five
years, have been made or required to be made, by the Issuer or any ERISA
Affiliate or with respect to which the Issuer or any ERISA Affiliate may have
any liability.
"REGULATION G" means Regulation G of the Board of Governors of the
Federal Reserve System.
"REGULATION T" means Regulation T of the Board of Governors of the
Federal Reserve System.
"REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System.
"REGULATION X" means Regulation X of the Board of Governors of the
Federal Reserve System.
"REQUIRED HOLDERS" means, at any time, the holders of a majority in
aggregate principal amount of the Notes at the time outstanding (exclusive of
Notes then owned by the Issuer or any of its Affiliates).
"RESPONSIBLE OFFICER" means any Senior Financial Officer and other
officer with responsibility for the administration of the relevant portion of
this agreement.
"RESTRICTED PAYMENT" means any dividend or other distribution, direct or
indirect, on account of any shares of any class of capital stock of (or other
ownership or profit interest in) the Issuer, now or hereafter outstanding.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time.
"SENIOR FINANCIAL OFFICER" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the General Partner.
"SOLVENT" and "SOLVENCY" mean, with respect to any Person on any date of
determination, that, on such date:
(a) the fair value of the property and assets of such Person is
greater than the total amount of liabilities (including, without limitation,
contingent liabilities) of such Person;
(b) the present fair salable value of the property and assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured;
(c) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person's ability to pay such
debts and liabilities as they mature; and
(d) such Person is not engaged in business or in a transaction,
and is not about to engage in business or in a transaction, for which such
Person's property and assets would constitute an unreasonably small capital.
"SUBSIDIARY" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries
or such Person and one or more of its Subsidiaries owns sufficient equity or
voting interests to enable it or them (as a group) ordinarily, in the absence
of contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if
more than a 50% interest in the profits or capital thereof is owned by such
Person or one or more of its Subsidiaries or such Person and one or more of
its Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of
its Subsidiaries).
"SWAPS" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps or similar obligations which
are due upon the termination thereof; provided, however, that if any
agreement relating to a Swap provides for the netting of amounts payable by
and to such Person thereunder or if any agreement provides for the simul-
taneous payment of amounts by and to such Person, then, in each case, the
amount of such obligation shall be the net amount determined to be due.
"TOTAL ASSETS" as of any date means the sum of (i) the Undepreciated
Real Estate Assets, (ii) all other assets of the Issuer, and of its
Subsidiaries determined at the applicable proportionate interest of the
Issuer in each such Subsidiary, determined in accordance with GAAP (but
excluding intangibles and accounts receivable) and (iii) the cost of any
property of the Issuer, or any Subsidiary thereof, in which the Issuer, or
such Subsidiary, as the case may be, has a firm, non-contingent purchase
obligation.
"TOTAL UNENCUMBERED ASSETS" means the sum of (i) those Undepreciated
Real Estate Assets not subject to a Lien on a consolidated basis, (ii) all
other assets of the Issuer, and of its Subsidiaries determined at the
applicable proportionate interest of the Issuer in each such Subsidiary,
which are not subject to a Lien determined in accordance with GAAP (but
excluding intangibles and accounts receivable) and (iii) the cost of any
property of the Issuer, or any Subsidiary thereof, in which the Issuer, or
such Subsidiary, as the case may be, has a firm, non-contingent purchase
obligation and which is not subject to a Lien.
"UNDEPRECIATED REAL ESTATE ASSETS" means as of any date the sum of (i)
the cost (original cost plus capital improvements) of real estate assets (as
such cost is reduced if a reduction is required on the books of an entity in
accordance with FASB Statement No. 121, as amended or superseded from time to
time, which reductions shall be reported to the holders of Notes under
Section 7.1(a)) of the Issuer, and of its Subsidiaries determined at the
applicable proportionate interest of the Issuer in each such Subsidiary, on
such date, before depreciation and amortization, determined on a consolidated
basis in accordance with GAAP and (ii) the cost of any property of the
Issuer, or any Subsidiary thereof, in which the Issuer, or such Subsidiary,
as the case may be, has a firm, non-contingent purchase obligation.
"UNSECURED DEBT" means any Debt (other than Debt owing between
Subsidiaries, or between one or more Subsidiaries and the Issuer) of the
Issuer, or of any Subsidiary determined at the applicable proportionate
interest of the Issuer in each such Subsidiary, for which the obligations
thereunder are not secured by a Lien on any assets of the Issuer or any
Subsidiary.
EXHIBIT 1
(FORM OF NOTE)
This Note has not been registered under the Securities Act of 1933, as
amended (the "Act"), or any state securities law and may not be sold or
otherwise transferred without an effective registration or exemption from
registration under the Act and any applicable state securities laws.
RECKSON OPERATING PARTNERSHIP, L.P.
SENIOR UNSECURED NOTE DUE 2007
No. (______) August 28, 1997
$(_________)
FOR VALUE RECEIVED, the undersigned, Reckson Operating Partnership, L.P.
(the "Issuer"), a limited partnership organized and existing under the laws
of the State of Delaware, hereby promises to pay to (______________), or its
registered assigns, the principal sum of (______________________) DOLLARS on
August 28, 2007 or such earlier date of redemption effected in accordance
with the provisions set forth in the Note Purchase Agreement (as defined
below), with interest (computed on the basis of a 360-day year of twelve 30-
day months) (a) on the unpaid balance thereof at the rate of 7.20% per annum
from the date hereof, payable semiannually in arrears, on the 28th day of
February and August of each year, commencing on February 28, 1998, until the
principal hereof shall have become due and payable, and (b) on any overdue
payment (including, without limitation, any overdue prepayment) of principal
and, to the extent permitted by applicable law, any overdue payment of
interest and any overdue payment of any Make-Whole Amount (as defined in the
Note Purchase Agreement), payable semiannually on each of the dates on which
interest is payable under clause (a) above (or, at the option of the holder
of this Note, upon demand), at the Default Rate (as defined in the Note
Purchase Agreement).
Payments of principal of, interest on, and any Make-Whole Amount with
respect to, this Note are to be made in the lawful currency of the United
States of America as provided in the Note Purchase Agreement.
This Note is one of several Notes (herein called the "Notes") issued
pursuant to a Note Purchase Agreement, dated as of August 27, 1997 (as from
time to time amended, the "Note Purchase Agreement"), among the Issuer, the
Guarantor (as defined below) and the respective Purchasers named therein and
is entitled to the benefits thereof. Each holder of this Note will be deemed,
by its acceptance hereof, to have (i) agreed to the confidentiality
provisions set forth in Section 19 of the Note Purchase Agreement and (ii)
made the representations set forth in Section 6.1 of the Note Purchase
Agreement.
As provided in, and subject to the conditions specified in, the Note
Purchase Agreement, upon surrender of this Note for registration of transfer,
duly endorsed, or accompanied by a written instrument of transfer duly
executed, by the holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee.
Prior to due presentment for registration of transfer, the Issuer may
treat the person in whose name this Note is registered as the owner and
holder hereof for the purpose of receiving payments and for all other
purposes, and the Issuer will not be affected by any notice to the contrary.
If an Event of Default, as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise automatically become due and payable in the manner, at the price
(including any applicable Make-Whole Amount) and with the effect provided in
the Note Purchase Agreement.
This Note shall be governed by, and construed in accordance with, the
laws of the State of New York.
RECKSON OPERATING PARTNERSHIP, L.P.
By: Reckson Associates Realty Corp.,
General Partner
By:
---------------------------------
Name:
Title:
GUARANTEE
OF
RECKSON FS LIMITED PARTNERSHIP
For value received, Reckson FS Limited Partnership, a Delaware limited
partnership (the "Guarantor"), hereby unconditionally and irrevocably
guarantees to the holder of the Note upon which this Guarantee is endorsed
the due and punctual payment of the principal of, and premium (including any
applicable Make-Whole Amount) and interest on, said Note (the "Guaranteed
Obligations"), when and as the same shall become due and payable, whether at
maturity or earlier redemption, upon acceleration, or otherwise, in
accordance with the terms of said Note and the Note Purchase Agreement. In
case of the failure of the Issuer punctually to pay any such principal,
premium and/or interest, the Guarantor hereby agrees to cause any such
payment to be made punctually when and as the same shall become due and
payable, whether at maturity or earlier redemption, upon acceleration, or
otherwise, and as if such payment were made by the Issuer.
Without limiting the generality of the foregoing, the Guarantor's
liability shall extend to all amounts that constitute part of the Guaranteed
Obligations and would be owed by the Issuer under the Note but for the fact
that it is unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving such Issuer.
The obligations of the Guarantor under this Guarantee are independent of
the Guaranteed Obligations, and a separate action or actions may be brought
and prosecuted against the Guarantor to enforce this Guarantee, irrespective
of whether any action is brought against the issuer or whether the Issuer is
joined in any such action or actions. The liability of the Guarantor under
this Guarantee shall be irrevocable, absolute and unconditional irrespective
of, and the Guarantor hereby irrevocably waives any defenses it may now or
hereafter have in any way relating to, any or all of the following:
(a) any lack of validity, irregularity or enforceability of a
Note, the Note Purchase Agreement or any agreement or instrument
relating thereto;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Guaranteed Obligations or any other
obligations of the Issuer under the Note, or any other amendment of or
any consent to departure from the Note;
(c) any change, restructuring or termination of the corporate
structure or existence of the Issuer;
(d) any other circumstance (including, without limitation, any
statute of limitations) or any existence of or reliance on any
representation by the holder of the Note that might otherwise constitute
a defense available to, or a discharge of, the Guarantor or any other
guarantor or surety; or
(e) any failure to enforce the provisions of the Note or the Note
Purchase Agreement, or any waiver, modification, consent or indulgence
granted with respect thereto by the holder of such Note.
This Guarantee shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed Obligations
is rescinded or must otherwise be returned by the holder of the Note or any
other person upon the insolvency, bankruptcy or reorganization of any obligor
or otherwise, all as though such payment had not been made.
The Guarantor hereby waives diligence, presentment, demand of payment,
filing of claims with a court in the event of merger, insolvency or
bankruptcy of the Issuer, any right to require a proceeding first against the
Issuer, protest or notice with respect to said Note or the indebtedness
evidenced thereby and all demands whatsoever, and covenants that this
Guarantee will not be discharged except by payment in full of the principal
of, and premium and interest on, said Note and the complete performance of
all other obligations contained in said Note and the Note Purchase Agreement
insofar as they relate to said Note.
The Guarantor shall be subrogated to all rights of the holder of the
Note upon which this Guarantee is endorsed against the Issuer in respect of
any amounts paid to such holder by the Guarantor pursuant to the provisions
of this Guarantee; provided, however, that the Guarantor shall not be
entitled to enforce, or to receive any payments arising out of or based upon,
such right of subrogation until the principal of, and premium (including any
Make-Whole Amount) and interest on, said Note shall have been paid in full.
This Guarantee shall be governed by, and construed in accordance with,
the laws of the State of New York.
IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly
executed as of the date of execution of the Note upon which this Guarantee is
endorsed.
RECKSON FS LIMITED PARTNERSHIP,
as Guarantor
By: Reckson FS Inc.,
General Partner
By:
-----------------------------
Name:
Title:
EXHIBIT 4.4
FORM OF OPINION OF COUNSEL
TO THE ISSUER AND THE GUARANTOR
EXHIBIT 5.15
SCHEDULE OF DEBT OF THE ISSUER, THE
GUARANTOR AND THEIR RESPECTIVE
CONSOLIDATED SUBSIDIARIES
Exhibit 10.24
SEVERANCE AGREEMENT
SEVERANCE AGREEMENT, dated as of the 25th day of February, 1998 (the
"Agreement") by and between Donald J. Rechler (the "Executive"), and Reckson
Associates Realty Corp., a Maryland corporation with a principal place of
business at 225 Broadhollow Road, Melville, New York 11747 (the "Employer").
Terms used in this Agreement with the initial letter capitalized shall,
unless otherwise defined herein, have the meanings specified in the
Employment and Noncompetition Agreement, dated June 2, 1995, between the
Employer and the Executive and in any amendment to or restatement of such
agreement (the "Employment Agreement").
W I T N E S S E T H :
WHEREAS, Executive and Employer have previously entered into the
Employment Agreement; and
WHEREAS, the Employer desires to continue to employ the Executive and
the Executive desires to continue to be employed by the Employer.
NOW THEREFORE, in consideration of the premises and subject to the terms
and conditions set forth herein, the parties hereto agree as follows:
I. Employment and Noncompetition Agreement. This Agreement is
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supplementary to and, except as explicitly set forth herein, does not limit
or alter any of the terms and conditions established under the Employment
Agreement.
II. Term. The term and duration of this Agreement shall be identical
----
to the term of the Employment Agreement, provided, however, that if a Change-
in-Control shall occur during the Employment Period, the term of this
Agreement, the Employment Agreement and the Employment Period shall continue
in effect until the later of (i) the date on which the term of the Employment
Agreement otherwise would have ended or (ii) the date which is thirty-six
months beyond the end of the calendar year in which the Change-in-Control
occurs. Section 1 of the Employment Agreement is hereby amended in
accordance with the foregoing.
III. Termination and Severance Payments. Sections 7(a), (b) and (c) of
----------------------------------
the Employment Agreement are hereby superseded in their entirety by this
Section 3.
A. At-Will Employment. Executive's employment pursuant to the
------------------
Employment Agreement is "at will" and may be terminated by the Employer at
any time with or without Good Reason, by a majority vote of all of the
members of the Board of Directors of the Employer upon written notice to
Executive, subject only to the severance provisions specifically set forth in
this Section 3 and in Sections 7(d) through 7(h) of the Employment Agreement.
B. Termination by Executive. The Employment Period and
------------------------
Executive's employment under the Employment Agreement may be terminated
effective immediately by Executive by written notice to the Board of
Directors of the Employer (i) within 30 days of the occurrence of a failure
of the Board of Directors of the Employer to elect Executive to offices with
the same or substantially the same duties and responsibilities as set forth
in Section 2 of the Employment Agreement, (ii) within 30 days of the
occurrence of a material failure by the Employer to comply with the
provisions of Section 3 of the Employment Agreement or a material breach by
the Employer of any other provision of the Employment Agreement, or (iii) at
any time during the 30 day period beginning on the effective date of a Change
in Control and the 30 day period beginning one year after the effective date
of a Change-in-Control.
C. Certain Benefits upon Termination by Executive. Except as
----------------------------------------------
specifically provided in this Section 3 or in Sections 7(d) through 7(h) of
the Employment Agreement or as otherwise required by law, all compensation
and benefits to Executive under the Employment Agreement shall terminate on
the date of termination of the Employment Period. Notwithstanding the
foregoing, if the Employment Period is terminated pursuant to Section 3(b) or
if Executive's employment is terminated by the Employer other than for Good
Reason, Executive shall be entitled to the following benefits:
1. The Employer shall pay the Executive (x) his or her
full Base Salary though the date of termination at the rate in effect on
such date, (y) compensation for accrued but unused vacation time, plus
(z) a pro rata portion of the Executive's incentive compensation for the
calendar year in which the event of termination occurs, assuming that
the Executive would have received incentive compensation for such full
calendar year equal to the product of (A) the Base Salary that would be
payable to the Executive pursuant to subsection 3(a) of the Employment
Agreement for such full calendar year and (B) the greater of (a) 1/2 or
(b) a percentage equal to the percentage of the Executive's Base Salary
for the immediately preceding fiscal year that was paid to the Executive
as incentive compensation (including all cash and other incentive
compensation, and including shares of Common Stock) for the immediately
preceding fiscal year, expressed as a percentage (the greater of clauses
(a) and (b) being herein referred to as the "Deemed Bonus Percentage");
2. The Employer shall pay as severance to the Executive, not
later than the tenth day following the date of termination, a lump sum
severance payment (the "Severance Payment") equal to the aggregate of
all compensation due to the Executive hereunder had his or her
employment not been so terminated (without duplication of subsection
3(c)(i) above), including, without limitation, all incentive
compensation which would have been due to the Executive pursuant to
subsection 3(b) of the Employment Agreement, through the expiration of
this Agreement (as such Agreement may continue in effect under Section 2
hereof in the event of a Change-in-Control) assuming that the Executive
would have received incentive compensation for each calendar year
through the expiration of this Agreement (as such Agreement may continue
in effect under Section 2 hereof in the event of a Change-in-Control)
equal to the product of (A) the Base Salary payable to the Executive
pursuant to subsection 3(a) of the Employment Agreement for each such
calendar year and (B) the Deemed Bonus Percentage; provided, however,
that such Severance Payment shall not be payable to the Executive until
(x) the Executive has executed and delivered to the Employer a general
release in a form to be determined by the Employer in good faith, and
(y) any applicable revocation period with respect to such release has
expired. For purposes of determining Executive's annual compensation in
the preceding sentence, compensation payable to the Executive by the
Employer shall include every type and form of compensation includible in
the Executive's gross income in respect of his or her employment by the
Employer (including, without limitation, all income reported on an
Internal Revenue Service Form W-2), compensation income recognized as a
result of the Executive's exercise of stock options or sale of the stock
so acquired and including, without limitation, any annual incentive
compensation paid in cash or securities to such Executive;
3. An amount equal to the Additional Amount pursuant to
Section 5 below;
4. For the remaining term of the Employment Agreement,
Executive shall continue to receive all benefits described in Section 3
of the Employment Agreement existing on the date of termination and any
other benefits then provided by Employer to Executive in addition to
those described in Section 3 of the Employment Agreement, including, but
not limited to, the life insurance coverage provided by Employer to
Executive and the automobile provided by Employer to Executive and
automobile insurance and maintenance in respect of such automobile. For
purposes of the application of such benefits, Executive shall be treated
as if he or she had remained in the employ of the Employer with a Base
Salary at the rate in effect on the date of termination;
5. For purposes of any stock option plan of the Employer,
(x) any stock options or other awards (including restricted stock
grants) of the Executive under such plan shall vest and become
exercisable upon any such termination, and (y) Executive shall be
treated as if he or she had remained in the employ of the Employer for
the remaining term of the Employment Agreement after the date of
Executive's termination so that Executive shall be entitled to exercise
any exercisable options or other rights;
6. For purposes of any section 401(k) plan or other deferred
compensation plan of the Employer, Executive shall be treated as if he
or she had remained in the employ of the Employer for the remaining term
of the Employment Agreement after the date of Executive's termination so
that Executive may continue to receive all matching contributions as
provided by the Employer in connection with such plan or any other
contributions by Employer in connection with such plan as in effect
immediately prior to such termination;
7. The amount of any outstanding loans made by the Employer
to the Executive to acquire shares of Common Stock or units of limited
partnership interest in Reckson Operating Partnership, L.P., together
with any interest accrued on any such loans, and any related "tax" loans
made by the Employer to the Executive in respect of tax liabilities
owing as the result of the forgiveness of such loans (including
forgiveness pursuant to the terms of this Section 3(c)(vii)), together
with any interest accrued on any such tax loans, shall be deemed
forgiven and Executive shall have no further liability in respect
thereof;
8. If, in spite of the provisions above, any benefits or
service credits under any benefit plan or program of the Employer may
not be paid or provided under such plan or program to Executive, or to
Executive's dependents, beneficiaries or estate, because Executive is no
longer considered to be an employee of the Employer, the Employer shall
pay or provide for payment of such benefits and service credits to
Executive, or to Executive's dependents, beneficiaries or estate, for
the remaining term of the Employment Agreement; and
9. Nothing herein shall be deemed to obligate Executive to
seek other employment in the event of any such termination and any
amounts earned or benefits received from such other employment will not
serve to reduce in any way the amounts and benefits payable in
accordance herewith.
IV. Expenses. Section 3(e) of the Employment Agreement is hereby
--------
amended by this Section 4. In addition to the expenses referred to in
Section 3(e) of the Employment Agreement, the Employer shall pay all legal
fees and related expenses (including the costs of experts, evidence and
counsel) incurred by the Executive as they become due as a result of (i) the
termination of the Employment Period or Executive's employment pursuant to
this Agreement or the Employment Agreement (including all such fees and
expenses, if any, incurred in contesting or disputing any such termination),
(ii) the Executive seeking to obtain or enforce any right or benefit provided
by this Agreement, the Employment Agreement or by any other plan or
arrangement maintained by the Employer under which the Executive is or may be
entitled to receive benefits or (iii) any action taken by the Employer
against the Executive, unless and until such time that a final judgement has
been rendered in favor of the Employer and all appeals related to any such
action have been exhausted; provided however, that the circumstances set
forth above occurred on or after a Change-in-Control.
V. Additional Amount. Whether or not Section 3 is applicable, if in
-----------------
the opinion of tax counsel selected by the Executive and reasonably
acceptable to the Employer, the Executive has or will receive any
compensation or recognize any income (whether or not pursuant to this
Agreement, the Employment Agreement or any plan or other arrangement of the
Employer and whether or not the Employment Period or the Executive's
employment with the Employer has terminated) which will constitute an "excess
parachute payment" within the meaning of Section 280G(b)(1) of the Code (or
for which a tax is otherwise payable under Section 4999 of the Code), then
the Employer shall pay the Executive an additional amount (the "Additional
Amount") equal to the sum of (i) all taxes payable by the Executive under
Section 4999 of the Code with respect to all such excess parachute payments
and any such Additional Amount, plus (ii) all federal, state and local income
taxes payable by Executive with respect to any such Additional Amount. Any
amounts payable pursuant to this Section 4 shall be paid by the Employer to
the Executive within 30 days of each written request therefor made by the
Executive.
VI. Income Tax Payment. Whether or not Section 3 is applicable, if (i)
------------------
the Executive has or will receive any compensation or recognize any income
(whether or not pursuant to this Agreement, the Employment Agreement or any
plan or other arrangement of the Employer and whether or not the Employment
Period or the Executive's employment with the Employer has terminated) in
connection with a "Change-in-Control" (as that term may be interpreted in
this Agreement, the Employment Agreement or any plan or other arrangement of
the Employer), and (ii) such compensation or income represents non-cash
compensation or income (including, without limitation, non-cash compensation
or income attributable to the vesting or exercise of stock options and other
awards (including restricted stock grants) under any stock option plan of the
Employer), then the Employer shall pay the Executive in cash an amount (the
"Income Tax Payment") equal to all federal, state and local income taxes
payable by Executive with respect to such non-cash compensation or income.
The Income Tax Payment shall be paid by the Employer to the Executive within
30 days of the written request therefor made by the Executive.
VII. Notices. Any notice required or permitted hereunder shall be in
-------
writing and shall be deemed sufficient when given by hand, by nationally
recognized overnight courier or by express, registered or certified mail,
postage prepaid, return receipt requested, and addressed to the Employer or
Executive, as applicable, at the address indicated above (or to such other
address as may be provided by notice).
VIII. Miscellaneous. This Agreement (i) may not be assigned by
-------------
Executive without the prior written consent of the Employer and (ii) may be
assigned by the Employer and shall be binding upon, and inure to the benefit
of, the Employer's successors and assigns. Headings herein are for
convenience of reference only and shall not define, limit or interpret the
contents hereof.
IX. Amendment. This Agreement may be amended, modified or supplemented
---------
by the mutual consent of the parties in writing, but no oral amendment,
modification or supplement shall be effective.
X. Severability. If a court of competent jurisdiction adjudicates any
------------
one or more of the provisions hereof as invalid, illegal or unenforceable in
any respect, such provision(s) shall be ineffective only to the extent and
duration of such invalidity, illegality or unenforceability and such
invalidity, illegality or unenforceability shall not affect the remaining
substance of such provision or any other provision of this Agreement and this
Agreement shall be construed as if such invalid, illegal or unenforceable
provision had been limited or modified (consistent with its general intent)
to the extent necessary so that it shall be valid, legal and enforceable. If
it shall not be possible to so limit or modify such invalid, illegal or
unenforceable provision, this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein,
and the parties will use their best efforts to substitute a valid, legal and
enforceable provision which, insofar as practicable, implements the purpose
and intent of the provision originally contained herein.
XI. Governing Law. This Agreement shall be construed and governed by
-------------
the laws of the State of New York.
IN WITNESS WHEREOF, this Agreement is entered into as of the date and
year first above written.
RECKSON ASSOCIATES REALTY CORP.
By:
-----------------------------------
Name:
Title:
---------------------------------------
Donald J. Rechler
Exhibit 10.25
SEVERANCE AGREEMENT
SEVERANCE AGREEMENT, dated as of the 25th day of February, 1998 (the
"Agreement") by and between Scott H. Rechler (the "Executive"), and Reckson
Associates Realty Corp., a Maryland corporation with a principal place of
business at 225 Broadhollow Road, Melville, New York 11747 (the "Employer").
Terms used in this Agreement with the initial letter capitalized shall,
unless otherwise defined herein, have the meanings specified in the
Employment and Noncompetition Agreement, dated June 2, 1995, between the
Employer and the Executive and in any amendment to or restatement of such
agreement (the "Employment Agreement").
W I T N E S S E T H :
WHEREAS, Executive and Employer have previously entered into the
Employment Agreement; and
WHEREAS, the Employer desires to continue to employ the Executive and
the Executive desires to continue to be employed by the Employer.
NOW THEREFORE, in consideration of the premises and subject to the terms
and conditions set forth herein, the parties hereto agree as follows:
I. Employment and Noncompetition Agreement. This Agreement is
---------------------------------------
supplementary to and, except as explicitly set forth herein, does not limit
or alter any of the terms and conditions established under the Employment
Agreement.
II. Term. The term and duration of this Agreement shall be identical
----
to the term of the Employment Agreement, provided, however, that if a Change-
in-Control shall occur during the Employment Period, the term of this
Agreement, the Employment Agreement and the Employment Period shall continue
in effect until the later of (i) the date on which the term of the Employment
Agreement otherwise would have ended or (ii) the date which is thirty-six
months beyond the end of the calendar year in which the Change-in-Control
occurs. Section 1 of the Employment Agreement is hereby amended in
accordance with the foregoing.
III. Termination and Severance Payments. Sections 7(a), (b) and (c) of
----------------------------------
the Employment Agreement are hereby superseded in their entirety by this
Section 3.
A. At-Will Employment. Executive's employment pursuant to the
------------------
Employment Agreement is "at will" and may be terminated by the Employer at
any time with or without Good Reason, by a majority vote of all of the
members of the Board of Directors of the Employer upon written notice to
Executive, subject only to the severance provisions specifically set forth in
this Section 3 and in Sections 7(d) through 7(h) of the Employment Agreement.
B. Termination by Executive. The Employment Period and
------------------------
Executive's employment under the Employment Agreement may be terminated
effective immediately by Executive by written notice to the Board of
Directors of the Employer (i) within 30 days of the occurrence of a failure
of the Board of Directors of the Employer to elect Executive to offices with
the same or substantially the same duties and responsibilities as set forth
in Section 2 of the Employment Agreement, (ii) within 30 days of the
occurrence of a material failure by the Employer to comply with the
provisions of Section 3 of the Employment Agreement or a material breach by
the Employer of any other provision of the Employment Agreement, or (iii) at
any time during the 30 day period beginning on the effective date of a Change
in Control and the 30 day period beginning one year after the effective date
of a Change-in-Control.
C. Certain Benefits upon Termination by Executive. Except as
----------------------------------------------
specifically provided in this Section 3 or in Sections 7(d) through 7(h) of
the Employment Agreement or as otherwise required by law, all compensation
and benefits to Executive under the Employment Agreement shall terminate on
the date of termination of the Employment Period. Notwithstanding the
foregoing, if the Employment Period is terminated pursuant to Section 3(b) or
if Executive's employment is terminated by the Employer other than for Good
Reason, Executive shall be entitled to the following benefits:
1. The Employer shall pay the Executive (x) his or her
full Base Salary though the date of termination at the rate in effect on
such date, (y) compensation for accrued but unused vacation time, plus
(z) a pro rata portion of the Executive's incentive compensation for the
calendar year in which the event of termination occurs, assuming that
the Executive would have received incentive compensation for such full
calendar year equal to the product of (A) the Base Salary that would be
payable to the Executive pursuant to subsection 3(a) of the Employment
Agreement for such full calendar year and (B) the greater of (a) 1/2 or
(b) a percentage equal to the percentage of the Executive's Base Salary
for the immediately preceding fiscal year that was paid to the Executive
as incentive compensation (including all cash and other incentive
compensation, and including shares of Common Stock) for the immediately
preceding fiscal year, expressed as a percentage (the greater of clauses
(a) and (b) being herein referred to as the "Deemed Bonus Percentage");
2. The Employer shall pay as severance to the Executive, not
later than the tenth day following the date of termination, a lump sum
severance payment (the "Severance Payment") equal to the aggregate of
all compensation due to the Executive hereunder had his or her
employment not been so terminated (without duplication of subsection
3(c)(i) above), including, without limitation, all incentive
compensation which would have been due to the Executive pursuant to
subsection 3(b) of the Employment Agreement, through the expiration of
this Agreement (as such Agreement may continue in effect under Section 2
hereof in the event of a Change-in-Control) assuming that the Executive
would have received incentive compensation for each calendar year
through the expiration of this Agreement (as such Agreement may continue
in effect under Section 2 hereof in the event of a Change-in-Control)
equal to the product of (A) the Base Salary payable to the Executive
pursuant to subsection 3(a) of the Employment Agreement for each such
calendar year and (B) the Deemed Bonus Percentage; provided, however,
that such Severance Payment shall not be payable to the Executive until
(x) the Executive has executed and delivered to the Employer a general
release in a form to be determined by the Employer in good faith, and
(y) any applicable revocation period with respect to such release has
expired. For purposes of determining Executive's annual compensation in
the preceding sentence, compensation payable to the Executive by the
Employer shall include every type and form of compensation includible in
the Executive's gross income in respect of his or her employment by the
Employer (including, without limitation, all income reported on an
Internal Revenue Service Form W-2), compensation income recognized as a
result of the Executive's exercise of stock options or sale of the stock
so acquired and including, without limitation, any annual incentive
compensation paid in cash or securities to such Executive;
3. An amount equal to the Additional Amount pursuant to
Section 5 below;
4. For the remaining term of the Employment Agreement,
Executive shall continue to receive all benefits described in Section 3
of the Employment Agreement existing on the date of termination and any
other benefits then provided by Employer to Executive in addition to
those described in Section 3 of the Employment Agreement, including, but
not limited to, the life insurance coverage provided by Employer to
Executive and the automobile provided by Employer to Executive and
automobile insurance and maintenance in respect of such automobile. For
purposes of the application of such benefits, Executive shall be treated
as if he or she had remained in the employ of the Employer with a Base
Salary at the rate in effect on the date of termination;
5. For purposes of any stock option plan of the Employer,
(x) any stock options or other awards (including restricted stock
grants) of the Executive under such plan shall vest and become
exercisable upon any such termination, and (y) Executive shall be
treated as if he or she had remained in the employ of the Employer for
the remaining term of the Employment Agreement after the date of
Executive's termination so that Executive shall be entitled to exercise
any exercisable options or other rights;
6. For purposes of any section 401(k) plan or other deferred
compensation plan of the Employer, Executive shall be treated as if he
or she had remained in the employ of the Employer for the remaining term
of the Employment Agreement after the date of Executive's termination so
that Executive may continue to receive all matching contributions as
provided by the Employer in connection with such plan or any other
contributions by Employer in connection with such plan as in effect
immediately prior to such termination;
7. The amount of any outstanding loans made by the Employer
to the Executive to acquire shares of Common Stock or units of limited
partnership interest in Reckson Operating Partnership, L.P., together
with any interest accrued on any such loans, and any related "tax" loans
made by the Employer to the Executive in respect of tax liabilities
owing as the result of the forgiveness of such loans (including
forgiveness pursuant to the terms of this Section 3(c)(vii)), together
with any interest accrued on any such tax loans, shall be deemed
forgiven and Executive shall have no further liability in respect
thereof;
8. If, in spite of the provisions above, any benefits or
service credits under any benefit plan or program of the Employer may
not be paid or provided under such plan or program to Executive, or to
Executive's dependents, beneficiaries or estate, because Executive is no
longer considered to be an employee of the Employer, the Employer shall
pay or provide for payment of such benefits and service credits to
Executive, or to Executive's dependents, beneficiaries or estate, for
the remaining term of the Employment Agreement; and
9. Nothing herein shall be deemed to obligate Executive to
seek other employment in the event of any such termination and any
amounts earned or benefits received from such other employment will not
serve to reduce in any way the amounts and benefits payable in
accordance herewith.
IV. Expenses. Section 3(e) of the Employment Agreement is hereby
--------
amended by this Section 4. In addition to the expenses referred to in
Section 3(e) of the Employment Agreement, the Employer shall pay all legal
fees and related expenses (including the costs of experts, evidence and
counsel) incurred by the Executive as they become due as a result of (i) the
termination of the Employment Period or Executive's employment pursuant to
this Agreement or the Employment Agreement (including all such fees and
expenses, if any, incurred in contesting or disputing any such termination),
(ii) the Executive seeking to obtain or enforce any right or benefit provided
by this Agreement, the Employment Agreement or by any other plan or
arrangement maintained by the Employer under which the Executive is or may be
entitled to receive benefits or (iii) any action taken by the Employer
against the Executive, unless and until such time that a final judgement has
been rendered in favor of the Employer and all appeals related to any such
action have been exhausted; provided however, that the circumstances set
forth above occurred on or after a Change-in-Control.
V. Additional Amount. Whether or not Section 3 is applicable, if in
-----------------
the opinion of tax counsel selected by the Executive and reasonably
acceptable to the Employer, the Executive has or will receive any
compensation or recognize any income (whether or not pursuant to this
Agreement, the Employment Agreement or any plan or other arrangement of the
Employer and whether or not the Employment Period or the Executive's
employment with the Employer has terminated) which will constitute an "excess
parachute payment" within the meaning of Section 280G(b)(1) of the Code (or
for which a tax is otherwise payable under Section 4999 of the Code), then
the Employer shall pay the Executive an additional amount (the "Additional
Amount") equal to the sum of (i) all taxes payable by the Executive under
Section 4999 of the Code with respect to all such excess parachute payments
and any such Additional Amount, plus (ii) all federal, state and local income
taxes payable by Executive with respect to any such Additional Amount. Any
amounts payable pursuant to this Section 4 shall be paid by the Employer to
the Executive within 30 days of each written request therefor made by the
Executive.
VI. Income Tax Payment. Whether or not Section 3 is applicable, if (i)
------------------
the Executive has or will receive any compensation or recognize any income
(whether or not pursuant to this Agreement, the Employment Agreement or any
plan or other arrangement of the Employer and whether or not the Employment
Period or the Executive's employment with the Employer has terminated) in
connection with a "Change-in-Control" (as that term may be interpreted in
this Agreement, the Employment Agreement or any plan or other arrangement of
the Employer), and (ii) such compensation or income represents non-cash
compensation or income (including, without limitation, non-cash compensation
or income attributable to the vesting or exercise of stock options and other
awards (including restricted stock grants) under any stock option plan of the
Employer), then the Employer shall pay the Executive in cash an amount (the
"Income Tax Payment") equal to all federal, state and local income taxes
payable by Executive with respect to such non-cash compensation or income.
The Income Tax Payment shall be paid by the Employer to the Executive within
30 days of the written request therefor made by the Executive.
VII. Notices. Any notice required or permitted hereunder shall be in
-------
writing and shall be deemed sufficient when given by hand, by nationally
recognized overnight courier or by express, registered or certified mail,
postage prepaid, return receipt requested, and addressed to the Employer or
Executive, as applicable, at the address indicated above (or to such other
address as may be provided by notice).
VIII. Miscellaneous. This Agreement (i) may not be assigned by
-------------
Executive without the prior written consent of the Employer and (ii) may be
assigned by the Employer and shall be binding upon, and inure to the benefit
of, the Employer's successors and assigns. Headings herein are for
convenience of reference only and shall not define, limit or interpret the
contents hereof.
IX. Amendment. This Agreement may be amended, modified or supplemented
---------
by the mutual consent of the parties in writing, but no oral amendment,
modification or supplement shall be effective.
X. Severability. If a court of competent jurisdiction adjudicates any
------------
one or more of the provisions hereof as invalid, illegal or unenforceable in
any respect, such provision(s) shall be ineffective only to the extent and
duration of such invalidity, illegality or unenforceability and such
invalidity, illegality or unenforceability shall not affect the remaining
substance of such provision or any other provision of this Agreement and this
Agreement shall be construed as if such invalid, illegal or unenforceable
provision had been limited or modified (consistent with its general intent)
to the extent necessary so that it shall be valid, legal and enforceable. If
it shall not be possible to so limit or modify such invalid, illegal or
unenforceable provision, this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein,
and the parties will use their best efforts to substitute a valid, legal and
enforceable provision which, insofar as practicable, implements the purpose
and intent of the provision originally contained herein.
XI. Governing Law. This Agreement shall be construed and governed by
-------------
the laws of the State of New York.
IN WITNESS WHEREOF, this Agreement is entered into as of the date and
year first above written.
RECKSON ASSOCIATES REALTY CORP.
By:
------------------------------------------
Name:
Title:
---------------------------------------------
Scott H. Rechler
Exhibit 10.26
SEVERANCE AGREEMENT
SEVERANCE AGREEMENT, dated as of the 25th day of February, 1998 (the
"Agreement") by and between Mitchell D. Rechler (the "Executive"), and
Reckson Associates Realty Corp., a Maryland corporation with a principal
place of business at 225 Broadhollow Road, Melville, New York 11747 (the
"Employer").
Terms used in this Agreement with the initial letter capitalized shall,
unless otherwise defined herein, have the meanings specified in the
Employment and Noncompetition Agreement, dated June 2, 1995, between the
Employer and the Executive and in any amendment to or restatement of such
agreement (the "Employment Agreement").
W I T N E S S E T H :
WHEREAS, Executive and Employer have previously entered into the
Employment Agreement; and
WHEREAS, the Employer desires to continue to employ the Executive and
the Executive desires to continue to be employed by the Employer.
NOW THEREFORE, in consideration of the premises and subject to the terms
and conditions set forth herein, the parties hereto agree as follows:
I. Employment and Noncompetition Agreement. This Agreement is
---------------------------------------
supplementary to and, except as explicitly set forth herein, does not limit
or alter any of the terms and conditions established under the Employment
Agreement.
II. Term. The term and duration of this Agreement shall be identical
----
to the term of the Employment Agreement, provided, however, that if a Change-
in-Control shall occur during the Employment Period, the term of this
Agreement, the Employment Agreement and the Employment Period shall continue
in effect until the later of (i) the date on which the term of the Employment
Agreement otherwise would have ended or (ii) the date which is thirty-six
months beyond the end of the calendar year in which the Change-in-Control
occurs. Section 1 of the Employment Agreement is hereby amended in
accordance with the foregoing.
III. Termination and Severance Payments. Sections 7(a), (b) and (c) of
----------------------------------
the Employment Agreement are hereby superseded in their entirety by this
Section 3.
A. At-Will Employment. Executive's employment pursuant to the
------------------
Employment Agreement is "at will" and may be terminated by the Employer at
any time with or without Good Reason, by a majority vote of all of the
members of the Board of Directors of the Employer upon written notice to
Executive, subject only to the severance provisions specifically set forth in
this Section 3 and in Sections 7(d) through 7(h) of the Employment Agreement.
B. Termination by Executive. The Employment Period and
------------------------
Executive's employment under the Employment Agreement may be terminated
effective immediately by Executive by written notice to the Board of
Directors of the Employer (i) within 30 days of the occurrence of a failure
of the Board of Directors of the Employer to elect Executive to offices with
the same or substantially the same duties and responsibilities as set forth
in Section 2 of the Employment Agreement, (ii) within 30 days of the
occurrence of a material failure by the Employer to comply with the
provisions of Section 3 of the Employment Agreement or a material breach by
the Employer of any other provision of the Employment Agreement, or (iii) at
any time during the 30 day period beginning on the effective date of a Change
in Control and the 30 day period beginning one year after the effective date
of a Change-in-Control.
C. Certain Benefits upon Termination by Executive. Except as
----------------------------------------------
specifically provided in this Section 3 or in Sections 7(d) through 7(h) of
the Employment Agreement or as otherwise required by law, all compensation
and benefits to Executive under the Employment Agreement shall terminate on
the date of termination of the Employment Period. Notwithstanding the
foregoing, if the Employment Period is terminated pursuant to Section 3(b) or
if Executive's employment is terminated by the Employer other than for Good
Reason, Executive shall be entitled to the following benefits:
1. The Employer shall pay the Executive (x) his or her
full Base Salary though the date of termination at the rate in effect on
such date, (y) compensation for accrued but unused vacation time, plus
(z) a pro rata portion of the Executive's incentive compensation for the
calendar year in which the event of termination occurs, assuming that
the Executive would have received incentive compensation for such full
calendar year equal to the product of (A) the Base Salary that would be
payable to the Executive pursuant to subsection 3(a) of the Employment
Agreement for such full calendar year and (B) the greater of (a) 1/2 or
(b) a percentage equal to the percentage of the Executive's Base Salary
for the immediately preceding fiscal year that was paid to the Executive
as incentive compensation (including all cash and other incentive
compensation, and including shares of Common Stock) for the immediately
preceding fiscal year, expressed as a percentage (the greater of clauses
(a) and (b) being herein referred to as the "Deemed Bonus Percentage");
2. The Employer shall pay as severance to the Executive, not
later than the tenth day following the date of termination, a lump sum
severance payment (the "Severance Payment") equal to the aggregate of
all compensation due to the Executive hereunder had his or her
employment not been so terminated (without duplication of subsection
3(c)(i) above), including, without limitation, all incentive
compensation which would have been due to the Executive pursuant to
subsection 3(b) of the Employment Agreement, through the expiration of
this Agreement (as such Agreement may continue in effect under Section 2
hereof in the event of a Change-in-Control) assuming that the Executive
would have received incentive compensation for each calendar year
through the expiration of this Agreement (as such Agreement may continue
in effect under Section 2 hereof in the event of a Change-in-Control)
equal to the product of (A) the Base Salary payable to the Executive
pursuant to subsection 3(a) of the Employment Agreement for each such
calendar year and (B) the Deemed Bonus Percentage; provided, however,
that such Severance Payment shall not be payable to the Executive until
(x) the Executive has executed and delivered to the Employer a general
release in a form to be determined by the Employer in good faith, and
(y) any applicable revocation period with respect to such release has
expired. For purposes of determining Executive's annual compensation in
the preceding sentence, compensation payable to the Executive by the
Employer shall include every type and form of compensation includible in
the Executive's gross income in respect of his or her employment by the
Employer (including, without limitation, all income reported on an
Internal Revenue Service Form W-2), compensation income recognized as a
result of the Executive's exercise of stock options or sale of the stock
so acquired and including, without limitation, any annual incentive
compensation paid in cash or securities to such Executive;
3. An amount equal to the Additional Amount pursuant to
Section 5 below;
4. For the remaining term of the Employment Agreement,
Executive shall continue to receive all benefits described in Section 3
of the Employment Agreement existing on the date of termination and any
other benefits then provided by Employer to Executive in addition to
those described in Section 3 of the Employment Agreement, including, but
not limited to, the life insurance coverage provided by Employer to
Executive and the automobile provided by Employer to Executive and
automobile insurance and maintenance in respect of such automobile. For
purposes of the application of such benefits, Executive shall be treated
as if he or she had remained in the employ of the Employer with a Base
Salary at the rate in effect on the date of termination;
5. For purposes of any stock option plan of the Employer,
(x) any stock options or other awards (including restricted stock
grants) of the Executive under such plan shall vest and become
exercisable upon any such termination, and (y) Executive shall be
treated as if he or she had remained in the employ of the Employer for
the remaining term of the Employment Agreement after the date of
Executive's termination so that Executive shall be entitled to exercise
any exercisable options or other rights;
6. For purposes of any section 401(k) plan or other deferred
compensation plan of the Employer, Executive shall be treated as if he
or she had remained in the employ of the Employer for the remaining term
of the Employment Agreement after the date of Executive's termination so
that Executive may continue to receive all matching contributions as
provided by the Employer in connection with such plan or any other
contributions by Employer in connection with such plan as in effect
immediately prior to such termination;
7. The amount of any outstanding loans made by the Employer
to the Executive to acquire shares of Common Stock or units of limited
partnership interest in Reckson Operating Partnership, L.P., together
with any interest accrued on any such loans, and any related "tax" loans
made by the Employer to the Executive in respect of tax liabilities
owing as the result of the forgiveness of such loans (including
forgiveness pursuant to the terms of this Section 3(c)(vii)), together
with any interest accrued on any such tax loans, shall be deemed
forgiven and Executive shall have no further liability in respect
thereof;
8. If, in spite of the provisions above, any benefits or
service credits under any benefit plan or program of the Employer may
not be paid or provided under such plan or program to Executive, or to
Executive's dependents, beneficiaries or estate, because Executive is no
longer considered to be an employee of the Employer, the Employer shall
pay or provide for payment of such benefits and service credits to
Executive, or to Executive's dependents, beneficiaries or estate, for
the remaining term of the Employment Agreement; and
9. Nothing herein shall be deemed to obligate Executive to
seek other employment in the event of any such termination and any
amounts earned or benefits received from such other employment will not
serve to reduce in any way the amounts and benefits payable in
accordance herewith.
IV. Expenses. Section 3(e) of the Employment Agreement is hereby
--------
amended by this Section 4. In addition to the expenses referred to in
Section 3(e) of the Employment Agreement, the Employer shall pay all legal
fees and related expenses (including the costs of experts, evidence and
counsel) incurred by the Executive as they become due as a result of (i) the
termination of the Employment Period or Executive's employment pursuant to
this Agreement or the Employment Agreement (including all such fees and
expenses, if any, incurred in contesting or disputing any such termination),
(ii) the Executive seeking to obtain or enforce any right or benefit provided
by this Agreement, the Employment Agreement or by any other plan or
arrangement maintained by the Employer under which the Executive is or may be
entitled to receive benefits or (iii) any action taken by the Employer
against the Executive, unless and until such time that a final judgement has
been rendered in favor of the Employer and all appeals related to any such
action have been exhausted; provided however, that the circumstances set
forth above occurred on or after a Change-in-Control.
V. Additional Amount. Whether or not Section 3 is applicable, if in
-----------------
the opinion of tax counsel selected by the Executive and reasonably
acceptable to the Employer, the Executive has or will receive any
compensation or recognize any income (whether or not pursuant to this
Agreement, the Employment Agreement or any plan or other arrangement of the
Employer and whether or not the Employment Period or the Executive's
employment with the Employer has terminated) which will constitute an "excess
parachute payment" within the meaning of Section 280G(b)(1) of the Code (or
for which a tax is otherwise payable under Section 4999 of the Code), then
the Employer shall pay the Executive an additional amount (the "Additional
Amount") equal to the sum of (i) all taxes payable by the Executive under
Section 4999 of the Code with respect to all such excess parachute payments
and any such Additional Amount, plus (ii) all federal, state and local income
taxes payable by Executive with respect to any such Additional Amount. Any
amounts payable pursuant to this Section 4 shall be paid by the Employer to
the Executive within 30 days of each written request therefor made by the
Executive.
VI. Income Tax Payment. Whether or not Section 3 is applicable, if (i)
------------------
the Executive has or will receive any compensation or recognize any income
(whether or not pursuant to this Agreement, the Employment Agreement or any
plan or other arrangement of the Employer and whether or not the Employment
Period or the Executive's employment with the Employer has terminated) in
connection with a "Change-in-Control" (as that term may be interpreted in
this Agreement, the Employment Agreement or any plan or other arrangement of
the Employer), and (ii) such compensation or income represents non-cash
compensation or income (including, without limitation, non-cash compensation
or income attributable to the vesting or exercise of stock options and other
awards (including restricted stock grants) under any stock option plan of the
Employer), then the Employer shall pay the Executive in cash an amount (the
"Income Tax Payment") equal to all federal, state and local income taxes
payable by Executive with respect to such non-cash compensation or income.
The Income Tax Payment shall be paid by the Employer to the Executive within
30 days of the written request therefor made by the Executive.
VII. Notices. Any notice required or permitted hereunder shall be in
-------
writing and shall be deemed sufficient when given by hand, by nationally
recognized overnight courier or by express, registered or certified mail,
postage prepaid, return receipt requested, and addressed to the Employer or
Executive, as applicable, at the address indicated above (or to such other
address as may be provided by notice).
VIII. Miscellaneous. This Agreement (i) may not be assigned by
-------------
Executive without the prior written consent of the Employer and (ii) may be
assigned by the Employer and shall be binding upon, and inure to the benefit
of, the Employer's successors and assigns. Headings herein are for
convenience of reference only and shall not define, limit or interpret the
contents hereof.
IX. Amendment. This Agreement may be amended, modified or supplemented
---------
by the mutual consent of the parties in writing, but no oral amendment,
modification or supplement shall be effective.
X. Severability. If a court of competent jurisdiction adjudicates any
------------
one or more of the provisions hereof as invalid, illegal or unenforceable in
any respect, such provision(s) shall be ineffective only to the extent and
duration of such invalidity, illegality or unenforceability and such
invalidity, illegality or unenforceability shall not affect the remaining
substance of such provision or any other provision of this Agreement and this
Agreement shall be construed as if such invalid, illegal or unenforceable
provision had been limited or modified (consistent with its general intent)
to the extent necessary so that it shall be valid, legal and enforceable. If
it shall not be possible to so limit or modify such invalid, illegal or
unenforceable provision, this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein,
and the parties will use their best efforts to substitute a valid, legal and
enforceable provision which, insofar as practicable, implements the purpose
and intent of the provision originally contained herein.
XI. Governing Law. This Agreement shall be construed and governed by
-------------
the laws of the State of New York.
IN WITNESS WHEREOF, this Agreement is entered into as of the date and
year first above written.
RECKSON ASSOCIATES REALTY CORP.
By:
------------------------------------------
Name:
Title:
---------------------------------------------
Mitchell D. Rechler
Exhibit 10.27
SEVERANCE AGREEMENT
SEVERANCE AGREEMENT, dated as of the 25th day of February, 1998 (the
"Agreement") by and between Gregg M. Rechler (the "Executive"), and Reckson
Associates Realty Corp., a Maryland corporation with a principal place of
business at 225 Broadhollow Road, Melville, New York 11747 (the "Employer").
Terms used in this Agreement with the initial letter capitalized shall,
unless otherwise defined herein, have the meanings specified in the
Employment and Noncompetition Agreement, dated June 2, 1995, between the
Employer and the Executive and in any amendment to or restatement of such
agreement (the "Employment Agreement").
W I T N E S S E T H :
WHEREAS, Executive and Employer have previously entered into the
Employment Agreement; and
WHEREAS, the Employer desires to continue to employ the Executive and
the Executive desires to continue to be employed by the Employer.
NOW THEREFORE, in consideration of the premises and subject to the terms
and conditions set forth herein, the parties hereto agree as follows:
I. Employment and Noncompetition Agreement. This Agreement is
---------------------------------------
supplementary to and, except as explicitly set forth herein, does not limit
or alter any of the terms and conditions established under the Employment
Agreement.
II. Term. The term and duration of this Agreement shall be identical
----
to the term of the Employment Agreement, provided, however, that if a Change-
in-Control shall occur during the Employment Period, the term of this
Agreement, the Employment Agreement and the Employment Period shall continue
in effect until the later of (i) the date on which the term of the Employment
Agreement otherwise would have ended or (ii) the date which is thirty-six
months beyond the end of the calendar year in which the Change-in-Control
occurs. Section 1 of the Employment Agreement is hereby amended in
accordance with the foregoing.
III. Termination and Severance Payments. Sections 7(a), (b) and (c) of
----------------------------------
the Employment Agreement are hereby superseded in their entirety by this
Section 3.
A. At-Will Employment. Executive's employment pursuant to the
------------------
Employment Agreement is "at will" and may be terminated by the Employer at
any time with or without Good Reason, by a majority vote of all of the
members of the Board of Directors of the Employer upon written notice to
Executive, subject only to the severance provisions specifically set forth in
this Section 3 and in Sections 7(d) through 7(h) of the Employment Agreement.
B. Termination by Executive. The Employment Period and
------------------------
Executive's employment under the Employment Agreement may be terminated
effective immediately by Executive by written notice to the Board of
Directors of the Employer (i) within 30 days of the occurrence of a failure
of the Board of Directors of the Employer to elect Executive to offices with
the same or substantially the same duties and responsibilities as set forth
in Section 2 of the Employment Agreement, (ii) within 30 days of the
occurrence of a material failure by the Employer to comply with the
provisions of Section 3 of the Employment Agreement or a material breach by
the Employer of any other provision of the Employment Agreement, or (iii) at
any time during the 30 day period beginning on the effective date of a Change
in Control and the 30 day period beginning one year after the effective date
of a Change-in-Control.
C. Certain Benefits upon Termination by Executive. Except as
----------------------------------------------
specifically provided in this Section 3 or in Sections 7(d) through 7(h) of
the Employment Agreement or as otherwise required by law, all compensation
and benefits to Executive under the Employment Agreement shall terminate on
the date of termination of the Employment Period. Notwithstanding the
foregoing, if the Employment Period is terminated pursuant to Section 3(b) or
if Executive's employment is terminated by the Employer other than for Good
Reason, Executive shall be entitled to the following benefits:
1. The Employer shall pay the Executive (x) his or her
full Base Salary though the date of termination at the rate in effect on
such date, (y) compensation for accrued but unused vacation time, plus
(z) a pro rata portion of the Executive's incentive compensation for the
calendar year in which the event of termination occurs, assuming that
the Executive would have received incentive compensation for such full
calendar year equal to the product of (A) the Base Salary that would be
payable to the Executive pursuant to subsection 3(a) of the Employment
Agreement for such full calendar year and (B) the greater of (a) 1/2 or
(b) a percentage equal to the percentage of the Executive's Base Salary
for the immediately preceding fiscal year that was paid to the Executive
as incentive compensation (including all cash and other incentive
compensation, and including shares of Common Stock) for the immediately
preceding fiscal year, expressed as a percentage (the greater of clauses
(a) and (b) being herein referred to as the "Deemed Bonus Percentage");
2. The Employer shall pay as severance to the Executive, not
later than the tenth day following the date of termination, a lump sum
severance payment (the "Severance Payment") equal to the aggregate of
all compensation due to the Executive hereunder had his or her
employment not been so terminated (without duplication of subsection
3(c)(i) above), including, without limitation, all incentive
compensation which would have been due to the Executive pursuant to
subsection 3(b) of the Employment Agreement, through the expiration of
this Agreement (as such Agreement may continue in effect under Section 2
hereof in the event of a Change-in-Control) assuming that the Executive
would have received incentive compensation for each calendar year
through the expiration of this Agreement (as such Agreement may continue
in effect under Section 2 hereof in the event of a Change-in-Control)
equal to the product of (A) the Base Salary payable to the Executive
pursuant to subsection 3(a) of the Employment Agreement for each such
calendar year and (B) the Deemed Bonus Percentage; provided, however,
that such Severance Payment shall not be payable to the Executive until
(x) the Executive has executed and delivered to the Employer a general
release in a form to be determined by the Employer in good faith, and
(y) any applicable revocation period with respect to such release has
expired. For purposes of determining Executive's annual compensation in
the preceding sentence, compensation payable to the Executive by the
Employer shall include every type and form of compensation includible in
the Executive's gross income in respect of his or her employment by the
Employer (including, without limitation, all income reported on an
Internal Revenue Service Form W-2), compensation income recognized as a
result of the Executive's exercise of stock options or sale of the stock
so acquired and including, without limitation, any annual incentive
compensation paid in cash or securities to such Executive;
3. An amount equal to the Additional Amount pursuant to
Section 5 below;
4. For the remaining term of the Employment Agreement,
Executive shall continue to receive all benefits described in Section 3
of the Employment Agreement existing on the date of termination and any
other benefits then provided by Employer to Executive in addition to
those described in Section 3 of the Employment Agreement, including, but
not limited to, the life insurance coverage provided by Employer to
Executive and the automobile provided by Employer to Executive and
automobile insurance and maintenance in respect of such automobile. For
purposes of the application of such benefits, Executive shall be treated
as if he or she had remained in the employ of the Employer with a Base
Salary at the rate in effect on the date of termination;
5. For purposes of any stock option plan of the Employer,
(x) any stock options or other awards (including restricted stock
grants) of the Executive under such plan shall vest and become
exercisable upon any such termination, and (y) Executive shall be
treated as if he or she had remained in the employ of the Employer for
the remaining term of the Employment Agreement after the date of
Executive's termination so that Executive shall be entitled to exercise
any exercisable options or other rights;
6. For purposes of any section 401(k) plan or other deferred
compensation plan of the Employer, Executive shall be treated as if he
or she had remained in the employ of the Employer for the remaining term
of the Employment Agreement after the date of Executive's termination so
that Executive may continue to receive all matching contributions as
provided by the Employer in connection with such plan or any other
contributions by Employer in connection with such plan as in effect
immediately prior to such termination;
7. The amount of any outstanding loans made by the Employer
to the Executive to acquire shares of Common Stock or units of limited
partnership interest in Reckson Operating Partnership, L.P., together
with any interest accrued on any such loans, and any related "tax" loans
made by the Employer to the Executive in respect of tax liabilities
owing as the result of the forgiveness of such loans (including
forgiveness pursuant to the terms of this Section 3(c)(vii)), together
with any interest accrued on any such tax loans, shall be deemed
forgiven and Executive shall have no further liability in respect
thereof;
8. If, in spite of the provisions above, any benefits or
service credits under any benefit plan or program of the Employer may
not be paid or provided under such plan or program to Executive, or to
Executive's dependents, beneficiaries or estate, because Executive is no
longer considered to be an employee of the Employer, the Employer shall
pay or provide for payment of such benefits and service credits to
Executive, or to Executive's dependents, beneficiaries or estate, for
the remaining term of the Employment Agreement; and
9. Nothing herein shall be deemed to obligate Executive to
seek other employment in the event of any such termination and any
amounts earned or benefits received from such other employment will not
serve to reduce in any way the amounts and benefits payable in
accordance herewith.
IV. Expenses. Section 3(e) of the Employment Agreement is hereby
--------
amended by this Section 4. In addition to the expenses referred to in
Section 3(e) of the Employment Agreement, the Employer shall pay all legal
fees and related expenses (including the costs of experts, evidence and
counsel) incurred by the Executive as they become due as a result of (i) the
termination of the Employment Period or Executive's employment pursuant to
this Agreement or the Employment Agreement (including all such fees and
expenses, if any, incurred in contesting or disputing any such termination),
(ii) the Executive seeking to obtain or enforce any right or benefit provided
by this Agreement, the Employment Agreement or by any other plan or
arrangement maintained by the Employer under which the Executive is or may be
entitled to receive benefits or (iii) any action taken by the Employer
against the Executive, unless and until such time that a final judgement has
been rendered in favor of the Employer and all appeals related to any such
action have been exhausted; provided however, that the circumstances set
forth above occurred on or after a Change-in-Control.
V. Additional Amount. Whether or not Section 3 is applicable, if in
-----------------
the opinion of tax counsel selected by the Executive and reasonably
acceptable to the Employer, the Executive has or will receive any
compensation or recognize any income (whether or not pursuant to this
Agreement, the Employment Agreement or any plan or other arrangement of the
Employer and whether or not the Employment Period or the Executive's
employment with the Employer has terminated) which will constitute an "excess
parachute payment" within the meaning of Section 280G(b)(1) of the Code (or
for which a tax is otherwise payable under Section 4999 of the Code), then
the Employer shall pay the Executive an additional amount (the "Additional
Amount") equal to the sum of (i) all taxes payable by the Executive under
Section 4999 of the Code with respect to all such excess parachute payments
and any such Additional Amount, plus (ii) all federal, state and local income
taxes payable by Executive with respect to any such Additional Amount. Any
amounts payable pursuant to this Section 4 shall be paid by the Employer to
the Executive within 30 days of each written request therefor made by the
Executive.
VI. Income Tax Payment. Whether or not Section 3 is applicable, if (i)
------------------
the Executive has or will receive any compensation or recognize any income
(whether or not pursuant to this Agreement, the Employment Agreement or any
plan or other arrangement of the Employer and whether or not the Employment
Period or the Executive's employment with the Employer has terminated) in
connection with a "Change-in-Control" (as that term may be interpreted in
this Agreement, the Employment Agreement or any plan or other arrangement of
the Employer), and (ii) such compensation or income represents non-cash
compensation or income (including, without limitation, non-cash compensation
or income attributable to the vesting or exercise of stock options and other
awards (including restricted stock grants) under any stock option plan of the
Employer), then the Employer shall pay the Executive in cash an amount (the
"Income Tax Payment") equal to all federal, state and local income taxes
payable by Executive with respect to such non-cash compensation or income.
The Income Tax Payment shall be paid by the Employer to the Executive within
30 days of the written request therefor made by the Executive.
VII. Notices. Any notice required or permitted hereunder shall be in
-------
writing and shall be deemed sufficient when given by hand, by nationally
recognized overnight courier or by express, registered or certified mail,
postage prepaid, return receipt requested, and addressed to the Employer or
Executive, as applicable, at the address indicated above (or to such other
address as may be provided by notice).
VIII. Miscellaneous. This Agreement (i) may not be assigned by
-------------
Executive without the prior written consent of the Employer and (ii) may be
assigned by the Employer and shall be binding upon, and inure to the benefit
of, the Employer's successors and assigns. Headings herein are for
convenience of reference only and shall not define, limit or interpret the
contents hereof.
IX. Amendment. This Agreement may be amended, modified or supplemented
---------
by the mutual consent of the parties in writing, but no oral amendment,
modification or supplement shall be effective.
X. Severability. If a court of competent jurisdiction adjudicates any
------------
one or more of the provisions hereof as invalid, illegal or unenforceable in
any respect, such provision(s) shall be ineffective only to the extent and
duration of such invalidity, illegality or unenforceability and such
invalidity, illegality or unenforceability shall not affect the remaining
substance of such provision or any other provision of this Agreement and this
Agreement shall be construed as if such invalid, illegal or unenforceable
provision had been limited or modified (consistent with its general intent)
to the extent necessary so that it shall be valid, legal and enforceable. If
it shall not be possible to so limit or modify such invalid, illegal or
unenforceable provision, this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein,
and the parties will use their best efforts to substitute a valid, legal and
enforceable provision which, insofar as practicable, implements the purpose
and intent of the provision originally contained herein.
XI. Governing Law. This Agreement shall be construed and governed by
-------------
the laws of the State of New York.
IN WITNESS WHEREOF, this Agreement is entered into as of the date and
year first above written.
RECKSON ASSOCIATES REALTY CORP.
By:
------------------------------------------
Name:
Title:
---------------------------------------------
Gregg M. Rechler
Exhibit 10.28
SEVERANCE AGREEMENT
SEVERANCE AGREEMENT, dated as of the 25th day of February, 1998 (the
"Agreement") by and between Roger Rechler (the "Executive"), and Reckson
Associates Realty Corp., a Maryland corporation with a principal place of
business at 225 Broadhollow Road, Melville, New York 11747 (the "Employer").
Terms used in this Agreement with the initial letter capitalized shall,
unless otherwise defined herein, have the meanings specified in the
Employment and Noncompetition Agreement, dated June 2, 1995, between the
Employer and the Executive and in any amendment to or restatement of such
agreement (the "Employment Agreement").
W I T N E S S E T H :
WHEREAS, Executive and Employer have previously entered into the
Employment Agreement; and
WHEREAS, the Employer desires to continue to employ the Executive and
the Executive desires to continue to be employed by the Employer.
NOW THEREFORE, in consideration of the premises and subject to the terms
and conditions set forth herein, the parties hereto agree as follows:
I. Employment and Noncompetition Agreement. This Agreement is
---------------------------------------
supplementary to and, except as explicitly set forth herein, does not limit
or alter any of the terms and conditions established under the Employment
Agreement.
II. Term. The term and duration of this Agreement shall be identical
----
to the term of the Employment Agreement, provided, however, that if a Change-
in-Control shall occur during the Employment Period, the term of this
Agreement, the Employment Agreement and the Employment Period shall continue
in effect until the later of (i) the date on which the term of the Employment
Agreement otherwise would have ended or (ii) the date which is thirty-six
months beyond the end of the calendar year in which the Change-in-Control
occurs. Section 1 of the Employment Agreement is hereby amended in
accordance with the foregoing.
III. Termination and Severance Payments. Sections 7(a), (b) and (c) of
----------------------------------
the Employment Agreement are hereby superseded in their entirety by this
Section 3.
A. At-Will Employment. Executive's employment pursuant to the
------------------
Employment Agreement is "at will" and may be terminated by the Employer at
any time with or without Good Reason, by a majority vote of all of the
members of the Board of Directors of the Employer upon written notice to
Executive, subject only to the severance provisions specifically set forth in
this Section 3 and in Sections 7(d) through 7(h) of the Employment Agreement.
B. Termination by Executive. The Employment Period and
------------------------
Executive's employment under the Employment Agreement may be terminated
effective immediately by Executive by written notice to the Board of
Directors of the Employer (i) within 30 days of the occurrence of a failure
of the Board of Directors of the Employer to elect Executive to offices with
the same or substantially the same duties and responsibilities as set forth
in Section 2 of the Employment Agreement, (ii) within 30 days of the
occurrence of a material failure by the Employer to comply with the
provisions of Section 3 of the Employment Agreement or a material breach by
the Employer of any other provision of the Employment Agreement, or (iii) at
any time during the 30 day period beginning on the effective date of a Change
in Control and the 30 day period beginning one year after the effective date
of a Change-in-Control.
C. Certain Benefits upon Termination by Executive. Except as
----------------------------------------------
specifically provided in this Section 3 or in Sections 7(d) through 7(h) of
the Employment Agreement or as otherwise required by law, all compensation
and benefits to Executive under the Employment Agreement shall terminate on
the date of termination of the Employment Period. Notwithstanding the
foregoing, if the Employment Period is terminated pursuant to Section 3(b) or
if Executive's employment is terminated by the Employer other than for Good
Reason, Executive shall be entitled to the following benefits:
1. The Employer shall pay the Executive (x) his or her
full Base Salary though the date of termination at the rate in effect on
such date, (y) compensation for accrued but unused vacation time, plus
(z) a pro rata portion of the Executive's incentive compensation for the
calendar year in which the event of termination occurs, assuming that
the Executive would have received incentive compensation for such full
calendar year equal to the product of (A) the Base Salary that would be
payable to the Executive pursuant to subsection 3(a) of the Employment
Agreement for such full calendar year and (B) the greater of (a) 1/2 or
(b) a percentage equal to the percentage of the Executive's Base Salary
for the immediately preceding fiscal year that was paid to the Executive
as incentive compensation (including all cash and other incentive
compensation, and including shares of Common Stock) for the immediately
preceding fiscal year, expressed as a percentage (the greater of clauses
(a) and (b) being herein referred to as the "Deemed Bonus Percentage");
2. The Employer shall pay as severance to the Executive, not
later than the tenth day following the date of termination, a lump sum
severance payment (the "Severance Payment") equal to the aggregate of
all compensation due to the Executive hereunder had his or her
employment not been so terminated (without duplication of subsection
3(c)(i) above), including, without limitation, all incentive
compensation which would have been due to the Executive pursuant to
subsection 3(b) of the Employment Agreement, through the expiration of
this Agreement (as such Agreement may continue in effect under Section 2
hereof in the event of a Change-in-Control) assuming that the Executive
would have received incentive compensation for each calendar year
through the expiration of this Agreement (as such Agreement may continue
in effect under Section 2 hereof in the event of a Change-in-Control)
equal to the product of (A) the Base Salary payable to the Executive
pursuant to subsection 3(a) of the Employment Agreement for each such
calendar year and (B) the Deemed Bonus Percentage; provided, however,
that such Severance Payment shall not be payable to the Executive until
(x) the Executive has executed and delivered to the Employer a general
release in a form to be determined by the Employer in good faith, and
(y) any applicable revocation period with respect to such release has
expired. For purposes of determining Executive's annual compensation in
the preceding sentence, compensation payable to the Executive by the
Employer shall include every type and form of compensation includible in
the Executive's gross income in respect of his or her employment by the
Employer (including, without limitation, all income reported on an
Internal Revenue Service Form W-2), compensation income recognized as a
result of the Executive's exercise of stock options or sale of the stock
so acquired and including, without limitation, any annual incentive
compensation paid in cash or securities to such Executive;
3. An amount equal to the Additional Amount pursuant to
Section 5 below;
4. For the remaining term of the Employment Agreement,
Executive shall continue to receive all benefits described in Section 3
of the Employment Agreement existing on the date of termination and any
other benefits then provided by Employer to Executive in addition to
those described in Section 3 of the Employment Agreement, including, but
not limited to, the life insurance coverage provided by Employer to
Executive and the automobile provided by Employer to Executive and
automobile insurance and maintenance in respect of such automobile. For
purposes of the application of such benefits, Executive shall be treated
as if he or she had remained in the employ of the Employer with a Base
Salary at the rate in effect on the date of termination;
5. For purposes of any stock option plan of the Employer,
(x) any stock options or other awards (including restricted stock
grants) of the Executive under such plan shall vest and become
exercisable upon any such termination, and (y) Executive shall be
treated as if he or she had remained in the employ of the Employer for
the remaining term of the Employment Agreement after the date of
Executive's termination so that Executive shall be entitled to exercise
any exercisable options or other rights;
6. For purposes of any section 401(k) plan or other deferred
compensation plan of the Employer, Executive shall be treated as if he
or she had remained in the employ of the Employer for the remaining term
of the Employment Agreement after the date of Executive's termination so
that Executive may continue to receive all matching contributions as
provided by the Employer in connection with such plan or any other
contributions by Employer in connection with such plan as in effect
immediately prior to such termination;
7. The amount of any outstanding loans made by the Employer
to the Executive to acquire shares of Common Stock or units of limited
partnership interest in Reckson Operating Partnership, L.P., together
with any interest accrued on any such loans, and any related "tax" loans
made by the Employer to the Executive in respect of tax liabilities
owing as the result of the forgiveness of such loans (including
forgiveness pursuant to the terms of this Section 3(c)(vii)), together
with any interest accrued on any such tax loans, shall be deemed
forgiven and Executive shall have no further liability in respect
thereof;
8. If, in spite of the provisions above, any benefits or
service credits under any benefit plan or program of the Employer may
not be paid or provided under such plan or program to Executive, or to
Executive's dependents, beneficiaries or estate, because Executive is no
longer considered to be an employee of the Employer, the Employer shall
pay or provide for payment of such benefits and service credits to
Executive, or to Executive's dependents, beneficiaries or estate, for
the remaining term of the Employment Agreement; and
9. Nothing herein shall be deemed to obligate Executive to
seek other employment in the event of any such termination and any
amounts earned or benefits received from such other employment will not
serve to reduce in any way the amounts and benefits payable in
accordance herewith.
IV. Expenses. Section 3(e) of the Employment Agreement is hereby
--------
amended by this Section 4. In addition to the expenses referred to in
Section 3(e) of the Employment Agreement, the Employer shall pay all legal
fees and related expenses (including the costs of experts, evidence and
counsel) incurred by the Executive as they become due as a result of (i) the
termination of the Employment Period or Executive's employment pursuant to
this Agreement or the Employment Agreement (including all such fees and
expenses, if any, incurred in contesting or disputing any such termination),
(ii) the Executive seeking to obtain or enforce any right or benefit provided
by this Agreement, the Employment Agreement or by any other plan or
arrangement maintained by the Employer under which the Executive is or may be
entitled to receive benefits or (iii) any action taken by the Employer
against the Executive, unless and until such time that a final judgement has
been rendered in favor of the Employer and all appeals related to any such
action have been exhausted; provided however, that the circumstances set
forth above occurred on or after a Change-in-Control.
V. Additional Amount. Whether or not Section 3 is applicable, if in
-----------------
the opinion of tax counsel selected by the Executive and reasonably
acceptable to the Employer, the Executive has or will receive any
compensation or recognize any income (whether or not pursuant to this
Agreement, the Employment Agreement or any plan or other arrangement of the
Employer and whether or not the Employment Period or the Executive's
employment with the Employer has terminated) which will constitute an "excess
parachute payment" within the meaning of Section 280G(b)(1) of the Code (or
for which a tax is otherwise payable under Section 4999 of the Code), then
the Employer shall pay the Executive an additional amount (the "Additional
Amount") equal to the sum of (i) all taxes payable by the Executive under
Section 4999 of the Code with respect to all such excess parachute payments
and any such Additional Amount, plus (ii) all federal, state and local income
taxes payable by Executive with respect to any such Additional Amount. Any
amounts payable pursuant to this Section 4 shall be paid by the Employer to
the Executive within 30 days of each written request therefor made by the
Executive.
VI. Income Tax Payment. Whether or not Section 3 is applicable, if (i)
------------------
the Executive has or will receive any compensation or recognize any income
(whether or not pursuant to this Agreement, the Employment Agreement or any
plan or other arrangement of the Employer and whether or not the Employment
Period or the Executive's employment with the Employer has terminated) in
connection with a "Change-in-Control" (as that term may be interpreted in
this Agreement, the Employment Agreement or any plan or other arrangement of
the Employer), and (ii) such compensation or income represents non-cash
compensation or income (including, without limitation, non-cash compensation
or income attributable to the vesting or exercise of stock options and other
awards (including restricted stock grants) under any stock option plan of the
Employer), then the Employer shall pay the Executive in cash an amount (the
"Income Tax Payment") equal to all federal, state and local income taxes
payable by Executive with respect to such non-cash compensation or income.
The Income Tax Payment shall be paid by the Employer to the Executive within
30 days of the written request therefor made by the Executive.
VII. Notices. Any notice required or permitted hereunder shall be in
-------
writing and shall be deemed sufficient when given by hand, by nationally
recognized overnight courier or by express, registered or certified mail,
postage prepaid, return receipt requested, and addressed to the Employer or
Executive, as applicable, at the address indicated above (or to such other
address as may be provided by notice).
VIII. Miscellaneous. This Agreement (i) may not be assigned by
-------------
Executive without the prior written consent of the Employer and (ii) may be
assigned by the Employer and shall be binding upon, and inure to the benefit
of, the Employer's successors and assigns. Headings herein are for
convenience of reference only and shall not define, limit or interpret the
contents hereof.
IX. Amendment. This Agreement may be amended, modified or supplemented
---------
by the mutual consent of the parties in writing, but no oral amendment,
modification or supplement shall be effective.
X. Severability. If a court of competent jurisdiction adjudicates any
------------
one or more of the provisions hereof as invalid, illegal or unenforceable in
any respect, such provision(s) shall be ineffective only to the extent and
duration of such invalidity, illegality or unenforceability and such
invalidity, illegality or unenforceability shall not affect the remaining
substance of such provision or any other provision of this Agreement and this
Agreement shall be construed as if such invalid, illegal or unenforceable
provision had been limited or modified (consistent with its general intent)
to the extent necessary so that it shall be valid, legal and enforceable. If
it shall not be possible to so limit or modify such invalid, illegal or
unenforceable provision, this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein,
and the parties will use their best efforts to substitute a valid, legal and
enforceable provision which, insofar as practicable, implements the purpose
and intent of the provision originally contained herein.
XI. Governing Law. This Agreement shall be construed and governed by
-------------
the laws of the State of New York.
IN WITNESS WHEREOF, this Agreement is entered into as of the date and
year first above written.
RECKSON ASSOCIATES REALTY CORP.
By:
------------------------------------------
Name:
Title:
---------------------------------------------
Roger Rechler
Exhibit 10.29
SEVERANCE AGREEMENT
SEVERANCE AGREEMENT, dated as of the 25th day of February, 1998 (the
"Agreement") by and between Michael Maturo (the "Executive"), and Reckson
Associates Realty Corp., a Maryland corporation with a principal place of
business at 225 Broadhollow Road, Melville, New York 11747 (the "Employer").
Terms used in this Agreement with the initial letter capitalized shall,
unless otherwise defined herein, have the meanings specified in the
Employment and Noncompetition Agreement, dated June 15, 1995, between the
Employer and the Executive and in any amendment to or restatement of such
agreement (the "Employment Agreement").
W I T N E S S E T H :
WHEREAS, Executive and Employer have previously entered into the
Employment Agreement; and
WHEREAS, the Employer desires to continue to employ the Executive and
the Executive desires to continue to be employed by the Employer.
NOW THEREFORE, in consideration of the premises and subject to the terms
and conditions set forth herein, the parties hereto agree as follows:
I. Employment and Noncompetition Agreement. This Agreement is
---------------------------------------
supplementary to and, except as explicitly set forth herein, does not limit
or alter any of the terms and conditions established under the Employment
Agreement.
II. Term. The term and duration of this Agreement shall be identical
----
to the term of the Employment Agreement, provided, however, that if a Change-
in-Control shall occur during the Employment Period, the term of this
Agreement, the Employment Agreement and the Employment Period shall continue
in effect until the later of (i) the date on which the term of the Employment
Agreement otherwise would have ended or (ii) the date which is thirty-six
months beyond the end of the calendar year in which the Change-in-Control
occurs. Section 1 of the Employment Agreement is hereby amended in
accordance with the foregoing.
III. Termination and Severance Payments. Sections 7(a), (b) and (c) of
----------------------------------
the Employment Agreement are hereby superseded in their entirety by this
Section 3.
A. At-Will Employment. Executive's employment pursuant to the
------------------
Employment Agreement is "at will" and may be terminated by the Employer at
any time with or without Good Reason, by a majority vote of all of the
members of the Board of Directors of the Employer upon written notice to
Executive, subject only to the severance provisions specifically set forth in
this Section 3 and in Sections 7(d) through 7(h) of the Employment Agreement.
B. Termination by Executive. The Employment Period and
------------------------
Executive's employment under the Employment Agreement may be terminated
effective immediately by Executive by written notice to the Board of
Directors of the Employer (i) within 30 days of the occurrence of a failure
of the Board of Directors of the Employer to elect Executive to offices with
the same or substantially the same duties and responsibilities as set forth
in Section 2 of the Employment Agreement, (ii) within 30 days of the
occurrence of a material failure by the Employer to comply with the
provisions of Section 3 of the Employment Agreement or a material breach by
the Employer of any other provision of the Employment Agreement, or (iii) at
any time during the 30 day period beginning on the effective date of a Change
in Control and the 30 day period beginning one year after the effective date
of a Change-in-Control.
C. Certain Benefits upon Termination by Executive. Except as
----------------------------------------------
specifically provided in this Section 3 or in Sections 7(d) through 7(h) of
the Employment Agreement or as otherwise required by law, all compensation
and benefits to Executive under the Employment Agreement shall terminate on
the date of termination of the Employment Period. Notwithstanding the
foregoing, if the Employment Period is terminated pursuant to Section 3(b) or
if Executive's employment is terminated by the Employer other than for Good
Reason, Executive shall be entitled to the following benefits:
1. The Employer shall pay the Executive (x) his or her
full Base Salary though the date of termination at the rate in effect on
such date, (y) compensation for accrued but unused vacation time, plus
(z) a pro rata portion of the Executive's incentive compensation for the
calendar year in which the event of termination occurs, assuming that
the Executive would have received incentive compensation for such full
calendar year equal to the product of (A) the Base Salary that would be
payable to the Executive pursuant to subsection 3(a) of the Employment
Agreement for such full calendar year and (B) the greater of (a) 1/2 or
(b) a percentage equal to the percentage of the Executive's Base Salary
for the immediately preceding fiscal year that was paid to the Executive
as incentive compensation (including all cash and other incentive
compensation, and including shares of Common Stock) for the immediately
preceding fiscal year, expressed as a percentage (the greater of clauses
(a) and (b) being herein referred to as the "Deemed Bonus Percentage");
2. The Employer shall pay as severance to the Executive, not
later than the tenth day following the date of termination, a lump sum
severance payment (the "Severance Payment") equal to the aggregate of
all compensation due to the Executive hereunder had his or her
employment not been so terminated (without duplication of subsection
3(c)(i) above), including, without limitation, all incentive
compensation which would have been due to the Executive pursuant to
subsection 3(b) of the Employment Agreement, through the expiration of
this Agreement (as such Agreement may continue in effect under Section 2
hereof in the event of a Change-in-Control) assuming that the Executive
would have received incentive compensation for each calendar year
through the expiration of this Agreement (as such Agreement may continue
in effect under Section 2 hereof in the event of a Change-in-Control)
equal to the product of (A) the Base Salary payable to the Executive
pursuant to subsection 3(a) of the Employment Agreement for each such
calendar year and (B) the Deemed Bonus Percentage; provided, however,
that such Severance Payment shall not be payable to the Executive until
(x) the Executive has executed and delivered to the Employer a general
release in a form to be determined by the Employer in good faith, and
(y) any applicable revocation period with respect to such release has
expired. For purposes of determining Executive's annual compensation in
the preceding sentence, compensation payable to the Executive by the
Employer shall include every type and form of compensation includible in
the Executive's gross income in respect of his or her employment by the
Employer (including, without limitation, all income reported on an
Internal Revenue Service Form W-2), compensation income recognized as a
result of the Executive's exercise of stock options or sale of the stock
so acquired and including, without limitation, any annual incentive
compensation paid in cash or securities to such Executive;
3. An amount equal to the Additional Amount pursuant to
Section 5 below;
4. For the remaining term of the Employment Agreement,
Executive shall continue to receive all benefits described in Section 3
of the Employment Agreement existing on the date of termination and any
other benefits then provided by Employer to Executive in addition to
those described in Section 3 of the Employment Agreement, including, but
not limited to, the life insurance coverage provided by Employer to
Executive and the automobile provided by Employer to Executive and
automobile insurance and maintenance in respect of such automobile. For
purposes of the application of such benefits, Executive shall be treated
as if he or she had remained in the employ of the Employer with a Base
Salary at the rate in effect on the date of termination;
5. For purposes of any stock option plan of the Employer,
(x) any stock options or other awards (including restricted stock
grants) of the Executive under such plan shall vest and become
exercisable upon any such termination, and (y) Executive shall be
treated as if he or she had remained in the employ of the Employer for
the remaining term of the Employment Agreement after the date of
Executive's termination so that Executive shall be entitled to exercise
any exercisable options or other rights;
6. For purposes of any section 401(k) plan or other deferred
compensation plan of the Employer, Executive shall be treated as if he
or she had remained in the employ of the Employer for the remaining term
of the Employment Agreement after the date of Executive's termination so
that Executive may continue to receive all matching contributions as
provided by the Employer in connection with such plan or any other
contributions by Employer in connection with such plan as in effect
immediately prior to such termination;
7. The amount of any outstanding loans made by the Employer
to the Executive to acquire shares of Common Stock or units of limited
partnership interest in Reckson Operating Partnership, L.P., together
with any interest accrued on any such loans, and any related "tax" loans
made by the Employer to the Executive in respect of tax liabilities
owing as the result of the forgiveness of such loans (including
forgiveness pursuant to the terms of this Section 3(c)(vii)), together
with any interest accrued on any such tax loans, shall be deemed
forgiven and Executive shall have no further liability in respect
thereof;
8. If, in spite of the provisions above, any benefits or
service credits under any benefit plan or program of the Employer may
not be paid or provided under such plan or program to Executive, or to
Executive's dependents, beneficiaries or estate, because Executive is no
longer considered to be an employee of the Employer, the Employer shall
pay or provide for payment of such benefits and service credits to
Executive, or to Executive's dependents, beneficiaries or estate, for
the remaining term of the Employment Agreement; and
9. Nothing herein shall be deemed to obligate Executive to
seek other employment in the event of any such termination and any
amounts earned or benefits received from such other employment will not
serve to reduce in any way the amounts and benefits payable in
accordance herewith.
IV. Expenses. Section 3(e) of the Employment Agreement is hereby
--------
amended by this Section 4. In addition to the expenses referred to in
Section 3(e) of the Employment Agreement, the Employer shall pay all legal
fees and related expenses (including the costs of experts, evidence and
counsel) incurred by the Executive as they become due as a result of (i) the
termination of the Employment Period or Executive's employment pursuant to
this Agreement or the Employment Agreement (including all such fees and
expenses, if any, incurred in contesting or disputing any such termination),
(ii) the Executive seeking to obtain or enforce any right or benefit provided
by this Agreement, the Employment Agreement or by any other plan or
arrangement maintained by the Employer under which the Executive is or may be
entitled to receive benefits or (iii) any action taken by the Employer
against the Executive, unless and until such time that a final judgement has
been rendered in favor of the Employer and all appeals related to any such
action have been exhausted; provided however, that the circumstances set
forth above occurred on or after a Change-in-Control.
V. Additional Amount. Whether or not Section 3 is applicable, if in
-----------------
the opinion of tax counsel selected by the Executive and reasonably
acceptable to the Employer, the Executive has or will receive any
compensation or recognize any income (whether or not pursuant to this
Agreement, the Employment Agreement or any plan or other arrangement of the
Employer and whether or not the Employment Period or the Executive's
employment with the Employer has terminated) which will constitute an "excess
parachute payment" within the meaning of Section 280G(b)(1) of the Code (or
for which a tax is otherwise payable under Section 4999 of the Code), then
the Employer shall pay the Executive an additional amount (the "Additional
Amount") equal to the sum of (i) all taxes payable by the Executive under
Section 4999 of the Code with respect to all such excess parachute payments
and any such Additional Amount, plus (ii) all federal, state and local income
taxes payable by Executive with respect to any such Additional Amount. Any
amounts payable pursuant to this Section 4 shall be paid by the Employer to
the Executive within 30 days of each written request therefor made by the
Executive.
VI. Income Tax Payment. Whether or not Section 3 is applicable, if (i)
------------------
the Executive has or will receive any compensation or recognize any income
(whether or not pursuant to this Agreement, the Employment Agreement or any
plan or other arrangement of the Employer and whether or not the Employment
Period or the Executive's employment with the Employer has terminated) in
connection with a "Change-in-Control" (as that term may be interpreted in
this Agreement, the Employment Agreement or any plan or other arrangement of
the Employer), and (ii) such compensation or income represents non-cash
compensation or income (including, without limitation, non-cash compensation
or income attributable to the vesting or exercise of stock options and other
awards (including restricted stock grants) under any stock option plan of the
Employer), then the Employer shall pay the Executive in cash an amount (the
"Income Tax Payment") equal to all federal, state and local income taxes
payable by Executive with respect to such non-cash compensation or income.
The Income Tax Payment shall be paid by the Employer to the Executive within
30 days of the written request therefor made by the Executive.
VII. Notices. Any notice required or permitted hereunder shall be in
-------
writing and shall be deemed sufficient when given by hand, by nationally
recognized overnight courier or by express, registered or certified mail,
postage prepaid, return receipt requested, and addressed to the Employer or
Executive, as applicable, at the address indicated above (or to such other
address as may be provided by notice).
VIII. Miscellaneous. This Agreement (i) may not be assigned by
-------------
Executive without the prior written consent of the Employer and (ii) may be
assigned by the Employer and shall be binding upon, and inure to the benefit
of, the Employer's successors and assigns. Headings herein are for
convenience of reference only and shall not define, limit or interpret the
contents hereof.
IX. Amendment. This Agreement may be amended, modified or supplemented
---------
by the mutual consent of the parties in writing, but no oral amendment,
modification or supplement shall be effective.
X. Severability. If a court of competent jurisdiction adjudicates any
------------
one or more of the provisions hereof as invalid, illegal or unenforceable in
any respect, such provision(s) shall be ineffective only to the extent and
duration of such invalidity, illegality or unenforceability and such
invalidity, illegality or unenforceability shall not affect the remaining
substance of such provision or any other provision of this Agreement and this
Agreement shall be construed as if such invalid, illegal or unenforceable
provision had been limited or modified (consistent with its general intent)
to the extent necessary so that it shall be valid, legal and enforceable. If
it shall not be possible to so limit or modify such invalid, illegal or
unenforceable provision, this Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been contained herein,
and the parties will use their best efforts to substitute a valid, legal and
enforceable provision which, insofar as practicable, implements the purpose
and intent of the provision originally contained herein.
XI. Governing Law. This Agreement shall be construed and governed by
-------------
the laws of the State of New York.
IN WITNESS WHEREOF, this Agreement is entered into as of the date and
year first above written.
RECKSON ASSOCIATES REALTY CORP.
By:
-----------------------------------
Name:
Title:
---------------------------------------
Michael Maturo
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