-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K5JsPVTmoytGyl5Ad4R0H8DCfYT5eht+mWsYQh2Iv0PRyTsEJVwbJ2Nrpa4wI9IY jyAdZ1TmG/sDc6l462bDBg== 0000892626-00-000147.txt : 20000331 0000892626-00-000147.hdr.sgml : 20000331 ACCESSION NUMBER: 0000892626-00-000147 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CARLYLE REAL ESTATE LTD PARTNERSHIP XIII CENTRAL INDEX KEY: 0000711604 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 363207212 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 000-12791 FILM NUMBER: 585907 BUSINESS ADDRESS: STREET 1: C/O JMB REALTY CORP STREET 2: 900 N MICHIGAN AVE CITY: CHICAGO STATE: IL ZIP: 60611 BUSINESS PHONE: 3129151987 MAIL ADDRESS: STREET 1: C/O JMB REALTY CORP STREET 2: 900 N MICHIGAN AVE CITY: CHICAGO STATE: IL ZIP: 60611 FORMER COMPANY: FORMER CONFORMED NAME: CARLYLE REAL ESTATE LTD PARTNERSHIP XIV DATE OF NAME CHANGE: 19830504 10-K405 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Act of 1934 For the fiscal year ended December 31, 1999 Commission File Number 0-12791 CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (Exact name of registrant as specified in its charter) Illinois 36-3207212 (State of organization) (I.R.S. Employer Identification No.) 900 N. Michigan Ave., Chicago, Illinois 60611 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code 312-915-1987 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered - ------------------- ------------------------------ None None Securities registered pursuant to Section 12(g) of the Act: LIMITED PARTNERSHIP INTERESTS (Title of Class) 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 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 [ X ] State the aggregate market value of the voting stock held by non-affiliates of the registrant. Not applicable. Documents incorporated by reference: None TABLE OF CONTENTS Page ---- PART I Item 1. Business . . . . . . . . . . . . . . . . . . . 1 Item 2. Properties . . . . . . . . . . . . . . . . . . 10 Item 3. Legal Proceedings. . . . . . . . . . . . . . . 10 Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . 10 PART II Item 5. Market for the Partnership's Limited Partnership Interests and Related Security Holder Matters. . . . . . . . . . . . 11 Item 6. Selected Financial Data. . . . . . . . . . . . 12 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . . . . 14 Item 7A. Quantitative and Qualitative Disclosures about Market Risk. . . . . . . . . . . . . . . 18 Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . 19 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . . . . . 44 PART III Item 10. Directors and Executive Officers of the Partnership . . . . . . . . . . . . . . 44 Item 11. Executive Compensation . . . . . . . . . . . . 47 Item 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . 48 Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . 49 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. . . . . . . . . . . . 49 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . 53 i PART I ITEM 1. BUSINESS Unless otherwise indicated, all references to "Notes" are to Notes to Consolidated Financial Statements contained in this report. Capitalized terms used herein, but not defined, have the same meanings as used in the Notes. The registrant, Carlyle Real Estate Limited Partnership-XIII (the "Partnership"), is a limited partnership formed in late 1982 and currently governed by the Revised Uniform Limited Partnership Act of the State of Illinois to invest in improved income-producing commercial and residential real property. The Partnership sold 366,177.57 limited partnership interests (the "Interests") at $1,000 per Interest commencing on June 9, 1983, pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933 (Registration No. 2-81125 and No. 2-87033). The offering closed on May 22, 1984. No holder of Interests (hereinafter, "Holder" or "Holder of Interests") has made any additional capital contribution after such date. The Holders of Interests share in their portion of the benefits of ownership of the Partnership's real property investments according to the number of Interests held. The Partnership is engaged solely in the business of the acquisition, operation and sale and disposition of equity real estate investments. Such equity investments are or have been held by fee title, leasehold estates and/or through joint venture partnership interests. The Partnership's real estate investments were located throughout the nation and it has no real estate investments located outside of the United States. A presentation of information about industry segments, geographic regions, raw materials or seasonality is not applicable and would not be material to an understanding of the Partnership's business taken as a whole. Pursuant to the Partnership Agreement, the Partnership is required to terminate no later than December 31, 2033. The Partnership is self-liquidating in nature. At sale of a particular property, the net proceeds, if any, are generally distributed or reinvested in existing properties rather than invested in acquiring additional properties. The Partnership currently has indirect interests in 1290 Avenue of the Americas and 237 Park Avenue and a portfolio of other investments. In October 1994, the Partnership and its affiliated partners (together with the Partnership, the "Affiliated Partners"), through JMB/NYC, entered into an agreement (the "Agreement") with affiliates (the "Olympia & York affiliates") of Olympia & York Developments, Ltd. ("O&Y") who were the venture partners in the Joint Ventures that owned 237 Park Avenue, 1290 Avenue of the Americas and 2 Broadway Buildings, to resolve certain disputes among the Affiliated Partners and the Olympia & York affiliates. In general, the parties agreed to: (i) restructure the first mortgage loan; (ii) sell the 2 Broadway Building; (iii) reduce or eliminate approval rights of JMB/NYC with respect to virtually all property management, leasing, sale or refinancing; (iv) amend the Joint Ventures' agreements to eliminate any funding obligations by JMB/NYC and (v) establish a new preferential cash distribution level for the Olympia & York affiliates. In accordance with the Agreement and in anticipation of the sale of the 2 Broadway Building, the unpaid first mortgage indebtedness previously allocated to 2 Broadway was allocated in 1994 to 237 Park Avenue and 1290 Avenue of the Americas Buildings. As part of the Agreement, JMB/NYC and the Olympia & York affiliates agreed to file a pre-arranged bankruptcy plan for reorganization under Chapter 11 of the Bankruptcy Code in order to facilitate the restructuring of the Joint Ventures between JMB/NYC and the Olympia & York affiliates and the debt encumbering the two properties remaining after the sale of 2 Broadway. In June 1995, the 2 Broadway Joint Ventures filed their pre- arranged bankruptcy plans for reorganization, and in August 1995, the bankruptcy court entered an order confirming their plans of reorganization. In September 1995, the sale of the 2 Broadway Building was completed. Such sale did not result in any distributable proceeds to JMB/NYC or the Olympia and York affiliates. Bankruptcy filings for the Joint Ventures owning the 237 Park Avenue and 1290 Avenue of the Americas properties were made in April 1996, and in August 1996, an Amended Plan of Reorganization and Disclosure Statement (the "Plan") was filed with the Bankruptcy Court for these Joint Ventures. The Plan was accepted by the various classes of debt and equity holders and confirmed by the Court on September 20, 1996 and became effective October 10, 1996 ("Effective Date"). Prior to the restructuring in 1999 discussed below, the Plan provided that JMB/NYC had an indirect limited partnership interest which, before taking into account significant preferences to other partners, equals approximately 4.9% of the reorganized and restructured ventures owning 237 Park and 1290 Avenue of the Americas (the "Properties"). Neither O&Y nor any of its affiliates had any direct or indirect continuing interest in the Properties. The new ownership structure gave control of the Properties to an unaffiliated real estate investment trust ("REIT") owned primarily by holders of the first mortgage debt that encumbered the Properties prior to the bankruptcy. JMB/NYC had, under certain limited circumstances, through January 1, 2001 rights of consent regarding sale of the Properties or the consummation of certain other transactions that significantly reduced indebtedness of the Properties. In general, at any time on or after January 2, 2001, an affiliate of the REIT had the right to purchase JMB/NYC's interest in the Properties for an amount relating to the operations of the Properties (the "Formula Price"). In addition, the purchase money note made by JMB/NYC for its interest in the Properties, which had outstanding principal and accrued and deferred interest of approximately $133,148,000 at December 31, 1999, matures on January 2, 2001. If such REIT affiliate exercised such right to purchase, due to the level of indebtedness remaining on the Properties, the purchase money note payable by JMB/NYC, and the significant preference levels to the other partners within the reorganized structure of the joint ventures owning the Properties, it was unlikely that such purchase would result in payment of any significant amount to JMB/NYC. Additionally, at any time, JMB/NYC had the right to require such REIT affiliate to purchase the interest of JMB/NYC in the Properties for the Formula Price. The restructuring and reorganization discussed above eliminated any potential additional obligation of the Partnership in the future to provide additional funds under its previous joint venture agreements (other than that related to a certain indemnification agreement provided in connection with such restructuring). In 1996, the Affiliated Partners entered into a joint and several obligation to indemnify the REIT to the extent of $25 million to ensure their compliance with the terms and conditions relating to JMB/NYC's indirect limited partnership interest in the restructured and reorganized joint ventures that own the Properties. The Affiliated Partners contributed approximately $7.8 million (of which the Partnership's share was approximately $1.9 million) to JMB/NYC, which was deposited into an escrow account as collateral for such indemnification. These funds have been invested in stripped U.S. Government obligations with a maturity date of February 15, 2001. Due to the Restructuring discussed below, the maximum potential obligation has been reduced to $14,285,000 and a portion of the collateral was released in 1999 to JMB/NYC. The Partnership's share of the reduction of the maximum unfunded obligation under the indemnification agreement recognized as income is a result of interest earned on amounts contributed by the Partnership and held in escrow by JMB/NYC and, in 1999, the agreed upon reduction of the maximum obligation. Interest income earned reduces the Partnership's share of the maximum unfunded obligation under the indemnification agreement, which is reflected as a liability in the accompanying financial statements. In November 1999, JMB/NYC closed a transaction (the "Restructuring") pursuant to which, among other things, JMB/NYC's interests in 237 Park Avenue ("237 Park") and 1290 Avenue of the Americas ("1290 Avenue of the Americas") were restructured. Under the Restructuring, the partnership that owns 237 Park has been converted to a limited liability company ("237 Park LLC"). The membership interest in 237 Park LLC owned by 237/1290 Upper Tier Associates, L.P. (the "Upper Tier Partnership"), in which JMB/NYC is a limited partner with a 99% interest, was contributed to a partnership (the "237 Partnership") that acquired the other membership interests in 237 Park LLC from the REIT and one of its affiliates. In exchange for the interest in 237 Park LLC, the Upper Tier Partnership received a limited partnership interest in the 237 Partnership having a fair market value (determined in accordance with the partnership agreement of the 237 Partnership) of approximately $500,000. (JMB/NYC's total investment in the 237 Partnership is significantly less than 1% of the 237 Partnership.) The 237 Partnership owns a portfolio of investments in addition to 237 Park. JMB/NYC has the right, during the month of July of each calendar year commencing with 2001, to cause a sale of the interest in the 237 Partnership for a price equal to the greater of the fair market value of such interest (determined in accordance with the partnership agreement of the 237 Partnership) and a specified amount, of which JMB/NYC's share would be $500,000. In addition, the general partner of the 237 Partnership has the right, during the month of January of each calendar year commencing with 2002, to purchase the interest in the 237 Partnership for a price equal to the greater of the fair market value of such interest (determined as described above) and a specified amount, of which JMB/NYC's share would be $650,000. Although under the terms of the Restructuring JMB/NYC is not able to cause a sale of the interest in the 237 Partnership prior to 2001, the earliest date on which such interest may be purchased at the election of the general partner of the 237 Partnership is January 2002. In the absence of JMB/NYC's earlier election to cause a sale of its interest in the 237 Partnership, this extends by a year (to January 2002 from January 2001) the date on which JMB/NYC's indirect interest in 237 Park was previously subject to purchase at the election of an affiliate of the REIT. JMB/NYC's indirect interest through the Upper Tier Partnership in the partnership (the "1290 Partnership") that owns 1290 Avenue of the Americas was also modified, although the REIT continues to own the controlling interest in the property. In general, the REIT has the right to sell 1290 Avenue of the Americas or the REIT's interest in the 1290 Partnership or permit a sale of more than 51% of the stock in the REIT, during the period January 1, 2000 through February 28, 2001, provided that JMB/NYC receives the greater of (i) an amount based on a formula relating to the operations of the property (the "1290 Formula Price") and (ii) $4,500,000. Although the REIT is able to cause a sale of the entire property one year earlier than previously which would result in the Partnership's (and the Holders of Interests') recognition of income for Federal income tax purposes from such a transaction, JMB/NYC would be entitled to receive a minimum specified amount (determined as described above) in connection with such sale. An affiliate of the REIT also has the right, during the month of March of each calendar year commencing with 2001, to purchase JMB/NYC's indirect interest in the property for the greater of (x) the 1290 Formula Price and (y) $1,400,000. In addition, JMB/NYC has the right, during the month of September of each calendar year commencing with 2001, to require an affiliate of the REIT to purchase JMB/NYC's indirect interest in the property for the greater of (1) the 1290 Formula Price, and (2) $1,000,000. In connection with the above transactions, approximately $4,460,000 in face amount at maturity of U.S. Treasury securities held as collateral for the indemnification obligations of the Affiliated Partners was released from escrow and returned to the Affiliated Partners. The remaining face amount of the securities will be held as collateral for the indemnification obligations for the Affiliated Partners relating to 1290 Avenue of the Americas generally until 90 days after the earlier of the sale of 1290 Avenue of the Americas and the sale of JMB/NYC's indirect interest in 1290 Avenue of the Americas. The Partnership expects its share of the remaining collateral, including interest earned thereon, to be returned after the termination of the indemnification obligations. While the Partnership is not expected to terminate in the near term, it currently appears unlikely that any significant distributions will be made to the Partnership at any time due to, among other things, the level of indebtedness on 1290 Avenue of the Americas, the purchase money note payable by JMB/NYC and the significant preference levels for the other partners within the reorganized joint venture owning 1290 Avenue of the Americas. The Partnership has made the real property investments set forth in the following table:
SALE OR DISPOSITION DATE OR IF OWNED AT DECEMBER 31, 1999, NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED AND LOCATION SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b) - ---------------------- ---------- -------- ---------------------- --------------------- 1. Copley Place multi-use complex Boston, Massachusetts. . . 1,220,000 sq.ft. 9/1/83 1/23/97 fee ownership of improve- n.r.a. ments and leasehold interest in air rights (through joint venture partnership) (e) 2. 1001 Fourth Avenue Plaza office building Seattle, Washington . . . . 678,000 sq.ft. 9/1/83 11/1/93 fee ownership of land and n.r.a. improvements 3. First Tennessee Plaza (Plaza Tower) office building Knoxville, Tennessee. . . . . 418,000 sq.ft. 10/26/83 9/19/97 fee ownership of land and n.r.a. improvements (e) 4. Gables Corporate Plaza office building Coral Gables, Florida. . . . . . 106,000 sq.ft. 11/15/83 1/5/94 fee ownership of land and n.r.a. improvements (through joint venture partnership) 5. University Park office building Sacramento, California . . . . 120,000 sq.ft. 1/16/84 1/10/94 fee ownership of land and n.r.a. improvements SALE OR DISPOSITION DATE OR IF OWNED AT DECEMBER 31, 1999, NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED AND LOCATION SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b) - ---------------------- ---------- -------- ---------------------- --------------------- 6. Sherry Lane Place office building Dallas, Texas. . . 286,000 sq.ft. 12/1/83 9/12/97 fee ownership of land and n.r.a. improvements (through joint venture partnerships)(e) 7. Allied Automotive Center Southfield, Michigan . . . . . 192,000 sq.ft. 3/30/84 10/10/90 fee ownership of land and n.r.a. improvements (e) 8. Commercial Union Building Quincy, Massachusetts. . . 172,000 sq.ft. 3/12/84 8/15/91 fee ownership of land and n.r.a. improvements 9. 237 Park Avenue Building New York, New York . . . . . 1,140,000 sq.ft. 8/14/84 (h) (i) fee ownership of land and n.r.a. improvements (through joint venture partnerships) (c) 10. 1290 Avenue of the Americas Building New York, New York . . . . . 2,000,000 sq.ft. 7/27/84 (h) fee ownership of land and n.r.a. improvements (through joint venture partnerships) (c) 11. 2 Broadway Building New York, New York . . . . . 1,600,000 sq.ft. 8/14/84 9/18/95 fee ownership of land and n.r.a. improvements (through joint venture partnerships) (c)(e) SALE OR DISPOSITION DATE OR IF OWNED AT DECEMBER 31, 1999, NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED AND LOCATION SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b) - ---------------------- ---------- -------- ---------------------- --------------------- 12. Long Beach Plaza shopping center Long Beach, California . . . . 559,000 sq.ft. 6/22/83 12/31/98 fee ownership of land and g.l.a. improvements and leasehold interest in the parking structure (d)(f) 13. Michael's (Marshall's) Aurora Plaza shopping center Aurora (Denver), Colorado . . . . . 123,000 sq.ft. 4/1/83 10/15/97 fee ownership of land and g.l.a. improvements (e) 14. Old Orchard shopping center Skokie (Chicago), Illinois . . . . . 843,000 sq.ft. 4/1/84 8/30/93 fee ownership of land and g.l.a. improvements (through a joint venture partnership) (g) 15. Heritage Park-II Apartments Oklahoma City, Oklahoma . . . . . 244 units 7/1/83 3/26/92 fee ownership of land and improvements (through a joint venture partnership) 16. Quail Place Apartments Oklahoma City, Oklahoma . . . . . 180 units 7/1/83 3/26/92 fee ownership of land and improvements (through a joint venture partnership) 17. Lake Point Apartments Charlotte, North Carolina . . 208 units 9/15/83 12/29/89 fee ownership of land and improvements SALE OR DISPOSITION DATE OR IF OWNED AT DECEMBER 31, 1999, NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED AND LOCATION SIZE PURCHASE CAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP (b) - ---------------------- ---------- -------- ---------------------- --------------------- 18. Eastridge Apartments Tucson, Arizona. . 456 units 8/23/83 6/30/94 fee ownership of land and improvements (through a joint venture partnership) 19. Rio Cancion Apartments Tucson, Arizona. . 380 units 8/18/83 3/31/93 fee ownership of land and improvements 20. Bridgeport Apartments Irving, Texas. . . 312 units 9/30/83 4/2/92 fee ownership of land and improvements 21. Carrollwood Station Apartments Tampa, Florida . . 336 units 12/16/83 3/2/98 fee ownership of land and improvements (through a joint venture partnership) (e) 22. Greenwood Creek II Apartments Benbrook (Fort Worth), Texas. . . . . . . 152 units 3/30/84 4/6/93 fee ownership of land and improvements 23. The Glades Apartments Jacksonville, Florida . . . . . 360 units 10/9/84 11/21/96 fee ownership of land and improvements (through a joint venture partnership) - ----------------------- (a) The computation of this percentage for properties held at December 31, 1999 does not include amounts invested from sources other than the original net proceeds of the public offering as described above and in Item 7. (b) Reference is made to the Notes filed with this annual report for a description of the long-term mortgage indebtedness that had been secured by certain of the Partnership's real property investments. (c) Reference is made to the Notes for a description of the joint venture partnership or partnerships through which the Partnership made this real property investment. (d) Reference is made to the Notes for a description of the leasehold interest in the land on which a portion of this real property investment had been situated. (e) This property or the Partnership's interest in this property has been sold. Reference is made to the Notes for a description of the sale of such real property investment. (f) This property has been disposed of. Reference is made to the Notes for a description of such transaction. (g) The venture sold its interest in the property. Reference is made to the Notes. (h) The original invested capital percentage for the 237 Park Avenue Building and the 1290 Avenue of the Americas Building was 4% and 8%, respectively. Reference is made to the Notes for a description of the reorganization and restructuring of the Partnership's indirect interests in these investment properties. (i) As a result of the restructuring that occurred in 1999, the Partnership owns through JMB/NYC an indirect interest in 237 Park Avenue and certain other investments. Reference is made to the Notes for a description of such transaction.
The Partnership has no employees. The terms of transactions between the Partnership, the General Partners and their affiliates are set forth in Item 11 below to which reference is hereby made for a description of such terms and transactions. ITEM 2. PROPERTIES As a result of the restructuring that occurred in 1999, the Partnership owns through JMB/NYC (i) an indirect interest in 1290 Avenue of the Americas, and (ii) an indirect interest in 237 Park Avenue and certain other investments. The following is certain information concerning 237 Park Avenue and 1290 Avenue of the Americas. PROPERTY AND LOCATION NET RENTABLE AREA 237 Park Avenue Building 1,140,000 square feet New York, New York 1290 Avenue of the Americas Building 2,000,000 square feet New York, New York ITEM 3. LEGAL PROCEEDINGS The Partnership is not subject to any material pending legal proceedings. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of security holders during 1998 and 1999. PART II ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS AND RELATED SECURITY HOLDER MATTERS As of December 31, 1999, there were 37,966 record holders of the 365,104.02298 Interests outstanding in the Partnership. There is no public market for Interests and it is not anticipated that a public market for Interests will develop. Upon request, the Corporate General Partner may provide information relating to a prospective transfer of Interests to an investor desiring to transfer his Interests. The price to be paid for the Interests, as well as any other economic aspects of the transaction, will be subject to negotiation by the investor. There are certain conditions and restrictions on the transfer of Interests, including, among other things, the requirement that the substitution of a transferee of Interests as a Limited Partner of the Partnership be subject to the written consent of the Corporate General Partner, which may be granted or withheld in its sole and absolute discretion. The rights of a transferee of Interests who does not become a substituted Limited Partner will be limited to the rights to receive his share of profits or losses and cash distributions from the Partnership, and such transferee will not be entitled to vote such Interests or have other rights of a Limited Partner. No transfer will be effective until the first day of the next succeeding calendar quarter after the requisite transfer form satisfactory to the Corporate General Partner has been received by the Corporate General Partner. The transferee consequently will not be entitled to receive any cash distributions or any allocable share of profits or losses for tax purposes until such next succeeding calendar quarter. Profits or losses from operations of the Partnership for a calendar year in which a transfer occurs will be allocated between the transferor and the transferee based upon the number of quarterly periods in which each was recognized as the Holder of the Interests, without regard to the results of the Partnership's operations during particular quarterly periods and without regard to whether cash distributions were made to the transferor or transferee. Profits or losses arising from the sale or other disposition of Partnership properties will be allocated to the recognized Holder of the Interests as of the last day of the quarter in which the Partnership recognized such profits or losses. Cash distributions to a Holder of Interests arising from the sale or other disposition of Partnership properties will be distributed to the recognized Holder of the Interests as of the last day of the quarterly period with respect to which such distribution is made. Reference is made to Item 6 below for a discussion of cash distribu- tions made to the Holders of Interests. Reference is made to the Notes for a discussion of the provisions of the Partnership Agreement relating to cash distributions. It currently appears unlikely that any significant distributions will be made by the Partnership due to, among other things, the level of indebtedness on 1290 Avenue of the Americas, the preference levels to other partners within the reorganized joint venture owning 1290 Avenue of the Americas, and the purchase money note payable by JMB/NYC, which requires payment of principal and interest out of distributions payable to JMB/NYC by the Partnerships in which it has interests. ITEM 6. SELECTED FINANCIAL DATA CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES DECEMBER 31, 1999, 1998, 1997, 1996 AND 1995 (NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
1999 1998 1997 1996 1995 ------------- ------------- ----------- ------------ ------------ Total income. . . . . . . . $ 300,152 5,173,967 16,941,329 69,093,943 66,763,349 ============ ============ ============ ============ ============ Earnings (loss) before gains on sale or disposi- tion of securities, investment properties or interest in invest- ment property. . . . . . . $ 2,286,026 (4,612,001) (5,592,268) 42,099,222 (25,732,699) Gains (losses) on sale or disposition of securities, investment properties or interest in investment property, net of venture partners' share of $14,492,690 in 1997 and ($329,169) in 1996. . . . . . . . . . 980,945 5,365,511 96,019,552 5,484,249 -- Partnership's share of gains (losses) on sale of property or interest in property of unconsolidated ventures . . . . . . . . . -- -- -- -- (14,789,529) ------------ ------------ ------------ ------------ ------------ Earnings (loss) before extraordinary items. . . . 3,266,971 753,510 90,427,284 47,583,471 (40,522,228) Extraordinary items . . . . (1,121,200) 47,015,485 55,468,888 -- 15,632,407 ------------ ------------ ------------ ------------ ------------ Net earnings (loss) . . . . . . . . . . $ 2,145,771 47,768,995 145,896,172 47,583,471 (24,889,821) ============ ============ ============ ============ ============ 1999 1998 1997 1996 1995 ------------- ------------ ----------- ------------ ------------ Net earnings (loss) per Interest (b): Earnings (loss) before gains on sale or disposition of securities, investment properties or interest in investment property . . . . . . . . $ 6.01 (12.12) (14.67) 110.42 (67.47) Gains (losses) on sale or disposition of securities, investment properties or interest in investment property . . . . . . . . 2.66 14.54 259.75 14.83 -- Partnership's share of gains (losses) on sale of property or interest in property of unconsolidated ventures . . . . . . . . -- -- -- -- (39.99) Extraordinary items . . . (3.04) 74.92 150.05 -- 42.27 ------------ ------------ ------------ ------------ ------------ Net earnings (loss) . . . $ 5.63 77.34 395.13 125.25 (65.19) ============ ============ ============ ============ ============ Total assets. . . . . . . . $ 2,669,876 4,035,478 27,600,886 280,595,580 307,460,106 Long-term debt. . . . . . . $ -- 1,667,340 1,479,679 384,098,834 382,303,505 Cash distributions per Interest (b) . . . . . $ -- 30.00 25.00 -- 30.00 ============ ============ ============ ============ ============ - ------------- (a) The above selected financial data should be read in conjunction with the consolidated financial statements and the related notes appearing elsewhere in this annual report. (b) Cash distributions from the Partnership are generally not equal to Partnership income (loss) for financial reporting or Federal income tax purposes. Each Partner's taxable income or (loss) from the Partnership in each year is equal to his allocable share of the taxable income (loss) of the Partnership, without regard to the cash generated or distributed by the Partnership. Accordingly, cash distributions to the Holders of Interests since the inception of the Partnership have not resulted in taxable income to such Holders of Interests and have therefore represented a return of capital.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES As a result of the public offering of Interests as described in Item 1, the Partnership had approximately $326,000,000 (after deducting selling expenses) and other offering costs with which to make investments in income-producing commercial and residential real property, to pay legal fees and other costs (including acquisition fees) related to such invest- ments and to satisfy working capital requirements. A portion of the proceeds was utilized to acquire the properties described in Item 1 above. At December 31, 1999, the Partnership had cash and cash equivalents of approximately $2,523,000. These funds are available for working capital requirements and reserves and potential future distributions to the General Partners and Holders of Interests. The Partnership does not consider its indirect interest in JMB/NYC to be a significant source of liquidity. However, in the fourth quarter of 1999, the Partnership received approximately $1,037,000, which represented a partial return of its share of the funds held in escrow (including interest earned) as collateral under the indemnification agreement as discussed below. The Partnership expects to receive the remainder of its share of the funds held in escrow (including accrued interest) after termination of such agreement. Reference is made to the Partnership's property-specific discussion of JMB/NYC in the Notes. In December 1999, the Partnership reached an agreement with the seller of the Long Beach investment property for the retirement of the promissory note payable in the amount of $10,000,000 originally due in 2013 and 2014 to the seller in connection with the acquisition of the property by the Partnership in 1983. The terms of the agreement provided for full satisfaction of the loan in exchange for a payment of $3,000,000. On December 22, 1999, the Partnership remitted this payment to the seller and received a full release of all obligations related to the loan. In 1984, the Partnership purchased certain government securities to help offset the $10,000,000 obligation due in 2013 and 2014. The Partnership sold these marketable securities (with a market value of approximately $2,535,000 and a carrying value of $1,559,000) and used the proceeds to make the payment, with the remainder of approximately $465,000 funded from available cash held by the Partnership. The Partnership had suspended operating cash distributions to the Holders of Interests and General Partners effective as of the first quarter of 1992. In November 1999, JMB/NYC closed a transaction (the "Restructuring"), pursuant to which, among other things, JMB/NYC's interests in 237 Park Avenue ("237 Park") and 1290 Avenue of the Americas ("1290 Avenue of the Americas") were restructured. Under the Restructuring, the partnership that owns 237 Park would be converted to a limited liability company ("237 Park LLC"). The membership interest in 237 Park LLC owned by 237/1290 Upper Tier Associates, L.P. (the "Upper Tier Partnership"), in which JMB/NYC is a limited partner with a 99% interest, was contributed to a partnership (the "237 Partnership") that acquired the other membership interests in 237 Park LLC from the REIT and one of its affiliates. In exchange for the interest in 237 Park LLC, the Upper Tier Partnership received a limited partnership interest in the 237 Partnership having a fair market value (determined in accordance with the partnership agreement of the 237 Partnership) of approximately $500,000. (JMB/NYC's total investment in the 237 Partnership is significantly less than 1% of the 237 Partnership.) The 237 Partnership owns a portfolio of investments in addition to 237 Park. JMB/NYC has the right, during the month of July of each calendar year commencing with 2001, to cause a sale of the interest in the 237 Partnership for a price equal to the greater of the fair market value of such interest (determined in accordance with the partnership agreement of the 237 Partnership) and a specified amount, of which JMB/NYC's share would be $500,000. In addition, the general partner of the 237 Partnership has the right, during the month of January of each calendar year commencing with 2002, to purchase the interest in the 237 Partnership for a price equal to the greater of the fair market value of such interest (determined as described above) and a specified amount, of which JMB/NYC's share would be $650,000. The Restructuring, by itself, of JMB/NYC's indirect interest in 237 Park did not result in the Partnership's (or the Holders of Interests') recognizing any income for Federal income tax purposes. In addition, although under the terms of the Restructuring JMB/NYC is not able to cause a sale of the interest in the 237 Partnership prior to 2001, the earliest date on which such interest could be purchased at the election of the general partner of the 237 Partnership is January 2002. In the absence of JMB/NYC's earlier election to cause a sale of its interest in the 237 Partnership, this extends by a year (to January 2002 from January 2001) the date on which JMB/NYC's indirect interest in 237 Park was previously subject to purchase at the election of an affiliate of the REIT. JMB/NYC's indirect interest through the Upper Tier Partnership in the Partnership (the "1290 Partnership") that owns 1290 Avenue of the Americas would also be modified, although the REIT continues to own the controlling interest in the property. In general, the REIT has the right to sell 1290 Avenue of the Americas or the REIT's interest in the 1290 Partnership or permit a sale of more than 51% of the stock in the REIT, during the period January 1, 2000 through February 28, 2001, provided that JMB/NYC receives the greater of (i) an amount based on a formula relating to the operations of the property (the "1290 Formula Price"), and (ii) $4,500,000. Although the REIT is able to cause a sale of the entire property one year earlier than previously, which would result in the Partnership's (and the Holders of Interests') recognition of income for Federal income tax purposes from such a transaction, JMB/NYC would be entitled to receive a minimum specified amount (determined as described above) in connection with such sale. An affiliate of the REIT also has the right, during the month of March of each calendar year commencing with 2001, to purchase JMB/NYC's indirect interest in the 1290 Partnership for the greater of (x) the 1290 Formula Price and (y) $1,400,000. In addition, JMB/NYC has the right, during the month of September of each calendar year commencing with 2001, to require an affiliate of the REIT to purchase JMB/NYC's indirect interest in the 1290 Partnership for the greater of (1) the 1290 Formula Price, and (2) $1,000,000. A portion of the purchase price for JMB/NYC's interest in the 1290 Avenue of the Americas and 237 Park Avenue office buildings is represented by a promissory note (the "Purchase Note") bearing interest at 12-3/4% per annum. The Purchase Note is secured by JMB/NYC's indirect interest in the 1290 Partnership and the 237 Partnership and is non-recourse to JMB/NYC. Prior to maturity, the Purchase Note requires payment of principal and interest out of distributions made to JMB/NYC from the 1290 Partnership and the 237 Partnership. Unpaid interest accrues and is deferred, compounded monthly. Unpaid principal and interest are due at maturity on January 2, 2001, and it is not expected that JMB/NYC will have funds to pay the Purchase Note at maturity. The outstanding principal and accrued and deferred interest on the Purchase Note at December 31, 1999, was approximately $133,148,000. In December 1999, the Affiliated Partners advanced a total of approximately $425,000 (of which the Partnership advanced approximately $105,000) to the limited partners of JMB/NYC, which was used to acquire a $5,425,000 tranche of the Purchase Note and the related security agreement for the collateralization of such tranche. As a result of this purchase, such limited partners, as creditors of JMB/NYC, are entitled to receive up to $5,425,000 in proceeds otherwise payable to JMB/NYC in respect of its indirect interest in the 1290 Partnership or the 237 Partnership. Such amounts received by the limited partners will be distributed to the Affiliated Partners in proportion to their respective advances made to purchase the tranche (i.e., 25% to the Partnership and 75% in the aggregate to the other Affiliated Partners). Also in December 1999, JMB/NYC was entitled to receive refinancing proceeds, as defined, of approximately $446,000 in respect of its indirect interest in the 1290 Partnership as a result of a refinancing of the mortgage note secured by the 1290 Avenue of Americas office building. These proceeds were used by JMB/NYC to make a payment of approximately $443,000 on the Purchase Note tranche held by the limited partners. It is expected that the limited partners will repay the Partnership's $105,000 advance in 2000. In connection with the Restructuring, approximately $4,460,000 in face amount at maturity of U.S. Treasury securities held as collateral for the indemnification obligations of the Affiliated Partners was released from escrow and returned to the Affiliated Partners (of which approximately $1,027,000 was distributed to the Partnership). The remaining face amount of the securities will be held as collateral for the indemnification obligations of the Affiliated Partners relating to 1290 Avenue of the Americas generally until 90 days after the earlier of the sale of 1290 Avenue of the Americas and the sale of JMB/NYC's indirect interest in 1290 Avenue of the Americas. The Partnership expects its share of the remaining collateral, including interest earned thereon, to be returned after termination of the indemnification obligations. Due, among other things, to the level of indebtedness remaining on 1290 Avenue of the Americas, the Purchase Note payable by JMB/NYC and the significant preference levels to other partners within the 1290 Partnership, it is unlikely that the Partnership will receive any significant distributions from JMB/NYC or be able to make any significant distributions to the Holders Of Interests. However, in connection with sales or other dispositions of 1290 Avenue of the Americas or 237 Park Avenue or of the Partnership's (or JMB/NYC's) interest in those properties, Holders of Interests will recognize a substantial amount of net gain for Federal income tax purposes (corresponding at a minimum to all or most of their deficit capital account balances for tax purposes) even though the Partnership would not be able to make any significant amounts of distributions. For certain Holders of Interests such taxable income may be offset by their suspended passive activity losses (if any). Each Holder's tax consequences will depend on his own tax situation. RESULTS OF OPERATIONS Significant fluctuations between periods in the accompanying consolidated financial statements are primarily the result of the disposition of Long Beach Plaza in December 1998, the sale of the Partnership's interest in Carrollwood Station Associates in March 1998, the sale of the Partnership's interest in the Copley Place multi-use complex in January 1997, the sales of the Sherry Lane Place and First Tennessee Office Building in September 1997, and the sale of Michael's (Marshall's) Aurora Plaza in October 1997. Reference is made to the Notes in the accompanying consolidated financial statements for discussions of the sales. The decrease in short term investments, interest, rents and other receivables and related decrease in long-term debt at December 31, 1999 as compared to December 31, 1998 is primarily due to the sale of securities held by the Partnership. The proceeds from such sale were used to retire the note payable (with a maturity value of $10,000,000) to the seller of the Long Beach investment property to the Partnership in December, 1999. Reference is made to the Notes for a description of such transaction. Distributions received in excess of recorded investment at December 31, 1999 is a result of the distribution by Carlyle Managers, Inc. and Carlyle Investors, Inc. of the notes related to the Partnership's obligations to fund on demand additional paid in capital to such corporations. These obligations were reduced and, subsequently, fully retired in October 1999. The decrease in interest income for the year ended December 31, 1999 as compared to the year ended December 31, 1998 and the decrease in interest income for the year ended December 31, 1998 as compared to the year ended December 31, 1997 are primarily due to lower average balances in short term investments in 1999 and 1998 as a result of the payments of previously deferred property management and leasing fees and distributions to Holders of Interests of sale proceeds. The dividend income for the year ended December 31, 1999 is due to dividends paid by Carlyle Investors, Inc. and Carlyle Managers, Inc. to the Partnership (as a shareholder of both corporations) as a result of amounts distributed by JMB/NYC related to the escrow refund discussed above. The decrease in other income for the year ended December 31, 1999 as compared to the year ended December 31, 1998 and the increase in other income for the year ended December 31, 1998 as compared to the year ended December 31, 1997 is primarily due to the 1998 sale of stock which was received in a settlement of claims against a tenant in bankruptcy. The claim originated from the Partnership's interest in the Old Orchard Venture prior to its being sold in August 1993. The decrease in professional services and general and administrative expenses for the year ended December 31, 1999 as compared to the years ended December 31, 1998 and 1997 is primarily due to the Partnership incurring fewer administrative costs due to the sales of the Partnership's investments discussed above. The increase in the Partnership's share of the reduction of the maximum unfunded obligation under the indemnification agreement for the year ended December 31, 1999 as compared to the years ended December 31, 1998 and 1997 is primarily due to the restructuring of the Partnership's indirect interest in 237 Park. As a result of such restructuring, the Partnership was released from a portion of its obligations under the indemnification agreement. Reference is made to the discussion of JMB/NYC in the Notes for further information concerning this transaction. The gain on sale or disposition of securities, investment properties or interest in investment property, net of venture partner's share, of $980,945 for the year ended December 31, 1999 is due to the sale of securities held by the Partnership. Such gain of $5,365,511 for the year ended December 31, 1998 consists of gain related to the sale of the Partnership's interest in Carrollwood Station Associates. The gain on sale or disposition of investment properties, net of venture partners' share, of $96,019,552 for the year ended December 31, 1997 consists of gain of $71,276,721 related to the sale of the interest in Copley Place multi-use complex, a gain of $541,792 related to the sale of land at the Allied Automotive Center, a gain of $18,174,417 related to the sale of Sherry Lane Place Office Building, a gain of $5,207,750 related to the sale of the First Tennessee Plaza Office Building and a gain of $818,872 related to the sale of Michael's Aurora Plaza. The extraordinary item of $1,121,200 for the year ended December 31, 1999 is due to a loss on the extinguishment of debt in 1999 related to the early retirement of the note payable to the seller of Long Beach property. The extraordinary item of $47,015,485 for the year ended December 31, 1998 consists of the forgiveness of principal and accrued but unpaid interest by the lender at the time of disposition of the Long Beach Plaza. The extraordinary items of $55,468,888 for the year ended December 31, 1997 consists of the forgiveness of indebtedness of $55,183,784 on the purchase price note payable to an affiliate in connection with the sale of the interest in the Copley Place multi-use complex, and the write off of unamortized deferred mortgage expense of $285,104 resulting from the sales of the Sherry Lane Place Office Building and the First Tennessee Plaza Office Building. INFLATION Due to the decrease in the level of inflation in recent years, inflation generally has not had a material effect on rental income or property operating expenses. Inflation is not expected to significantly impact future operations of the Partnership. YEAR 2000 The Partnership has not experienced any material disruption in its operations in connection with the century change and does not expect any such disruption in the future. The Partnership has not needed to implement contingency plans, has not had any material remediation costs and does not anticipate that its future costs of remediation will be material. However, there can be no assurance that disruption may not occur in the future or that the cost of any required remediation may not be material. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Partnership does not believe that it is exposed to market risk relating to interest rate changes. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES INDEX Independent Auditors' Report Consolidated Balance Sheets, December 31, 1999 and 1998 Consolidated Statements of Operations, years ended December 31, 1999, 1998 and 1997 Consolidated Statements of Partners' Capital Accounts (Deficits), years ended December 31, 1999, 1998 and 1997 Consolidated Statements of Cash Flows, years ended December 31, 1999, 1998 and 1997 Notes to Consolidated Financial Statements SCHEDULES NOT FILED: All schedules have been omitted as the required information is inapplicable or the information is presented in the consolidated financial statements or related notes. INDEPENDENT AUDITORS' REPORT The Partners CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII: We have audited the consolidated financial statements of Carlyle Real Estate Limited Partnership - XIII, a limited partnership, (the Partnership), and consolidated ventures as listed in the accompanying index. These consolidated financial statements are the responsibility of the General Partners of the Partnership. Our responsibility is to express an opinion on these consolidated financial statements 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 the General Partners of the Partnership, 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Partnership and consolidated ventures at December 31, 1999 and 1998, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1999, in conformity with generally accepted accounting principles. KPMG LLP Chicago, Illinois March 20, 2000 CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1999 AND 1998 ASSETS ------
1999 1998 ------------ ----------- Current assets: Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . $ 2,523,388 2,577,367 Short-term investments. . . . . . . . . . . . . . . . . . . . . . . . -- 249,985 Interest, rents and other receivables . . . . . . . . . . . . . . . . 41,300 1,163,973 ------------ ------------ Total current assets. . . . . . . . . . . . . . . . . . . . . 2,564,688 3,991,325 Investment in unconsolidated ventures, at equity. . . . . . . . . . . . -- 31,957 Deferred expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 12,196 Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105,188 -- ------------ ------------ $ 2,669,876 4,035,478 ============ ============ CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES CONSOLIDATED BALANCE SHEETS - CONTINUED LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS (DEFICITS) ----------------------------------------------------- 1999 1998 ------------ ----------- Current liabilities: Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 89,008 103,437 Amounts due to affiliates . . . . . . . . . . . . . . . . . . . . . . 11,980 731,623 ------------ ------------ Total current liabilities . . . . . . . . . . . . . . . . . . 100,988 835,060 Partnership's share of the maximum unfunded obligation under the indemnification agreement. . . . . . . . . . . . 2,225,817 3,997,006 Distribution received in excess of recorded investment. . . . . . . . . 661,228 -- Long-term debt, less current portion. . . . . . . . . . . . . . . . . . -- 1,667,340 ------------ ------------ Commitments and contingencies Total liabilities . . . . . . . . . . . . . . . . . . . . . . 2,988,033 6,499,406 Partners' capital accounts (deficits): General partners: Capital contributions . . . . . . . . . . . . . . . . . . . . . . 1,000 1,000 Cumulative net earnings (losses). . . . . . . . . . . . . . . . . 1,115,114 1,025,076 Cumulative cash distributions . . . . . . . . . . . . . . . . . . (1,149,967) (1,149,967) ------------ ------------ (33,853) (123,891) ------------ ------------ Limited partners: Capital contributions, net of offering costs. . . . . . . . . . . 326,224,167 326,224,167 Cumulative net earnings (losses). . . . . . . . . . . . . . . . . (265,436,533) (267,492,266) Cumulative cash distributions . . . . . . . . . . . . . . . . . . (61,071,938) (61,071,938) ------------ ------------ (284,304) (2,340,037) ------------ ------------ Total partners' capital accounts (deficits) . . . . . . . . . (318,157) (2,463,928) ------------ ------------ $ 2,669,876 4,035,478 ============ ============ See accompanying notes to consolidated financial statements.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
1999 1998 1997 ------------ ------------ ------------ Income: Rental income . . . . . . . . . . . . . . . . . . . $ -- 4,529,682 16,385,742 Interest income . . . . . . . . . . . . . . . . . . 275,237 458,243 555,587 Dividend income . . . . . . . . . . . . . . . . . . 20,757 -- -- Other income. . . . . . . . . . . . . . . . . . . . 4,158 186,042 -- ------------ ------------ ------------ 300,152 5,173,967 16,941,329 ------------ ------------ ------------ Expenses: Mortgage and other interest . . . . . . . . . . . . 233,008 4,771,671 9,869,385 Property operating expenses . . . . . . . . . . . . -- 4,337,451 10,768,100 Professional services . . . . . . . . . . . . . . . 164,881 271,017 414,224 Amortization of deferred expenses . . . . . . . . . 12,196 28,688 661,788 General and administrative. . . . . . . . . . . . . 395,299 510,992 540,647 ------------ ------------ ------------ 805,384 9,919,819 22,254,144 ------------ ------------ ------------ (505,232) (4,745,852) (5,312,815) Partnership's share of the reduction of the maximum unfunded obligation under the indemnification agreement . . . . . . . . . . . 2,809,020 134,252 134,252 Partnership's share of income (loss) from unconsolidated ventures . . . . . . . . . . . . . . (17,762) -- (400,400) Venture partners' share of earnings (loss) from consolidated ventures' operations . . . . . . . . . -- (401) (13,305) ------------ ------------ ------------ Earnings (loss) before gains on sale or disposition of securities, investment properties or interest in investment property . . . . . . . . . . . . 2,286,026 (4,612,001) (5,592,268) Gains (loss) on sale or disposition of securities, investment properties or interest in investment property, net of venture partners' share of $14,492,690 in 1997 . . . . . . . . . . . . . . . . 980,945 5,365,511 96,019,552 ------------ ------------ ------------ Earnings (loss) before extraordinary items. . 3,266,971 753,510 90,427,284 CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED 1999 1998 1997 ------------ ------------ ------------ Extraordinary items . . . . . . . . . . . . . . . . . (1,121,200) 47,015,485 55,468,888 ------------ ------------ ------------ Net earnings (loss). . . . . . . . . . . . . . $ 2,145,771 47,768,995 145,896,172 ============ ============ ============ Net earnings (loss) per limited partnership interest: Earnings (loss) before gains on sale or disposition of securities, investment properties or interest in investment property . . . . . . . . . . . . . . $ 6.01 (12.12) (14.67) Gains (loss) on sale or disposition of securities, investment properties or interest in investment property. . . . . . . 2.66 14.54 259.75 Extraordinary items . . . . . . . . . . . . . . . (3.04) 74.92 150.05 ------------ ------------ ------------ Net earnings (loss) . . . . . . . . . . . . . . $ 5.63 77.34 395.13 ============ ============ ============ See accompanying notes to consolidated financial statements.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS) YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
GENERAL PARTNERS LIMITED PARTNERS ------------------------------------------------ ----------------------------------------------------- CONTRI- BUTIONS NET NET OF NET CONTRI- EARNINGS CASH OFFERING EARNINGS CASH BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL ------- ---------- ------------- ----------- ------------ ------------ ------------------------- Balance (deficit) Decem- ber 31, 1996 . . . . .$1,000(19,776,680) (1,149,967)(20,925,647) 326,224,167 (440,355,677) (40,958,417)(155,089,927) Net earn- ings (loss). . -- 1,291,194 -- 1,291,194 -- 144,604,978 -- 144,604,978 Cash distri- butions ($25 per limited partner- ship interest). . . -- -- -- -- -- -- (9,149,292) (9,149,292) ------ ----------- ---------- ----------- ----------- ------------ ----------- ----------- Balance (deficit) Decem- ber 31, 1997 . . . . .1,000 (18,485,486) (1,149,967)(19,634,453) 326,224,167 (295,750,699) (50,107,709)(19,634,241) Net earnings (loss) . . . . -- 19,510,562 -- 19,510,562 -- 28,258,433 -- 28,258,433 Cash distri- butions ($30.00 per limited partner- ship interest). . . -- -- -- -- -- -- (10,964,229)(10,964,229) ------ ----------- ---------- ----------- ----------- ------------ ----------- ----------- CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS (DEFICITS) - CONTINUED GENERAL PARTNERS LIMITED PARTNERS ------------------------------------------------ ----------------------------------------------------- CONTRI- BUTIONS NET NET OF NET CONTRI- EARNINGS CASH OFFERING EARNINGS CASH BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL ------- ---------- ------------- ----------- ------------ ------------ ------------------------- Balance (deficit) Decem- ber 31, 1998 . . . . .1,000 1,025,076 (1,149,967) (123,891) 326,224,167 (267,492,266) (61,071,938) (2,340,037) Net earnings (loss) . . . . -- 90,038 -- 90,038 -- 2,055,733 -- 2,055,733 Cash distri- butions. . . . -- -- -- -- -- -- -- -- ------ ----------- ---------- ----------- ----------- ------------ ----------- ----------- Balance (deficit) Decem- ber 31, 1999 . . . . .$1,000 1,115,114 (1,149,967) (33,853) 326,224,167 (265,436,533) (61,071,938) (284,304) ====== =========== ========== =========== =========== ============ =========== =========== See accompanying notes to consolidated financial statements.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
1999 1998 1997 ------------ ------------ ------------ Cash flows from operating activities: Net earnings (loss) . . . . . . . . . . . . . . . . $ 2,145,771 47,768,995 145,896,172 Items not requiring (providing) cash or cash equivalents: Amortization of deferred expenses . . . . . . . . 12,196 28,688 661,788 Amortization of discount on long-term debt. . . . 211,460 187,661 166,538 Long-term debt - deferred accrued interest. . . . -- -- 629,639 Partnership's share of income (loss) from unconsolidated ventures . . . . . . . . . . . . 17,762 -- 400,400 Partnership's share of the reduction of the maximum unfunded obligation . . . . . . . . . . (2,809,020) (134,252) (134,252) Venture partners' share of ventures' operations. . . . . . . . . . . . . . . . . . . -- 401 13,305 Gain on sale or disposition of securities, investment properties or interest in investment properties, net of venture partner's share . . . . . . . . . . . . . . . . (980,945) (5,365,511) (96,019,552) Net asset decrease resulting from the sale of investment properties . . . . . . . . . -- -- 442,505 Extraordinary items . . . . . . . . . . . . . . . 1,121,200 (47,015,485) (55,468,888) Working capital decrease related to sale of interest in investment property . . . . . . . . -- -- (2,318,702) Changes in: Restricted funds. . . . . . . . . . . . . . . . . -- 23,218 735,933 Interest, rents and other receivables . . . . . . (186,349) 1,046,317 (315,451) Prepaid expenses. . . . . . . . . . . . . . . . . -- 96,133 11,823 Escrow deposits . . . . . . . . . . . . . . . . . -- 107,674 1,729,227 Accrued rents receivable. . . . . . . . . . . . . -- -- (30,334) Accounts payable. . . . . . . . . . . . . . . . . (14,430) 131,289 (1,496,748) Unearned rents. . . . . . . . . . . . . . . . . . -- (109,854) (266,390) Accrued interest. . . . . . . . . . . . . . . . . -- 4,357,785 5,421,141 Accrued real estate taxes . . . . . . . . . . . . -- -- (1,474,691) Amounts due to affiliates . . . . . . . . . . . . (48,036) (1,262,516) (1,573,492) Tenant security deposits. . . . . . . . . . . . . -- (255,538) (386,996) ------------ ------------ ------------ Net cash provided by (used in) operating activities. . . . . . . . . . . (530,391) (394,995) (3,377,025) ------------ ------------ ------------ CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED 1999 1998 1997 ------------ ------------ ------------ Cash flows from investing activities: Cash proceeds from sale of investment properties or interest in investment property, net of selling expenses . . . . . . . . -- 4,642,150 19,329,753 Additions to investment properties. . . . . . . . . -- (97,746) (2,494,608) Partnership's advance to affiliated entity. . . . . (105,188) -- -- Net sales and maturities (purchases) of short-term investments . . . . . . . . . . . . 2,540,348 124,100 -- Partnership's distributions from unconsolidated ventures . . . . . . . . . . . . . 1,041,252 -- -- Payment of deferred expenses. . . . . . . . . . . . -- -- (357,657) ------------ ------------ ------------ Net cash provided by (used in) investing activities. . . . . . . . . . . 3,476,412 4,668,504 16,477,488 ------------ ------------ ------------ Cash flows from financing activities: Principal payments on long-term debt. . . . . . . . (3,000,000) (37,494) (453,087) Venture partner's distribution from venture . . . . -- (222,720) -- Distributions to limited partners . . . . . . . . . -- (10,964,229) (9,149,292) ------------ ------------ ------------ Net cash provided by (used in) financing activities. . . . . . . . . . . (3,000,000) (11,224,443) (9,602,379) ------------ ------------ ------------ Net increase (decrease) in cash and cash equivalents. . . . . . . . . . . (53,979) (6,950,934) 3,498,084 Cash and cash equivalents, beginning of year . . . . . . . . . . . . 2,577,367 9,528,301 6,030,217 ------------ ------------ ------------ Cash and cash equivalents, end of year . . . . . . . . . . . . . . . $ 2,523,388 2,577,367 9,528,301 ============ ============ ============ CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED 1999 1998 1997 ------------ ------------ ------------ Supplemental disclosure of cash flow information: Cash paid for mortgage and other interest . . . . . $ -- 413,886 3,652,067 ============ ============ ============ Non-cash investing and financing activities: Reduction in investment in unconsolidated venture $ -- -- 400,000 ============ ============ ============ Net distributions in excess of recorded investment. . . . . . . . . . . . . . . . . . . $ (661,228) -- -- ============ ============ ============ Activity due to sale of investment properties: Reduction of fixed assets, net of accumulated depreciation . . . . . . . . . . . . . . . . . . $ -- 9,379,156 225,785,579 Reduction of working capital. . . . . . . . . . . -- -- 9,495,504 Reduction of security deposits. . . . . . . . . . -- -- (158,400) Reduction of deferred expenses. . . . . . . . . . -- -- 4,609,869 Reduction of long-term debt (including accrued interest) . . . . . . . . . . . . . . . -- (56,394,631) (386,383,929) Venture partners' share of gain . . . . . . . . . -- -- 14,492,690 Gain on sale or disposition of interest in investment properties, net of venture partners' share. . . . . . . . . . . . . . . . . -- -- 96,019,552 Extraordinary items . . . . . . . . . . . . . . . -- 47,015,485 55,468,888 ------------ ------------ ------------ Cash sales proceeds from sale or disposition of investment properties, net of selling expenses. . . . . . . . . . . . . . . . . . . . $ -- 10 19,329,753 ============ ============ ============ CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED 1999 1998 1997 ------------ ------------ ------------ Sale of interest in investment property: Gain on sale of interest in investment property. . . . . . . . . . . . . . . . . . . $ -- 5,365,511 -- Basis in investment property. . . . . . . . . . -- (723,371) -- ------------ ------------ ----------- Cash proceeds from sale of interest in investment property. . . . . . . . . . $ -- 4,642,140 -- ============ ============ =========== Gain on sale of securities. . . . . . . . . . . $ 980,945 -- -- Basis in securities . . . . . . . . . . . . . . 1,559,403 -- -- ------------ ------------ ----------- Cash proceeds from sale of securities . . . $ 2,540,348 -- -- ============ ============ =========== Retirement of long-term debt: Principal balance due on long-term debt . . . . $ 1,878,800 -- -- Payment on long-term debt . . . . . . . . . . . (3,000,000) -- -- ------------ ------------ ----------- Extraordinary item. . . . . . . . . . . . . $ (1,121,200) -- -- ============ ============ =========== Net assets and venture partner's deficit in venture written off at sale of interest in investment property. . . . . . . $ -- 355,705 -- ============ ============ =========== See accompanying notes to consolidated financial statements.
CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII (A LIMITED PARTNERSHIP) AND CONSOLIDATED VENTURES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1999, 1998 AND 1997 OPERATIONS AND BASIS OF ACCOUNTING GENERAL The Partnership holds an approximate indirect 25% interest in JMB/NYC Office Building Associates, L.P. ("JMB/NYC"), which in turn owns an indirect approximate 4.9% interest in commercial real estate in New York, New York consisting of the 1290 Avenue of the Americas property. Due to the Restructuring in November 1999, JMB/NYC owns an indirect interest in the Partnership that owns 237 Park Avenue and certain other investments (JMB/NYC's investment is significantly less than 1% of such partnership). The accompanying consolidated financial statements include the accounts of the Partnership and its consolidated ventures - Copley Place Associates ("Copley Place") (sold January 23, 1997); Carrollwood Station Associates, Ltd. ("Carrollwood") (sold March 2, 1998); and Sherry Lane Associates ("Sherry Lane") (sold September 12, 1997) in which the Partnership had certain preferential claims and rights as discussed below. The effect of all transactions between the Partnership and the consolidated ventures has been eliminated. The equity method of accounting had been applied with respect to the Partnership's indirect 25% interest in JMB/NYC through Carlyle-XIII Associates, L.P. through the confirmation and acceptance of the Amended Plan of Reorganization and Disclosure Statement on October 10, 1996 ("Effective Date"). During 1996, the Partnership reversed those previously recognized losses resulting from its interest in JMB/NYC that it is no longer obligated to fund due to the conversion of JMB/NYC's general partnership interest to a limited partnership interest in the joint ventures which owned 1290 Avenue of the Americas and 237 Park Avenue (collectively, the "Properties") and the terms of the restructuring. The Partnership has no future funding obligations (other than that related to a certain indemnification agreement provided in connection with the restructuring) and has no influence or control over the day-to-day affairs of the joint ventures or partnership which own the Properties subsequent to the Effective Date. Accordingly, the Partnership discontinued the application of the equity method of accounting for the indirect interests in the Properties and additional losses from the investment in unconsolidated venture will not be recognized. Should the unconsolidated venture subsequently report income, the Partnership will resume applying the equity method on its share of such income only after such income exceeds net losses not previously recognized. The Partnership records are maintained on the accrual basis of accounting as adjusted for Federal income tax reporting purposes. The accompanying consolidated financial statements have been prepared from such records after making appropriate adjustments to present the Partnership's accounts in accordance with generally accepted accounting principles ("GAAP") and to consolidate the accounts of the ventures as described above. Such GAAP and consolidation adjustments are not recorded on the records of the Partnership. The effect of these items for the years ended December 31, 1999 and 1998 is summarized as follows:
1999 1998 ------------------------------ ------------------------------ TAX BASIS TAX BASIS GAAP BASIS (UNAUDITED) GAAP BASIS (UNAUDITED) ------------ ---------- ----------- ---------- Total assets. . . . . . . . . . . . $ 2,669,876 42,659,819 4,035,478 44,429,507 Partners' capital accounts (deficits): General partners . . . . . . . (33,853) (4,031,365) (123,891) (4,249,821) Limited partners . . . . . . . (284,304) (48,320,392) (2,340,037) (52,962,082) Net earnings (loss): General partners . . . . . . . 90,038 218,456 19,510,562 1,997,992 Limited partners . . . . . . . 2,055,733 4,641,690 28,258,433 36,094,151 Net earnings (loss) per limited partnership interest. . . . . . . . . . . . . 5.63 12.71 77.34 98.79 ============ ============ ============ ============
The net earnings (loss) per limited partnership interest is based upon the limited partnership interests outstanding at the end of the period. Deficit capital accounts will result, through the duration of the Partnership, in net gain for financial reporting and Federal income tax purposes. The preparation of financial statements in accordance with GAAP requires the Partnership to make estimates and assumptions that affect the reported or disclosed amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Statement of Financial Accounting Standards No. 95 requires the Partnership to present a statement which classifies receipts and payments according to whether they stem from operating, investing or financing activities. The required information has been segregated and accumulated according to the classifications specified in the pronouncement. Partnership distributions from unconsolidated ventures are considered cash flow from operating activities only to the extent of the Partnership's cumulative share of net earnings. In addition, the Partnership records amounts held in U.S. Government obligations at cost, which approximates market. For the purposes of these statements, the Partnership's policy was to consider all such amounts held with original maturities of three months or less ($2,350,000 and $2,461,590 at December 31, 1999 and 1998, respectively) as cash equivalents, which includes investments in an institutional mutual fund that holds U.S. Government obligations, with any remaining amounts (generally with original maturities of one year or less) reflected as short-term investments being held to maturity. Deferred expenses were comprised principally of leasing fees which were amortized using the straight-line method over the terms stipulated in the related agreements, and commitment fees which were amortized over the related commitment periods. Although certain leases of the Partnership provided for tenant occupancy during periods for which no rent is due and/or increases in minimum lease payments over the term of the lease, the Partnership accrued prorated rental income for the full period of occupancy on a straight-line basis. No provision for state or Federal income taxes has been made as the liability for such taxes is that of the partners rather than the Partnership. However, in certain instances, the Partnership has been or may be required under applicable law to remit directly to the tax authorities amounts representing withholding from distributions paid to partners. The Partnership acquired, either directly or through joint ventures, interests in nine apartment complexes, three shopping centers, ten office buildings and a multi-use complex. Twenty-one properties have been sold or disposed of by the Partnership as of December 31, 1999. Statement of Financial Accounting Standards No. 121 ("SFAS 121") "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" was adopted by the Partnership in 1996. SFAS 121 required that the Partnership record an impairment loss on its properties to be held for investment whenever their carrying value cannot be fully recovered through estimated undiscounted future cash flows from their operations and sale. The amount of the impairment loss to be recognized was the difference between the property's carrying value and the property's estimated fair value. The Partnership's policy was to consider a property to be held for sale or disposition when the Partnership had committed to a plan to sell or dispose of such property and active marketing activity had commenced or was expected to commence in the near term or the Partnership had concluded that it might have disposed of the property by no longer funding operating deficits or debt service requirements of the property thus allowing the lender to realize upon its security. In accordance with SFAS 121, any properties identified as "held for sale or disposition" were no longer depreciated. Adjustments for impairment loss for such properties (subsequent to the date of adoption of SFAS 121) were made in each period as necessary to report these properties at the lower of carrying value or fair value less costs to sell. In certain situations, such estimated fair value was less than the existing non-recourse debt which was secured by the property. The results of operations, net of venture partners' share, for consolidated properties sold or disposed of during the past three years were $0, $(4,688,400) and $(3,727,014), respectively, for the years ended December 31, 1999, 1998 and 1997. VENTURE AGREEMENTS - GENERAL The Partnership at December 31, 1999 is a party to one operating joint venture agreement (JMB/NYC). Pursuant to such agreement, the Partnership made initial capital contributions of approximately $43,254,393 (before legal and other acquisition costs and its share of operating deficits as discussed below). INVESTMENT PROPERTIES LONG BEACH PLAZA The Partnership had not remitted all of the scheduled debt service payments for the mortgage loan secured by the Long Beach Plaza Shopping Center since June 1993. The mortgage lender agreed to a short-term loan extension until August 31, 1995. The Partnership was unable to secure a modification or further extension to the loan and decided not to commit any significant additional amounts to the property. In March 1996, a receiver for the property was appointed for the benefit of the lender. On December 31, 1998, the Partnership transferred title to the land, building and improvements, and other assets and liabilities related to the property in consideration of a discharge of the mortgage loan and payment of $10 in cash. The Partnership realized an extraordinary gain on forgiveness of debt from this transaction in 1998 of approximately $47,015,000 for financial reporting purposes. This amount includes the effect of the impairment losses recognized by the Partnership aggregating approximately $17,600,000. In addition, the Partnership recognized a gain of approximately $28,256,000 for Federal income tax purposes, with no corresponding distributable proceeds. In December 1999, the Partnership reached an agreement with the seller of the Long Beach investment property for the retirement of the promissory note payable in the amount of $10,000,000, originally due in 2013 and 2014 to the seller in connection with the acquisition of the property by the Partnership in 1983. The terms of the agreement provided for full satisfaction of the loan in exchange for a payment of $3,000,000. On December 22, 1999, the Partnership remitted this payment to the seller and received a full release of all obligations related to the loan. In 1984, the Partnership purchased certain government securities to help offset the $10,000,000 obligation due in 2013 and 2014. The Partnership sold these marketable securities (with a market value of approximately $2,535,000 and a carrying value of $1,559,000) and used the proceeds to make the payment, with the remainder of approximately $465,000 funded from available cash held by the Partnership. As a result of these transactions, the Partnership recognized income of approximately $3,000,000 for federal income tax purposes. Additionally, the Partnership recognized a gain from the sale of securities of approximately $980,000 and an extraordinary loss from extinguishment of debt of approximately $1,100,000 for financial reporting purposes in 1999. COPLEY PLACE On January 23, 1997, through a series of transactions, the Partnership sold its entire partnership interest in Copley Place Associates as described below. During 1996, the Partnership and Copley Place Associates had committed to a plan to sell the property, and therefore, classified the property as held for sale at October 1, 1996. The property was not subject to continued depreciation as of such date. The Partnership's outstanding obligations on the purchase price note (the "Note") and for principal and interest on certain loans (the "Deficit Loans") made by the joint venture partner to pay for operating deficits (as defined), and the projected continuing accruals of additional interest on such amounts made it unlikely that the Partnership's interest in Copley Place Associates would ever be sold for an amount which would result in any net proceeds to the Partnership. In order to provide the Partnership with incentive to consummate the sale of its interest, the joint venture partner, the holder of the Note and the Partnership executed an agreement whereby the net proceeds were distributed in a manner which permitted the Partnership to satisfy its obligations relative to the Note and the Deficit Loans and still realize some modest cash proceeds. In addition, the holder of the Note agreed on a discounted payoff of the Note. In general, the Partnership received $43,900,000 of sale proceeds, of which $34,000,000 was remitted to the holder of the Note as payment in full satisfaction of the Note. As a result, the Partnership was relieved of an approximately $55,000,000 obligation. The Partnership's obligation under the Deficit Loans were next satisfied in full out of the Partnership's remaining sale proceeds. After the repayment of the Note and Deficit Loans, as discussed above, the Partnership's remaining net proceeds amounted to approximately $929,000, all of which was received in cash at closing. The effect on the Partnership's consolidated financial statements as a result of the sale was to eliminate the Partnership's investment in Copley Place Associates and to recognize a gain on sale of the Partnership's interest in the consolidated venture of approximately $71,277,000 and a gain on the forgiveness of indebtedness of approximately $55,184,000 for financial reporting purposes in 1997. The Partnership also recognized a gain on the sale of approximately $171,500,000 for Federal income tax purposes in 1997. JMB/NYC JMB/NYC is a limited partnership among Carlyle-XIII Associates, L.P., and its affiliates Carlyle-XIV Associates, L.P. and Property Partners, L.P., as limited partners and Carlyle Managers, Inc. as the sole general partner. The Partnership is a 25% shareholder of Carlyle Managers, Inc. The Partnership currently holds, indirectly as a limited partner of Carlyle-XIII Associates, L.P., an approximate 25% limited partnership interest in JMB/NYC. The sole general partner of Carlyle-XIII Associates, L.P. is Carlyle Investors, Inc., of which the Partnership is a 25% shareholder. The general partner in each of JMB/NYC and Carlyle-XIII Associates, L.P. is an affiliate of the Partnership. In October 1994, the Partnership and its affiliated partners (together with the Partnership, the "Affiliated Partners"), through JMB/NYC, entered into an agreement (the "Agreement") with affiliates (the "Olympia & York affiliates") of Olympia & York Developments, Ltd. ("O&Y") who were the venture partners in the joint ventures (the "Joint Ventures") that owned 237 Park Avenue, 1290 Avenue of the Americas and 2 Broadway, to resolve certain disputes among the Affiliated Partners and the Olympia & York affiliates. In general, the parties agreed to: (i) restructure the first mortgage loan; (ii) sell the 2 Broadway Building; (iii) reduce or eliminate approval rights of JMB/NYC with respect to virtually all property management, leasing, sale or refinancing; (iv) amend the Joint Ventures' agreements to eliminate any funding obligations by JMB/NYC and (v) establish a new preferential cash distribution level for the Olympia & York affiliates. In accordance with the Agreement and in anticipation of the sale of the 2 Broadway Building, the unpaid first mortgage indebtedness previously allocated to 2 Broadway was allocated in 1994 to 237 Park Avenue and 1290 Avenue of the Americas. As part of the Agreement, JMB/NYC and the Olympia & York affiliates agreed to file a pre-arranged bankruptcy plan for reorganization under Chapter 11 of the Bankruptcy Code in order to facilitate the restructuring of the Joint Ventures between JMB/NYC and the Olympia & York affiliates and the debt encumbering the two properties remaining after the sale of 2 Broadway. In June 1995, the 2 Broadway Joint Ventures filed their pre- arranged bankruptcy plans for reorganization, and in August 1995, the bankruptcy court entered an order confirming their plans of reorganization. In September 1995, the sale of the 2 Broadway Building was completed. Such sale did not result in any distributable proceeds to JMB/NYC or the Olympia & York affiliates. Bankruptcy filings for the Joint Ventures owning the 237 Park Avenue and 1290 Avenue of the Americas properties (collectively, the "Properties") were made in April 1996, and in August 1996, an Amended Plan of Reorganization and Disclosure Statement (the "Plan") was filed with the Bankruptcy Court for these Joint Ventures. The Plan was accepted by the various classes of debt and equity holders and confirmed by the Court on September 20, 1996 and became effective October 10, 1996 ("Effective Date"). The Plan provided that JMB/NYC had an indirect limited partnership interest which, before taking into account significant preferences to other partners, equaled approximately 4.9% of the reorganized and restructured ventures owning 237 Park and 1290 Avenue of the Americas. Neither O&Y nor any of its affiliates retained any direct or indirect continuing interest in the Properties. The new ownership structure gave control of the two properties to an unaffiliated real estate investment trust ("REIT"), owned primarily by holders of the first mortgage debt that encumbered the Properties prior to the bankruptcy. JMB/NYC had, under certain limited circumstances, through January 1, 2001 rights of consent regarding sale of the Properties or the consummation of certain other transactions that would have significantly reduced indebtedness of the Properties. In general, at any time on or after January 2, 2001, an affiliate of the REIT had the right to purchase JMB/NYC's interest in the Properties for an amount based on a formula relating to the operations of the Properties (the "Formula Price"). In addition, the non-recourse purchase money note made by JMB/NYC for its interests in the Properties, which is secured by JMB/NYC's interests in the Properties and had outstanding principal and accrued and deferred interest of approximately $133,148,000, at December 31, 1999, matures on January 2, 2001. If such REIT affiliate exercised such right to purchase, for the reasons discussed below, it was unlikely that such purchase would result in any significant distributions to the partners of the Partnership. Additionally, at any time, JMB/NYC had the right to require such REIT affiliate to purchase the interest of JMB/NYC in the Properties for the Formula Price. Pursuant to the indemnification agreement, the Affiliated Partners were jointly and severally obligated to indemnify the REIT to the extent of $25 million to ensure their compliance with the terms and conditions relating to JMB/NYC's indirect limited partnership interest in the restructured and reorganized joint ventures that owned the Properties. The Affiliated Partners contributed approximately $7.8 million (of which the Partnership's share was approximately $1.9 million) to JMB/NYC, which was deposited into an escrow account as collateral for such indemnification. These funds have been invested in stripped U.S. Government obligations with a maturity date of February 15, 2001. Due to the Restructuring discussed below, the maximum potential obligation has been reduced to $14,285,000 and a portion of the collateral was released in 1999 to JMB/NYC. The Partnership's share of the reduction of the maximum unfunded obligation under the indemnification agreement recognized as income is a result of interest earned on amounts contributed by the Partnership and held in escrow by JMB/NYC, and, in 1999, the agreed upon reduction of the maximum obligation. Interest income earned reduces the Partnership's share of the maximum unfunded obligation under the indemnification agreement, which is reflected as a liability in the accompanying financial statements. The provisions of the indemnification agreement (as amended in connection with the Restructuring discussed below) generally prohibit the Affiliated Partners from taking actions that could have an adverse effect on the exercise of the purchase rights by the REIT affiliate discussed below or a sale or certain other transactions involving direct or indirect interest in 1290 Avenue of the Americas unless such transaction requires JMB/NYC's consent. Compliance, therefore, is within the control of the Affiliated Partners and non-compliance with such provisions by either the Partnership or the other Affiliated Partners is highly unlikely. Therefore, the Partnership expects its share of the remaining collateral to be returned (including interest earned) after the termination of the indemnification agreement. In November 1999, JMB/NYC closed a transaction (the "Restructuring") pursuant to which, among other things, JMB/NYC's interests in 237 Park Avenue ("237 Park") and 1290 Avenue of the Americas ("1290 Avenue of the Americas") were restructured. Under the Restructuring, the partnership that owns 237 Park has been converted to a limited liability company ("237 Park LLC"). The membership interest in 237 Park LLC owned by 237/1290 Upper Tier Associates, L.P. (the "Upper Tier Partnership"), in which JMB/NYC is a limited partner with a 99% interest, was contributed to a partnership (the "237 Partnership") that acquired the other membership interests in 237 Park LLC from the REIT and one of its affiliates. In exchange for the interest in 237 Park LLC, the Upper Tier Partnership received a limited partnership interest in the 237 Partnership having a fair market value (determined in accordance with the partnership agreement of the 237 Partnership) of approximately $500,000. (JMB/NYC's total investment in the 237 Partnership is significantly less than 1% of the 237 Partnership.) The 237 Partnership owns a portfolio of investments in addition to 237 Park. JMB/NYC has the right, during the month of July of each calendar year commencing with 2001, to cause a sale of the interest in the 237 Partnership for a price equal to the greater of the fair market value of such interest (determined in accordance with the partnership agreement of the 237 Partnership) and a specified amount, of which JMB/NYC's share would be $500,000. In addition, the general partner of the 237 Partnership has the right, during the month of January of each calendar year commencing with 2002, to purchase the interest in the 237 Partnership for a price equal to the greater of the fair market value of such interest (determined as described above) and a specified amount, of which JMB/NYC's share would be $650,000. Although under the terms of the Restructuring Agreement JMB/NYC is not able to cause a sale of the interest in the 237 Partnership prior to 2001, the earliest date on which such interest may be purchased at the election of the general partner of the 237 Partnership is January 2002. In the absence of JMB/NYC's earlier election to cause a sale of its interest in the 237 Partnership, this extends by a year (to January 2002 from January 2001) the date on which JMB/NYC's indirect interest in 237 Park was previously subject to purchase at the election of an affiliate of the REIT. JMB/NYC's indirect interest through the Upper Tier Partnership in the Partnership (the "1290 Partnership") that owns 1290 Avenue of the Americas was also modified, although the REIT continues to own the controlling interest in the property. In general, the REIT has the right to sell 1290 Avenue of the Americas or the REIT's interest in the 1290 Partnership or permit a sale of more than 51% of the stock in the REIT, during the period January 1, 2000 through February 28, 2001, provided that JMB/NYC receives the greater of (i) an amount based on a formula relating to the operations of the property (the "1290 Formula Price"), and (ii) $4,500,000. Although the REIT is able to cause a sale of the entire property one year earlier than previously, which would result in the Partnership's (and the Holders of Interests') recognition of income for Federal income tax purposes from such a transaction, JMB/NYC would be entitled to receive a minimum specified amount (determined as described above) in connection with such sale. An affiliate of the REIT also has the right, during the month of March of each calendar year commencing with 2001, to purchase JMB/NYC's indirect interest in the 1290 Partnership for the greater of (x) the 1290 Formula Price and (y) $1,400,000. In addition, JMB/NYC has the right, during the month of September of each calendar year commencing with 2001, to require an affiliate of the REIT to purchase JMB/NYC's indirect interest in the 1290 Partnership for the greater of (1) the 1290 Formula Price, and (2) $1,000,000. A portion of the purchase price for JMB/NYC's indirect interest in the 1290 Avenue of the Americas and 237 Park Avenue office buildings is represented by a certain promissory note (the "Purchase Note") bearing interest at 12-3/4% per annum. The Purchase Note is secured by JMB/NYC's indirect interest in the 1290 Partnership and the 237 Partnership and is non-recourse to JMB/NYC. Prior to maturity, the Purchase Note requires payment of principal and interest out of distributions made to JMB/NYC from the 1290 Partnership and the 237 Partnership. Unpaid interest accrues and is deferred, compounded monthly. Unpaid principal and interest are due at maturity on January 2, 2001, and it is not expected that JMB/NYC will have funds to pay the Purchase Note at maturity. The outstanding principal and accrued and deferred interest on the Purchase Note at December 31, 1999, was approximately $133,148,000. In December 1999, the Affiliated Partners advanced a total of approximately $425,000 (of which the Partnership advanced approximately $105,000) to the limited partners of JMB/NYC, which was used to acquire a $5,425,000 tranche of the Purchase Note and the related security agreement for the collateralization of such tranche. As a result of this purchase, such limited partners, as creditors of JMB/NYC, are entitled to receive up to $5,425,000 in proceeds otherwise payable to JMB/NYC in respect of its indirect interest in the 1290 Partnership or the 237 Partnership. Such amounts received by the limited partners will be distributed to the Affiliated Partners in proportion to their respective advances made to purchase the tranche (i.e., 25% to the Partnership and 75% in the aggregate to the other Affiliated Partners). Also in December 1999, JMB/NYC was entitled to receive refinancing proceeds, as defined, of approximately $446,000 in respect of its indirect interest in the 1290 Partnership as a result of a refinancing of the mortgage note secured by the 1290 Avenue of Americas office building. These proceeds were used by JMB/NYC to make a payment of approximately $443,000 on the Purchase Note tranche held by the limited partners. It is expected that the limited partners will repay the Partnership's $105,000 advance in 2000. In connection with the Restructuring, approximately $4,460,000 in face amount at maturity of U.S. Treasury securities currently held as collateral for the indemnification obligations of the Affiliated Partners was released from escrow and returned to the Affiliated Partners. The remaining face amount of the securities will be held as collateral for the indemnification obligations of the Affiliated Partners relating to 1290 Avenue of the Americas generally until 90 days after the earlier of the sale of 1290 Avenue of the Americas and the sale of JMB/NYC's indirect interest in 1290 Avenue of the Americas. The Partnership expects its share of the remaining collateral, including interest earned thereon, to be returned after the termination of the indemnification obligations. While the Partnership is not expected to terminate in the near term, it currently appears unlikely that any significant distributions will be made by JMB/NYC to the Partnership at any time due to, among other things, the level of indebtedness remaining on the 1290 Avenue of the Americas, the Purchase Note payable by JMB/NYC, and the significant preference levels to other partners within the 1290 Partnership. ORCHARD ASSOCIATES The Partnership's interest in Old Orchard Shopping Center (through Orchard Associates and Old Orchard Urban Venture ("OOUV")) was sold in September 1993. In 1998, the Partnership received income of approximately $186,000 related to a sale of stock received in the settlement of claims against a former tenant in bankruptcy (prior to the sale of the Partnership's interest in 1993). The Partnership retained these funds for working capital purposes. SHERRY LANE PLACE OFFICE BUILDING The Partnership had committed to a plan to sell or dispose of Sherry Lane Place office building, and accordingly, as of December 31, 1996, the Partnership classified this property as held for sale or disposition. The property was not subject to continued depreciation after such date. On September 12, 1997, the Partnership, through Sherry Lane Associates, sold the Sherry Lane Place Office Building to an unaffiliated third party for $44,000,000 (before selling costs and prorations) all of which was paid in cash at closing. After repayment of the mortgage notes securing the property (approximately $41,171,000, including contingent interest (as defined)), the Partnership realized net proceeds of approximately $2,653,000. The sale resulted in a gain of approximately $18,300,000 to the Partnership in 1997 for financial reporting purposes. The Partnership recognized a gain of approximately $29,600,000 for Federal income tax purposes in 1997. Pursuant to the Sherry Lane Associates venture agreement, substantially all of the net proceeds from the sale were distributed to the Partnership. In connection with the sale of this property and as is customary in such transactions, Sherry Lane Associates agreed to certain representations and warranties, with a stipulated survival period which expired December 15, 1997 with no liability to the Partnership. CARROLLWOOD STATION APARTMENTS The joint venture committed to a plan to sell or dispose of Carrollwood Station Apartments. Accordingly, as of December 31, 1996, the joint venture classified this property as held for sale or disposition. The property was not subject to continued depreciation after such date. In December 1997, the Partnership, on behalf of the joint venture, entered into a contract with an unaffiliated third party to sell the property. Pursuant to the joint venture agreement, the unaffiliated venture partner held the right of first refusal to purchase the Partnership's interest in the joint venture in the event the Partnership secured a buyer for the property. On March 2, 1998, the unaffiliated venture partner purchased the Partnership's interest in the joint venture for $4,642,140, which approximated the share of proceeds that the Partnership would have received from a sale of the property to the proposed purchaser of the property. As of the date of the sale, the Partnership was relieved from any further obligations under the joint venture agreement. The Partnership recognized a gain of approximately $5,366,000 for financial reporting purposes and a gain of approximately $8,501,000 for Federal income tax purposes in 1998. MICHAEL'S (MARSHALL'S) AURORA PLAZA As of December 31, 1996, the Partnership committed to a plan to sell or dispose of Michael's Aurora Plaza. Accordingly, the Partnership classified this property as held for sale or disposition. The property was not subject to continued depreciation after such date. In August 1997, the Partnership entered into a contract to sell the property to an unaffiliated third party buyer. Pursuant to the contract, on October 15, 1997, the Partnership sold the land and related improvements of the Michael's Aurora Plaza. The sale price was $6,885,000, all of which was paid in cash at closing (net of selling costs). The Partnership used a substantial portion of the proceeds to repay the existing mortgage note of approximately $5,045,000, and the Partnership realized net proceeds of approximately $1,600,000. The sale resulted in a gain in 1997 to the Partnership of approximately $819,000 for financial reporting purposes and approximately $4,176,000 for Federal income tax purposes. In addition, in connection with the sale of this property and as is customary in such transactions, the Partnership agreed to certain representations and warranties, with a stipulated survival period which expired June 15, 1998, with no liability to the Partnership. FIRST TENNESSEE PLAZA (PLAZA TOWER) As of December 31, 1996, the Partnership committed to a plan to sell or dispose of First Tennessee Plaza office building. Accordingly, the Partnership classified this property as held for sale or disposition. The property was not subject to continued depreciation after such date. On September 19, 1997, the Partnership sold the land, related improvements, and personal property of the First Tennessee Plaza office building to an unaffiliated third party for $29,200,000 (before selling costs and prorations) all of which was paid in cash at closing. After repayment of the mortgage note securing the property (approximately $15,079,000), the Partnership realized net proceeds of approximately $13,462,000. The sale resulted in a gain of approximately $5,347,000 to the Partnership in 1997 for financial reporting purposes. The Partnership recognized a gain of approximately $20,131,000 for Federal income tax purposes in 1997. In connection with the sale of this property and as is customary in such transactions, the Partnership agreed to certain representations and warranties, with a stipulated survival period which expired December 15, 1997 with no liability to the Partnership. ALLIED AUTOMOTIVE CENTER On October 10, 1990, the Partnership sold the land, building, and related improvements of the Allied Automotive Center located in Southfield, Michigan. The Partnership had retained title to a defined 1.9 acre piece of land (the "Parcel"). During the buyer's due diligence investigation, the buyer found traces of contamination located on a portion of the Parcel as well as on a portion of the land owned by two affiliated selling entities. It was subsequently determined that such contamination was most likely the result of certain activities of the previous owner. As a result, the purchase price was reduced by approximately $682,000 for the Partnership's excluded land. The land was to be purchased by the buyer after the environmental clean-up was completed. During 1996, the Partnership was informed that certain regulatory agencies approved the clean-up of the site that had been performed and approved the shut-down of the clean-up operation. On March 12, 1997, the Partnership sold the Parcel for approximately $682,000. The sale of this Parcel resulted in a gain for financial reporting and Federal income tax purposes of approximately $542,000 in 1997. LONG-TERM DEBT Long-term debt consists of the following at December 31, 1999 and 1998: 1999 1998 ----------- ----------- Other loans: Long Beach Plaza Shopping Center, non-interest bearing promissory note to original seller, (net of $8,332,660 unamortized discount at 12% at December 31, 1998) due 2014, retired in 1999 . . . . . . $ -- 1,667,340 ----------- ----------- Total debt. . . . . . . . . . . . -- 1,667,340 Less current portion of long-term debt . . . . . . . -- -- ----------- ----------- Total long-term debt. . . . . $ -- 1,667,340 =========== =========== PARTNERSHIP AGREEMENT Pursuant to the terms of the Partnership Agreement, net profits and losses of the Partnership from operations are allocated 96% to the Holders of Interests and 4% to the General Partners. Profits from the sale of investment properties are allocated to the General Partners to the greatest of (i) 1% of such profits, (ii) the amount of cash distributions to the General Partners, or (iii) an amount which will reduce the General Partners' capital account deficits (if any) to a level consistent with the gain anticipated to be realized from the sale of properties. In accordance with clause (iii) of such provision, the General Partners were allocated an additional $19,171,233 of gain for financial reporting purposes for the years ended December 31, 1998. Additionally, the General Partners were allocated $53,177 and $1,577,028 of additional gain for Federal income tax purposes for the years ended December 31, 1999 and 1998, respectively. Losses from the sale of properties are allocated 1% to the General Partners. The remaining profits and losses are allocated to the Holders of Interests. The General Partners are not required to make any additional capital contributions except under certain limited circumstances upon termination of the Partnership. Distributions of "Net cash receipts" of the Partnership are allocated 90% to the Holders of Interests and 10% to the General Partners (of which 6.25% constitutes a management fee to the Corporate General Partner for services in managing the Partnership). The Partnership Agreement provides that the General Partners shall receive as a distribution of the proceeds (net after expenses and liabilities and retained working capital) from the sale or refinancing of a real property of up to 3% of the selling price of a property, and that the remaining net proceeds for any property sold be distributed 85% to the Holders of Interests and 15% to the General Partners. However, prior to such distributions being made, the Holders of Interests are entitled to receive 99% of net sale or refinancing proceeds and the General Partners are entitled to receive 1% until the Holders of Interests (i) have received cumulative cash distributions from the Partnership's operations which, when combined with net sale or refinancing proceeds previously distributed, equal a 6% annual return on the Holders' average capital investment for each year (their initial capital investment as reduced by net sale or refinancing proceeds previously distributed) and (ii) have received cash distributions of net sale or refinancing proceeds in an amount equal to the Holders' aggregate initial capital investment in the Partnership. If upon the completion of the liquidation of the Partnership and the distribution of all Partnership funds, the Holders of Interests have not received the amounts in (i) and (ii) above, the General Partners will be required to return all or a portion of the 1% distribution of net sale or refinancing proceeds described above in an amount equal to such deficiency in payments to the Holders of Interests pursuant to (i) and (ii) above. The Holders of Interests have not received and are not expected to receive distributions to the above levels. As of the date of this report, the General Partners have received $123,891 in distributions of net sale proceeds. MANAGEMENT AGREEMENTS The Partnership had entered into agreements for the operation and management of the investment properties. Such agreements are summarized as follows: The Partnership entered into an agreement with an affiliate of the seller for the operation and management of Michael's Aurora Plaza (prior to its sale in October 1997) for a management fee calculated at a percentage of certain types of cash income from the property. The Long Beach Plaza in Long Beach, California (prior to its disposition in December 1998), First Tennessee Plaza (Plaza Tower) office building in Knoxville, Tennessee (prior to its sale in September 1997) and Sherry Lane Place office building in Dallas, Texas (prior to its sale in September 1997) were managed by an affiliate of the Corporate General Partner until December 1994 for a fee equal to a percentage of defined gross income from the property. In December 1994, one of the affiliated property managers sold substantially all of its assets and assigned its interest in its management contracts to an unaffiliated third party. In addition, certain of the management personnel of the property manager became management personnel of the purchaser and its affiliates. The successor to the affiliated property manager's assets was acting as the property manager of the Plaza Tower office building and the Sherry Lane office building through the respective dates of their sale on the same terms that existed prior to the assignment of the management contracts. LEASE - AS PROPERTY LESSEE The following lease agreement had been determined to be an operating lease: Prior to the disposition of the Long Beach property, the Partnership owned the leasehold rights to the parking structure adjacent to the shopping center. The lease had an initial term of 50 years which commenced in 1981 with one 49-year renewal option exercisable by a local municipal authority. The lease provided for annual rental of $745,000, which was subject to decrease based on formulas which related to the amount of real estate taxes assessed against the shopping center and the parking structure. The rental expense for 1998 and 1997 under the above operating lease was $547,371 and $533,181, respectively, and consisted exclusively of minimum rent. Such lease was assigned to an unaffiliated third party in connection with the disposition of the property. TRANSACTIONS WITH AFFILIATES The Partnership, pursuant to the Partnership Agreement, is permitted to engage in various transactions involving the Corporate General Partner and its affiliates including the reimbursement for salaries and salary- related expenses of its employees, certain of its officers, and other direct expenses relating to the administration of the Partnership and the operation of the Partnership's investment properties. Fees, commissions and other expenses required to be paid by the Partnership to the General Partners and their affiliates for the years ended December 31, 1999, 1998 and 1997 are as follows: UNPAID AT DECEMBER 31, 1999 1998 1997 1999 ------- ------- ------- ------------ Property management and leasing fees . . . . . $ -- 121,522 89,060 -- Insurance commissions . . . 1,248 28,795 70,890 -- Reimbursement (at cost) for accounting services. . 232 16,155 36,297 46 Reimbursement (at cost) for portfolio manage- melt services. . . . . . . 33,650 88,318 43,856 7,157 Reimbursement (at cost) for legal services . . . . 16,817 10,866 18,423 4,777 Reimbursement (at cost) for administrative charges and other out- of-pocket expenses . . . . -- 115 164 -- ------- ------- ------- ------ $51,947 265,771 258,690 11,980 ======= ======= ======= ====== In February 1998, the Partnership paid approximately $1,322,000 of previously deferred management and leasing fees to an affiliate of the General Partners. All subsequent property management fees and leasing fees were paid currently. The Partnership had obligations, which bore interest ranging from 4.62% to 5.35% per annum in 1999, to fund, on demand, $200,000 and $200,000 to Carlyle Investors, Inc. and Carlyle Managers, Inc., respectively, of additional paid-in capital. In 1999, these obligations including all unpaid accrued interest aggregating approximately $670,000 were retired. Such amounts are recorded as distributions received in excess of recorded investment in the accompanying 1999 balance sheet. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There were no changes in or disagreements with accountants during fiscal year 1999 and 1998. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP The Corporate General Partner of the Partnership is JMB Realty Corporation ("JMB"), a Delaware corporation. Substantially all of the outstanding shares of JMB are owned, directly or indirectly, by certain of its officers, directors, members of their families and their affiliates. JMB, as the Corporate General Partner, has responsibility for all aspects of the Partnership's operations, subject to the requirement that purchases and sales of real property must be approved by the Associate General Partner of the Partnership, ABPP Associates, L.P., an Illinois limited partnership with JMB as its sole general partner. The limited partners of ABPP Associates, L.P. are generally current or former officers and directors of JMB and their affiliates. The Partnership is subject to certain conflicts of interest arising out of its relationships with the General Partners and their affiliates as well as the fact that the General Partners and their affiliates are engaged in a range of real estate activities. Certain services have been and may in the future be provided to the Partnership or its investment properties by affiliates of the General Partners, including property management, insurance brokerage and administrative services. In general, such services are to be provided on terms no less favorable to the Partnership than could be obtained from independent third parties and are otherwise subject to conditions and restrictions contained in the Partnership Agreement. The Partnership Agreement permits the General Partners and their affiliates to provide services to, and otherwise deal and do business with, persons who may be engaged in transactions with the Partnership, and permits the Partnership to borrow from, purchase goods and services from, and otherwise to do business with, persons doing business with the General Partners or their affiliates. The General Partners and their affiliates may be in competition with the Partnership or its investment properties under certain circumstances, including, in certain geographical markets, for tenants for properties and/or for the sale of properties. Because the timing and amount of cash distributions and profits and losses of the Partnership may be affected by various determinations by the General Partners under the Partnership Agreement, including whether and when to sell or refinance a property, the establishment and maintenance of reasonable reserves and the determination of the sources (i.e., offering proceeds, cash generated from operations or sale proceeds) and uses or distributions of such reserves, the timing of expenditures and the allocation of certain tax items under the Partnership Agreement, the General Partners may have a conflict of interest with respect to such determinations. The names, positions held and length of service therein of each director and the executive officers of the Corporate General Partner of the Partnership are as follows: SERVED IN NAME OFFICE OFFICE SINCE - ---- ------ ------------ Judd D. Malkin Chairman 5/03/71 Director 5/03/71 Chief Financial Officer 2/22/96 Neil G. Bluhm President 5/03/71 Director 5/03/71 Burton E. Glazov Director 7/01/71 Stuart C. Nathan Executive Vice President 5/08/79 Director 3/14/73 A. Lee Sacks Director 5/09/88 John G. Schreiber Director 3/14/73 H. Rigel Barber Chief Executive Officer 8/01/93 Executive Vice President 1/02/87 Gary Nickele Executive Vice President 1/01/92 General Counsel 2/27/84 Gailen J. Hull Senior Vice President 6/01/88 Effective May 31, 1996, the Board of Directors of JMB established a special committee, consisting of Messrs. Malkin, Glazov, Nathan, Sacks and Schreiber, to deal with all matters relating to tender offers for Interests. There is no family relationship among any of the foregoing directors or officers. The foregoing directors have been elected to serve a one-year term until the annual meeting of the Corporate General Partner to be held on June 6, 2000. All of the foregoing officers have been elected to serve one-year terms until the first meeting of the Board of Directors held after the annual meeting of the Corporate General Partner to be held on June 6, 2000. There are no arrangements or understandings between or among any of said directors or officers and any other person pursuant to which any director or officer was elected as such. JMB is the corporate general partner of Carlyle Real Estate Limited Partnership-XI ("Carlyle-XI"), Carlyle Real Estate Limited Partnership-XIV ("Carlyle-XIV"), Carlyle Real Estate Limited Partnership-XV ("Carlyle-XV"), and Carlyle Income Plus, L.P.-II ("Carlyle Income Plus-II") and the managing general partner of JMB Income Properties, Ltd.-V ("JMB Income-V"), JMB Income Properties, Ltd.-VII ("JMB Income-VII"), and JMB Income Properties, Ltd.-XI ("JMB Income-XI"). JMB is also the sole general partner of the associate general partner of most of the foregoing partnerships. The foregoing directors and officers are also officers and/or directors of various affiliated companies of JMB including Arvida/JMB Managers, Inc. (the general partner of Arvida/JMB Partners, L.P). Most of such directors and officers are also partners, directly or indirectly, of certain partnerships which are associate general partners in the following real estate limited partnerships: the Partnership, Carlyle-XI, Carlyle-XIV, Carlyle-XV, JMB Income-VII, JMB Income-XI, and Carlyle Income Plus-II. The business experience during the past five years of each such director and officer of the Corporate General Partner of the Partnership in addition to that described above is as follows: Judd D. Malkin (age 62) is Chairman and Chief Financial Officer of Carlyle Managers, Inc., the general partner of JMB/NYC. He is also an individual general partner of JMB Income-V. Mr. Malkin has been associated with JMB since October, 1969. Mr. Malkin is also a director of Urban Shopping Centers, Inc., an affiliate of JMB that is a real estate investment trust in the business of owning, managing and developing shopping centers. He is also a director of Chisox Corporation, which is the general partner of a limited partnership that owns the Chicago White Sox, a Major League Baseball team, and CBLS, Inc., which is the general partner of the general partner of a limited partnership that owns the Chicago Bulls, a National Basketball Association team. He is a Certified Public Accountant. Neil G. Bluhm (age 62) is Executive Vice President of Carlyle Managers, Inc. He is also an individual general partner of JMB Income-V. Mr. Bluhm has been associated with JMB since August, 1970. Mr. Bluhm is also a principal of Walton Street Capital, L.L.C., which sponsors real estate investment funds, and a director of Urban Shopping Centers, Inc. He is a member of the Bar of the State of Illinois and a Certified Public Accountant. Burton E. Glazov (age 61) has been associated with JMB since June, 1971 and served as an Executive Vice President of JMB until December 1990. Mr. Glazov is currently retired. He is a member of the Bar of the State of Illinois. Stuart C. Nathan (age 58) is the director and President of Carlyle Managers, Inc. Mr. Nathan has been associated with JMB since July, 1972. He is a member of the Bar of the State of Illinois. A. Lee Sacks (age 66) has been associated with JMB since December, 1972. He is also President and a director of JMB Insurance Agency, Inc. John G. Schreiber (age 53) has been associated with JMB since December, 1970 and served as an Executive Vice President of JMB until December 1990. Mr. Schreiber is President of Schreiber Investments, Inc. a company engaged in the real estate investing business. He is also a senior advisor and partner of Blackstone Real Estate Advisors L.P., an affiliate of the Blackstone Group, L.P. Mr. Schreiber is also a director of Urban Shopping Centers, Inc., Host Marriott Corporation, The Brickman Group, Ltd., which is engaged in the landscape maintenance business, and a director of a number of investment companies advised by T. Rowe Price Associates, Inc. and its affiliates, and a trustee of Amli Residential Properties Trust. Mr. Schreiber holds a Masters degree in Business Administration from Harvard University Graduate School of Business. H. Rigel Barber (age 51) is Vice President of Carlyle Managers, Inc. Mr. Barber has been associated with JMB since March, 1982. He holds a J.D. degree from the Northwestern Law School and is a member of the Bar of the State of Illinois. Gary Nickele (age 47) is Vice President and General Counsel of Carlyle Managers, Inc. Mr. Nickele has been associated with JMB since February, 1984. He holds a J.D. degree from the University of Michigan Law School and is a member of the Bar of the State of Illinois. Gailen J. Hull (age 51) has been associated with JMB since March, 1982. He holds a Masters degree in Business Administration from Northern Illinois University and is a Certified Public Accountant. ITEM 11. EXECUTIVE COMPENSATION The Partnership has no officers or directors. The Partnership is required to pay a management fee to the Corporate General Partner and the General Partners are entitled to receive a share of cash distributions, when and as cash distributions are made to the Holders of Interests, and a share of profits or losses. Reference is made to the Notes for a description of such distributions and allocations. In 1999, the General Partners received no distributions and the Corporate General Partner received no management fee. The General Partners received an additional share of Partnership gains for Federal income tax purposes aggregating $53,253 in 1999. Such allocation of income reduces the deficit balances in the capital accounts of the General Partners and an obligation under the terms of the Partnership Agreement to make capital contributions in the amount of the deficit balances in their capital accounts upon termination of the Partnership. If upon the completion of the liquidation of the Partnership and the distribution of all Partnership funds, the Holders of Interest have not received a certain specified amount of net sale or refinancing proceeds, the General Partners will be required to return the net sale or refinancing proceeds received by them, $123,891 as of the date of this report. The Holders of Interests are not expected to receive the specified amount of net sale or refinancing proceeds. Accordingly, the General Partners will be required to return the $123,891 of sale or refinancing proceeds prior to termination of the Partnership. The Partnership is permitted to engage in various transactions involving affiliates of the Corporate General Partner of the Partnership, as described in the Notes, which may involve conflicts of interest for the General Partners or their affiliates. The relationship of the Corporate General Partner (and its directors and officers) to its affiliates is set forth above in Item 10. JMB Insurance Agency, Inc., an affiliate of the Corporate General Partner, earned insurance brokerage commissions in 1999 aggregating $1,248 for providing professional liability insurance for the Partnership, all of which was paid at December 31, 1999. Such commissions are at rates set by insurance companies for the classes of coverage provided. The General Partners of the Partnership or their affiliates may be reimbursed for their direct expenses or out-of-pocket expenses and salaries and related salary expenses relating to the administration of the Partnership and the acquisition and operation of the Partnership's real property investments. In 1999, the Corporate General Partner of the Partnership or its affiliates were due no reimbursement for such out-of-pocket expenses. The General Partners are also entitled to reimbursements for portfolio management, legal and accounting services. Such costs for 1999 were $33,650, $16,817 and $232, respectively, of which $11,980 was unpaid at December 31, 1999. The Partnership had obligations, which bore interest ranging from 4.62% to 5.35% per annum in 1999, to fund, on demand, $200,000 and $200,000 to Carlyle Investors, Inc. and Carlyle Managers, Inc., respectively, of additional paid-in capital. In 1999, these obligations including all unpaid accrued interest aggregating approximately $670,000 were retired. Such amounts are recorded as distributions received in excess of recorded investment in the accompanying 1999 balance sheet. In addition to the Partnership, JMB was a 20% shareholder in each of Carlyle Investors, Inc. and Carlyle Managers, Inc. and had obligations, which bore interest ranging from 4.62% to 5.35% per annum in 1999, to fund, on demand $200,000 and $200,000 to Carlyle Investors, Inc. and Carlyle Managers, Inc., respectively, of additional paid-in capital. In June 1999, the shareholdings of JMB in each of Carlyle Investors, Inc. and Carlyle Managers, Inc. were redeemed and the obligation of JMB to fund additional paid-in capital (totaling approximately $632,000 at June 15, 1999) was fully retired.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (a) No person or group is known by the Partnership to own beneficially more than 5% of the outstanding Interests of the Partnership. (b) The Corporate General Partner, its executive officers and directors and the Associate General Partner beneficially own the following Interests of the Partnership: NAME OF AMOUNT AND NATURE BENEFICIAL OF BENEFICIAL PERCENT TITLE OF CLASS OWNER OWNERSHIP OF CLASS - -------------- ---------- ----------------- -------- Limited Partnership Interests JMB Realty Corporation 5 Interests directly (1) Less than 1% Limited Partnership Interests Corporate General 59.99897 Interests Less than 1% Partner, its executive directly (1)(2) officers and directors and the Associate General Partner as a group (1) Includes 5 Interests owned by JMB Realty Corporation, for which it is deemed to have sole voting and investment power. (2) Includes 54.99897 Interests owned by certain executive officers for which each such officer has sole investment and voting power as to such Interests so owned. No officer or director of the Corporate General Partner of the Partnership possesses a right to acquire beneficial ownership of Interests of the Partnership. Reference is made to Item 10 for information concerning ownership of the Corporate General Partner. (c) There exists no arrangement, known to the Partnership, the operation of which may at a subsequent date result in a change in control of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS There were no significant transactions or business relationships with the Corporate General Partner, affiliates or their management other than those described in Items 10 and 11 above. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this report: (1) Financial Statements (See Index to Financial Statements filed with this annual report). (2) Exhibits. 3-A.* Amended and Restated Agreement of Limited Partnership set forth as Exhibit A to the Prospectus, and which is hereby incorporated by reference. 3-B. Acknowledgement of rights and duties of the General Partners of the Partnership between ABPP Associates, L.P. (a successor Associated General Partner of the Partnership) and JMB Realty Corporation as of December 31, 1995 is hereby incorporated herein by reference to the Partnership's Report for September 30, 1996 on Form 10-Q (File No. 0-12791) dated November 8, 1996. 10-A. Agreement of Limited Partnership of Carlyle-XIII Associates L.P. is hereby incorporated by reference to the Partnership's Report on Form 10-Q (File No. 0-12791) dated May 14, 1993. 10-B. Second Amended and Restated Articles of Partnership of JMB/NYC Office Building Associates, L.P. are hereby incorporated herein by reference to the Partnership's Report on Form 10-K (File No. 0-12791) for December 31, 1993 dated March 28, 1994. 10-C. Amended and Restated Certificate of Incorporation of Carlyle-XIV Managers, Inc., are hereby incorporated herein by reference to the Partnership's Report on Form 10-K (File No. 0-12791) for December 31, 1993 dated March 28, 1994. 10-D. Amended and Restated Certificate of Incorporation of Carlyle-XIII Managers, Inc., are hereby incorporated herein by reference to the Partnership's Report on Form 10-K (File No. 0-12791) for December 31, 1993 dated March 28, 1994. 10-E. $600,000 demand note between Carlyle-XIII Associates, L.P. and Carlyle Managers, Inc., are hereby incorporated herein by reference to the Partnership's Report on Form 10-K (File No. 0-12791) for December 31, 1993 dated March 28, 1994. 10-F. $600,000 demand note between Carlyle-XIII Associates, L.P. and Carlyle Investors, Inc., are hereby incorporated herein by reference to the Partnership's Report on Form 10-K (File No. 0- 12791) for December 31, 1993 dated March 28, 1994. 10-G. Amendment No. 1 to the Agreement of Limited Partnership of Carlyle-XIII Associates, L.P. is hereby incorporated by reference to the Partnership's Report for March 31, 1995 on Form 10-Q (File No. 0-12791) dated May 11, 1995. 10-H. Amendment No. 1 to the Second Amended and Restated Articles of Partnership of JMB/NYC Office Building Associates, L.P. is hereby incorporated by reference to the Partnership's Report for March 31, 1995 on Form 10-Q (File No. 0-12791) dated May 11, 1995. 10-I. Consent of Director of Carlyle-XIV Managers, Inc. (known as Carlyle Managers, Inc.) dated October 31, 1996 is hereby incorporated by reference to the Partnership's Report for December 31, 1996 on Form 10-K (File No. 0-12791) dated March 21, 1997. 10-J. Consent of Director of Carlyle-XIII, Managers, Inc. (known as Carlyle Investors, Inc.) dated October 31, 1996 is hereby incorporated by reference to the Partnership's Report for December 31, 1996 on Form 10-K (File No. 0-12791) dated March 21, 1997. 10-K. Allonge to demand note between Carlyle Real Estate Limited Partnership - XIII and Carlyle Managers, Inc. dated October 31, 1996 is hereby incorporated by reference to the Partnership's Report for December 31, 1996 on Form 10-K (File No. 0-12791) dated March 21, 1997. 10-L. Allonge to demand note between Carlyle Real Estate Limited Partnership - XIII and Carlyle Investors, Inc., dated October 31, 1996 is hereby incorporated by reference to the Partnership's Report for December 31, 1996 on Form 10-K (File No. 0-12791) dated March 21, 1997. 10-M. Indemnification agreement between Property Partners, L.P., Carlyle-XIII Associates, L.P. and Carlyle-XIV Associates, L.P. dated as of October 10, 1996 is hereby incorporated by reference to the Partnership's Report for December 31, 1996 on Form 10-K (File No. 0- 12791) dated March 21, 1997. 10-N. Agreement of Limited Partnership of 237/1290 Lower Tier Associates, L.P. dated as of October 10, 1996 is hereby incorporated by reference to the Partnership's Report for December 31, 1996 on Form 10-K (File No. 0-12791) dated March 21, 1997. 10-O. Amended and Restated Limited Partnership Agreement of 237/1290 Upper Tier Associates, L.P. dated as of October 10, 1996 is hereby incorporated by reference to the Partnership's Report for December 31, 1996 on Form 10-K (File No. 0-12791) dated March 21, 1997. 10-P Purchase Agreement and amendments thereto between Sherry Lane Associates and Cottonwood Realty Services, L.L.C. dated July 7, 1997 is incorporated herein by reference to the Partnership's Report for September 12, 1997 on Form8-K (file No. 0-12791) dated September 26, 1997. 10-Q Purchase Agreement and amendments thereto between Carlyle Real Estate Limited Partnership - XIII and Parkway Properties, L.P. dated August 20, 1997 is incorporated herein by reference to the Partnership's Report for September 19, 1997 on Form 8-K (File No. 0-12791) dated October 3, 1997. 10-R Purchase Agreement and Joint Escrow Instructions between Carlyle Real Estate Limited Partnership - XIII and GDA Real Estate Services, Inc. dated August 4, 1997 is incorporated herein by reference to the Partnership's Report for October 15, 1997 on Form 8-K (File No. 0- 12791) dated October 30, 1997. 10-S Letter agreement related to the Purchase Agreement between Carlyle Real Estate Limited Partnership - XIII and GDA Real Estate Services, Inc. dated September 3, 1997 is incorporated herein by reference to the Partnership's Report for October 15, 1997 on Form 8-K (File No. 0-12791) dated October 30, 1997. 10-T Assignment of Limited Partnership Interest by Carlyle Real Estate Limited Partnership - XIII dated March 2, 1998 is incorporated herein by reference to the Partnership's Report for March 2, 1998 on Form 8-K (File No. 0-12791) dated March 16, 1998. 10-U Conveyance and Settlement Agreement between RVM Long Beach Plaza LLC and Carlyle Real Estate Partnership - XIII dated December 15, 1998 is incorporated herein by reference to the Partnership's Report for December 31, 1998 on Form 8-K (File No. 0-12791) dated January 12, 1999. 10-V Loan Pay-Off Agreement between Trizechahn Developments Inc. and Carlyle Real Estate limited Partnership - XIII dated December 13, 1999 is hereby filed herewith. 10-W. Restructuring Agreement related to 237/1290 Upper Tier Associates, L.P. dated October 27, 1999 is filed herewith. 10-X. Contribution Agreement between 237/120 Upper Tier Associates, L.P. and Oak Hill Strategic Partners, L.P. is filed herewith. 10-Y. Amendment and Release Agreement by and among Metropolis Realty Trust, Inc. Property Partners, L.P., Carlyle Associates- XIII Associates, L.P. and Carlyle-XIV Associates, L.P. is filed herewith. 10-Z. Third Amended and Restated Partnership Agreement of 237/1290 Upper Tier Associates, L.P. by and between 237/1290 Upper Tier GP Corp. Carlyle Managers, Inc., a JMB/NYC Office Building Associates, L.P. dated November 19, 1999 is filed herewith. 10-AA. Intercreditor Agreement among Michigan Avenue L.L.C., Carlyle-XIII Associates, L.P. Carlyle-XIV Associates, L.P. and Property Partners, L.P. dated November 19, 1999 is filed herewith. 21. List of Subsidiaries. 24. Powers of Attorney. 27. Financial Data Schedule. Although certain additional long-term debt instruments of the Registrant have been excluded from Exhibit 4 above, pursuant to Rule 601(b)(4)(iii), the Registrant commits to provide copies of such agreements to the SEC upon request. (b) No reports on Form 8-K were filed since the beginning of the last quarter of the period covered by this report. ---------------- * Previously filed as Exhibits 3, 4-C and 4-D, respectively, to the Partnership's Report for December 31, 1992 on Form 10-K to the Securities Exchange Act of 1934 (File No. 0-12791) dated March 30, 1993 are hereby incorporated herein by reference. No annual report or proxy material for the fiscal year 1999 has been sent to the Partners of the Partnership. An annual report will be sent to the Partners subsequent to this filing. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII By: JMB Realty Corporation Corporate General Partner GAILEN J. HULL By: Gailen J. Hull Senior Vice President Date: March 24, 2000 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. By: JMB Realty Corporation Corporate General Partner JUDD D. MALKIN* By: Judd D. Malkin, Chairman and Chief Financial Officer Date: March 24, 2000 NEIL G. BLUHM* By: Neil G. Bluhm, President and Director Date: March 24, 2000 H. RIGEL BARBER* By: H. Rigel Barber, Chief Executive Officer Date: March 24, 2000 GAILEN J. HULL By: Gailen J. Hull, Senior Vice President Principal Accounting Officer Date: March 24, 2000 By: A. LEE SACKS* A. Lee Sacks, Director Date: March 24, 2000 By: STUART C. NATHAN* Stuart C. Nathan, Executive Vice President and Director Date: March 24, 2000 *By: GAILEN J. HULL, Pursuant to a Power of Attorney GAILEN J. HULL By: Gailen J. Hull, Attorney-in-Fact Date: March 24, 2000 CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII EXHIBIT INDEX Document Incorporated By Reference Page ------------ ---- 3-A. Amended and Restated Agreement of Limited Partnership set forth as Exhibit A to the Prospectus Yes 3-B. Acknowledgement of rights and duties of the General Partners of the Partnership between ABPP Associates, L.P. (a successor Associated General Partner of the Partnership) and JMB Realty Corporation as of December 31, 1995 Yes 10-A. Agreement of Limited Partnership of Carlyle-XIII Associates L.P. Yes 10-B. Second Amended and Restated Articles of Partnership of JMB/NYC Office Building Associates, L.P. Yes 10-C. Amended and Restated Certificate of Incorporation of Carlyle-XIV Managers, Inc. Yes 10-D. Amended and Restated Certificate of Incorporation of Carlyle-XIII Managers, Inc. Yes 10-E. $600,000 demand note between Carlyle-XIII Associates, Ltd. and Carlyle Managers, Inc. Yes 10-F. $600,000 demand note between Carlyle-XIII Associates, Ltd. and Carlyle Investors, Inc. Yes 10-G. Amendment No. 1 to Carlyle-XIII Associates Yes 10-H. Amendment No. 1 to JMB/NYC Office Building Associates, L.P. Yes 10-I. Consent of Director of Carlyle-XIV Managers, Inc. (known as Carlyle Managers, Inc.) dated October 31, 1996 Yes 10-J. Consent of Director of Carlyle-XIII, Managers, Inc. (known as Carlyle Investors, Inc.) dated October 31, 1996 Yes 10-K. Allonge to demand note between Carlyle Real Estate Limited Partnership-XIII and Carlyle Managers, Inc. dated October 31, 1996 Yes 10-L. Allonge to demand note between Carlyle Real Estate Limited Partnership-XIII and Carlyle Investors, Inc., dated October 31, 1996 Yes Document Incorporated By Reference Page ------------ ---- 10-M. Indemnification agreement between Property Partners, L.P., Carlyle-XIII Associates, L.P. and Carlyle-XIV Associates, L.P. dated as of October 10, 1996 Yes 10-N. Agreement of Limited Partnership of 237/1290 Lower Tier Associates, L.P. dated as of October 10, 1996 Yes 10-0. Amended and Restated Limited Partnership of 237/1290 Upper Tier Associates, L.P. dated as of October 10, 1996 Yes 10-P. Purchase Agreement and amendments thereto between Sherry Lane Associates and Cottonwood Realty Services, L.L.C. dated as of July 7, 1997 Yes 10-Q. Purchase Agreement and amendments thereto between Carlyle Real Estate Limited Partnership - XIII and Parkway Properties, L.P. dated as of August 20, 1997 Yes 10-R. Purchase Agreement and Joint Escrow Instructions between Carlyle Real Estate Limited Partnership - XIII and GDA Real Estate Services, Inc. dated August 4, 1997 Yes 10-S. Letter of Agreement related to the Purchase Agreement between Carlyle Real Estate Limited Partnership - XIII and GDA Real Estate Services, Inc. dated September 3, 1997 Yes 10-T. Assignment of Limited Partnership Interest by Carlyle Real Estate Limited Partnership - XIII dated March 2, 1998 Yes 10-U. Conveyance and Settlement Agreement between RVM Long Beach Plaza LLC and Carlyle Real Estate Partnership - XIII dated December 15, 1998 Yes 10-V. Loan Pay-Off Agreement between Trizechahn Developments, Inc. and Carlyle Real Estate Partnership - XIII dated December 13, 1999 No 10-W. Restructuring Agreement related to 237/1290 Upper Tier Associates, L.P. dated October 27, 1999 No 10-X. Contribution Agreement between 237/120 Upper Tier Associates, L.P. and Oak Hill Strategic Partners, L.P. No DOCUMENT INCORPORATED BY REFERENCE PAGE ------------- ---- 10-Y. Amendment and Release Agreement by and among Metropolis Realty Trust, Inc. Property Partners, L.P., Carlyle Associates-XIII Associates, L.P. and Carlyle-XIV Associates, L.P. No 10-Z. Third Amended and Restated Partnership Agreement of 237/1290 Upper Tier Associates, L.P. by and between 237/1290 Upper Tier GP Corp. Carlyle Managers, Inc., a JMB/NYC Office Building Associates, L.P. dated November 19, 1999 No 10-AA. Intercreditor Agreement among Michigan Avenue L.L.C., Carlyle-XIII Associates, L.P. Carlyle-XIV Associates, L.P. and Property Partners, L.P. dated November 19, 1999 No 21. List of Subsidiaries No 24. Powers of Attorney No 27. Financial Data Schedule No - ------------------ * Previously filed as exhibits to the Partnership's Registration Statement on Form S-11 (as amended) under the Securities Exchange Act of 1933 and the Partnership's prior Reports on Form 8-K and Form 10-K of the Securities Exchange Act of 1934. EX-10.V 2 EXHIBIT 10-V - ------------ LOAN PAY-OFF AGREEMENT ---------------------- THIS LOAN PAY-OFF AGREEMENT ("Agreement") is made and entered into as of the __ day of December, 1999, by and between TRIZECHAHN DEVELOPMENTS INC., a California corporation, as successor-in-interest to Ernest W. Hahn, Inc. ("Lender"), and CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XIII, an Illinois limited partnership ("Borrower"). RECITALS -------- A. Lender made a loan (the "Loan") in the principal amount of $20,225,000.00 to Borrower. The Loan is evidenced by the "Note" (described on Exhibit A). The Loan had been secured by the "Deed of Trust" (described on Exhibit A) and the "Spreader Agreement" (described on Exhibit A), which Deed of Trust and Spreader Agreement were released and reconveyed pursuant to the "Full Reconveyance" (described on Exhibit A). The Note, the Deed of Trust, the Spreader Agreement and the Full Reconveyance, and the other documents and instruments executed by Borrower evidencing, securing or otherwise relating to the Loan are hereinafter collectively referred to as the "Loan Documents". B. Borrower has requested that Lender accept less than the outstanding principal balance of the Loan in repayment of the Loan. Lender has agreed to such request on terms and subject to the conditions hereinafter set forth. NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants and conditions contained herein, Borrower and Lender hereby agree as follows: 1. REPAYMENT OF LOAN. Borrower shall prepay (and fully satisfy) the Loan by paying to Lender $3,000,000.00 (the "Pay-Off Amount"). 2. CLOSING. A. CLOSING DATE. The closing (the "Closing") of the pay-off of the Loan shall be on a date mutually agreed upon by the parties hereto but not later than December 22, 1999 (the "Closing Date"). B. CLOSING COSTS. Each party shall pay all costs, fees, charges and expenses of whatever kind or character incurred by it in connection with the preparation and negotiation of all documentation for, and the consummation of, the transactions contemplated by this Agreement. 3. DELIVERIES TO OTHER PARTY AT CLOSING. Borrower and Lender shall deliver or cause to be delivered to each other the following items: A. BY LENDER. Lender shall deliver the original Note marked "paid in full" (or a lost note affidavit if the original Note is unavailable) to Ernie Park, Esq. at the following address: c/o Bewley, Lassleben & Miller, 510 Whittier Square, 13215 East Penn Street, Whittier, California, 90602. B. BY BORROWER. Upon the written confirmation by Ernie Park, Esq. of his receipt of the document set forth in Paragraph 3.A. above, Borrower shall deliver or cause to be delivered to Lender, in time for the Closing to occur on the Closing Date, the Pay-Off Amount by wire transfer or other immediately available funds pursuant to Lender's instructions. C. DELIVERY OF DOCUMENT. Immediately upon Lender's receipt of the Pay-Off Amount, Lender shall direct Ernie Park, Esq. to deliver the document set forth in Paragraph 3.A. above to Borrower. 4. CONDITIONS TO CLOSE. The obligations of Lender and Borrower to close this transaction shall be subject to the other performing, satisfying and complying with all covenants, agreements and conditions required by this Agreement to be performed or complied with by the other party. 5. RELEASE BY LENDER. A. RELEASE. If and only if the Closing occurs, upon the Closing, Lender, on its own behalf and on behalf of its employees, officers, shareholders, directors, agents, successors, assigns, partners, attorneys, agents, servants, parent, subsidiary and affiliate corporations, hereby absolutely and irrevocably releases Borrower, and each of Borrower's beneficiaries and certificate holders and each of their respective trustees, partners, attorneys, officers, directors, representatives, agents, servants, contractors, employees, parent, subsidiary and affiliate corporations and predecessors-in-interest, and each of their respective past and present partners, successors, heirs and assigns, and each of them (collectively, the "Borrower Released Parties") from any and all claims, rights, demands, suits, causes of actions, losses, costs, obligations, liabilities and expenses (collectively, "Claims") of every kind or nature, known or unknown, suspected or unsuspected, fixed or contingent, arising out of or relating to any statements, representations, acts or omissions, intentional, willful, negligent or innocent, by any of the Borrower Released Parties in any way connected with, relating to or affecting, directly or indirectly, the Loan, the Loan Documents or the relationship between Lender and Borrower. B. NON-RELIANCE. Lender hereby acknowledges that it has not relied upon any representation of any kind made by Borrower or any of the Borrower Released Parties in making the foregoing release. C. CIVIL CODE. Lender is aware of the provisions of Section 1542 of the California Civil Code, which Section reads as follows: A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor. Lender waives the provisions of said Section 1542 of the California Civil Code and the provisions of any other applicable laws restricting the release of claims which the releasing parties do not know or suspect to exist at the time of release, which, if known, would have materially affected the decision of Lender to agree to this Agreement. D. NO ADMISSION OF LIABILITY. It is hereby further understood and agreed that the acceptance of delivery of this Agreement by the parties released hereby shall not be deemed or construed as an admission of liability of any nature whatsoever arising from or related to the subject of this Agreement. 6. RELEASE BY BORROWER. A. RELEASE. If and only if the Closing occurs, upon the Closing, Borrower, on its own behalf and on behalf of its employees, officers, shareholders, directors, agents, successors, assigns, partners, attorneys, agents, servants, parent, subsidiary and affiliate corporations, hereby absolutely and irrevocably releases Lender, and each of Lender's beneficiaries, shareholders, partners, attorneys, officers, directors, representatives, agents, servants, contractors, employees, parent, subsidiary and affiliate corporations and predecessors-in-interest, and each of their respective past and present partners, successors, heirs and assigns, and each of them (collectively, the "Lender Released Parties") from any and all Claims of every kind or nature, known or unknown, suspected or unsuspected, fixed or contingent, arising out of or relating to any statements, representations, acts or omissions, intentional, willful, negligent or innocent, by any of the Lender Released Parties in any way connected with, relating to or affecting, directly or indirectly, the Loan, the Loan Documents or the relationship between Lender and Borrower. B. NON-RELIANCE. Borrower hereby acknowledges that it has not relied upon any representation of any kind made by Lender or any of the Lender Released Parties in making the foregoing release. C. CIVIL CODE. Borrower is aware of the provisions of Section 1542 of the California Civil Code, which Section reads as follows: A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor. Borrower waives the provisions of said Section 1542 of the California Civil Code and the provisions of any other applicable laws restricting the release of claims which the releasing parties do not know or suspect to exist at the time of release, which, if known, would have materially affected the decision of Borrower to agree to this Agreement. D. NO ADMISSION OF LIABILITY. It is hereby further understood and agreed that the acceptance of delivery of this Agreement by the parties released hereby shall not be deemed or construed as an admission of liability of any nature whatsoever arising from or related to the subject of this Agreement. 7. FURTHER INSTRUMENTS. Borrower and Lender, when requested to do so by another party to this Agreement, shall cause to be executed, acknowledged or delivered any and all such further instruments and documents as may be reasonably necessary or proper to carry out the intent and purpose of this Agreement. 8. GOVERNING LAW. This Agreement shall be construed and enforced in accordance with the laws of the State of California (without taking into account conflicts of law). 9. AMENDMENTS. This Agreement may be amended by written agreement of amendment executed by all parties, but not otherwise. 10. ATTORNEYS' FEES. If any action or proceeding is commenced to enforce any of the terms of this Agreement, the prevailing party will have the right to recover its reasonable attorneys' fees and costs of such action or proceeding from the other party. 11. ENTIRE AGREEMENT. This Agreement (and all exhibits attached hereto, which are hereby incorporated herein by this reference) contains the entire agreement between the parties respecting the matters herein set forth and supersedes all prior agreements between the parties hereto respecting such matters. 12. SEVERABILITY. If any term or provision of this Agreement is construed or interpreted by a court of competent jurisdiction to be void, invalid or unenforceable, such decision shall affect only those paragraphs, clauses or provisions so construed or interpreted and shall not affect the remaining paragraphs, clauses and provisions of this Agreement. 13. TIME OF ESSENCE. Time is of the essence of this Agreement. [Remainder of Page Intentionally Blank] COUNTERPARTS. This Agreement may be executed in any number of counterparts so long as each signatory hereto executes at least one such counterpart. Each such counterpart shall constitute one original, but all such counterparts taken together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. BORROWER CARLYLE REAL ESTATE LIMITED PARTNERSHIP-XIII, an Illinois limited partnership By: JMB REALTY CORPORATION, a Delaware corporation, General Partner By: ------------------------------ Name: Andrea Pauls Backman Title: Senior Vice President LENDER TRIZECHAHN DEVELOPMENTS INC., a California corporation By: ------------------------------ Name: ------------------------------ Title: ------------------------------ By: ------------------------------ Name: ------------------------------ Title: ------------------------------ EXHIBIT "A" LOAN DOCUMENTS -------------- 1. Promissory Note Secured by Deed of Trust (the "Note") by Borrower to Lender. 2. Long Term Deed of Trust and Assignment of Rents (the "Deed of Trust") between Borrower, Title Insurance and Trust Company, a California corporation, and Lender dated June 22, 1983, and recorded June 24, 1983 as Instrument No. 83-711204. 3. Deed of Trust Spreader Agreement (the "Spreader Agreement") by Borrower dated June 22, 1983 and recorded March 15, 1984. 4. Full Reconveyance (the Full Reconveyance") by Ticor Title Insurance Company of California, formerly Title Insurance and Trust Company, as duly appointed Trustee under the Deed of Trust, dated June 29, 1984, and recorded June 29, 1984 as Instrument No. 84-784753. EX-10.W 3 EXHIBIT 10-W - ------------ RESTRUCTURING AGREEMENT THIS RESTRUCTURING AGREEMENT (this "Agreement") is entered into as of the 27th day of October, 1999, by and among OAK HILL STRATEGIC PARTNERS, L.P., a Delaware limited partnership ("OHSP"), 237/1290 UPPER TIER ASSOCIATES, L.P., a Delaware limited partnership ("UTLP"); 237/1290 UPPER TIER GP CORP., a Delaware corporation ("UTLP GP Corp."); 237 GP CORP., a Delaware corporation ("237 GP Corp."), JMB/NYC OFFICE BUILDING ASSOCIATES, L.P., an Illinois limited partnership ("JMB/NYC"); PROPERTY PARTNERS, L.P., a Delaware limited partnership ("Property Partners"); CARLYLE-XIII ASSOCIATES, L.P., a Delaware limited partnership ("Carlyle XIII"); CARLYLE-XIV ASSOCIATES, L.P., a Delaware limited partnership ("Carlyle XIV"); CARLYLE MANAGERS, INC., a Delaware corporation ("JMB/NYC Special"); 237 PARK PARTNERS, L.P., a Delaware limited partnership ("237 Park L.P."); 1290 PARTNERS, L.P., a Delaware limited partnership ("1290 L.P."); 1290 GP CORP., a Delaware corporation ("1290 GP Corp."); METROPOLIS REALTY TRUST, INC., a Maryland Corporation ("Metropolis") and, solely for the purpose of agreeing to certain obligations set forth in Sections 4.02(b) and (d) hereof, FW STRATEGIC ASSET MANAGEMENT, L.P. ("FW Strategic"), a Texas limited partnership (collectively, the "Parties"). WHEREAS, Metropolis holds a 95% interest as the general partner of 237/1290 Lower Tier Associates, L.P., a Delaware limited partnership ("LTLP"), which owns (x) a 99% interest as limited partner in 237 Park L.P., which owns a direct interest in that certain property known as 237 Park Avenue, New York, New York (together with all related personal property, intangibles, improvements and fixtures, the "237 Property"), and (y) a 99% interest as a limited partner in 1290 L.P., which owns a direct interest in that certain property known as 1290 Avenue of the Americas, New York, New York (together with all related personal property, intangibles, improvements and fixtures, "1290 Sixth"); and WHEREAS, UTLP holds a 5% interest as the limited partner of LTLP; and WHEREAS, it is intended that 237 Park L.P. shall be converted into a Delaware limited liability company ("237 Park LLC"); and WHEREAS, it is intended that following such conversion, Metropolis and UTLP shall cause LTLP to liquidate, and pursuant to such liquidation, each of Metropolis and UTLP shall receive an in-kind distribution of its pro rata portion of LTLP's interests in 237 Park LLC and 1290 L.P.; and WHEREAS, Metropolis and 237 GP Corp, as sellers, and 237 Park Investors, L.L.C. (an affiliate of OHSP), as buyer, have entered into the Interest Purchase Agreement (as defined below) pursuant to which 237 Park Investors, L.L.C. will acquire the respective interests of Metropolis and 237 GP Corp in 237 Park LLC (following the conversion); and WHEREAS, UTLP and OHSP desire to enter into a Contribution Agreement (the "Contribution Agreement") in connection with UTLP's contribution of its membership interest in 237 Park LLC for Class A Partnership Units in OHSP (the "UTLP OHSP Units") as more particularly described herein; and WHEREAS, the JMB/NYC Partners (as defined below) and Metropolis desire to enter into an Amendment and Release Agreement (the "Amendment and Release Agreement") relating to the Indemnification Agreement (as defined below) in connection with the transactions contemplated by this Agreement and the Interest Purchase Agreement. NOW, THEREFORE, in consideration of the mutual terms, covenants and conditions herein contained, and for other good, valid and binding consideration (including, without limitation, the terms, covenants and conditions set forth in the Interest Purchase Agreement), the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows: SECTION 1 DEFINITIONS When used herein, the following capitalized terms shall have the following meanings: "Agreement" shall have the meaning set forth in the first paragraph hereof. "Amendment and Release Agreement" shall have the meaning set forth in the recitals hereto. "Closing" shall have the meaning set forth in Section 2.02 hereof. "Closing Date" shall have the meaning set forth in Section 2.02 hereof. "Closing Transactions" shall have the meaning set forth in Section 2.01 hereof. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Confidential Information" shall have the meaning set forth in Section 4.06(a) hereof. "Contribution Agreement" shall have the meaning set forth in the recitals hereto. "Effective Time" shall have the meaning set forth in Section 2.02 hereof. "Fair Market Value" shall have the meaning set forth in Section 5.5 of the OHSP Partnership Agreement. "FW Strategic" shall have the meaning set forth in the first paragraph hereof. "Indemnifiable Action" shall have the meaning set forth in Section 7.02(a)(ii) hereof. "Indemnification Agreement" shall mean that certain Indemnification Agreement dated as of October 10, 1996 by and among the JMB/NYC Partners and Metropolis. "Interest Purchase Agreement" shall mean that certain Interest Purchase Agreement, by and among 237 Park Investors L.L.C., Metropolis Reality Trust, Inc. and 237 GP Corp., dated as of September 23, 1999, as the same was modified by letters dated October 6, 1999, October 13, 1999, October 14, 1999, and October 18, 1999, and by an Amendment No. 4 to Interest Purchase Agreement dated October 15, 1999, as the same may be further modified or amended from time to time. "JMB/NYC Controlled Entity" shall mean JMB/NYC, its partners (including, without limitation, any Indemnitor), stockholders, agents or affiliates. "JMB/NYC" shall have the meaning set forth in the first paragraph of this Agreement. "JMB/NYC Indemnifiable Action" shall have the meaning set forth in Section 7.02(a)(i) hereof. "JMB/NYC Partners" shall mean Property Partners, Carlyle XIII and Carlyle XIV. "JMB/NYC Special" shall have the meaning set forth in the first paragraph of this Agreement. "Losses" shall mean any and all losses, claims, liabilities, damages, costs or expenses (including, without limitation, reasonable counsel fees) of any nature whatsoever, contingent or otherwise, foreseen or unforeseen. "LTLP" shall have the meaning set forth in the recitals hereto. "LTLP LP Agreement" shall mean that certain Agreement of Limited Partnership of 237/1290 Lower Tier Associates, L.P., dated as of October 10, 1996, and entered into by and between Metropolis and UTLP. "Metropolis" shall have the meaning set forth in the first paragraph hereof. "New 237 Park Indebtedness" shall mean any non-recourse indebtedness secured by the 237 Property or by an interest in a limited liability company which is directly or indirectly wholly-owned by 237 Park LLC and through which the 237 Property is wholly owned (or any refinancing thereof), which indebtedness shall constitute a "nonrecourse liability" allocable to UTLP pursuant to U.S. Treasury regulation section 1.752- 1(a)(2) and shall qualify as qualified non-recourse financing within the meaning of Section 465(b)(6) of the Code. "OHSP Adverse Transaction" shall mean (i) any sale, disposition, transfer or exchange of the 237 Property, or of any of OHSP's interests in the 237 Park Entities, (ii) any release, discharge or reduction of New 237 Park Indebtedness of the 237 Park Entities below $200 million (other than through actions taken by a secured lender such as application of insurance proceeds or condemnation awards or the exercise of remedies, or in the case where the released indebtedness is concurrently being replaced with other non-recourse indebtedness complying with clause (B) below), (iii) any distribution of the assets of the 237 Park Entities (other than distributions of cash and other distributions by the 237 Park Entities in the ordinary course of business), or (iv) any other transaction or agreement to which OHSP or the 237 Park Entities is a party, if as a result of any such transaction or agreement described in (i), (ii), (iii), or (iv) above, JMB/NYC would be required to recognize a material amount of taxable income or gain prior to the earlier of (1) the exercise by FW Strategic of the right set forth in Section 4.02(c) hereof and the receipt by JMB/NYC, in accordance with Section 4.02(e), of all amounts to be received under such Section 4.02(c), and (2) the exercise by JMB/NYC of the right set forth in the proviso of Section 4.02(d)(ii) hereof and the receipt by JMB/NYC, in accordance with Section 4.02(e), of all amounts to be received under such Section 4.02(d). "OHSP Adverse Transactions" shall specifically exclude (A) distribution of income of the 237 Park Entities or OHSP derived in the ordinary course of the 237 Park Entities' business, (B) incurrence of New 237 Park Indebtedness of the properties owned by the 237 Park Entities on commercially reasonable terms in an aggregate amount equal to not less than $200,000,000, (C) payment of amortization on non- recourse financing encumbering the assets owned by the 237 Park Entities, provided that the outstanding balance of such financing is not reduced below $200,000,000, in the aggregate, between the date hereof and the earlier of (1) the exercise by FW Strategic of the right set forth in Section 4.02(c) hereof and the receipt by JMB/NYC, in accordance with Section 4.02(e), of all amounts to be received under such Section 4.02(c), and (2) the exercise by JMB/NYC of the right set forth in the proviso of Section 4.02(d)(ii) hereof and the receipt by JMB/NYC, in accordance with Section 4.02(e), of all amounts to be received under such Section 4.02(d), and other repayments of principal as described in the parenthetical of clause (ii) above (i.e., actions taken by a secured lender such as application of insurance proceeds or condemnation awards or the exercise of remedies, or in the case where the released indebtedness is concurrently being replaced with other non-recourse indebtedness complying with clause (B) above), (D) a transfer of the 237 Property owned by any of the 237 Park Entities pursuant to an involuntary foreclosure or similar action arising from a default by any of the 237 Park Entities with respect to its obligations under its indebtedness, (E) a transfer of the 237 Property to any 237 Park Entity in connection with the obligations of any 237 Park Entity under its indebtedness, and (F) a transfer of the 237 Property pursuant to a voluntary foreclosure or similar action arising from a default by any of the 237 Park Entities with respect to such entities' obligations under the New 237 Park Indebtedness; provided that, in the case of a consensual foreclosure or deed in lieu of foreclosure by reason of a default under the New 237 Park Indebtedness (as defined pursuant to the terms thereof), the default is a bona fide default and the foreclosure or deed in lieu of foreclosure is not a collusive transaction between the holders of the New 237 Park Indebtedness and 237 Park LLC, or any member thereof or any affiliate of either, attributable to any commonality of ownership between the beneficial ownership of the New 237 Park Indebtedness and 237 Park LLC or any member thereof or any affiliate of either. "OHSP" shall have the meaning set forth in the first paragraph hereof. "OHSP Indemnifiable Action" shall have the meaning set forth in Section 7.02(a)(ii) hereof. "OHSP Partnership Agreement" shall mean that certain agreement of limited partnership relating to OHSP, as the same may be amended or modified from time to time. "Parties" shall have the meaning set forth in the first paragraph hereof. "Property Partners" shall have the meaning set forth in the first paragraph of this Agreement. "Representatives" shall have the meaning set forth in Section 4.06(a) hereof. "Termination Date" shall have the meaning set forth in Section 6.01(b) hereof. "Transaction Agreements" shall mean this Agreement, the Contribution Agreement, the Amendment and Release Agreement, and the Interest Purchase Agreement. "1290 GP Corp." shall have the meaning set forth in the first paragraph of this Agreement. "1290 L.P." shall have the meaning set forth in the first paragraph hereof. "1290 LP Agreement" shall mean that certain agreement of limited partnership relating to 1290 L.P., as the same may be amended or modified from time to time. "1290 Sixth" shall have the meaning set forth in the recitals hereto. "237 Book/Tax Amount" shall have the meaning set forth in Section 4.02(a) hereof. "237 GP Corp." shall have the meaning set forth in the first paragraph hereof. "237 Park Entities" shall mean 237 Park LLC and any other direct or indirect wholly-owned, single member, limited liability company subsidiary of 237 Park LLC formed in connection with the New 237 Park Indebtedness financing. "237 Park LLC" shall have the meaning set forth in the recitals hereto. "237 Park L.P." shall have the meaning set forth in the recitals hereto. "237 Park Partners LP Agreement" shall mean that certain agreement of limited partnership relating to 237 Park L.P., as the same may be amended or modified from time to time. "237 Property" shall have the meaning set forth in the recitals hereto. "UTLP" shall have the meaning set forth in the first paragraph hereof. "UTLP GP Corp." shall have the meaning set forth in the first paragraph hereof. "UTLP LP Agreement" shall mean that certain Second Amended and Restated Limited Partnership Agreement of UTLP, dated as of October 14, 1997, entered into by and between UTLP GP Corp., JMB/NYC and JMB/NYC Special. "UTLP OHSP Units" shall have the meaning set forth in the recitals hereto. SECTION 2 CLOSING 2.01 Transactions on the Closing Date. Subject to the terms and on the conditions of this Agreement, at or before Closing, each of the following transactions (the "Closing Transactions") shall be consummated in the following order (and only upon the completion of the transaction set forth in the paragraph immediately prior to it): (a) Conversion of 237 Park L.P. (i) LTLP, Metropolis, 237 GP Corp. and 237 Park L.P. shall, and LTLP, Metropolis and 237 GP Corp. shall cause 237 Park L.P. to, (A) take all actions necessary in order to effect the conversion of 237 Park L.P. from a Delaware limited partnership to a Delaware limited liability company, and (B) immediately following such conversion, appoint OHSP as the manager (and submit to OHSP the written resignation of each other manager, if any) of 237 Park LLC, and amend its certificate of formation to reflect such changes. (ii) It is hereby expressly agreed by the Parties that, in conjunction with, and to effectuate, the closing under the Interest Purchase Agreement, OHSP shall have the right, in its sole discretion, to amend, restate or otherwise modify the terms of the 237 Park Partners LP Agreement and, upon the execution thereof, the limited liability company agreement of 237 Park LLC. (b) Amendments to the UTLP and 1290 LP Agreements. (i) The UTLP LP Agreement shall be amended so that such agreement shall conform in both form and substance to the form attached to this Agreement as Exhibit A. (ii) The 1290 LP Agreement shall be amended so that such agreement shall conform in both form and substance to the form attached to this Agreement as Exhibit B. (c) Liquidation. Metropolis, UTLP and UTLP GP Corp. shall cause LTLP to liquidate in accordance with the terms of a liquidation agreement attached hereto as Exhibit C, and in connection with such liquidation, each of Metropolis and UTLP shall receive an in-kind distribution of its pro rata portion of LTLP's interests in 237 Park LLC and 1290 LP. (d) Creation of 237 Park Entities; Transfer of 237 Property. In accordance with the provisions of the Interest Purchase Agreement, Metropolis, 237 GP Corp. and UTLP shall cause 237 Park LLC to, and 237 Park LLC shall (x) form a subsidiary, which subsidiary shall at all times, remain a direct or indirect wholly-owned subsidiary of 237 Park LLC; (y) transfer ownership of the 237 Property to such subsidiary, and (z) thereafter, form one or more additional subsidiaries as may be required by the lenders in conjunction with the New 237 Park Indebtedness, which additional subsidiaries shall at all times, remain direct or indirect wholly-owned subsidiaries of 237 Park LLC. Such subsidiaries shall, together with 237 Park LLC, constitute the 237 Park Entities as defined herein. (e) Contribution of 237 Park LLC Membership Interests. Subsequent to the sale by Metropolis and 237 GP Corp. of their respective partnership interests (or, following the conversion of 237 Park L.P., of their respective membership interests) in 237 Park L.P. or 237 Park LLC, as applicable, to 237 Park Investors, L.L.C., UTLP shall contribute its membership interest in 237 Park LLC to OHSP as consideration for UTLP's receipt of Class A Partnership Units in OHSP with a Fair Market Value and initial Capital Account on the Closing Date of $505,050. 2.02 The Closing; Effective Time. The closing (the "Closing") with respect to the Closing Transactions shall take place (i) at the same time (the "Effective Time"), on the same date (the "Closing Date") and at the same location of the closing under the Interest Purchase Agreement, subject to satisfaction or waiver of the conditions set forth in Section 3 hereof, or (ii) at such other place, time and/or date as the Parties shall mutually agree in writing. SECTION 3 CONDITIONS TO CLOSING The obligation of each Party to consummate the Closing Transactions shall be conditioned as follows: 3.01 Subscription. It shall be a condition of OHSP's obligation to close hereunder that, simultaneous to the occurrence of the Closing Transactions as set forth above, UTLP shall be delivering to OHSP a Contribution Agreement in the form set forth in Exhibit D hereto. 3.02 Closing Under Interest Purchase Agreement. It shall be a condition of OHSP's, Metropolis's, UTLP's and JMB/NYC's obligation to close hereunder that, simultaneous to the occurrence of the Closing Transactions as set forth above, the closing of the purchase under the Interest Purchase Agreement shall be occurring (and all conditions to such closing shall either have been satisfied or waived). 3.03 Execution of the Amendment and Release Agreement. It shall be a condition of JMB/NYC's obligation to close hereunder that, simultaneous to the occurrence of the Closing Transactions as set forth above, the execution and delivery of the Amendment and Release Agreement in the form set forth in Exhibit E hereto by the JMB/NYC Partners and Metropolis shall be occurring. 3.04 Participation Extinguished. It shall be a condition of JMB/NYC's obligation to close hereunder that, simultaneous to the occurrence of the Closing Transactions as set forth above, Metropolis shall assign its interest in (i) that certain Second Amended, Restated and Consolidated Note, dated as of October 10, 1996, made by JMB/NYC in favor of Metropolis in an original principal amount of $88,572,780 (a true and correct copy of which is attached hereto as Exhibit F); (ii) that Second Amended, Restated and Consolidated Security Agreement, dated as of October 10, 1996, between JMB/NYC and Metropolis; and (iii) that certain Participation Agreement, dated as of October 10, 1996, between Metropolis and Michigan Avenue, L.L.C., a Delaware limited liability company ("Michigan Avenue, LLC"), to Michigan Avenue, LLC. 3.05 Representations and Warranties; Covenants. It shall be a condition of each Party's obligation to close hereunder, that, with respect to each other Party: (a) such Party's respective representations and warranties contained in this Agreement shall be true at and as of the Effective Time with the same effect as though made at and as of such time; provided, however, that, with respect to representations and warranties which expressly speak as of a different date, the same shall be true as of such date. (b) such Party shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it (and, with respect to Section 2.01, such performance or compliance shall have occurred in the appropriate order) on or before the Effective Time. SECTION 4 COVENANTS AND AGREEMENTS 4.01 Pre-Closing Covenants and Agreements. After the date hereof and prior to the Effective Time (unless otherwise agreed to in writing by all of the Parties): (a) JMB Consent. JMB/NYC, the JMB/NYC Partners and JMB/NYC Special shall (and hereby do) expressly acknowledge, and grant their unconditional consent and, as applicable, approval to, all of the Closing Transactions expressly provided for in Section 2.01 hereof and all acts which must be taken by any Party in connection therewith. (b) [Intentionally Omitted] 4.02 Post-Closing Covenants and Agreements. (a) OHSP will treat and report UTLP's Code Section 704(c) book/tax difference with respect to UTLP's interest in OHSP (taking into account the remedial allocation under Section 4.02(b)(ii)) as equal to approximately $191,400,000 as of the Effective Time (the "237 Book/Tax Amount"). (b) From the Closing Date to the earlier of (x) the exercise by FW Strategic of the right set forth in Section 4.02(c) hereof, and the receipt by JMB/NYC, in accordance with Section 4.02(e), of all amounts to be received under Section 4.02(c), and (y) the exercise by JMB/NYC of the right set forth in the proviso of Section 4.02(d)(ii) hereof, and the receipt by JMB/NYC, in accordance with Section 4.02(e), of all amounts to be received under Section 4.02(d)(ii): (i) Maintenance and Allocation of Indebtedness. OHSP shall, or shall cause the 237 Park Entities to, (A) maintain outstanding New 237 Park Indebtedness in a principal amount equal at least to $200 million which indebtedness shall qualify as qualified non-recourse financing (within the meaning of section 465(b)(6)(B) of the Code); (B) report a portion of the New 237 Park Indebtedness in a principal amount equal to not less than the 237 Book/Tax Amount (as reduced each year by the amount allocated to UTLP under the "remedial method" pursuant to clause (ii) of this Section 4.02(b)) as being allocated to UTLP for U.S. federal income tax purposes; (C) file all U.S. federal and state income tax returns in a manner consistent with such allocation of the New 237 Park Indebtedness; (D) report all of the liabilities allocated to UTLP as qualified non- recourse financing (within the meaning of section 465(b)(6)(B) of the Code); and (E) in preparing any income tax return, not make any statement or file any attachment that indicates that there is more than one activity with respect to the 237 Park Entities for purposes of section 465 of the Code. (ii) Election of Remedial Method. UTLP and JMB/NYC hereby expressly recognize and agree that OHSP shall elect to make U.S. federal income tax allocations in respect of the 237 Property in accordance with the "remedial method" described in U.S. Treasury regulation section 1.704- 3(d). OHSP agrees that the effect of using the "remedial method" described in U.S. Treasury regulation section 1.704-3(d) shall be that UTLP shall receive an annual remedial income allocation from the 237 Property in an amount equal to approximately $4,600,000. (iii) OHSP Classification. OHSP shall be classified as a partnership (and not as a publicly traded partnership) for federal income tax purposes. (c) FW Strategic Call Right. FW Strategic shall, upon ninety (90) days' prior written notice to UTLP and JMB/NYC, have the continuing right, exercisable at any time during the month of January of each calendar year commencing with 2002, to purchase, or to cause its designee to purchase, the UTLP OHSP Units free and clear of all liens, restrictions, and encumbrances, for a cash amount (which cash amount shall not be reduced or increased in any way in respect of any costs or fees imposed by any Party) equal to the greater of the Fair Market Value of such UTLP OHSP Units or $656,566. (d) Non-Transferability and Non-Redeemability of the UTLP OHSP Units and JMB/NYC Put Right. After the Effective Time: (i) UTLP shall not in any way transfer, assign, sell, abandon, hypothecate, pledge, exchange or otherwise dispose of or encumber any of the UTLP OHSP Units or any interest therein without the consent of OHSP, which consent may be withheld in OHSP's sole and absolute discretion. (ii) notwithstanding any of the provisions of the OHSP Partnership Agreement to the contrary, UTLP shall not have any rights to redeem, or to cause the redemption of, the UTLP OHSP Units; provided, however, that JMB/NYC shall, upon ninety (90) days' prior written notice to UTLP, FW Strategic and OHSP, have the continuing right, exercisable at any time during the month of July of each calendar year commencing with 2001, to cause the sale by UTLP of the UTLP OHSP Units, and, in the event of the exercise of such right, (x) UTLP shall have the obligation, and hereby agrees, to sell, and (y) FW Strategic and OHSP, jointly and severally, shall have the obligation, and hereby agree, to purchase (either directly or through their respective assigns or designees), the UTLP OHSP Units free and clear of all liens, restrictions, and encumbrances, for a net cash amount (which cash amount shall not be reduced or increased in any way in respect of any costs or fees imposed by any Party) equal to the greater of the Fair Market Value of such UTLP OHSP Units or $505,050. (e) Payment Directions. Notwithstanding anything to the contrary in this Agreement or otherwise, any payments to be made by FW Strategic or OHSP pursuant to Section 4.02(c) or 4.02(d)(ii) of this Agreement shall be made directly by wire transfer to the partners of UTLP in the ratio of 99.001% of the funds to be paid pursuant to such sections to JMB/NYC pursuant to the written wire instructions of JMB/NYC and .999% of the funds to be paid pursuant to such sections to UTLP GP Corp. pursuant to the written wire instructions of UTLP GP Corp., without reduction for any fees, expenses or costs. (f) 1290 L.P. will treat and report UTLP's Code Section 704(c) book/tax difference with respect to UTLP's interest in 1290 L.P. as equal to approximately $129,700,000 as of the Effective Time. (g) From and after the Closing Date to the date UTLP is no longer a partner in 1290 L.P., (i) 1290 L.P. agrees that the effect of using the "remedial method" described in U.S. Treasury regulation section 1.704-3(d) shall be that UTLP shall receive an annual remedial income allocation from 1290 L.P. in an amount equal to approximately $3,300,000; (ii) 1290 L.P. shall qualify and report all of the liabilities allocated to UTLP as qualified non-recourse financing (within the meaning of section 465(b)(6)(B) of the Code); and (iii) in preparing any income tax return, 1290 L.P. shall not make any statement or file any attachment that indicates that there is more than one activity for purposes of Section 465 of the Code. 4.03 OHSP Adverse Transactions. OHSP hereby covenants that no OHSP Adverse Transaction shall occur from the Closing Date hereof to the earlier of (x) the exercise by FW Strategic of the right set forth in Section 4.02(c) hereof, and the receipt by JMB/NYC, in accordance with Section 4.02(e), of all amounts to be received pursuant to Section 4.02(c), and (y) the exercise by JMB/NYC of the right set forth in the proviso of Section 4.02(d)(ii) hereof, and the receipt by JMB/NYC, in accordance with Section 4.02(e), of all amounts to be received under Section 4.02(d)(ii), it being hereby expressly agreed that in no event shall the consummation of any of the Closing Transactions be deemed to be an "OHSP Adverse Transaction". 4.04. Further Assurances. After the date hereof and at any time thereafter, each Party shall, subject to the fulfillment of each of the covenants and conditions of performance set forth herein or the waiver thereof, use its reasonable best efforts (a) to perform such further acts and execute such documents as may be required to (i) effect the transactions expressly provided in the Transaction Agreements, (ii) obtain in a timely manner all necessary waivers, consents and approvals, and effect all necessary filings, in each case as required in order to effect the transactions expressly provided in the Transaction Agreements, and, (b) to take, or cause to be taken, all other actions and to do, or cause to be done, all other things reasonably necessary, proper or advisable to consummate and make effective as promptly as practicable the provisions of the Transaction Agreements and the transactions expressly provided therein. 4.05. Negative Covenant. After the date hereof and at any time thereafter, no Party shall take or refuse to take any action (including, without limitation, refusing to approve or otherwise consent to any act for which the approval or consent of such Party is required) so as to hinder, delay or otherwise impair the ability of any Party to consummate the transactions expressly provided for in the Transaction Agreements. 4.06. Confidentiality. (a) Each Party hereby agrees that it will not, without the prior written consent of the other Parties, disclose to any person (i) the identities of the other Parties or any of their investors or affiliates, (ii) the fact that this Agreement or the other Parties exist, (iii) the status of the discussions or negotiations relating to the transactions expressly provided for in the Transaction Agreements, (iv) copies of, or the terms and provisions contained in, this Agreement, the Contribution Agreement, the Amendment and Release Agreement, or any other documents or agreements necessary to the consummation of the transactions expressly provided for in the Transaction Agreements, or (v) any other material confidential information with respect to the Parties or their respective operations or other assets thereof (collectively, "Confidential Information"); provided, however, that any Party may disclose Confidential Information (A) to its partners or members (as applicable), officers, directors, employees, affiliates, investors, agents, advisors and lenders (including, without limitation, any accountants, attorneys or financial advisors) (the "Representatives") who need to know such information for the purpose of evaluating the transactions contemplated by the Transaction Agreements (it being understood and agreed that such Party shall advise such persons of their obligations concerning the confidentiality of such Confidential Information and shall instruct such persons to maintain the confidentiality of such Confidential Information in accordance with the terms of this Agreement), (B) pursuant to a subpoena or other legal process received in connection with a judicial, administrative or regulatory proceeding in which such Party or its Representatives are involved, subject to the provisions of Section 8.02, and (C) to the extent that it is required to be disclosed by law or the rules or regulations of any relevant regulatory organization, or that it is otherwise deemed advisable in the opinion of counsel to such Party; provided, further that, in the case of the foregoing clause (B), the applicable Party shall provide the other Parties promptly with prior written notice of the applicable matter and cooperate with the other Parties (at such other Parties' sole cost and expense) to the extent such Parties seek any protective order to prevent the disclosure of all or any portion of any Confidential Information. (b) No Party shall issue any press release or make any other public announcement (it being agreed that the provisions of this paragraph (b) shall apply to voluntary press releases or public announcement in contrast to the required press releases or public announcements which are governed by the provisions of paragraph (a) above) with respect to the Transaction Agreements without the prior written consent of the other Parties; provided, however, that any Party may issue a press release or make a public announcement if, in the reasonable opinion of counsel to such Party, (x) the information contained therein is required to be disclosed by law or the rules or regulations of any relevant regulatory organization and (y) such press release or public announcement does not involve the disclosure of any Confidential Information. 4.07 OHSP shall furnish to UTLP, within sixty (60) days after the close of its fiscal year, a statement required pursuant to Section 7.3 of the OHSP Partnership Agreement. 4.08 Each Party to this Agreement hereby covenants that it shall notify in writing each other Party to this Agreement, prior to the occurrence of and at the Closing hereunder, upon its having knowledge of any facts or circumstances that would make any of the representations, warranties, covenants or agreements contained in this Agreement untrue or incorrect as of such date and as of the Closing Date. 4.09 237 Park L.P., 237 GP Corp., Metropolis, OHSP and UTLP agree that if there is an actual or deemed liquidation of 237 Park L.P. (or, following conversion, 237 Park LLC), UTLP will be allocated for federal income tax purposes the same amount of any indebtedness secured by the 237 Property or by an interest in 237 Park L.P. (or, following conversion, 237 Park LLC) or in a partnership or limited liability company which is directly or indirectly wholly-owned by 237 Park L.P. (or, following conversion, 237 Park LLC) as was allocated to UTLP immediately prior to the actual or deemed liquidation. SECTION 5 REPRESENTATIONS AND WARRANTIES 5.01. OHSP hereby represents and warrants as of the date hereof and as of the Closing, as follows: (a) It is duly organized, validly existing and in good standing as a limited partnership under the laws of the State of Delaware, with full power and authority to perform its obligations under this Agreement. (b) It has all partnership power and authority to enter into this Agreement, and the person signing this Agreement on behalf of it has been duly authorized by it to do so. (c) This Agreement has been duly authorized and duly executed and delivered by it and, assuming the due authorization, execution and delivery by the other Parties, constitutes the valid and binding instrument or agreement of it, enforceable in accordance with its terms subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (d) Neither the execution, delivery and performance of this Agreement by OHSP nor the consummation of any other of the transactions herein contemplated by OHSP nor the fulfillment of the terms hereof or thereof by OHSP will conflict with, result in a breach or violation of, or constitute a default (or any event which with the giving of notice or the lapse of time or both would constitute a default) under the organizational documents of OHSP or the terms of any indenture, loan agreement, bond, note, evidence of indebtedness, mortgage, deed of trust, lease, license, permit, franchise, certificate or other agreement or instrument to which OHSP is a party or by which it is bound or to which any of its properties are subject, or require any authorization or approval under or pursuant to any of the foregoing, or violate in any material respect any statute, treaty, rule, regulation, ordinance, judgment, order, writ, ruling, injunction or decree applicable to OHSP of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over OHSP. (e) No consent, approval, authorization or order of, or qualification with, any court or governmental authority is required in connection with the execution, delivery or performance by OHSP of this Agreement, except for any of the foregoing which have been obtained. (f) OHSP will not, (i) immediately after UTLP contributes its membership interests in 237 Park LLC to OHSP in return for the UTLP OHSP Units, be a partnership described in section 721(b) of the Code (i.e., a partnership that would be an "investment company" within the meaning of section 351(e) of the Code if it were incorporated) or (ii) at the time that UTLP contributes its membership interests in 237 Park LLC to OHSP in return for the UTLP OHSP Units, (A) have any plan or intention to become a partnership described in section 721(b) of the Code or (B) have any obligation to acquire additional assets or dispose of assets that would cause it to become a partnership described in section 721(b) of the Code. (g) OHSP will be classified as a partnership (and not as a publicly traded partnership) for federal income tax purposes. (h) The audited financial statements of OHSP as of and for the year ended December 31, 1998, and the unaudited financial statements of OHSP as of and for the periods ended June 30, 1999, and September 30, 1999, respectively, provided by OHSP to JMB/NYC present fairly in all material respects the financial condition and results of operations of OHSP as of and for the periods ended on the dates thereof. Since September 30, 1999, there has been no material adverse change in the financial condition, assets, operations or prospects of OHSP other than in the ordinary course of its business or fluctuations in the market value of its assets in the ordinary course. (i) OHSP is not subject to any litigation, claim, action or proceeding that could, if adversely determined, have a material adverse effect on the financial condition, assets, operations or prospects of OHSP and nothing has come to the attention of OHSP to cause it to believe that any entity in which it has invested is subject to any litigation, claim, action or proceeding that could, if adversely determined, have a material adverse effect on the financial condition, assets, operations or prospects of OHSP. 5.02. UTLP GP Corp. hereby represents and warrants, with respect to UTLP, as of the date hereof and as of the Closing, as follows: (a) It is duly organized, validly existing and in good standing as a limited partnership under the laws of the State of Delaware, with full power and authority to perform its obligations under this Agreement. (b) It owns a 5% limited partnership interest in LTLP, free and clear of any liens, restrictions, and encumbrances (except for those liens, restrictions or encumbrances provided in the LTLP LP Agreement running in favor of the partners of LTLP or their affiliates). (c) It has all partnership power and authority to enter into this Agreement, and the person signing this Agreement on behalf of it has been duly authorized by it to do so. (d) This Agreement has been duly authorized and duly executed and delivered by it and, assuming the due authorization, execution and delivery by the other Parties, constitutes the valid and binding instrument or agreement of it, enforceable in accordance with its terms subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (e) Neither the execution, delivery and performance of this Agreement by UTLP nor the consummation of any other of the transactions herein contemplated by UTLP or the fulfillment of the terms hereof or thereof by UTLP will conflict with, result in a breach or violation of, or constitute a default (or any event which with the giving of notice or the lapse of time or both would constitute a default) under the organizational documents of UTLP or the terms of any indenture, loan agreement, bond, note, evidence of indebtedness, mortgage, deed of trust, lease, license, permit, franchise, certificate or other agreement or instrument to which UTLP is a party or by which it is bound or to which any of its properties are subject, or require any authorization or approval under or pursuant to any of the foregoing, or violate in any material respect any statute, treaty, rule, regulation, ordinance, judgment, order, writ, ruling, injunction or decree applicable to UTLP of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over UTLP. (f) No consent, approval, authorization or order of, or qualification with, any court or governmental authority is required in connection with the execution, delivery or performance by UTLP of this Agreement, except for any of the foregoing which have been obtained. (g) It has not been formed or recapitalized for the specific purpose of acquiring the UTLP OHSP Units. 5.03. JMB/NYC, the JMB/NYC Partners and JMB/NYC Special hereby represent and warrant (each only as to itself) as of the date hereof and as of the Closing, as follows: (a) With respect to JMB/NYC, it is duly organized, validly existing and in good standing as a limited partnership under the laws of the State of Illinois, with full power and authority to perform its obligations under this Agreement. With respect to Property Partners, Carlyle XIII and Carlyle XIV, each is duly organized, validly existing and in good standing as a limited partnership under the laws of the State of Illinois, with full power and authority to perform its obligations under this Agreement. With respect to JMB/NYC Special, it is duly organized, validly existing and in good standing as a corporation, under the laws of the State of Delaware, with full power and authority to perform its obligations under this Agreement. (b) JMB/NYC owns a 98.901% limited partnership interest, and JMB/NYC Special owns a 0.1% general partnership interest, in UTLP, in each case, free and clear of any liens, restrictions, and encumbrances (except for those liens, restrictions or encumbrances provided in the UTLP LP Agreement running in favor of the partners of UTLP or their affiliates or that certain Amended, Restated and Consolidated Security Agreement, dated October 10, 1996 by and between JMB/NYC and Metropolis). Property Partners, Carlyle XIII and Carlyle XIV collectively own 100% of the limited partnership interests in JMB/NYC. JMB/NYC Special is the sole general partner of JMB/NYC. (c) JMB/NYC, JMB/NYC Special and each of the JMB/NYC Partners have all requisite power and authority to enter into this Agreement, and the person signing this Agreement on behalf of each such entity has been duly authorized by it to do so. (d) This Agreement has been duly authorized and duly executed and delivered by JMB/NYC, JMB/NYC Special and each of the JMB/NYC Partners and, assuming the due authorization, execution and delivery by the other Parties, constitutes the valid and binding instrument or agreement of each such entity, enforceable in accordance with its terms subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (e) Neither the execution, delivery and performance of this Agreement by JMB/NYC, JMB/NYC Special or any of the JMB/NYC Partners nor the consummation of any other of the transactions herein contemplated by any such entity or the fulfillment of the terms hereof or thereof by any such entity will conflict with, result in a breach or violation of, or constitute a default (or any event which with the giving of notice or the lapse of time or both would constitute a default) under the organizational documents of any such entity or the terms of any indenture, loan agreement, bond, note, evidence of indebtedness, mortgage, deed of trust, lease, license, permit, franchise, certificate or other agreement or instrument to which such entity is a party or by which it is bound or to which any of its properties are subject, or require any authorization or approval under or pursuant to any of the foregoing, or violate in any material respect any statute, treaty, rule, regulation, ordinance, judgment, order, writ, ruling, injunction or decree applicable to such entity of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over such entity. (f) No consent, approval, authorization or order of, or qualification with, any court or governmental authority is required in connection with the execution, delivery or performance by JMB/NYC, JMB/NYC Special or any of the JMB/NYC Partners of this Agreement, except for any of the foregoing which have been obtained. 5.04. Metropolis hereby represents and warrants as of the date hereof and as of the Closing, as follows: (a) It is duly organized, validly existing and in good standing as a corporation under the laws of the State of Maryland, with full power and authority to perform its obligations under this Agreement. (b) It owns 100% of the capital stock of 237 GP Corp., free and clear of any liens, restrictions, and encumbrances. It owns a 95% general partnership interest in LTLP, free and clear of any liens, restrictions, and encumbrances. (c) It has all corporate power and authority to enter into this Agreement, and the person signing this Agreement on behalf of it has been duly authorized by it to do so. (d) This Agreement has been duly authorized and duly executed and delivered by Metropolis and, assuming the due authorization, execution and delivery by the other Parties constitutes the valid and binding instrument or agreement of Metropolis, enforceable in accordance with its terms subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (e) Neither the execution, delivery and performance of this Agreement by Metropolis nor the consummation of any other of the transactions herein contemplated by Metropolis or the fulfillment of the terms hereof or thereof by Metropolis will conflict with, result in a breach or violation of, or constitute a default (or any event which with the giving of notice or the lapse of time or both would constitute a default) under the organizational documents of Metropolis or the terms of any indenture, loan agreement, bond, note, evidence of indebtedness, mortgage, deed of trust, lease, license, permit, franchise, certificate or other agreement or instrument to which Metropolis is a party or by which it is bound or to which any of its properties are subject, or require any authorization or approval under or pursuant to any of the foregoing, or violate in any material respect any statute, treaty, rule, regulation, ordinance, judgment, order, writ, ruling, injunction or decree applicable to Metropolis of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over Metropolis. (f) No consent, approval, authorization or order of, or qualification with, any court or governmental authority is required in connection with the execution, delivery or performance by Metropolis of this Agreement, except for any of the foregoing which have been obtained. (g) Attached hereto as Exhibit G is a schedule reflecting the relevant dates and amounts of (i) all capital contributions and loans (including the identity of the lender and a description of the terms thereof) received by LTLP, 237 Park L.P. (and, following conversion, 237 Park LLC) and 1290 L.P. and (ii) all distributions made by LTLP, 237 Park L.P. (and, following conversion, 237 Park LLC) and 1290 L.P. for the period commencing October 10, 1996 through the date hereof and updated as of the Closing after giving effect to the transactions expressly provided for in the Transaction Agreements. (h) Attached hereto as Exhibit H is a schedule reflecting all cash and cash equivalents held by each of 237 Park L.P. (and, following conversion, 237 Park LLC), 1290 Park L.P. and LTLP as of the date hereof and updated as of the Closing after giving effect to the transactions expressly provided for in the Transaction Agreements. 5.05. UTLP GP Corp. hereby represents and warrants as of the date hereof and as of the Closing, as follows: (a) It is duly organized, validly existing and in good standing as a corporation under the laws of the State of Delaware, with full power and authority to perform its obligations under this Agreement. (b) 100% of the capital stock of UTLP GP Corp. is owned by Metropolis. UTLP GP Corp. owns a 0.999% general partnership interest in UTLP, free and clear of any liens, restrictions, and encumbrances. (c) It has all corporate power and authority to enter into this Agreement, and the person signing this Agreement on behalf of it has been duly authorized by it to do so. (d) This Agreement has been duly authorized and duly executed and delivered by UTLP GP Corp. and, assuming the due authorization, execution and delivery by the other Parties, constitutes the valid and binding instrument or agreement of UTLP GP Corp, enforceable in accordance with its terms subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (e) Neither the execution, delivery and performance of this Agreement by UTLP GP Corp. nor the consummation of any other of the transactions herein contemplated by UTLP GP Corp. or the fulfillment of the terms hereof or thereof by UTLP GP Corp. will conflict with, result in a breach or violation of, or constitute a default (or any event which with the giving of notice or the lapse of time or both would constitute a default) under the organizational documents of UTLP GP Corp. or the terms of any indenture, loan agreement, bond, note, evidence of indebtedness, mortgage, deed of trust, lease, license, permit, franchise, certificate or other agreement or instrument to which UTLP GP Corp. is a party or by which it is bound or to which any of its properties are subject, or require any authorization or approval under or pursuant to any of the foregoing, or violate in any material respect any statute, treaty, rule, regulation, ordinance, judgment, order, writ, ruling, injunction or decree applicable to UTLP GP Corp. of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over UTLP GP Corp. (f) No consent, approval, authorization or order of, or qualification with, any court or governmental authority is required in connection with the execution, delivery or performance by UTLP GP Corp. of this Agreement, except for any of the foregoing which have been obtained. 5.06. 237 Park L.P. hereby represents and warrants as of the date hereof and as of the Closing, as follows: (a) 237 Park L.P. is duly organized, validly existing and in good standing as a limited partnership under the laws of the State of Delaware, with full power and authority to perform its obligations under this Agreement; provided, however, that, upon conversion of 237 Park L.P. to 237 Park LLC, 237 Park LLC shall be and shall continue to be through the time of Closing, duly organized, validly existing and in good standing as a limited liability company under the laws of the State of Delaware. (b) 237 Park L.P. has all partnership power and authority to enter into this Agreement, and the person signing this Agreement on behalf of it has been duly authorized by it to do so. (c) This Agreement has been duly authorized and duly executed and delivered by 237 Park L.P. and, assuming the due authorization, execution and delivery by the other Parties, constitutes the valid and binding instrument or agreement of 237 Park L.P. and, following conversion, 237 Park LLC, enforceable in accordance with its terms subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (d) Neither the execution, delivery and performance of this Agreement by 237 Park L.P. or 237 Park LLC nor the consummation of any other of the transactions herein contemplated by 237 Park L.P. or 237 Park LLC or the fulfillment of the terms hereof or thereof by 237 Park L.P. or 237 Park LLC will conflict with, result in a breach or violation of, or constitute a default (or any event which with the giving of notice or the lapse of time or both would constitute a default) under the organizational documents of 237 Park L.P. or 237 Park LLC or the terms of any indenture, loan agreement, bond, note, evidence of indebtedness, mortgage, deed of trust, lease, license, permit, franchise, certificate or other agreement or instrument to which 237 Park L.P. or 237 Park LLC is a party or by which it is bound or to which any of its properties are subject, or require any authorization or approval under or pursuant to any of the foregoing, or violate in any material respect any statute, treaty, rule, regulation, ordinance, judgment, order, writ, ruling, injunction or decree applicable to 237 Park L.P. or 237 Park LLC of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over 237 Park L.P. or 237 Park LLC. (e) No consent, approval, authorization or order of, or qualification with, any court or governmental authority is required in connection with the execution, delivery or performance, as applicable, by 237 Park L.P. or 237 Park LLC of this Agreement, except for any of the foregoing which have been obtained. 5.07. FW Strategic hereby represents and warrants as of the date hereof and as of the Closing, as follows: (a) It is duly organized, validly existing and in good standing as a limited partnership under the laws of the State of Texas, with full power and authority to perform its obligations under this Agreement. (b) It has all partnership power and authority to enter into this Agreement, and the person signing this Agreement on behalf of it has been duly authorized by it to do so. (d) This Agreement has been duly authorized and duly executed and delivered by it and, assuming the due authorization, execution and delivery by the other Parties constitutes the valid and binding instrument or agreement of it, enforceable in accordance with its terms subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (e) Neither the execution, delivery and performance of this Agreement by FW Strategic nor the consummation of any other of the transactions herein contemplated by FW Strategic or the fulfillment of the terms hereof or thereof by FW Strategic will conflict with, result in a breach or violation of, or constitute a default (or any event which with the giving of notice or the lapse of time or both would constitute a default) under the organizational documents of FW Strategic or the terms of any indenture, loan agreement, bond, note, evidence of indebtedness, mortgage, deed of trust, lease, license, permit, franchise, certificate or other agreement or instrument to which FW Strategic is a party or by which it is bound or to which any of its properties are subject, or require any authorization or approval under or pursuant to any of the foregoing, or violate in any material respect any statute, treaty, rule, regulation, ordinance, judgment, order, writ, ruling, injunction or decree applicable to FW Strategic of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over FW Strategic. (f) No consent, approval, authorization or order of, or qualification with, any court or governmental authority is required in connection with the execution, delivery or performance by FW Strategic of this Agreement, except for any of the foregoing which have been obtained. 5.08. 237 GP Corp. hereby represents and warrants as of the date hereof and as of the Closing, as follows: (a) It is duly organized, validly existing and in good standing as a corporation under the laws of the State of Delaware, with full power and authority to perform its obligations under this Agreement. (b) 100% of the capital stock of 237 GP Corp. is owned by Metropolis. 237 GP Corp. owns a 1% general partnership interest (the sole general partnership interest) in 237 Park L.P. (or, following the conversion, a 1% membership interest in 237 Park LLC) free and clear of any liens, restrictions, and encumbrances. (c) It has all corporate power and authority to enter into this Agreement, and the person signing this Agreement on behalf of it has been duly authorized by it to do so. (d) This Agreement has been duly authorized and duly executed and delivered by 237 GP Corp. and, assuming the due authorization, execution and delivery by the other Parties, constitutes the valid and binding instrument or agreement of 237 GP Corp, enforceable in accordance with its terms subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (e) Neither the execution, delivery and performance of this Agreement by 237 GP Corp. nor the consummation of any other of the transactions herein contemplated by 237 GP Corp. or the fulfillment of the terms hereof or thereof by 237 GP Corp. will conflict with, result in a breach or violation of, or constitute a default (or any event which with the giving of notice or the lapse of time or both would constitute a default) under the organizational documents of 237 GP Corp. or the terms of any indenture, loan agreement, bond, note, evidence of indebtedness, mortgage, deed of trust, lease, license, permit, franchise, certificate or other agreement or instrument to which 237 GP Corp. is a party or by which it is bound or to which any of its properties are subject, or require any authorization or approval under or pursuant to any of the foregoing, or violate in any material respect any statute, treaty, rule, regulation, ordinance, judgment, order, writ, ruling, injunction or decree applicable to 237 GP Corp. of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over 237 GP Corp. (f) No consent, approval, authorization or order of, or qualification with, any court or governmental authority is required in connection with the execution, delivery or performance by 237 GP Corp. of this Agreement, except for any of the foregoing which have been obtained. 5.09. 1290 L.P. hereby represents and warrants as of the date hereof and as of the Closing, as follows: (a) It is duly organized, validly existing and in good standing as a limited partnership under the laws of the State of Delaware, with full power and authority to perform its obligations under this Agreement. (b) It has all partnership power and authority to enter into this Agreement, and the person signing this Agreement on behalf of it has been duly authorized by it to do so. (c) This Agreement has been duly authorized and duly executed and delivered by it and, assuming the due authorization, execution and delivery by the other Parties, constitutes the valid and binding instrument or agreement of it, enforceable in accordance with its terms subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (d) Neither the execution, delivery and performance of this Agreement by 1290 L.P. nor the consummation of any other of the transactions herein contemplated by 1290 L.P. or the fulfillment of the terms hereof or thereof by 1290 L.P. will conflict with, result in a breach or violation of, or constitute a default (or any event which with the giving of notice or the lapse of time or both would constitute a default) under the organizational documents of 1290 L.P. or the terms of any indenture, loan agreement, bond, note, evidence of indebtedness, mortgage, deed of trust, lease, license, permit, franchise, certificate or other agreement or instrument to which 1290 L.P. is a party or by which it is bound or to which any of its properties are subject, or require any authorization or approval under or pursuant to any of the foregoing, or violate in any material respect any statute, treaty, rule, regulation, ordinance, judgment, order, writ, ruling, injunction or decree applicable to 1290 L.P. of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over 1290 L.P. (e) No consent, approval, authorization or order of, or qualification with, any court or governmental authority is required in connection with the execution, delivery or performance by 1290 L.P. of this Agreement, except for any of the foregoing which have been obtained. 5.10. 1290 GP Corp. hereby represents and warrants as of the date hereof and as of the Closing, as follows: (a) It is duly organized, validly existing and in good standing as a corporation under the laws of the State of Delaware, with full power and authority to perform its obligations under this Agreement. (b) 100% of the capital stock of 1290 GP Corp. is owned by Metropolis. 1290 GP Corp. owns a 1.0% general partnership interest in 1290 L.P., free and clear of any liens, restrictions, and encumbrances. (c) It has all corporate power and authority to enter into this Agreement, and the person signing this Agreement on behalf of it has been duly authorized by it to do so. (d) This Agreement has been duly authorized and duly executed and delivered by 1290 GP Corp. and, assuming the due authorization, execution and delivery by the other Parties, constitutes the valid and binding instrument or agreement of 1290 GP Corp, enforceable in accordance with its terms subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (e) Neither the execution, delivery and performance of this Agreement by 1290 GP Corp. nor the consummation of any other of the transactions herein contemplated by 1290 GP Corp. or the fulfillment of the terms hereof or thereof by 1290 GP Corp. will conflict with, result in a breach or violation of, or constitute a default (or any event which with the giving of notice or the lapse of time or both would constitute a default) under the organizational documents of 1290 GP Corp. or the terms of any indenture, loan agreement, bond, note, evidence of indebtedness, mortgage, deed of trust, lease, license, permit, franchise, certificate or other agreement or instrument to which 1290 GP Corp. is a party or by which it is bound or to which any of its properties are subject, or require any authorization or approval under or pursuant to any of the foregoing, or violate in any material respect any statute, treaty, rule, regulation, ordinance, judgment, order, writ, ruling, injunction or decree applicable to 1290 GP Corp. of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over 1290 GP Corp. (f) No consent, approval, authorization or order of, or qualification with, any court or governmental authority is required in connection with the execution, delivery or performance by 1290 GP Corp. of this Agreement, except for any of the foregoing which have been obtained. SECTION 6 TERMINATION AND AMENDMENT 6.01 Termination. This Agreement may be terminated at any time before the Closing Date (except as otherwise provided herein) as follows: (a) by mutual written consent of all of the Parties; (b) by any of the Parties, if the Closing shall not have occurred on or before December 31, 1999 (the "Termination Date"); provided, however, that the right to terminate this Agreement under this Section 6.0l shall not be available to any Party whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or before the Termination Date; and (c) by OHSP or Metropolis, upon written notice from either such Party delivered to each of the other Parties hereto that the Interest Purchase Agreement has been terminated. 6.02 Effect of Termination. In the event of the termination of this Agreement pursuant to this Section 6, this Agreement shall become void and of no effect with no liability to any Party; provided, however, that (i) no such termination shall relieve any Party from any liability for the damages (excluding consequential damages) resulting from any willful and intentional breach of this Agreement, and (ii) this Section 6, as well as Sections 4.06, 7.02, 8.02, 8.08 and 8.15 shall survive such termination. SECTION 7 INDEMNIFICATION 7.01 [Intentionally Omitted] 7.02 Post-Closing Indemnification. (a) Indemnification. From and after the Closing Date: (i) JMB/NYC shall indemnify and hold OHSP harmless from and against any and all Losses which OHSP (or, in the case of a breach relating to Section 4.02(c) hereof, FW Strategic) may incur as a result of the JMB Controlled Entities' taking or refusing to take any action which would either (i) cause or result in the material inaccuracy or breach of any representation or warranty of JMB/NYC contained in this Agreement, or (ii) cause the material breach of any covenant or agreement of JMB/NYC contained in this Agreement (including, without limitation, by prohibiting or otherwise interfering with the exercise of the right of FW Strategic which is set forth in Section 4.02(c) hereof) (each, a "JMB/NYC Indemnifiable Action"); provided that any such JMB/NYC Indemnifiable Action is not revoked or rescinded within thirty (30) days of JMB/NYC's receipt of notice from OHSP that such an action has occurred. (ii) OHSP shall indemnify and hold JMB/NYC harmless from and against any and all Losses which JMB/NYC may incur as a result of OHSP's (or, in the case of a breach relating to the proviso in Section 4.02(d)(ii) hereof, FW Strategic's) taking or refusing to take any action which would either (i) cause or result in the material inaccuracy or breach of any representation or warranty of OHSP contained in this Agreement, or (ii) cause the material breach of any covenant or agreement of OHSP or, in the case of the agreement set forth in the proviso of Section 4.02(d)(ii) hereof, of FW Strategic, contained in this Agreement (including, without limitation, by prohibiting or otherwise interfering with the exercise of the right of JMB/NYC which is set forth in Section 4.02(d)(ii) hereof) (each such action, a "OHSP Indemnifiable Action", and, together with each JMB/NYC Indemnifiable Action, an "Indemnifiable Action"); provided that any such OHSP Indemnifiable Action is not revoked or rescinded within thirty (30) days of OHSP's receipt of notice from JMB/NYC that such an action has occurred. (b) Method of Asserting Claims, etc. The Parties hereby acknowledge and agree that, in the event that any of the applicable parties set forth in Section 7.02(a) take any applicable Indemnifiable Action (and provided that the applicable Indemnifiable Action is not revoked or rescinded within the time periods set forth in Section 7.02(a)(i) and (ii)), the applicable indemnifying party shall absolutely and unconditionally be liable to pay, and shall pay, the applicable indemnified party for any and all Losses suffered as a result thereof. Notwithstanding anything to the contrary in this Section 7.02, the foregoing sentence shall not limit the remedies which either JMB/NYC or OHSP may have against any other Party and the right of JMB/NYC or OHSP to seek injunctive relief with respect to the applicable Indemnifiable Actions or specific performance of the obligation underlying the same. SECTION 8 MISCELLANEOUS PROVISIONS 8.01. Successors. Except as otherwise provided herein, this Agreement and all of the terms and provisions hereof shall be binding upon and inure to the benefit of the Parties and their respective heirs, executors, administrators, successors, trustees and legal representatives. 8.02. GOVERNING LAW. (a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING LAWS RELATING TO THE VALIDITY, INTERPRETATION AND EFFECT OF THIS AGREEMENT, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. (b) EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE COURTS OF THE UNITED STATES OF AMERICA LOCATED IN THE STATE OF NEW YORK FOR ANY LITIGATION ARISING OUT OF, RELATING TO OR EXPRESSLY PROVIDED FOR IN THE TRANSACTION AGREEMENTS (AND AGREES NOT TO COMMENCE ANY LITIGATION RELATING HERETO EXCEPT IN SUCH COURTS), AND FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL TO ITS RESPECTIVE ADDRESS SET FORTH IN SECTION 8.04 SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY LITIGATION BROUGHT AGAINST IT IN ANY SUCH COURT. EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE IN ANY LITIGATION ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER TRANSACTIONS EXPRESSLY PROVIDED FOR IN THE TRANSACTION AGREEMENTS IN THE COURTS OF THE STATE OF NEW YORK OR THE COURTS OF THE UNITED STATES OF AMERICA LOCATED IN THE STATE OF NEW YORK AND HEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. (c) EACH OF THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN CONNECTION WITH ANY LITIGATION ARISING OUT OF, RELATING TO OR EXPRESSLY PROVIDED FOR IN THE TRANSACTION AGREEMENTS. 8.03. Modification, Waiver in Writing. Neither this Agreement nor any of the terms hereof may be amended, changed, waived, discharged or terminated, unless such amendment, change, waiver, discharge or termination is in writing signed by each Party. 8.04. Notices. (a) All notices, requests, directions and other communications permitted or provided for hereunder shall be in writing (including, unless the context expressly otherwise provides, facsimile transmission) and mailed, faxed or delivered, (i) if to Metropolis, to the following address: c/o Victor Capital Group, 605 Third Avenue, New York, NY 10016, Attention: John R. Klopp, (ii) if to JMB/NYC, JMB/NYC Partners or JMB/NYC Special, to the following address: 900 North Michigan Avenue, 19th Floor, Chicago, Illinois 60611, Attention: Stuart C. Nathan and Gary Nickele, (iii) if to UTLP or UTLP GP Corp., to the following address: c/o Victor Capital Group, 605 Third Avenue, New York, NY 10016, Attention: John R. Klopp, (iv) if to 237 Park L.P. or 237 GP Corp., to the following address: c/o Victor Capital Group, 605 Third Avenue, New York, NY 10016, Attention: John R. Klopp, (v) if to 1290 Park L.P. or 1290 GP Corp., to the following address: c/o Victor Capital Group, 605 Third Avenue, New York, NY 10016, Attention: John R. Klopp, (vi) if to OHSP or FW Strategic, to Oak Hill Strategic Asset Management, L.P., 201 Main Street, Suite 3100, Fort Worth, Texas 76102, Attention: John Fant, or in each case, to such other address as shall be designated by such Party in a written notice to the other Parties hereunder from time to time. (b) All such notices and communications transmitted by overnight delivery shall be effective when delivered or upon refusal to accept delivery (in the case of overnight delivery) or if mailed or delivered, upon receipt or upon refusal to accept delivery. All notices hereunder sent by facsimile transmission shall be deemed sufficiently served or given for all purposes hereunder upon transmission as confirmed by the sender's verified facsimile transmission or certified facsimile activity report, provided that such transmission is promptly followed by another form of notice allowed by this Section 8.04. 8.05. Headings. The Section and Sub-Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. 8.06. Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 8.07 Assignment. (a) This Agreement shall not be assigned or otherwise transferred by any party hereto whether by operation of law or otherwise without the express written consent of each of the other Parties. (b) The Parties hereby agree that any purported assignment in contravention of the preceding paragraph (a) shall be null and void. (c) Subject to the preceding paragraph (a), this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the Parties and their respective permitted successors and assigns. 8.08. Specific Performance. The Parties acknowledge and agree that a breach of the provisions hereof could not be adequately compensated for by money damages and that the subject matter of the transactions contemplated hereby is unique. The Parties therefore agree that any Party will be entitled, in addition to any other right or remedy available to him or it, to an injunction restraining such breach or a threatened breach and to specific performance of any such provision of this Agreement. 8.09. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. 8.10. No Third-Party Beneficiaries. This Agreement and the Contribution Agreement are solely for the benefit of the Parties to this Agreement or the parties to the Contribution Agreement and JMB/NYC, and nothing contained in this Agreement or the Contribution Agreement shall be deemed to confer upon any other person or entity any right to insist upon or to enforce the performance or observance of any of the obligations contained herein or therein. 8.11. Prior Agreements. The Transaction Agreements contain the entire agreements of the Parties hereto and thereto in respect of the transactions expressly set forth therein, and all prior agreements among or between such Parties (other than those letters dated October 14, 1996, regarding the reimbursement of certain fees and expenses of JMB/NYC), whether oral or written, are superseded by the terms of such Transaction Agreements. 8.13. Good Faith. All Parties shall act in good faith in the implementation of the foregoing provisions. 8.14 Survival. Except as otherwise provided herein, all representations, warranties, covenants and agreements contained in this Agreement shall survive the Closing until the later of (x) the earlier of (a) the exercise by FW Strategic of the right set forth in Section 4.02(c) hereof, and the receipt by JMB/NYC, in accordance with to Section 4.02(e), of all amounts to be received under Section 4.02(c), and (b) the exercise by JMB/NYC of the right set forth in the proviso of Section 4.02(d)(ii) hereof and the receipt by JMB/NYC, in accordance with Section 4.02(e), of all amounts to be received under Section 4.02(d)(ii), and (y) the date JMB/NYC no longer holds a direct or indirect interest in 1290 LP. 8.15 Limit of Liability. Any liability of JMB/NYC or any JMB/NYC Partner under this Agreement shall be limited to its respective assets. In no event shall a deficit capital account of any partner of any such partnership or any obligations of any partner to restore any deficit capital account be deemed an asset of any such partnership. [SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the undersigned have executed this Restructuring Agreement as of the date and year first above written. OAK HILL STRATEGIC PARTNERS, L.P. By: F.W. Strategic Asset Management, L.P., General Partner By: STRATEGIC GENPAR, INC., General Partner By: Name: Title: 237/1290 UPPER TIER ASSOCIATES, L.P. By: 237/1290 Upper Tier GP Corp., General Partner By: Name: Title: 237/1290 UPPER TIER GP CORP. By: Name: Title: 237 PARK PARTNERS, L.P. By: 237 GP Corp., General Partner By: Name: Title: 237 GP CORP. By: Name: Title: 1290 PARTNERS, L.P. By: 1290 GP Corp., General Partner By: Name: Title: 1290 GP CORP. By: Name: Title: JMB/NYC OFFICE BUILDING ASSOCIATES, L.P. By: Carlyle Managers, Inc., General Partner By: Name: Title: PROPERTY PARTNERS, L.P. By: Carlyle Investors, Inc., General Partner By: Name: Title: CARLYLE-XIII ASSOCIATES, L.P. By: Carlyle Investors, Inc., General Partner By: Name: Title: CARLYLE-XIV ASSOCIATES, L.P. By: Carlyle Investors, Inc., its general partner By: Name: Title: CARLYLE MANAGERS, INC. By: Name: Title: METROPOLIS REALTY TRUST, INC. By: Name: Title: F.W. STRATEGIC ASSET MANAGEMENT, L.P. (solely for the purpose of agreeing to certain obligations set forth in Sections 4.02(c) and (d) hereof) By: Strategic Genpar, Inc., General Partner By: Name: Title: Exhibit A Amendments to UTLP LP Agreement Exhibit B Amendments to the 1290 LP Agreement Exhibit C Form of Liquidation Agreement Exhibit D Form of Contribution Agreement Exhibit E Form of Amendment and Release Agreement Exhibit F Second Amended, Restated and Consolidated Note Exhibit G Schedule of Capital Contributions and Distributions Exhibit H Schedule of Cash and Cash Equivalents EX-10.X 4 EXHIBIT 10-X - ------------ Oak Hill Strategic Partners, L.P. (A Delaware Limited Partnership) CONTRIBUTION AGREEMENT SECTION 1 SUBSCRIPTION; CONTRIBUTED PROPERTY 1.1 Subscription. Subject to the terms and conditions of this Contribution Agreement (the "Contribution Agreement"), the undersigned (the "Contributor") hereby subscribes for and agrees to acquire a limited partnership interest ("Interest") in Oak Hill Strategic Partners, L.P., a Delaware limited partnership (the "Partnership"), pursuant to the terms of that certain Amended and Restated Agreement of Limited Partnership of Oak Hill Strategic Partners, L.P., dated as of August 26, 1996, as heretofore amended (the "Partnership Agreement"). In exchange for and in consideration of the Interest, the Contributor hereby agrees to (i) contribute to the capital of the Partnership, the membership interest which, at the time of the Closing, it shall own in 237 Park Partners, L.L.C. (the "Contributed Property"), it being agreed that, for purposes of Contributor's subscription, the foregoing shall be valued at $505,050, and (ii) take any and all of the other actions set forth herein which are required of it to be taken (including, without limitation, the actions set forth in Section 1.2(b) hereof). 1.2 Closing. (a) Unless otherwise agreed to by the parties hereto, the closing (the "Closing") of the transactions described herein shall occur simultaneous to, and in the same place as, the closing under the Restructuring Agreement (as defined below). (b) At the Closing, the Contributor shall (i) deliver, convey and contribute the Contributed Property for transfer to the Partnership or its designee (by instrument or instruments as the Partnership shall reasonably request); (ii) deliver the document described in Section 1.3(a) below; and (iii) execute and become a party to the Partnership Agreement. (c) At the Closing, the Partnership shall admit the Contributor as a limited partner in accordance with the Partnership Agreement and the terms specified in Section 1.3 hereof. 1.3 Election. (a) In connection with the consummation of the transactions described herein, the Contributor shall, at the Closing, deliver a document containing notice to the Partnership relating to which "Class" of "Book Capital Account" (as such terms are defined in the Partnership Agreement) it wishes to have the General Partner (as defined in the Partnership Agreement) maintain in respect of its Interest. (b) The General Partner hereby agrees that it shall notify the Contributor in a timely fashion of (i) the establishment of the initial balance in the Contributor's Book Capital Account and Tax Capital Account (as defined in Article I of the Partnership Agreement), and (ii) the respective percentages of the total Book Capital Account and Tax Capital Account represented thereby. (c) It is hereby acknowledged and agreed that no certificates will be issued for the Interest acquired by the Contributor hereunder. SECTION 2 CONTRIBUTOR REPRESENTATIONS, WARRANTIES AND COVENANTS 2.1 Certain Contributor Representations, Warranties and Covenants. In addition to the representations, warranties and covenants contained in that certain Restructuring Agreement (the "Restructuring Agreement") dated as of October 27, 1999, by and among the Partnership and the Contributor, among other parties, the Contributor hereby acknowledges, represents and warrants to, and agrees with, the Partnership, as of the date hereof and as of the Closing, as follows: (a) If the Contributor is a corporation, partnership, trust, estate or other entity, (i) it is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized, (ii) it is empowered, authorized and qualified to subscribe hereunder, to commit capital to the Partnership hereunder and to become a limited partner in, and, subject to the terms and conditions of the Partnership Agreement, to make its Capital Contribution to the Partnership and (iii) the person signing this Contribution Agreement and the Partnership Agreement on behalf of such entity has been duly authorized by such entity to do so and has the power to delegate authority pursuant to a power of attorney to be granted under the Restructuring Agreement. If the Contributor is an individual, the Contributor is of legal age to execute this Contribution Agreement and the Partnership Agreement and is legally competent to do so. (b) The Contributor has the full right, power and authority to enter into this Contribution Agreement and the Partnership Agreement and to carry out and perform its obligations hereunder and thereunder. Each of this Contribution Agreement and the Partnership Agreement have been duly authorized and have been duly executed and delivered by or on behalf of the Contributor and, assuming the due authorization, execution and delivery of each of them by the other parties hereto and thereto, such Agreements constitute a valid and binding instrument or agreement of the Contributor. (c) No consent, approval, authorization or order of, or filing, registration or qualification with, any court or governmental agency or body is required for the consummation by the Contributor of the transactions on its part contemplated herein. (d) The Contributor is acquiring the Interest for the Contributor's own account as principal for investment and not with a view to the distribution or sale thereof, subject to any requirement of law that its property at all times be within its control. (e) The Contributor has been given the opportunity to ask questions of, and receive answers from, the General Partner and its personnel relating to the Partnership, concerning the terms and conditions of the transaction contemplated hereby and other matters pertaining to the investment contemplated hereunder, and has had access to such financial and other information concerning the Partnership as it has considered necessary in order to make its decision to invest in the Partnership and has availed itself of this opportunity to the full extent desired. (f) No representations or warranties have been made to the Contributor with respect to the investment contemplated hereby or the Partnership other than the representations of the Partnership set forth herein and in the Restructuring Agreement and the Contributor has not relied upon any representation or warranty not provided herein or therein in making this subscription. (g) If the Contributor is not a United States Person (as defined below), the Contributor has heretofore notified the Partnership in writing of such status. For this purpose, "United States Person" means a citizen or resident of the United States, a corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof, or an estate or trust the income of which is subject to United States federal income taxation regardless of its source. (h) Except as expressly set forth in the Restructuring Agreement, neither the execution, delivery and performance of this Contribution Agreement or of the Partnership Agreement, nor the contribution of the Contributed Property being made by the Contributor, nor the consummation of any other of the transactions herein contemplated by the Contributor or the fulfillment of the terms hereof or thereof by the Contributor, will (i) result in the creation or imposition of any security interests, rights of first refusal or to acquire, claims, liens, pledges, equities or encumbrances (collectively, "Encumbrances") upon any of the assets of the Contributor pursuant to the terms or provisions of, or conflict with, result in a breach or violation of, or constitute a default (or an event which, with the giving of notice or the lapse of time or both, would constitute a default) under, the organizational documents, charter or by-laws of the Contributor (if the Contributor is a corporation, partnership, trust, estate or other entity), or the terms of any indenture, loan agreement, bond, note, evidence of indebtedness, mortgage, deed of trust, lease, license, permit, franchise, certificate or other agreement or instrument to which the Contributor or any of its subsidiaries is a party or by which they or it are bound or to which any of their or its properties are subject, or (ii) require any authorization or approval under or pursuant to any of the foregoing, or (iii) violate in any material respect any statute, treaty, rule, regulation, ordinance, judgment, order, writ, ruling, injunction or decree applicable to the Contributor or any of its subsidiaries of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Contributor or any of its subsidiaries. (i) The Contributor is not an entity exempt from federal income taxation or subject to taxation on "unrelated business taxable income" under Sections 511 and 512 of the Internal Revenue Code of 1986, as amended (the "Code"). (j) All information furnished to the Partnership by or on behalf of the Contributor is and will be true and correct in all material respects and, to the knowledge of the Contributor, such information does not and will not contain an untrue statement of a material fact or omit any material fact required to be stated therein or necessary in order to make the statements therein not misleading. 2.2 Contributor Representations, Warranties and Covenants with Respect to Contributed Property. In addition to the representations, warranties and covenants contained in the Restructuring Agreement, the Contributor hereby acknowledges, represents and warrants to, and agrees with, the Partnership, as of the date hereof and as of the Closing, as follows: (a) Except as otherwise expressly provided in the Agreement of Limited Partnership of 1290 Partners, L.P. or the Operating Agreement of 237 Park Partners, L.L.C., the Contributor is the lawful owner of the Contributed Property free and clear of any Encumbrances and upon contribution and delivery of such Contributed Property as provided herein, the Contributor will have conveyed good and marketable title to such Contributed Property, free and clear of any Encumbrances whatsoever. (b) No stamp or other issuance or transfer taxes or duties are payable by or on behalf of the Partnership or the General Partner in connection with the contribution of the Contributed Property by the Contributor to the Partnership in the manner contemplated herein. (c) None of the Contributed Property constitutes assets of an employee benefit plan as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), whether or not such plan is subject to ERISA, or a plan described in Section 4975(e)(1) of the Code. (d) Except as otherwise expressly provided in the Agreement of Limited Partnership of 1290 Partners, L.P. or the Operating Agreement of 237 Park Partners, L.L.C., the Contributed Property is not subject to any restrictions upon its sale by the Partnership by reason of any agreement, commitment or representation the Contributor has made in respect thereof, or by reason of the Contributor's being in control of, controlled by or under common control with the issuer(s) thereof within the meaning of the Securities Act of 1933, as amended ("Securities Act"), or for any other reason. 2.3 Investor's Awareness. In addition to the representations, warranties and covenants contained in the Restructuring Agreement, the Contributor hereby acknowledges that it understands the following: (a) No federal or state agency has passed upon the Interest or made any finding or determination as to the fairness of the investment to be made by Contributor pursuant to the terms of this Contribution Agreement. The Partnership Agreement has not and will not be filed with the U.S. Securities and Exchange Commission (the "SEC") or with any securities administrator under state securities laws. (b) There are substantial risks incident to the acquisition of the Interest. (c) There are substantial restrictions on the transferability of the Interest. Pursuant to the Partnership Agreement, the prior written consent of the General Partner is required for all transfers of the Interest. There will be no established market for the Interest and no public market for the Interest will develop. The Interest will not be, and investors in the Partnership will not have any rights to require that the Interest be, registered under the Securities Act or the securities laws of the various states and therefore the resale, pledge, assignment or other disposition thereof will not be permitted unless such Interest is subsequently registered or unless an exemption from such registration is available (it being hereby agreed by the Contributor that the General Partner may require (x) an opinion of Contributor's counsel with respect to such exemption in form and substance satisfactory to the General Partner and the General Partner's counsel, or (y) a favorable interpretive letter from the SEC and a copy of the application on which it was based). As a result of the foregoing, the Contributor may be required to hold the Interest herein subscribed for and bear the economic risk of its investment in the Partnership indefinitely and it may not be possible for the Contributor to liquidate its investment in the Partnership. (d) With respect to the tax and other legal consequences of an investment in the Interest, the Contributor is relying solely upon the advice of its own tax and legal advisors. (e) As of the date hereof and at all times up to and including the time immediately prior to its acquisition of the Interest, the Contributor has and shall have such knowledge and experience in financial and business matters such that the Contributor is and will be capable of evaluating the merits and risks of the prospective investment. (f) The Contributor has no need for liquidity in its investment hereunder and has the ability to bear the economic risk of such investment and to retain the Interest for the full term of the Partnership. (g) The Contributor has reviewed the Partnership Agreement, and understands the risks of, and other considerations relating to, an acquisition of the Interest as well as the Partnership's investments and the Partnership's objectives, policies and strategies. Section 2.4Certain Contributor Covenants. (a) The Contributor hereby covenants to deliver to the Partnership such information relevant to the Contributor's acquisition of the Interest as is reasonably requested by the Partnership, including, without limitation, information as to certain matters under the Securities Act and the Investment Company Act as the Partnership may reasonably request in order to ensure the Partnership's compliance with such acts and the availability of any exemption thereunder. (b) The Contributor hereby agrees that each of the representations, warranties and covenants made by it in this Contribution Agreement will be deemed to have been reaffirmed by the Contributor as of the Closing. (c) The Contributor hereby covenants that it shall notify the Partnership immediately upon its having knowledge of any facts or circumstances that would make any of its representations or warranties contained in this Contribution Agreement untrue or incorrect as of the Closing. (d) The Contributor hereby covenants that it shall not, and shall not cause or permit any other person to, act in a manner that would violate any covenant of the Contributor which is contained in this Contribution Agreement. SECTION 3 PARTNERSHIP REPRESENTATIONS 3.1 Partnership Representations. The Partnership hereby represents, warrants and acknowledges to the Contributor, as of the date hereof and as of the Closing, as follows: (a) The Partnership is duly organized, validly existing and in good standing as a limited partnership under the laws of the State of Delaware, with full power and authority to enter into this Contribution Agreement and to perform its obligations under this Contribution Agreement and the Partnership Agreement. The Interest offered hereby and specified pursuant to Section 1.3 hereof is a duly and validly issued limited partnership interest in the Partnership. (b) The Partnership is empowered, authorized and qualified to enter into this Contribution Agreement and the Partnership Agreement, and the person signing this Contribution Agreement and the Partnership Agreement on behalf of the Partnership has been duly authorized by the Partnership to do so. There is no outstanding judgment, decree, injunction, rule, order or award of any court, arbitrator or governmental agency or bureau against the Partnership or the General Partner that would prevent the consummation of the transactions expressly provided for in this Contribution Agreement or that would have a material adverse affect on the Partnership or the General Partner. (c) Each of this Contribution Agreement and the Partnership Agreement have been duly authorized and have been or will be duly executed and delivered by the Partnership and, assuming the due authorization, execution and delivery of each of them by the other parties hereto and thereto, such Agreements constitute or will constitute valid and binding instruments or agreements of the Partnership. The General Partner has delivered to the Contributor a true and complete copy of the Partnership Agreement as in effect on the date hereof and, except for the transactions contemplated by this Contribution Agreement, no amendment or modification to such Partnership Agreement has been authorized or proposed by the General Partner. (d) Neither the execution, delivery and performance of this Contribution Agreement or the Partnership Agreement by the Partnership, nor the consummation of any other of the transactions herein contemplated by the Partnership or the fulfillment of the terms hereof or thereof by the Partnership, will (i) conflict with, result in a breach or violation of, or constitute a default (or any event which, with the giving of notice or the lapse of time or both, would constitute a default) under the organizational documents of the Partnership or the terms of any indenture, loan agreement, bond, note, evidence of indebtedness, mortgage, deed of trust, lease, license, permit, franchise, certificate or other agreement or instrument to which the Partnership is a party or by which it is bound or to which any of its properties are subject, or (ii) require any authorization or approval under or pursuant to any of the foregoing, or (iii) violate in any material respect any statute, treaty, rule, regulation, ordinance, judgment, order, writ, ruling, injunction or decree applicable to the Partnership of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Partnership. (e) The Partnership is in compliance with all of the terms of the Partnership Agreement and is in compliance, in all material respect, with all laws, rules and regulations applicable to the Partnership. (f) No consent, approval, authorization of, or declaration or filing with, any governmental agency or bureau on the part of the Partnership, other than those that have been previously obtained, made or given, is required for the valid execution and delivery of this Contribution Agreement or the Restructuring Agreement and the transactions expressly provided for herein and therein. (g) Upon due authorization, execution and delivery of the Partnership Agreement by the Contributor, the Contributor will be entitled to all of the benefits of a Limited Partner under the Partnership Agreement and, unless otherwise expressly provided in the Partnership Agreement, the Delaware Revised Uniform Limited Partnership Act. (h) Under existing federal income tax laws and regulations, the Partnership will be classified as a partnership, and not as an association taxable as a corporation for federal income tax purposes. (i) As of the date hereof, the disclosure materials and the financial statements of the Partnership contained therein do not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. (j) The audited balance sheet of the Partnership as of December 31, 1998, the related audited statements of income and cash flows for the year then ended, the unaudited balance sheet of the Partnership as of September 30, 1999 and the related unaudited statements of income and cash flows for the nine (9) months then ended (collectively, the "Partnership Financial Statements") present fairly and accurately the financial condition and results of operations of the Partnership at the dates and for the periods indicated therein and were prepared in accordance with generally accepted accounting principles ("GAAP"), consistently applied, except that the unaudited Partnership Financial Statements are subject to normal year-end audit adjustments and contain no footnotes. The Partnership has no liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) required by GAAP to be set forth on a consolidated balance sheet of the Partnership or in the notes thereto and which, individually or in the aggregate, would have a material adverse effect on the business, business prospects, financial condition or results of operations of the Partnership. Since the date of the most recent audited Partnership Financial Statements, the Partnership has conducted its business only in the ordinary course (taking into account prior practices, including the acquisition of securities and properties and issuance of Partnership interests) and there has not been (i) any material adverse change in the business, business prospects, financial condition or results of operations of the Partnership, nor has there been any occurrence or circumstance that, with the passage of time, would reasonably be expected to result in such a material adverse change, (ii) any damage, destruction or loss, whether or not covered by insurance, that has or would have a material adverse effect on the business, business prospects, financial condition or results of operation of the Partnership or (iii) any change by the Partnership made prior to the date of this Contribution Agreement in its accounting methods, principles or practices materially affecting its assets, liabilities or business. (k) No broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial advisor's or similar fee or commission in connection with the transactions expressly contemplated hereby based upon arrangements made by or on behalf of the Partnership. 3.2 Certain Partnership Covenants. (a) The Partnership hereby agrees that it shall use its best efforts to meet all future requirements under applicable federal laws and regulations necessary to be classified as a partnership, and not as an association taxable as a corporation, for federal income tax purposes. (b) The Partnership hereby agrees that each of the representations, warranties and covenants made by it in this Contribution Agreement will be deemed to have been reaffirmed by the Partnership as of the Closing. (c) The Partnership hereby agrees that it shall notify the Contributor immediately upon its having knowledge of any facts or circumstances that would make any of its representations or warranties contained in this Contribution Agreement untrue or incorrect as of the Closing. SECTION 4 CONDITIONS TO CLOSING 4.1 Contributor Conditions to Closing. The Contributor's obligations as set forth hereunder are subject to the fulfillment (or waiver by the Contributor), prior to or at the Closing, of the following conditions: (a) Performance. The Partnership shall have duly performed and complied in all material respects with all agreements and conditions contained in this Contribution Agreement and in the Restructuring Agreement required to be performed or complied with by it prior to or at the Closing, and all representations and warranties of the Partnership herein and in the Restructuring Agreement shall be true and correct as of such date. (b) Concurrent Closing. All of the closing conditions set forth in the Restructuring Agreement and related documents shall have been satisfied as of the Closing and a closing thereunder shall be occurring concurrently with the Closing. (c) No Material Adverse Change. There shall not have occurred any material adverse change in the business, business prospects, financial condition or results of operations of the Partnership since the date hereof. 4.2 Partnership Conditions to Closing. The Partnership's obligations as set forth hereunder are subject to the fulfillment (or waiver by the Partnership), prior to or at the time of the Closing, of the following conditions: (a) Performance. The Contributor shall have duly performed and complied in all material respects with all agreements and conditions contained in this Contribution Agreement and in the Restructuring Agreement required to be performed or complied with by it prior to or at the Closing, and all representations and warranties of the Contributor herein and in the Restructuring Agreement shall be true and correct as of such date; and (b) Concurrent Closing. All of the closing conditions set forth in the Restructuring Agreement and related documents shall have been satisfied as of the Closing and a closing thereunder shall be occurring concurrently with the Closing. SECTION 5 MISCELLANEOUS 5.1 Modification. Neither this Contribution Agreement nor any provisions hereof shall be modified, changed, discharged or terminated except by an instrument in writing signed by the party against whom any such waiver, change, discharge or termination is sought. 5.2 Revocability. Except as otherwise provided by the Restructuring Agreement, this Contribution Agreement may not be withdrawn or revoked by the Contributor in whole or in part without the consent of the Partnership. 5.3 Notices. All notices, consents, requests, demands, offers, reports and other communications required or permitted to be given pursuant to this Contribution Agreement shall be in writing and shall be considered properly given and received when personally delivered to the party entitled thereto, or when sent by facsimile or by overnight courier, or seven (7) business days after being sent by certified United States mail, return receipt requested, in a sealed envelope, with postage prepaid, in each case, addressed, (i) if to the Partnership or the General Partner, to F.W. Strategic Asset Management, L.P., 201 Main Street, Suite 2300, Fort Worth, Texas 76102, and (ii) if to the Contributor, to the address set forth below the Contributor's signature on the counterpart of this Contribution Agreement which the Contributor originally executed and delivered to the Partnership; provided, however, that any notice sent by facsimile shall be promptly followed by a copy of such notice sent by mail or overnight courier in the manner described herein. The Partnership, the General Partner or the Contributor may change its address by giving notice of such change to the other party hereunder. The Partnership and the General Partner shall send a copy of all items given, sent or delivered to, or received from, Contributor to JMB/NYC Office Building Associates, L.P., c/o JMB Realty Corporation, 900 North Michigan Avenue, 19th Floor, Chicago, Illinois 60611, Attention: Stuart Nathan (Facsimile: (312) 915-1043). 5.4 Counterparts. This Contribution Agreement may be executed in multiple counterpart copies, each of which shall be considered an original and all of which shall constitute one and the same instrument binding on all the parties, notwithstanding that all parties are not signatories to the same counterpart. 5.5 Headings. The headings of the Sections of this Contribution Agreement are inserted for convenience only and shall not be deemed to constitute a part of this Contribution Agreement. 5.6 Successors. Except as otherwise provided herein, this Contribution Agreement and all of the terms and provisions hereof shall be binding upon and inure to the benefit of the parties and their respective heirs, executors, administrators, successors, trustees and legal representatives. If the Contributor is more than one person, the obligation of the Contributor shall be joint and several and the agreements, representations, warranties and acknowledgments herein contained shall be deemed to have been made by and shall be binding upon each such person and such person's heirs, executors, administrators, successors, trustees and legal representatives. 5.7 Assignability. This Contribution Agreement shall not be transferable or assignable by the Contributor in any manner whatsoever. Any purported assignment of this Contribution Agreement shall be null and void. 5.8 Confidentiality. (a) The Contributor shall, and shall direct those of its affiliates, directors, officers, employees, attorneys, accountants and advisors (the "Representatives") who have access to Confidential Information (as defined below) to, keep confidential and not disclose any Confidential Information without the express consent, (x) in the case of Confidential Information acquired from the Partnership, of the Partnership or, (y) in the case of Confidential Information acquired from the General Partner or any other partner in the Partnership, the General Partner or such other partner, unless (i) such disclosure shall be required by applicable law, governmental rule or regulation, court order, administrative or arbitral proceeding or by any bank regulatory authority having jurisdiction over the Contributor or (ii) such disclosure is in connection with any litigation against the Partnership, the Contributor, any other partner in the partnership or the General Partner. Such Confidential Information may be used by the Contributor only in connection with Partnership matters. (b) As used herein, "Confidential Information" shall mean any information that the Contributor may acquire from the Partnership or the General Partner which (i) is not already available through publicly available sources of information (other than as a result of disclosure by the Contributor), (ii) was not in the possession of, or known by, the Contributor prior to its disclosure to the Contributor by the Partnership, or (iii) does not become available to the Contributor on a non-confidential basis from a third party, (so long as that such third party is not bound by this Contribution Agreement or another confidentiality agreement with the Partnership). Such Confidential Information may include, without limitation, information that pertains or relates to (A) the business and affairs of the General Partner or any other partner, (B) any investments or proposed investments of the Partnership or (C) any other Partnership matters. (c) In the event that the Contributor or any Representative of the Contributor is required to disclose any Confidential Information pursuant to a subpoena, request for discovery or other civil or legal process, the Contributor will use reasonable efforts to provide the Partnership with prompt written notice so that the Partnership may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Contribution Agreement, and the Contributor will cooperate with the Partnership, at the expense of the Partnership, in any effort any such person undertakes to obtain a protective order or other remedy. In the event that such protective order or other remedy is not obtained, or that the Partnership waives compliance with the provisions of this Section 5.8, the Contributor and its Representatives will furnish only that portion of the Confidential Information which is required and will exercise reasonable efforts, at the expense of the Partnership, to obtain reliable assurance that the Confidential Information will be accorded confidential treatment. (d) In its sole discretion, the General Partner may agree to waive any or all of the provisions of this Section 5.8 with respect to the Contributor. (e) The General Partner and the Partnership may disclose the identity of the Contributor only (i) in accordance with the restrictions set forth in this section 5.8 or (ii) on a confidential basis to any other partner or acquiror of the Interest. (e) The provisions of this Section 5.8 shall survive the termination of this Contribution Agreement and the formation and dissolution of the Partnership, whether or not the Contributor is admitted to the Partnership. 5.9 GOVERNING LAW. THIS CONTRIBUTION AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO SHALL BE INTERPRETED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED WHOLLY WITHIN THAT JURISDICTION. 5.10 Jurisdiction; Venue. (a) All disputes arising out of, connected with, related to or incidental to the transactions contemplated by, or the relationship established between, the parties hereto in connection with this Contribution Agreement, whether arising in contract, tort, equity or otherwise, shall be resolved by the state or federal courts located in the County of New York in the State of New York, and the parties hereby consent and submit to the personal and subject matter jurisdiction of any state or federal court located in the County of New York in the State of New York; provided, however, that such disputes need not be brought in such courts if the defendant in such suit is not subject to personal jurisdiction in the State of New York. Each party hereby agrees that legal process in any such action or proceeding may be served in accordance with clause (c) hereof and the notice procedure set forth in Section 5.3 hereof. Nothing in this Section 5.10 shall affect the right of the Partnership to serve legal process in any other manner permitted by law. (b) The parties irrevocably waive, to the fullest extent permitted by law, any objection that they may now or hereafter have to the laying of venue of any such action or proceeding in the courts of the State of New York located in the County of New York, or the Federal courts located in the County of New York in the State of New York. (c) The Contributor hereby agrees and covenants that, if the Contributor is a non-United States person, it shall appoint an authorized agent that at all times shall have an office located in the State of New York upon which process may be served in any action or proceeding against the Contributor relating in any way to this Contribution Agreement and shall deliver the acceptance of such appointment to the Partnership. The Contributor further agrees that service of process upon such authorized agent together with written notice of said service to the Contributor by the person serving the same shall be deemed in every respect effective service of process upon the Contributor in any such action or proceeding. The Contributor may appoint a successor authorized agent and, upon delivery to the Partnership of acceptance of such appointment by such a successor, the appointment of the prior authorized agent shall terminate. The Contributor further agrees and covenants that it shall take any and all action, including the filing of any and all documents and instruments as may be necessary to continue the designation and appointment of the authorized agent described in this paragraph in full force and effect until the later of the termination of this Contribution Agreement or such time as the Contributor no longer holds the Interest. 5.11 Severability. To the extent that any provision of this Contribution Agreement shall be held to be invalid, illegal or unenforceable, such provision shall be deemed severable and the validity, legality and enforceability of the remaining provisions of this Contribution Agreement shall not in any way be affected or impaired. 5.12 Entire Agreement. This Contribution Agreement, the Partnership Agreement and the Restructuring Agreement constitute the entire agreement among the parties hereto and thereto with respect to the subject matter hereof and thereof and supersede all other prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof and thereof. 5.13 Survival of Representations, Warranties and Covenants. The representations, warranties and covenants in Sections 2.1, 2.2, 2.3, 2.4, 3.1 and 3.2 shall survive the formation and dissolution of the Partnership and the Contributor's admission as a Partner. 5.14 Termination. This Contribution Agreement shall terminate in the event that the Restructuring Agreement is terminated in accordance with its terms prior to the Closing; provided that Section 5.8 shall survive any such termination. IN WITNESS WHEREOF, the undersigned has executed this Contribution Agreement as of the date first written above. 237/1290 Upper Tier Associates, L.P. By: 237/1290 Upper Tier GP Corp. By: _______________________________ Name: Title: Contributor's Name and Mailing Address and Tax Identification Number: _____________________________________________________ (Name) _____________________________________________________ (Street) _____________________________________________________ (City) (State) (Zip Code) _____________________________________ (Telephone Number) _____________________________________ (Facsimile Number) _____________________________________________________ (Tax Identification or Social Security Number) Contributor's Address for Notices if Different from Address Above: _____________________________________________________ (Street) _____________________________________________________ (City) (State) (Zip Code) _____________________________________ (Telephone Number) _____________________________________ (Facsimile Number) Status of the Contributor (check one): [ ] General Partnership [ ] Trust [ X ] Limited Partnership [ ] "Grantor" Trust [ ] Corporation [ ] Estate [ ] S Corporation [ ] Limited Liability Company [ ] Individual [ ] Other (identify)______________ IN WITNESS WHEREOF, the Partnership has executed this Contribution Agreement as of the ______ day of _____________________, 1999. OAK HILL STRATEGIC PARTNERS, L.P. By: F.W. STRATEGIC ASSET MANAGEMENT, L.P., General Partner By: STRATEGIC GENPAR, INC., General Partner By: ------------------------------ Name: Title: EX-10.Y 5 EXHIBIT 10-Y - ------------ AMENDMENT AND RELEASE AGREEMENT THIS AMENDMENT AND RELEASE AGREEMENT (the "Agreement") is entered into as of the ___ day of __________, 1999, by and among METROPOLIS REALTY TRUST, INC., a Maryland Corporation ("Metropolis"); and PROPERTY PARTNERS, L.P. ("Property Partners"), CARLYLE-XIII ASSOCIATES, L.P. ("Carlyle-XIII") and CARLYLE-XIV ASSOCIATES, L.P. ("Carlyle-XIV"), each a Delaware limited partnership (collectively, the "Indemnitors" and, together with Metropolis, the "Parties"). WHEREAS, Metropolis holds a 95% interest as the general partner of 237/1290 Lower Tier Associates, L.P., a Delaware limited partnership ("LTLP"), which owns (x) a 99% interest as limited partner in 237 Park Partners, L.P. ("237 Park L.P."), which owns a direct interest in that certain property known as 237 Park Avenue, New York, New York (together with all related personal property, intangibles, improvements and fixtures, the "237 Property"), and (y) a 99% interest as a limited partner in 1290 Partners, L.P., a Delaware limited partnership ("1290 L.P."), which owns a direct interest in that certain property known as 1290 Avenue of the Americas, New York, New York (together with all related personal property, intangibles, improvements and fixtures, "1290 Sixth"). WHEREAS, JMB/NYC Office Building Associates, L.P., an Illinois limited partnership ("JMB/NYC"), holds a 98.901% interest as the limited partner of 237/1290 Upper Tier Associates, L.P., a Delaware limited partnership ("UTLP") which holds a 5% interest as the limited partner of LTLP. WHEREAS, simultaneous hereto, Oak Hill Strategic Partners, L.P., a Delaware limited partnership ("OHSP"), JMB/NYC, Metropolis, the Indemnitors, UTLP and certain other parties are entering into a Restructuring Agreement (the "Restructuring Agreement") pursuant to which (i) 237 Park L.P. shall be converted into 237 Park Partners, LLC ("237 Park LLC"), a Delaware limited liability company, (ii) Metropolis and UTLP shall cause LTLP to liquidate, and in connection therewith, shall receive an in- kind distribution of their respective pro rata portions of LTLP's interests in 237 Park LLC and 1290 L.P., and (iii) UTLP shall contribute its membership interest in 237 Park LLC for [Class __] Partnership Units in OHSP (the "UTLP OHSP Interests"), in each case, as more particularly described therein. WHEREAS, the Indemnitors, as all of the limited partners in JMB/NYC will derive substantial benefit from the closing of the transactions contemplated under the Restructuring Agreement. WHEREAS, the Parties are or are the successors in interest to, and are, as of the date hereof, all of, the parties to that certain Indemnification Agreement dated as of October 10, 1996, a true and correct copy of which is attached hereto as Exhibit A (the "Indemnification Agreement"). WHEREAS, it is a condition to the closing of the transactions under the Restructuring Agreement that this Agreement be executed by the Parties hereto. NOW, THEREFORE, in consideration of the mutual terms, covenants and conditions herein contained, and for other good, valid and binding consideration (including, without limitation, the terms, covenants and conditions set forth in the Restructuring Agreement), the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows: SECTION 1 AMENDMENT AND OTHER AGREEMENTS 1.01 Amendment. The Parties hereby amend the Indemnification Agreement as follows: (a) Paragraph 2 of the Indemnification Agreement is hereby deleted in its entirety, and the following is hereby added in lieu thereof: "2. The Indemnitors absolutely and unconditionally agree to indemnify and to hold Indemnitee harmless from and against any and all losses, claims, liabilities, damages, costs or expenses (including, without limitation, reasonable counsel fees) of any nature whatsoever, contingent or otherwise, foreseen or unforeseen, which Indemnitee may or shall incur as a result of any of JMB L.P., its officers, directors, partners (including, without limitation, any Indemnitor), stockholders, agents or affiliates (collectively, the "Controlled Entities") intentionally interfering with, impeding or preventing (including, without limitation, through the filing by JMB L.P. of a voluntary petition under the Bankruptcy Code or any other federal or state bankruptcy or insolvency statute or the joining by any Controlled Entity in an involuntary petition against JMB L.P. under the Bankruptcy Code or such other statute) any of the following: (x) the exercise by Indemnitee of the Purchase Right (as defined in Section 12.2A of the Amended and Restated Partnership Agreement (the "1290 L.P. Agreement") of 1290 Partners, L.P., a Delaware limited partnership ("1290 L.P."), dated as of October 25, 1999 between Indemnitee, the Upper Tier Partnership and 1290 G.P. Corp., a Delaware corporation); or (y) any (i) disposition, mortgage, pledge, encumbrance, hypothecation or exchange of (A) that certain property known as 1290 Avenue of the Americas, New York, New York ("1290 Sixth") by 1290 L.P., or (B) any partnership interest which Upper Tier Partnership may own in 1290 L.P., or (ii) merger or other combination of 1290 L.P. with or into another entity, in accordance with the terms of the 1290 L.P. Agreement, provided that such disposition, mortgage, pledge, encumbrance, hypothecation, exchange, merger or other combination described in this clause (y) does not constitute an "Adverse Transaction" as defined in the 1290 L.P. Agreement; provided, that, any such action (individually, a "Prohibited Action" and collectively, the "Prohibited Actions") is not revoked or rescinded within the time period provided in paragraph 3 below." (b) The Parties hereby delete paragraph 4 of the Indemnification Agreement in its entirety and hereby substitute in its place the following: "4. The term "Maximum Indemnitors' Liability Amount" as used in this Indemnification Agreement shall mean an amount equal to $14,285,000; provided that such amount shall be reduced on a dollar for dollar basis for each dollar actually received by Indemnitee in respect of the JMB Collateral (as defined in the 1290 L.P. Agreement)." (c) With respect to paragraph 5 of the Indemnification Agreement, the Parties hereby delete the phrase "Upper Tier and Lower Tier Partnership Agreements" and hereby substitute in its place the phrase "Upper Tier Partnership Agreement and 1290 L.P. Agreement". (d) With respect to clause (iii) of the first sentence of paragraph 13 of the Indemnification Agreement, the Parties hereby delete the phrase "or of the interest of the Upper Tier Partnership in the Lower Tier Partnership pursuant to the Put Right under Section 12.2C of the partnership agreement of the Lower Tier Partnership" in its entirety. (e) With respect to paragraph 15 of the Indemnification Agreement, the Parties hereby delete the phrase "Attention: Kenneth Friedman" and hereby substitute in its place the phrase "Attention: Louis Vitali". (f) Paragraph 19 of the Indemnification Agreement is hereby deleted in its entirety, and the following is hereby added in lieu thereof: "19. Except as set forth in paragraph 13 of this Indemnification Agreement, the obligations and liabilities of the Indemnitors under this Indemnification Agreement shall terminate upon the earliest to occur of (a) the date upon which the transactions described in clause (x) of paragraph 2 above have been consummated, (b) the date upon which 1290 Sixth has been sold or transferred by 1290 L.P. or all of the limited partnership interests which Upper Tier Partnership may own in 1290 L.P., if any, have been sold or transferred by Upper Tier Partnership, and (c) the date upon which the interest of the Upper Tier Partnership in 1290 L.P. has been sold or transferred pursuant to the terms of the 1290 L.P. Agreement." 1.02 Partial Release of JMB/NYC Collateral. (a) Metropolis hereby agrees that, immediately upon the closing (the "IPA Closing") of the transactions under that certain Interest Purchase Agreement (as defined in the Restructuring Agreement), it, along with JMB/NYC, shall, or shall cause the appropriate parties to, execute and deliver to JMB/NYC (x) an escrow release letter (attached hereto as Exhibit B) relating to that certain Account Control Agreement (a true and correct copy of which is attached hereto as Exhibit C), and (y) any other documentation necessary, to effectuate a release from escrow at LaSalle Bank National Association (successor to LaSalle National Trust, N.A.) and from the limitations set forth in Section 12.2B of the limited partnership agreement of LTLP (or, upon the liquidation of LTLP, of 1290 L.P.) of a portion of the "JMB Collateral" (as such term is defined in the limited partnership agreement of LTLP, or, upon the liquidation of LTLP, of 1290 L.P.) equal to $4,460,715 (the "Release Amount") (calculated by multiplying 3/7 by $10,000,000, plus $175,000). It is hereby agreed by the Parties that prior to the consummation of the transactions under the Restructuring Agreement, the Release Amount served as collateral for the obligations of the Indemnitors under the Indemnification Agreement in respect of the 237 Property. (b) Notwithstanding anything to the contrary contained herein, it is hereby agreed by the Parties that the partial release of the JMB Collateral set forth in the previous paragraph (a) shall not in any way constitute a release of, or in any other way affect, the portion of such collateral not released pursuant thereto. SECTION 2 MISCELLANEOUS PROVISIONS 2.01 No Further Amendment. Except as expressly amended hereby, the Indemnification Agreement shall remain in full force and effect. 2.02 Counterparts. This Agreement may be executed in counterparts, each of which when so executed shall together constitute one and the same agreement. [SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the undersigned have executed this Amendment and Release Agreement as of the date and year first above written. METROPOLIS REALTY TRUST, INC. By: ---------------------------------------- Name: Title: PROPERTY PARTNERS, L.P. By: Carlyle Investors, Inc., General Partner By: ---------------------------------------- Name: Title: CARLYLE-XIII ASSOCIATES, L.P. By: Carlyle Investors, Inc., General Partner By: ---------------------------------------- Name: Title: CARLYLE-XIV ASSOCIATES, L.P. By: Carlyle Investors, Inc., General Partner By: ---------------------------------------- Name: Title: Exhibit A to the Amendment and Release Agreement Indemnification Agreement TO BE PROVIDED Exhibit B to the Amendment and Release Agreement Escrow Release Letter TO BE PROVIDED Exhibit C to the Amendment and Release Agreement Account Control Agreement TO BE PROVIDED EX-10.Z 6 EXHIBIT 10-Z - ------------ THIRD AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF 237/1290 UPPER TIER ASSOCIATES, L.P. by and between 237/1290 UPPER TIER GP CORP., as General Partner, CARLYLE MANAGERS, INC., as Special General Partner AND JMB/NYC OFFICE BUILDING ASSOCIATES, L.P., as Limited Partner Dated: November 19, 1999 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . 2 ARTICLE II ORGANIZATIONAL MATTERS. . . . . . . . . . . . . . . . 5 2.1 Formation . . . . . . . . . . . . . . . . . . . . . . 5 2.2 Certificates. . . . . . . . . . . . . . . . . . . . . 5 2.3 Foreign Qualifications. . . . . . . . . . . . . . . . 5 2.4 Name. . . . . . . . . . . . . . . . . . . . . . . . . 5 2.5 Registered Office and Agent; Principal Office . . . . 6 2.6 Purpose; Powers . . . . . . . . . . . . . . . . . . . 6 2.7 Term. . . . . . . . . . . . . . . . . . . . . . . . . 6 ARTICLE III CAPITAL CONTRIBUTIONS . . . . . . . . . . . . . . . . 6 3.1 Capital Contributions of the General Partner. . . . . 6 3.2 Capital Contributions . . . . . . . . . . . . . . . . 6 3.3 Other Matters Relating to Capital Contributions . . . 6 3.4 Capital Accounts. . . . . . . . . . . . . . . . . . . 6 ARTICLE IV DISTRIBUTIONS OF NET CASH FLOW. . . . . . . . . . . . 7 ARTICLE V ALLOCATIONS OF PROFITS AND LOSSES . . . . . . . . . . 7 ARTICLE VI RIGHTS AND OBLIGATIONS OF THE GENERAL PARTNER . . . . 7 6.1 Management. . . . . . . . . . . . . . . . . . . . . . 7 6.2 Outside Activities of the General Partner . . . . . . 9 6.3 Employment of Experts or Advisors . . . . . . . . . . 9 ARTICLE VII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS. . . . . . . . . 9 7.1 Limitation of Liability . . . . . . . . . . . . . . .10 7.2 Management of Business. . . . . . . . . . . . . . . .10 7.3 Outside Activities of the Special General Partner and Limited Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . .10 7.4 Covenant of the Special General Partner and the Limited Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 7.5 This Section Intentionally Omitted. . . . . . . . . .10 7.6 Exercise of Put Right . . . . . . . . . . . . . . . .10 ARTICLE VIII AMENDMENTS OF LIMITED PARTNERSHIP AGREEMENT . . . . .11 ARTICLE IX LIMITATION ON SUBSTITUTION AND ASSIGNMENT OF A PARTNER'S INTEREST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 9.1 Transfer. . . . . . . . . . . . . . . . . . . . . . .11 9.2 Special General Partner and Limited Partners Right to Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 9.3 Transferred Partnership Interests Subject to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 9.4 Insolvency, Dissolution or Bankruptcy of a Limited Partner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 9.5 Transfers by the General Partner. . . . . . . . . . .12 9.6 Admission of Successor General Partner. . . . . . . .12 ARTICLE X ACCOUNTING PROCEDURE. . . . . . . . . . . . . . . . .12 10.1 Books and Accounts. . . . . . . . . . . . . . . . . .12 10.2 Choice of Accountants; Tax Information. . . . . . . .12 10.3 Delivery of Information . . . . . . . . . . . . . . .12 ARTICLE XI DISSOLUTION . . . . . . . . . . . . . . . . . . . . .13 11.1 Dissolution . . . . . . . . . . . . . . . . . . . . .13 11.2 Liquidation . . . . . . . . . . . . . . . . . . . . .13 11.3 Rights of the Special General Partner and of the Limited Partners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 11.4 No Obligation to Contribute Deficit . . . . . . . . .14 ARTICLE XII INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . .14 ARTICLE XIII MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . .15 13.1 Notices . . . . . . . . . . . . . . . . . . . . . . .15 13.2 Counterparts. . . . . . . . . . . . . . . . . . . . .15 13.3 Nature of Partnership Interest. . . . . . . . . . . .15 13.4 Insolvency Proceedings. . . . . . . . . . . . . . . .16 13.5 Titles and Captions . . . . . . . . . . . . . . . . .16 13.6 Pronouns and Plurals. . . . . . . . . . . . . . . . .16 13.7 Further Action. . . . . . . . . . . . . . . . . . . .16 13.8 Binding Effect. . . . . . . . . . . . . . . . . . . .16 13.9 Creditors . . . . . . . . . . . . . . . . . . . . . .16 13.10 Waiver. . . . . . . . . . . . . . . . . . . . . . . .16 13.11 Applicable Law. . . . . . . . . . . . . . . . . . . .16 13.12 Invalidity of Provisions. . . . . . . . . . . . . . .16 13.13 Entire Agreement. . . . . . . . . . . . . . . . . . .16 Exhibit A THIRD AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT OF 237/1290 UPPER TIER ASSOCIATES, L.P. (A Delaware Limited Partnership) THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF 237/1290 UPPER TIER ASSOCIATES, L.P. (the "Partnership"), dated as of November 19, 1999 (this "Agreement") is entered into by and between 237/1290 Upper Tier GP Corp., a Delaware corporation (the "General Partner"), Carlyle Managers, Inc., a Delaware corporation (the "Special General Partner"), JMB/NYC Office Building Associates, L.P., an Illinois limited partnership (the "JMB Limited Partner" and/or the "Limited Partner") and, solely for the purpose of agreeing to certain obligations set forth in Section 7.6A hereof, Metropolis Realty Trust, Inc., a Maryland corporation ("Metropolis"). WHEREAS, in accordance with the terms and conditions of the Joint Plan of Reorganization of 237 Park Avenue Associates, L.L.C. and 1290 Associates L.L.C. (respectively the "237 LLC" and the "1290 LLC" and collectively the "LLCs"), each a Delaware limited liability company, filed under title 11 of the United States Code, 11 U.S.C. Sections 101 et seq. (the "Plan"), (i) O&Y NY Building Corp. (the "Prior General Partner"), the JMB Limited Partner and the O&Y Equity Company, L.P. ("Equityco") entered into a Limited Partnership Agreement dated October 10, 1996 ( the "Original Agreement") pursuant to which they formed the Partnership in accordance with the Revised Uniform Limited Partnership Act of the State of Delaware, (ii) the LLCs merged into the Partnership pursuant to an Agreement and Plan of Merger dated October 10, 1996 (the "Merger Agreement"), with the Partnership as the surviving entity (the "Merger"), (iii) pursuant to a Redemption and Substitution Agreement dated October 10, 1996, the Prior General Partner and Equityco withdrew from the Partnership and the General Partner was admitted in its place, and (iv) the General Partner and the JMB Limited Partner amended and restated the Original LP Agreement (as so amended and restated, the "Amended and Restated Agreement"); WHEREAS, the Amended and Restated Agreement was amended and restated in its entirety as of October 14, 1997 to admit Carlyle Managers, Inc. as a Special General Partner (as amended and restated, the "Second Amended and Restated Agreement"); and WHEREAS, the Partnership has entered into an agreement (the "Restructuring Agreement"), dated as of October 28, 1999 pursuant to which the Partnership will, among other things, contribute its membership interests in the entity that owns the real property known as 237 Park Avenue, New York, New York, in exchange for Class A Partnership Interests in Oak Hill Strategic Partners, L.P. (the "OHSP Interests"). WHEREAS, the parties hereto desire to amend and restate the Second Amended and Restated Agreement in its entirety effective as of the Closing Date (as defined in the Restructuring Agreement) to reflect the consummation of such transactions. NOW, THEREFORE, in consideration of the mutual covenants and on the terms and conditions contained herein, and for other good, valid and binding consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows: ARTICLE I DEFINITIONS Certain terms used in this Agreement shall have the meanings designated below. (a) "Act" means the Delaware Revised Uniform Limited Partnership Act, as in effect on the date hereof as it may be amended from time to time hereafter, or any successor law. (b) "Adverse Transaction" means (i) any sale, disposition, transfer or exchange of the Partnership Property, or any property owned by the Property Owning Partnership, (ii) any release, discharge or reduction of non-recourse indebtedness of the Property Owning Partnership (other than through payment of scheduled amortization (so long as the non-recourse indebtedness of the Property Owning Partnership remains at all times greater than $129,700,000), actions taken by a secured lender such as application of insurance proceeds or condemnation awards or the exercise of remedies, or in the case where the released indebtedness is concurrently being replaced with other non-recourse indebtedness complying with clause (B) below), (iii) any distribution of Partnership assets (other than distributions of cash and other distributions by the Partnership and the Property Owning Partnership, in each case, in the ordinary course of business), or (iv) any other transaction or agreement to which any of the Partnership or the Property Owning Partnership is a party, if as a result of any such transaction or agreement described in (i), (ii), (iii) or (iv) above, the Limited Partner would be required to recognize a material amount of taxable income or gain prior to the Approval Right Termination Date. Adverse Transactions shall specifically exclude (A) Partnership income derived in the ordinary course of the Partnership's and the Property Owning Partnership's business, (B) non-recourse refinancing of the property owned by the Property Owning Partnership on commercially reasonable terms in an aggregate amount equal to not less than $129,700,000, (C) payment of amortization on non-recourse financing encumbering the property owned by the Property Owning Partnership, provided that the outstanding balance of such financing is not reduced below $129,700,000, in the aggregate and except as otherwise provided in the parenthetical of clause (ii) above (i.e. actions taken by a secured lender such as application of insurance proceeds or condemnation awards or the exercise of remedies, or in the case where released indebtedness is concurrently being replaced with other non- recourse indebtedness complying with clause (B) above), (D) the consummation of the transactions expressly provided for in Section 2.01 of the Restructuring Agreement, (E) a transfer of the any property owned by the Property Owning Partnership pursuant to an involuntary foreclosure or similar action arising from a default by the Property Owning Partnership with respect to its obligations under its indebtedness, (F) a transfer of the property of the Property Owning Partnership pursuant to a consensual foreclosure or similar action (including, without limitation, a deed in lieu of foreclosure) arising from a default by the Property Owning Partnership with respect to its obligations under its indebtedness; provided that the default is a bona fide default and the foreclosure or deed in lieu of foreclosure is not a collusive transaction between the holders of such indebtedness and Metropolis or any shareholders or Affiliates of Metropolis or any of their partners, members or Affiliates attributable to any commonality of ownership between the beneficial ownership of such indebtedness and any such Person, (G) any Metropolis Sale or sale, exchange, transfer, encumbrance or other disposition (whether by or through any intervening entity or entities) of Metropolis' interest as a limited partner of the Property Owning Partnership or the property owned by the Property Owning Partnership during the period commencing on January 1, 2000 and ending on February 28, 2001 if, simultaneous with any such transaction, the JMB Limited Partner receives its proportionate share of the Limited Partner Sale Distribution Amount (as defined in the Property Owning Partnership Agreement) and (H) payment of the Limited Partner Sale Distribution Amount (as defined in the Property Owning Partnership Agreement) or the authorized exercise of the Purchase Right (as defined in the Property Owning Partnership Agreement) or the Put Right (as defined in the Property Owning Partnership Agreement) and the consummation of the transactions incidental to the exercise of such rights. (c) "Affiliate" means, (a) with respect to any individual Person, any member of the Immediate Family of such Person or a trust established for the benefit of such member, or (b) with respect to any Entity, any Person which, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, any such Entity. (d) "Approval Right Termination Date" means the earliest of (i) March 1, 2001, and (ii) the date on which the Partnership no longer holds the Property Owning Partnership Interest as a result of the authorized exercise of the Purchase Right or the Put Right (as such terms are defined in the Property Owning Partnership Agreement) pursuant to Section 12.2A or 12.2C of the Property Owning Partnership Agreement or pursuant to such other transaction which does not constitute an Adverse Transaction, (iii) the date on which the JMB Limited Partner no longer holds a Partnership Interest in the Partnership, and (iv) the Default Date. (e) "Capital Contribution" means, with respect to any Partner, any cash, cash equivalents or the gross asset value of the Property, as determined by the General Partner in its sole and absolute discretion (except as otherwise provided in this Agreement), which such Partner contributes or is deemed to contribute to the Partnership pursuant to Article III hereof. (f) "Certificate" means the Certificate of Limited Partnership of the Partnership filed in the Office of the Secretary of State of Delaware, as such certificate may be amended and/or restated from time to time. (g) "Closing Date" shall have the meaning set forth in the Restructuring Agreement. (h) "Code" means the Internal Revenue Code of 1986, as amended from time to time (or any corresponding provisions of succeeding law). (i) "Default Date" shall have the meaning set forth in the Property Owning Partnership Agreement. (j) "Distribution" means any distribution pursuant to Articles IV or XI hereof. (k) "Entity" means any general partnership, limited partnership, corporation, joint venture, trust, business trust, real estate investment trust, limited liability company, cooperative or association. (l) "Fiscal Year" means the period commencing on any January 1 and ending on the earlier to occur of (A) the next December 31 and (B) the date on which all assets of the Partnership are distributed pursuant to Article XI hereof and the Certificate has been cancelled pursuant to the Act. (m) "FW Strategic" means FW Strategic Management, L.P., a Texas limited partnership. (n) "General Partner" means 237/1290 Upper Tier GP Corp., a Delaware corporation, in its capacity as General Partner hereunder and all other Persons hereafter being or acting as General Partner of the Partnership, individually and collectively. (o) "Indemnitee" means (i) any Person made a party to a proceeding by reason of (A) such Person's status as (1) the General Partner, (2) a stockholder, director, trustee or officer of the Partnership or the General Partner, or (3) a director, trustee or officer of any other Entity, each Person (including a Limited Partner) serving in such capacity at the request of the Partnership or the General Partner, or (B) his or its liabilities, pursuant to a loan guarantee or otherwise, for any indebtedness of the Partnership (including, without limitation, any indebtedness which the Partnership has assumed or taken assets subject to); and (ii) such other Persons (including affiliates of the General Partner to the Partnership) as the General Partner may designate from time to time (whether before or after the event giving rise to potential liability), in its sole and absolute discretion. (p) "JMB Indemnitors" shall mean Property Partners, L.P., Carlyle-XIII Associates, L.P. and Carlyle-XIV Associates, L.P. (q) "JMB Limited Partner" shall have the meaning set forth in the Preamble to this Agreement. (r) "JMB Put Right" shall have the meaning set forth in Section 7.7 of this Agreement. (s) "Limited Partner" shall have the meaning set forth in the Preamble to this Agreement and shall refer to any additional Limited Partner admitted to the Partnership in accordance with the terms hereof. (t) "LLC(s)" shall have the meanings set forth in the Recitals to this Agreement. (u) "Merger" means the merger of the LLCs with and into the Partnership pursuant to the Merger Agreement. (v) "Merger Agreement" means the Agreement and Plan of Merger, dated as of October 10, 1996 between the Partnership and the LLCs. (w) "Metropolis" means Metropolis Realty Trust, Inc., a Maryland corporation. (x) "Metropolis Sale" has the meaning given thereto in the Property Owning Partnership Agreement. (y) "Net Cash Flow" means the excess of all cash receipts of any kind received by the Partnership over the sum of the amounts of (i) Operating Expenses, and (ii) any reserves established by the General Partner. (z) "OHSP" means Oak Hill Strategic Partners, L.P., a Delaware limited partnership. (aa) "OHSP Interests" shall have the meaning set forth in the Recitals to this Agreement. (ab) "Operating Expenses" means all cash expenses, costs, debts and disbursements of every kind and nature which the Partnership shall pay or become obligated to pay in connection with the business of the Partnership or the performance of the General Partner's duties and obligations under this Agreement, including, without limitation, debt service, audit and legal expenses and management fees. (ac) "Partners" means the General Partner, the Special General Partner and the Limited Partners, where no distinction is required by the context in which the terms is used herein. "Partner" means any one of the Partners. (ad) "Partnership" means 237/1290 Upper Tier Associates, L.P. (ae) "Partnership Interest(s)" means that ownership interest of a Partner, expressed as a percentage, in the Partnership's profits and losses, other items of income, gain, losses, deductions, expenses and credits, and distributions of net cash receipts at any particular time, including the right of such Partner to any and all benefits to which a Partner may be entitled as provided in this Agreement and under the Act, together with the obligation of such Partner to comply with all the terms and provisions of this Agreement and the Act. The Partnership Interest of each Partner is set forth on Exhibit A. (af) "Partnership Property" means the Property Owning Partnership Interest, the OHSP Interests and any other property the Partnership may acquire after the date hereof. (ag) "Person" means any individual, corporation, company, partnership, joint venture, trust, association, unincorporated organization, other entity or group, or any domestic or foreign national, state or municipal or other local government or multi-national body any subdivision, agency, commission or authority thereof. (ah) "Plan" shall have the meaning set forth in the Recitals to this Agreement. (ai) "Property Owning General Partner" means 1290 GP Corp., a Delaware corporation. (aj) "Property Owning Partnership" means 1290 Partners, L.P., a Delaware limited partnership. (ak) "Property Owning Partnership Agreement" means the Amended and Restated Agreement of Limited Partnership of the Property Owning Partnership, dated as of the date hereof. (al) "Property Owning Partnership Interest" shall mean the Partnership's ownership interest, as a limited partner, in the Property Owning Partnership pursuant to the Property Owning Partnership Agreement. (am) "Restructuring Agreement" shall have the meaning set forth in the recitals. (an) "Special General Partner" shall have the meaning set forth in the Preamble to this Agreement. (ao) "Tax Matters Partner" shall have the meaning set forth in Section 10.2 of this Agreement. ARTICLE II ORGANIZATIONAL MATTERS 2.1 FORMATION. The General Partner, the Special General Partner and the Limited Partners hereby agree to continue the Partnership as a limited partnership pursuant and subject to the Act. The Original Agreement was effective from the date thereof up to, but not including, the effective time of the Amended and Restated Agreement. The Amended Agreement was effective up to, but not including, the effective date of the Second Amended and Restated Agreement. The Second Amended and Restated Agreement was effective from and including the date thereof up to the Closing Date (as defined in the Restructuring Agreement). This Agreement shall become effective on the Closing Date. Except as expressly provided in this Agreement, the rights and obligations of the Partners and the administration and termination of the Partnership shall be governed by the Act. 2.2 CERTIFICATES The General Partner shall file, record and publish such certificates and other documents as may be necessary and appropriate to comply with the requirements for the organization and operation of a limited partnership under the Act. 2.3 FOREIGN QUALIFICATIONS. If the business of the Partnership is carried on or conducted in any state other than the State of Delaware, then the parties agree that this Partnership shall be qualified to conduct business in accordance with the laws of each such other state in which business is conducted by the Partnership. The parties agree to execute such other and further documents as may be necessary or appropriate to permit the General Partner to qualify this Partnership, or otherwise to comply with requirements for a limited partnership to conduct business, in each such state. The General Partner shall execute and file in the proper offices such certificates as may be required by the Assumed Name Act or similar law in effect in the counties and other governmental jurisdictions in which the Partnership may elect to conduct business. 2.4 NAME. The name of the Partnership is "237/1290 Upper Tier Associates, L.P." The business of the Partnership shall be conducted under the name listed above or under such other names as the General Partner deems appropriate. The General Partner, in its sole discretion may, upon five days' prior written notice to the Limited Partners, change the name of the Partnership. 2.5 REGISTERED OFFICE AND AGENT; PRINCIPAL OFFICE. The address of the registered office of the Partnership in the State of Delaware and the name and address at the registered agent for service of process on the Partnership in the State of Delaware is The Corporation Trust Company, 1029 Orange Street, Wilmington (New Castle County), Delaware 19801. The principal office of the Partnership shall be c/o Victor Capital Group, L.P., 605 Third Avenue, 26th Floor, New York, New York 10016, Attn: John Klopp or such other place as the General Partner may from time to time designate by notice to the Limited Partners. The Partnership may maintain offices at such other place or places within or outside the State of Delaware as the General Partner deems advisable. 2.6 PURPOSE; POWERS. The purpose and nature of the business to be conducted by the Partnership is to hold the Partnership Property and serve as a limited partner of the Property Owning Partnership. 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. 2.7 TERM. The term of the Partnership shall continue until December 31, 2099, unless the Partnership is dissolved sooner pursuant to any provision of this Agreement. ARTICLE III CAPITAL CONTRIBUTIONS 3.1 CAPITAL CONTRIBUTIONS OF THE GENERAL PARTNER. The General Partner has made a Capital Contribution of $1 in cash to the Partnership and the Special General Partner has agreed to provide services to the Partnership as set forth in Section 10.2 hereof. In consideration therefor, the General Partner and the Special General Partner have received the Partnership Interests set forth in Exhibit A hereto. 3.2 CAPITAL CONTRIBUTIONS. As provided in the Merger Agreement, upon the consummation of the Merger, the Partnership succeeded to all of the LLCs' assets and liabilities (the "LLC Net Assets"). Upon the consummation of the Merger, the Partnership agreed that the LLC Net Assets were deemed to be the Capital Contributions of the JMB Limited Partner, and (ii) the LLC Net Assets had a gross fair market value of $100,000. 3.3 OTHER MATTERS RELATING TO CAPITAL CONTRIBUTIONS. A. Except as otherwise provided by the terms of this Agreement, no Partner shall be entitled to withdraw, or to a return of, any part of its Capital Contribution, or to receive property or assets other than cash in return thereof, and the General Partner shall not be liable to the Limited Partners for a return of their Capital Contributions. B. No Partner shall be entitled to priority over any other Partner, either with respect to a return of his Capital Contribution, or to allocations of taxable income, gains, losses or credits, or to distributions, except as provided in this Agreement. C. No interest shall be paid on Capital Contributions. D. No Partner shall be obligated to make any further Capital Contribution to the Partnership. 3.4 CAPITAL ACCOUNTS. A separate capital account shall be established for each Partner on the books of the Partnership on the dates on which such Partner makes its Capital Contributions, as provided herein. Each such capital account will thereafter be maintained on the books of the Partnership. Each Partner's capital account will be increased by that Partner's Capital Contributions, advances and allocation of income and gain and decreased by that Partner's distributions and allocation of losses. ARTICLE IV DISTRIBUTIONS OF NET CASH FLOW Subject to Article XI, the Partnership shall distribute to the Partners any Net Cash Flow at such times as the General Partner shall reasonably determine to be appropriate. Distributions of Net Cash Flow shall be made to the Partners in accordance with their respective Partnership Interests. Notwithstanding the foregoing, the Partners acknowledge that the interest of the JMB Limited Partner is subject to a Second Amended, Restated and Consolidated Security Agreement, dated as of October 10, 1996, executed and delivered pursuant to the Plan and the JMB Limited Partner and the Special General Partner agree that the General Partner shall be authorized to pay any distributions otherwise payable to the JMB Limited Partner or the Special General Partner hereunder to or at the direction of the holder of the Second Amended, Restated and Consolidated Promissory Note secured thereby. ARTICLE V ALLOCATIONS OF PROFITS AND LOSSES 5.1 All items of income, gain, loss or deduction for any Fiscal Year shall be allocated to the Partners in accordance with their respective Partnership Interests. 5.2 The Partnership shall use the "remedial method" described in Treasury Regulation Section 1.704-3(b) and allocations of nonrecourse debt shall be made in accordance therewith. The effect of this Agreement shall be that the JMB Limited Partner shall receive an allocation of Partnership nonrecourse debt, as of the date hereof, that is not less than $129,700,000. ARTICLE VI RIGHTS AND OBLIGATIONS OF THE GENERAL PARTNER 6.1 MANAGEMENT. A. Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and, except as provided in Section 6.1D hereof with respect to the JMB Limited Partner and in Section 10.2 hereof with respect to the Special General Partner, no Limited Partner nor the Special General Partner shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. No third party shall have any right to rely upon the authority of the Special General Partner or the Limited Partner to take any action on behalf of the Partnership, except as expressly set forth in this Agreement. The General Partner may not be removed by the Limited Partners or the Special General Partner with or without cause. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner shall have, subject to Section 6.1D hereof, full power and authority to do all things deemed necessary or desirable by it to conduct the business of the Partnership, to exercise all powers and to effectuate the purposes set forth in Section 2.6 hereof, including, without limitation, the power and authority to: 1. to acquire, sell, transfer, exchange, manage or otherwise dispose of all or a portion of the Partnership Property upon such terms and for such consideration as the General Partner may, in its sole and absolute discretion determine; 2. to take or enter into, perform and carry out contracts and agreements of every kind necessary or incidental to the purposes of the Partnership; 3. to take or omit such other or further action in connection with the Partnership's business as may, in the opinion of the General Partner, be necessary or desirable to further the purposes of the Partnership, including, without limitation, actions pursuant to the Property Owning Partnership Agreement; 4. to invest such funds as are temporarily not required for Partnership purposes; and 5. to carry on any other activities the General Partner may reasonably deem necessary, in connection with or incident to any of the foregoing. B. In connection with such management and subject to any limitations set forth elsewhere in this Agreement, the General Partner: 1. Shall maintain or cause to be maintained, at the expense of the Partnership, complete and accurate records of all correspondence, documents or instruments of any nature relating to the Partnership business. Such records, together with such supporting evidence thereof as is in the control and possession of the Partnership or of the General Partner, shall be kept in the principal office of the General Partner or of the Partnership for such periods as the General Partner deems appropriate. The Partners and/or their authorized representatives, shall have the right to inspect and/or copy any or all of the above-described records during normal business hours. 2. Shall execute any and all documents or instruments of any kind which the General Partner may reasonably deem appropriate in carrying out the purposes of the Partnership. 3. Shall maintain, or cause to have maintained, at the expense of the Partnership, adequate records and accounts of all transactions, operations and expenditures and shall furnish to or cause to be furnished to the Partners annual statements of account as of the end of each calendar year. C. The Limited Partner and the Special General Partner agree that the General Partner is authorized to execute, deliver and perform the above-mentioned agreements and transactions on behalf of the Partnership without any further act, approval or vote of the Limited Partner or the Special General Partner (except as provided in Section 6.1D hereof). Notwithstanding any other provision of this Agreement, to the fullest extent permitted under the Act or other applicable law, rule or regulation, the execution, delivery or performance by the General Partner or the Partnership of any agreements authorized or permitted under this Agreement shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership, the Special General Partner or the Limited Partner or any other Persons under this Agreement or of any duty stated or implied by law or equity. D. Notwithstanding anything to the contrary set forth in this Agreement, (x) until the Approval Right Termination Date in the case of items 1-6 of this Section 6.1D and (y) at any time in the case of item 7 of this Section 6.1D, the General Partner shall not, without the prior written consent of the JMB Limited Partner (which may be given or withheld in its sole and absolute discretion), have the power to take, on behalf of the Partnership as a limited partner of the Property Owning Partnership, the following actions: 1. Consent to any Adverse Transaction pursuant to Section 8.1E of the Property Owning Partnership Agreement; 2. Exercise the Partnership's Put Right (as such term is defined in the Property Owning Partnership Agreement) to require the Property Owning General Partner or Metropolis to purchase the Property Owning Partnership Interest pursuant to Section 12.2C of the Property Owning Partnership Agreement; 3. Effect the sale, disposition, exchange or transfer of the Property Owning Partnership Interest if such transaction would constitute an Adverse Transaction; 4. Consent to the amendment of the Property Owning Partnership Agreement pursuant to Sections 15.1B and 15.1C of such Partnership Agreement; 5. Consent to the dissolution of the Property Owning Partnership pursuant to Section 14.1C of the Property Owning Partnership Agreement; 6. Cause or permit (to the extent within the General Partner's reasonable control) any Adverse Transaction; provided however that the General Partner shall be under no obligation to commence litigation or to incur any expense (unless the JMB Limited Partner shall fund such expense) in order to avoid or prevent an Adverse Transaction from occurring; and 7. Cause or permit the sale, disposition, exchange or transfer of the OHSP Interests, unless FW Strategic properly exercises its right to purchase the OHSP Interests pursuant to Section 4.02(c) of the Restructuring Agreement. 6.2 OUTSIDE ACTIVITIES OF THE GENERAL PARTNER. The General Partner shall devote such time and effort to the business of the Partnership as the General Partner shall reasonably deem necessary to promote adequately the interests of the Partnership and the interests of the Partners; however, it is specifically understood and agreed that the General Partner shall not be required to devote full time to the business of the Partnership and that the Partners and their respective stockholders, partners, directors, officers and affiliates may at any time and from time to time engage in and possess interests in other business ventures of any and every type and description including business interests and activities that are in direct competition with the Partnership or that are enhanced by the activities of the Partnership, and neither the Partnership nor any Partner shall by virtue of this Agreement or otherwise have any right, title or interest in or to such independent ventures. 6.3 EMPLOYMENT OF EXPERTS OR ADVISORS. The General Partner may employ or retain such counsel, accountants, appraisers or other experts or advisors as the General Partner may reasonably deem appropriate for the purpose of discharging its duties hereunder, and shall be entitled to pay the fees of any such persons from the funds of the Partnership. The General Partner may act, and shall be protected in acting in good faith, on the opinion or advice of, or information obtained from, any such counsel, accountant, appraiser or other expert or advisor, whether retained or employed by the Partnership, the General Partner, or otherwise, in relation to any matter connected with the administration or operation of the business and affairs of the Partnership. ARTICLE VII RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS AND THE SPECIAL GENERAL PARTNER 7.1 LIMITATION OF LIABILITY. The Limited Partners and the Special General Partner shall have no liability under this Agreement except as expressly provided in this Agreement, or under the Act. 7.2 MANAGEMENT OF BUSINESS. Neither the Special General Partner nor any Limited Partner shall take part in the operation, management or control (within the meaning of the Act) of the Partnership's business, transact any business in the Partnership's name or have the power to sign documents for or otherwise bind the Partnership except as set forth in Section 10.2 hereof. No third party shall have any right to rely upon the authority of the Special General Partner on behalf of the Partnership, except as expressly set forth in this Agreement. The transaction of any such business by the General Partner, any of its affiliates or any officer, director, employee, partner, agent or trustee of the General Partner, the Partnership or any of their affiliates, in their capacity as such, shall not affect, impair or eliminate the limitations on the liability of the Limited Partners under this Agreement. 7.3 OUTSIDE ACTIVITIES OF THE SPECIAL GENERAL PARTNER AND LIMITED PARTNERS. The Special General Partner and any Limited Partner and any officer, director, partner, employee, agent, trustee, affiliate or shareholder of the Special General Partner or of any Limited Partner shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Partnership, including business interests and activities that are in direct competition with the Partnership or that are enhanced by the activities of the Partnership. Neither the Partnership nor any Partners shall have any rights by virtue of this Agreement in any business ventures of the Special General Partner or any Limited Partner. None of the Special General Partner or the Limited Partners nor any other Person shall have any rights by virtue of this Agreement or the Partnership relationship established hereby in any business ventures of any other Person and such Person shall have no obligation pursuant to this Agreement to offer any interest in any such business ventures to the Partnership, the Special General Partner or any Limited Partner or any such other Person, even if such opportunity is of a character which, if presented to the Partnership, the Special General Partner or any Limited Partner or such other Person, could be taken by such Person. 7.4 COVENANT OF THE SPECIAL GENERAL PARTNER AND THE LIMITED PARTNERS. The Special General Partner and each Limited Partner hereby warrants and covenants to the Partnership, provided that any of the following is not an Adverse Transaction, that neither it nor any of its partners or their respective officers, directors, partners, stockholders, agents and affiliates shall intentionally interfere with (x) the exercise by the Property Owning General Partner of the Purchase Right (as such term is defined in the Property Owning Partnership Agreement) pursuant to Section 12.2A of the Property Owning Partnership Agreement, or (y) any disposition, mortgage, pledge, encumbrance, hypothecation or exchange of the Property Owning Partnership Interest by the Partnership or the Property (as defined in the Property Owning Partnership Agreement) by the Property Owning Partnership or the merger or other combination of the Property Owning Partnership with or into another entity in accordance with the terms of this Agreement, or the Property Owning Partnership Agreement. 7.5 THIS SECTION INTENTIONALLY OMITTED. 7.6 EXERCISE OF PUT RIGHT. A. The General Partner shall, upon the written request of the JMB Limited Partner, promptly cause the Partnership to exercise its Put Right (as such term is defined in the Property Owning Partnership Agreement) to require the Property Owning General Partner and Metropolis, jointly and severally, to purchase the Property Owning Partnership Interest pursuant to Section 12.2C of the Property Owning Partnership Agreement. B. The General Partner shall, upon the written request of the JMB Limited Partner, promptly cause the Partnership to exercise its right to sell the OHSP Interests to FW Strategic or OHSP pursuant to the proviso of Section 4.02(d)(ii) of the Restructuring Agreement. C. Following (i) the exercise of the Put Right pursuant to Section 7.6A and (ii) the receipt by the JMB Limited Partner of all amounts to be received as a result thereof, the General Partner shall, upon receipt of the written election of the JMB Limited Partner at any time, in the JMB Limited Partner's sole discretion, cause its Partnership Interest to be converted to a limited partner interest, and the Special General Partner shall thereupon become the successor General Partner. D. Following (i) the exercise of the Purchase Right (as defined in Property Owning Partnership Agreement) the pursuant to Section 12.2A of the Property Owning Partnership Agreement and (ii) the receipt by the JMB Limited Partner of all amounts to be received as a result thereof, the General Partner shall, upon receipt of the written election of the JMB Limited Partner at any time, in the JMB Limited Partner's sole discretion, cause its Partnership Interest to be converted to a limited partner interest, and the Special General Partner shall thereupon become the successor General Partner. ARTICLE VIII AMENDMENTS OF LIMITED PARTNERSHIP AGREEMENT This Agreement may be amended only by instrument in writing signed by the General Partner, the Special General Partner and the Limited Partner. ARTICLE IX LIMITATION ON SUBSTITUTION AND ASSIGNMENT OF A PARTNER'S INTEREST 9.1 TRANSFER. A. The term "Transfer," when used in this Article IX with respect to a Partnership Interest, shall be deemed to refer to a transaction by which the General Partner purports to assign all or any part of its Partnership Interest to another Person or by which the Special General Partner or a Limited Partner purports to assign all or any part of its Partnership Interest to another Person. B. No Partnership Interest shall be Transferred, in whole or in part, except in accordance with the terms and conditions set forth in this Article IX. Any Transfer or purported Transfer of a Partnership Interest not made in accordance with this Article IX shall be null and void. 9.2 SPECIAL GENERAL PARTNER AND LIMITED PARTNERS RIGHT TO TRANSFER. Subject to the provisions of Sections 7.6, and this Section 9.2, neither the Special General Partner nor any Limited Partner shall sell, assign, transfer or convey all or any portion of its Partnership Interest to any person or entity without the prior written consent of the General Partner. Except for the security interest created pursuant to the Second Amended, Restated and Consolidated Promissory Note in the original principal amount of $88,572,780, dated October 10, 1996, made by the JMB Limited Partner in favor of Metropolis, the Second Amended, Restated and Consolidated Security Agreement, dated October 10, 1996, between the JMB Limited Partner and Metropolis, and the documents related thereto, neither the Special General Partner nor any Limited Partner shall pledge, encumber, place or suffer to exist a lien on its Partnership Interest without the prior written consent of the General Partner. No successor to the Special General Partner's Partnership Interest nor the Limited Partner's Partnership Interest shall become a substituted limited partner, as that term is used in the Act, without the prior written consent of the General Partner. Any consent from the General Partner required under this Section 9.2 may be granted or withheld by the General Partner in its sole discretion. 9.3 TRANSFERRED PARTNERSHIP INTERESTS SUBJECT TO THIS AGREEMENT. Sales, assignments, transfers, conveyances and pledges of Partnership Interests pursuant to this Article IX shall be subject to, and the transferee or pledgee shall acquire the transferred Partnership Interests subject to, all of the terms and provisions of this Agreement. 9.4 INSOLVENCY, DISSOLUTION OR BANKRUPTCY OF A LIMITED PARTNER. The insolvency, dissolution or bankruptcy of the Special General Partner or of a Limited Partner shall not terminate the Partnership. In such event, the trustee, representative, or other successor in interest of such Limited Partner or the Special General Partner shall have only the rights of an assignee of a Limited Partner which does not become a substituted limited partner under the Act. 9.5 TRANSFERS BY THE GENERAL PARTNER. A. The General Partner may Transfer all or any part of its Partnership Interest or withdraw as General Partner, in its sole discretion and without the consent of any Limited Partners or the Special General Partner; provided that the General Partner may withdraw as general partner only in connection with a Transfer of its Partnership Interest and immediately following the admission of a successor General Partner, as general partner, in accordance with this Article IX. B. If the General Partner withdraws as general partner in accordance with clause A. above, its Partnership Interest shall immediately be converted into a limited partner interest and the General Partner shall be entitled to receive distributions from the Partnership and the share of income, gain, loss, deduction and credit that were otherwise attributable to its Partnership Interest. 9.6 ADMISSION OF SUCCESSOR GENERAL PARTNER. A successor to all of the General Partner's Partnership Interest pursuant to this Article IX who is proposed to be admitted as a successor General Partner shall be admitted to the Partnership as the General Partner, effective immediately prior to such Transfer. Any such transferee shall carry on the business of the Partnership without dissolution. In each case, the admission shall be subject to the successor General Partner executing and delivering to the Partnership an acceptance of all of the terms and conditions of this Agreement and such other documents or instruments as may be required to effect the admission. ARTICLE X ACCOUNTING PROCEDURE 10.1 BOOKS AND ACCOUNTS. The General Partner shall keep or cause to be kept full, accurate, complete and proper books and accounts of all operations of the Partnership. Such books shall be kept in accordance with sound accounting practices consistently applied. 10.2 CHOICE OF ACCOUNTANTS; TAX INFORMATION. Notwithstanding anything to the contrary in this Agreement or any status of the General Partner as general partner, the Special General Partner is hereby designated as the "tax matters partner" as such term is defined in Section 6231(a)(7) of the Code. The Special General Partner shall have full and exclusive authority over all Partnership tax matters, including, without limitation, with respect to those matters under Section 11.2 of the Property Owning Partnership Agreement, reserved to the Limited Partner of such partnership under such Section 11.2 of the Property Owning Partnership Agreement. The Partnership's tax returns shall be prepared by a "Big Five" accounting firm selected by the Special General Partner. The Special General Partner shall sign and file tax returns prepared by the Partnership's accountant in consultation with the General Partner. The Special General Partner shall annually deliver or cause to be delivered to the Limited Partners all information forms reasonably necessary for federal tax purposes. 10.3 DELIVERY OF INFORMATION. The General Partner shall promptly deliver to the Special General Partner and the JMB Limited Partner copies of all reports and information received from the Property Owning Partnership, OHSP and FW Strategic. ARTICLE XI DISSOLUTION 11.1 DISSOLUTION. The Partnership shall not be dissolved by the admission of substituted Limited Partners or additional Limited Partners or by the admission of a successor General Partner in accordance with the terms of this Agreement. In the event of the withdrawal of the General Partner, any successor General Partner shall continue the business of the Partnership. The Partnership shall dissolve, and its affairs shall be wound up, only upon the first to occur of any of the following: A. the expiration of its term as provided in Section 2.7 hereof; B. an event of withdrawal of the General Partner, as defined in the Act, unless, within ninety (90) days after such event of withdrawal 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 withdrawal, of a successor General Partner; C. (i) prior to the Approval Right Termination Date, an election to dissolve the Partnership made by the General Partner, with the consent of the JMB Limited Partner (which may be given or withheld in its sole and absolute discretion), and (ii) after the Approval Right Termination Date, an election to dissolve the Partnership made by the General Partner, without the consent of the Limited Partner or the Special General Partner; D. entry of a decree of judicial dissolution of the Partnership pursuant to the provisions of the Act; E. the sale of all or substantially all of the assets and properties of the Partnership. 11.2 LIQUIDATION. In the event of dissolution of the Partnership pursuant to Section 11.1 where the business of the Partnership is not reconstituted, liquidation shall occur. The General Partner shall supervise the liquidation of the Partnership unless a wrongful act of the General Partner dissolved the Partnership or the Limited Partners elect another Partner to do so. In the event of any liquidation of the Partnership under this Agreement or the Act, except as otherwise provided herein, the proceeds of liquidating the Partnership shall be applied and distributed in the following order of priority (each item to be satisfied in full in the order listed below before any of such proceeds are allocated to the subsequent item): (a) First, to creditors, including Partners who are creditors (to the extent not otherwise prohibited by law), in satisfaction of liabilities of the Partnership (whether by payment or the making of reasonable provision for payment therefor), other than liabilities for which reasonable provision for payment has been made and liabilities for interim distributions to Partners and distributions to Partners on withdrawal; then (b) Second, to the setting up of any reserves which the supervising Partner (or, if applicable, the liquidating trustee) determines to be reasonably necessary for any contingent liabilities of the Partnership or of any Partner arising out of, or in connection with, a Partnership liability; then (c) Finally, the balance, if any, to the Partners in accordance with Article IV hereof. The General Partner shall not receive any compensation for any services performed pursuant to this Article XI. 11.3 RIGHTS OF THE SPECIAL GENERAL PARTNER AND OF THE LIMITED PARTNERS. Except as otherwise provided in this Agreement, the Special General Partner and each Limited Partner shall look solely to the assets of the Partnership for the return of its Capital Contributions and shall have no right or power to demand or receive property other than cash from the Partnership. Neither any Limited Partner nor the Special General Partner shall have priority over one another as to the return of its Capital Contributions, distributions, or allocations. 11.4 NO OBLIGATION TO CONTRIBUTE DEFICIT. If any Partner has a deficit balance in its capital account (after giving effect to all contributions, distributions and allocations for all taxable years, including the year during which such liquidation occurs), such Partner shall have no obligation to make any contribution to the capital of the Partnership with respect to such deficit, and such deficit shall not be considered a debt owed to the Partnership or to any other Person for any purpose whatsoever. ARTICLE XII INDEMNIFICATION 12.1 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 fees and expenses), judgments, fines, settlements, and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, that relate to the operations of the Partnership, the Special General Partner or the General Partner 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 it is finally determined by a court of competent jurisdiction, from which no further appeal may be taken, that such Indemnitee's action constituted intentional acts or omissions constituting willful misconduct or fraud. Without limitation, the foregoing indemnity shall extend to any liability of any Indemnitee, pursuant to a loan guaranty or otherwise for any indebtedness of the Partnership (including, without limitation, any indebtedness which the Partnership has assumed or taken subject to), and the General Partner is hereby authorized and empowered, on behalf of the Partnership, to enter into one or more indemnity agreements consistent with the provisions of this Article XII in favor of any Indemnitee having or potentially having liability for any such indebtedness. Any indemnification pursuant to this Article XII shall be made only out of the assets of the Partnership, and neither the General Partner, the Special 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 Article XII. 12.2 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. 12.3 The indemnification provided by this Article XII 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. 12.4 The Partnership may, but shall not be obligated to, purchase and maintain insurance, on behalf of the Indemnitees and such other Persons as the General Partner shall determine, against any liability that may be asserted against or expenses that may be incurred by such Person in connection with the Partnership's activities, regardless of whether the Partnership would have the power to indemnify such Person against such liability under the provisions of this Agreement. 12.5 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. 12.6 An Indemnitee shall not be denied indemnification in whole or in part under this Article XII 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. 12.7 The provisions of this Article XII are for the benefit of the Indemnitees, their heirs, successors, assigns and administrators and shall not be deemed to create any rights for the benefit of any other Persons. Any amendment, modification or repeal of this Article XII or any provision hereof shall be prospective only and shall not in any way affect the Partnership's liability to any Indemnitee under this Article XII, 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. ARTICLE XIII MISCELLANEOUS PROVISIONS 13.1 NOTICES. Notices hereunder shall be in writing and shall be deemed to be delivered upon actual receipt or 72 hours following deposit in a regularly maintained receptacle for the United States mail, registered or certified mail, return receipt requested, with postage prepaid, and addressed to the address of the addressee shown below, or to such other address of which any party shall notify the other parties hereto, in accordance with the terms hereof. If to the General Partner: 237/1290 Upper Tier GP Corp. c/o Victor Capital Group, L.P. 605 Third Avenue - 26th Floor New York, New York 10016 Attn: John Klopp with a copy to: Battle Fowler LLP 75 East 55th Street New York, New York 10022 Attn: Louis Vitali If to the JMB Limited Partner or the Special General Partner: 900 North Michigan Avenue 19th Floor Chicago, Illinois 60611 Attention: Stuart C. Nathan Gary Nickele 13.2 COUNTERPARTS. This Agreement may be executed in multiple counterparts, each to constitute an original, but all in the aggregate to constitute one agreement as executed. This Agreement shall be binding upon and inure to the benefit of the parties hereto, their heirs, legal representatives, successors and permitted assigns. 13.3 NATURE OF PARTNERSHIP INTEREST. The interest of each Partner in this Partnership is personal property. 13.4 INSOLVENCY PROCEEDINGS. No bankruptcy or insolvency filing or proceeding in respect of the Partnership shall be made or commenced without the consent of the General Partner, and the Partnership shall not acquiesce, petition or otherwise invoke or cause any other person and/or entity to invoke the process of the United States of America, any state or other political subdivision thereof or any other jurisdiction, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government for the purpose of commencing or sustaining a case against the Partnership under a federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Partnership or all or any part of its property or assets or ordering the winding-up or liquidation of the affairs of the Partnership, if such action has not been consented to by the General Partner. 13.5 TITLES AND CAPTIONS. All article or section titles or captions in this Agreement are for convenience only. They shall not be deemed part of this Agreement and in no way define, limit, extend or describe the scope or intent of any provisions hereof. Except as specifically provided otherwise, references to "Articles" and "Sections" are to Articles and Sections of this Agreement. 13.6 PRONOUNS AND PLURALS. Whenever the context may require, any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa. 13.7 FURTHER ACTION. The parties shall execute and deliver all documents, provide all information and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement. 13.8 BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives and permitted assigns. 13.9 CREDITORS. Other than as expressly set forth herein with respect to the Indemnitees, none of the provisions of this Agreement shall be for the benefit of, or shall be enforceable by, any creditor of the Partnership. 13.10 WAIVER. No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach or any other covenant, duty, agreement or condition. 13.11 APPLICABLE LAW. This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Delaware, without regard to the principles of conflicts of laws thereof. 13.12 INVALIDITY OF PROVISIONS. If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby. 13.13 ENTIRE AGREEMENT. This Agreement contains the entire understanding and agreement among the Partners with respect to the subject matter hereof and supersedes any other prior written or oral understandings or agreements among them with respect thereto. IN WITNESS WHEREOF, this Agreement is executed by the General Partner, the Special General Partner and the JMB Limited Partner as of the date first above written. 237/1290 UPPER TIER GP CORP. By: Name: Title: JMB/NYC OFFICE BUILDING ASSOCIATES, L.P., an Illinois limited partnership By: Carlyle Managers, Inc., its General Partner By: Name: Title: CARLYLE MANAGERS, INC. By: Name: Title: Solely with respect to Section 7.6A: METROPOLIS REALTY TRUST, INC. By: Name: Title: Exhibit A Entity Partnership Interest 237/1290 UPPER TIER GP CORP. 0.999% JMB/NYC OFFICE BUILDING ASSOCIATES, L.P. 98.901% CARLYLE MANAGERS, INC. 0.1% EX-10.AA 7 EXHIBIT 10-AA - ------------- INTERCREDITOR AGREEMENT THIS INTERCREDITOR AGREEMENT (the "Agreement"), made as of the 19th day of November, 1999, is among MICHIGAN AVENUE, L.L.C., a Delaware limited liability company (hereinafter referred to as "Seller") having an office at c/o JMB Property Management, Inc., 900 North Michigan Avenue, Suite 900, Chicago, Illinois 60611, and each of the following: CARLYLE - XIII ASSOCIATES, L.P., a Delaware limited partnership ("Carlyle XIII"); CARLYLE - - XIV ASSOCIATES, L.P., a Delaware limited partnership ("Carlyle XIV"); and PROPERTY PARTNERS, L.P., a Delaware limited partnership ("Property Partners"; Carlyle XIII, Carlyle XIV and Property Partners are herein sometimes each individually called a "Buyer" and collectively called the "Buyers"). RECITALS A. Seller is a participant in that certain Participation Agreement ("1996 Participation Agreement"), dated October 10, 1996, between Metropolis Realty Trust, Inc. ("Metropolis"), a Maryland corporation, and Seller. Pursuant to the 1996 Participation Agreement, Metropolis assigned to Seller and Seller assumed from Metropolis an undivided participation interest in (i) that certain Second Amended, Restated and Consolidated Promissory Note, dated October 10, 1996, in the principal amount of $88,572,780.00 made by JMB/NYC Office Building Associates, L.P., an Illinois limited partnership ("JMB/NYC"), in favor of Metropolis (as it may be hereafter amended, hereinafter referred to as the "Restated Note") and (ii) that certain Second Amended, Restated and Consolidated Security Agreement that secures the Restated Note, dated October 10, 1996 (hereinafter referred to as the "Restated Security Agreement"), such that after such assignment Seller was the holder of 100% of the outstanding principal balance and all interest accrued on the Restated Note except that Metropolis retained the right to receive the first $750,000 paid under the Restated Note. B. A copy of the Restated Note is attached hereto as Exhibit A and a copy of the Restated Security Agreement is attached hereto as Exhibit B. C. The Restated Note and the Restated Security Agreement represent consolidations of certain promissory notes (the "Existing Notes") and security agreements (the "Existing Agreements") described in Exhibit C. D. Seller desires to sell and assign to each Buyer, and each Buyer desires to purchase from Seller, as set forth in the letter agreement among Michigan Avenue, LLC, Carlyle Managers, Inc. and Carlyle Investors, Inc., dated September 27, 1999, an executed copy of which is attached hereto as Exhibit D, an interest in the first $5,425,000 of accrued interest for book purposes only (the "$5,425,000 Interest Amount"; i.e., this accrued interest will not have been deducted for tax purposes by JMB/NYC; that is, it will be the first $5,425,000 of interest which is owing immediately after the accrual of any interest which has been deducted by JMB/NYC for tax purposes) received by Seller on or after the date hereof pursuant to its interest in the Restated Note and the Restated Security Agreement (including any amounts Seller would otherwise receive pursuant to any transfer by Metropolis of its existing participation interest in the 1996 Participation Agreement to Seller after the date hereof) on the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the mutual covenants herein contained and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, Seller and each Buyer mutually agree as follows: I. Definitions: As used herein, "Percentage" shall mean: (A) In the case of Carlyle XIII, 25%; (B) In the case of Carlyle XIV, 50%; and (C) In the case of Property Partners, 25%. "Payout Date" means the date when each Buyer shall have received, in cash or cash equivalents, such Buyers' Percentage of Tranche A. "Tranche A" means the $5,425,000 Interest Amount received by Seller on or after the date hereof pursuant to its interest in the Restated Note and the Restated Security Agreement (including any amounts Seller would otherwise receive pursuant to any transfer by Metropolis of its existing participation interest in the 1996 Participation Agreement to Seller after the date hereof) on the terms and conditions hereinafter set forth, and whether made before or after the maturity or acceleration of the Restated Note, and whether or not received as a result of enforcement of the Restated Security Agreement or otherwise. For purposes of this Agreement, Seller and Buyers will treat and consider the first $5,425,000 of accrued interest paid on or after the date hereof under the Restated Note as representing the $5,425,000 Interest Amount. "Tranche B" means a subordinated interest in all amounts paid by or received from or on behalf of JMB/NYC or its successors in respect of Seller's interest in the Restated Note in each case paid or received on and after the date hereof but after the Payout Date. 2. Sale of Senior Interests. In consideration for the payment by each Buyer to the Seller of the amount (the "Purchase Price") set forth by such Buyer's name below under the heading "Purchase Price", Seller hereby sells and assigns to each Buyer, and each Buyer hereby purchases from Seller, a senior interest (each, a "Tranche A Interest") in Seller's interest (including any rights Seller might receive pursuant to any transfer by Metropolis of its existing participation interest in the 1996 Participation Agreement to Seller after the date hereof) in the Restated Note and the Restated Security Agreement in an amount equal to such Buyer's Percentage of Tranche A. Seller shall, subject to the provisions of this Agreement, retain a subordinated interest in the Restated Note and the Restated Security Agreement. The Buyers' interest in Tranche A shall entitle them as a group to receive the first $5,425,000 of accrued interest paid on or after the date hereof under the Restated Note, which the Seller and Buyers will consider to represent the $5,425,000 Interest Amount. The respective interest of the Buyers in Tranche A shall be equal in priority and no Buyer shall have priority over any other Buyer hereunder. All payments made to the Buyers in respect of the Tranche A Interest shall be made ratably according to their respective Percentages. The purchase price to be paid by each Buyer to Seller in respect to such Buyer's interest hereunder is as follows: BUYER PURCHASE PRICE ----- -------------- Carlyle XIII $106,250 Carlyle XIV $212,500 Property Partners $106,250 Each Buyer shall pay to Seller, as payment for such Buyer's purchase of its Tranche A Interest hereunder, the Purchase Price set forth above. 3. Interests. For purposes of allocating amounts between the parties hereto, the interests of the parties herein shall be treated as "stripped bonds" within the meaning of Section 1286 of the Internal Revenue Code of 1986, as amended (the "Code"). 4. Subordination of Tranche B (a) Tranche B Subordinate to Tranche A. The Seller and each Buyer hereby agree, that, to the extent and in the manner hereinafter set forth herein, the Seller's right to payment in respect to the Restated Note and the Restated Security Agreement is hereby expressly made subordinate and subject in right of payment to the prior payment in full to each Buyer of its respective Percentage of Tranche A. (b) No Payment to Seller Prior to Payment in Full of Tranche A. In the event that JMB/NYC shall make any payment to the Seller in respect of the Restated Note or the Restated Security Agreement, such payment shall be paid over and delivered forthwith by the Seller ratably to the Buyers, to the extent necessary to pay in full each Buyer's Percentage of Tranche A. No payment made to or received by or on behalf of the Seller from or on behalf of JMB/NYC in respect of the Restated Note or the Restated Security Agreement may be retained by the Seller until each Buyer has received in cash or cash equivalents such Buyer's Percentage of Tranche A. (c) Payment Over of Proceeds Upon Dissolution, Etc. In the event of (i) any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding in connection therewith, relative to JMB/NYC or its creditors, as such, or to its assets, or (ii) any liquidation, dissolution or other winding up of JMB/NYC, whether voluntary or involuntary and whether or not involving insolvency or bankruptcy, or (iii) any assignment for the benefit of creditors or any other marshalling of assets and liabilities of JMB/NYC, then and in any such event specified in (i), (ii) or (iii) above (each such event, if any, herein sometimes referred to as a "Proceeding"), the Buyers shall be entitled to receive payment in full of all amounts due or to become due on or in respect of all their respective Percentages of Tranche A, or provision shall be made for such payment in cash or cash equivalents or otherwise in a manner satisfactory to each of the Buyers, before the Seller shall be entitled to receive any payment on account of accrued interest on the Restated Note, the Restated Security Agreement or Tranche B or on account of purchase or redemption or other acquisition of the Restated Note, the Restated Security Agreement or Tranche B by JMB/NYC or any subsidiary of JMB/NYC, and to that end the Buyers shall be entitled to receive, for application to the payment of their senior interests in Tranche A, any payment or distribution of accrued interest, whether in cash, property or securities which may be payable or deliverable in respect of the Restated Note, the Restated Security Agreement or Tranche B in any such Proceeding. In the event that, notwithstanding the foregoing provisions of this Section 4(c), the Seller shall have received any payment or distribution of assets of JMB/NYC of any kind or character, in respect of the Restated Note, the Restated Security Agreement or Tranche B, then and in such event such payment or distribution shall be paid over or delivered forthwith to the Buyers ratably for application to the payment of all their respective Percentages of Tranche A remaining unpaid, to the extent necessary to pay each of their respective interests in Tranche A in full, after giving effect to any concurrent payment or distribution to or for the Buyers. (d) Provisions Solely to Define Relative Rights. The provisions of this Section 4 are and are intended solely for the purpose of defining the relative rights of Seller on the one hand and the Buyers on the other hand. Nothing contained in this Section 4 or elsewhere in this Agreement is intended to or shall impair the obligation of JMB/NYC to pay the principal of (and premium, if any) and interest and other amounts on the Restated Note and to perform its obligations under the Restated Security Agreement as and when the same shall become due and payable and performable in accordance with their respective terms. (e) No Waiver of Subordination Provisions. No right of any present or future Buyer to enforce the provisions in respect of subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of JMB/NYC or the Seller or by any act or failure to act, in good faith, by any such Buyer, or by any noncompliance by the Seller with the terms, provisions and covenants of this Agreement, regardless of any knowledge thereof any such Buyer may have to be otherwise charged with. 5. Obligations of Seller. (a) Seller shall, in its capacity as holder of its interest in the Restated Note and Restated Security Agreement and until the Buyers' senior interests in the Restated Note have been paid in full, (i) hold its interest in the Restated Security Agreement and the collateral for the Restated Note for the benefit of itself and the Buyers (each Buyer shall be deemed to have a senior interest therein in proportion to its Percentage in Tranche A), (ii) receive all payments of interest, principal and other sums on account of or with respect to its interest in the Restated Note, and (iii) promptly remit to each Buyer its share of interest received by Seller on account of or with respect to such Buyer's percentage of Tranche A in accordance with the provisions of this Agreement. (b) Except as specifically provided to the contrary in this Section 5 or in Section 7 of this Agreement, until the Payout Date, Seller shall not without the prior consent of each Buyer (i) agree to modify or amend the interest rate provisions set forth in the Restated Note and Restated Security Agreement, (ii) agree to extend the maturity date of the Restated Note, other than in accordance with the express provisions of the Restated Note and the Restated Security Agreement, (iii) agree to make or consent to any materially adverse amendment to the Buyers, modification or waiver of any of the terms, covenants, provisions or conditions of the Restated Note and Restated Security Agreement, (iv) agree to waive, compromise or settle any material claim under the Restated Note or the Restated Security Agreement against JMB/NYC or for the observance and performance by JMB/NYC of any of the terms, covenants, provisions and conditions of the Restated Note and the Restated Security Agreement, or release the maker from any material obligation or liability under the Restated Note and the Restated Security Agreement, (v) waive any material default under the Restated Note or the Restated Security Agreement, or (vi) release, reconvey or change in any material respect, any collateral or security interest held under the Restated Note and the Restated Security Agreement other than in accordance with the express provisions of the Restated Note and the Restated Security Agreement. (c) Except as set forth in Section 5(b) above or as provided in Section 7, Seller, in its capacity as holder of its interest in the Restated Note, may, without obtaining the prior consent of any Buyer, (i) extend for reasonable periods of time the time for the observance or performance by JMB/NYC of the terms and conditions of the Restated Note and the Restated Security Agreement, (ii) agree or consent to any non-material amendment, modification or waiver of the terms, covenants, provisions or conditions of the Restated Note and the Restated Security Agreement, (iii) waive, compromise or settle any non-material claim under the Restated Note or the Restated Security Agreement against JMB/NYC under the Restated Note or the Restated Security Agreement, or release JMB/NYC from any non- material obligation or liability under the Restated Note and the Restated Security Agreement, (iv) waive any non-material default under the Restated Note and the Restated Security Agreement, (vi) release, reconvey or change, in whole or in part, any collateral or security interest held under the Restated Note and the Restated Security Agreement which is required to be released or reconveyed in accordance with the express provisions of the Restated Note and the Restated Security Agreement, and (vii) do or perform any act or thing which in the reasonable judgment of Seller is necessary to enable Seller to discharge and perform its duties under this Agreement or which in the reasonable judgment of Seller is necessary or required to preserve and protect the liens and security interests created by the Restated Note and the Restated Security Agreement and the priority thereby and the collateral for the Restated Note and the interest of Seller and the Buyers therein. Each Buyer shall from time to time, upon request of Seller, execute and deliver such documents and instruments as may be reasonably necessary to enable Seller to effectively administer and service its interest in the Restated Note in its capacity as holder of such interest and in the manner contemplated by the provisions of this Agreement. (d) In giving or withholding its consent to any action or inaction hereunder, or in taking or not taking any action hereunder, each Buyer may act only in its own self interest and in its sole discretion and shall have no obligation to consider the interests of the Seller or any other Buyer. (e) Each Buyer hereby acknowledges that Seller has made no representations or warranties with respect to the Restated Note and that Seller shall have no responsibility for (i) the collectibility of the Restated Note, (ii) the validity, enforceability or legal effect of the Restated Note or the Restated Security Agreement, (iii) the validity, sufficiency or effectiveness of the lien created or to be created by the Restated Note and the Restated Security Agreement, or (iv) the financial condition of JMB/NYC or the accuracy of any information supplied by or to be supplied in connection with JMB/NYC or otherwise with respect to the Restated Note or the collateral for the Restated Note. Each Buyer assumes all risk of loss in connection with its undivided interest in Tranche A to the full extent of its Percentage in such Tranche A. Seller assumes all risk of loss in connection with its undivided interest in Tranche B to the full extent of its interest in such Tranche B. (f) Seller, in its capacity as holder of its interest in the Restated Note, shall retain all rights under the Restated Note and Restated Security Agreement with respect to enforcement, collection and administration of the Restated Note and the security for the Restated Note, which rights of Seller shall be subject to the provisions of this Section 5 and of Section 7 of this Agreement. At all times and until such time as the Restated Note has been paid in full Seller shall act as the holder of its interest in the Restated Note on behalf of itself and, prior to the Payout Date, the Buyers, in accordance with the provisions of this Agreement. 6. Expenses. Seller and the Buyers shall be responsible for enforcement expenses and costs sustained or incurred in connection with the Restated Note in proportion to the relative amounts of payments thereunder received by such parties in accordance with their interests under this Agreement. 7. Default by JMB/NYC. (a) Except as provided in Section 7(b) below, if a default shall occur under the Restated Note or the Restated Security Agreement, the decision of Seller shall control, which decision may include the taking of any action not otherwise prohibited under this Agreement. Seller shall, after Seller's having knowledge thereof, inform the Buyers of any material default under the Restated Note and/or the Restated Security Agreement and of all material facts relating to such default or relating to any other aspect which facts could or might have a materially adverse effect on the value of the security for the Restated Note or on the ability of JMB/NYC to perform its obligations under the Restated Note and Restated Security Agreement. (b) If a default shall occur under the Restated Note or the Restated Security Agreement or if JMB/NYC has not repaid all amounts due and owing under the Restated Note within one year after the Maturity Date (as defined in the Restated Note), the Seller will take the appropriate steps necessary to foreclose upon and obtain any partnership interests owned by JMB/NYC that serve as collateral under the Restated Note in lieu of seeking any other damages it may otherwise be entitled to receive. 8. Approval of Documents. Each Buyer has examined and approved the Existing Notes, the Existing Security Agreements, the Restated Note and the Restated Security Agreement and such other documents as such Buyer has deemed necessary or appropriate. 9. Files and Records. Seller shall keep and maintain at its offices, complete and accurate files and records of all matters pertaining to the Restated Note and the Restated Security Agreement, which files and records shall be available for inspection and copying by each Buyer and its employees and agents, at their own expense, during normal business hours upon reasonable prior notice to Seller. 10. Assignments and Subparticipations. Seller shall, subject to the terms of this Section herein set forth, have the right after the date of this Agreement to sell one or more additional interests in Seller's retained interest in Tranche B to any person, party or investor selected by Seller and on terms satisfactory to Seller. Without implying the necessity therefor, each Buyer shall, upon request of Seller, and at Seller's expense, enter into an amended and restated intercreditor agreement to reflect any such additional interest in the Restated Note so sold and assigned by Seller, which amended and restated intercreditor agreement shall be identical to this Agreement other than for (i) modifications necessary to reflect any such additional interest in the Restated Note so sold and assigned by Seller, and (ii) modifications requested by the purchaser of any such additional interest in the Restated Note and which are of a nonmaterial nature or are generally more favorable to each Buyer. Each Buyer shall have the right to assign or subparticipate its undivided interest in Tranche A, in whole or in part, without the prior consent of Seller or any other Buyer. If any Buyer shall subparticipate its interest in the Restated Note in accordance with the provisions of this Section, Seller shall not have any obligation to look to any person, party or entity (including, without limitation, any such person, party or entity to whom such Buyer has subparticipated its interest in the Restated Note in accordance with the provisions of this Section) other than such Buyer for the observance and performance by such Buyer of its obligations under this Agreement. 11. Withholding Taxes. In the event Seller or JMB/NYC shall be required by law to deduct and withhold Taxes (as hereinafter defined) from interest, fees or other amounts payable to any Buyer with respect to the Restated Note as a result of the Buyer constituting a Non-Exempt Person (as hereinafter defined), Seller, in its capacity as holder of its interest, shall be entitled to do so with respect to such Buyer's interest in such payment (all withheld amounts being deemed paid to such Buyer), provided Seller shall furnish such Buyer a statement setting forth the amount of Taxes withheld, the applicable rate and other information which may reasonably be requested for the purposes of assisting such Buyer to seek any allowable credits or deductions for the Taxes so withheld in each jurisdiction in which such Buyer is subject to tax. A "Non-Exempt Person" is any "Person" (i.e., an individual, corporation, partnership, business trust, trust, unincorporated association or other entity, or a governmental entity of any country) other than a Person who is either (i) a United States Person (as defined under the Code) or (ii) has on file with Seller for the year involved such duly executed form(s) or statements) which may, from time to time, be prescribed by law and which, pursuant to applicable provisions of (a) an income tax treaty between the United States and the country of residence of such Person, (b) the Code and as such may hereafter be amended, or (c) any applicable rules or regulations in effect under (a) or (b) above, permit Seller to make such payments free of any obligation or liability for withholding. For the purposes of this paragraph, "Taxes" shall mean any income or other taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature, now or hereafter imposed by any jurisdiction or by any department, agency, state or other political subdivision thereof or therein. Each Buyer, severally and for itself alone, agrees to indemnify Seller against and to hold Seller harmless from any Taxes, interests, penalties and reasonable counsel fees arising from any failure of Seller or JMB/NYC to withhold Taxes from payments made to such Buyer in reliance upon any representation, certificate, statement, document or instrument made or provided by such Buyer to Seller or JMB/NYC in connection with the obligation of Seller or JMB/NYC to withhold Taxes from payments made to such Buyer, it being expressly understood and agreed that (i) Seller shall be absolutely and unconditionally entitled to accept any such representation, certificate, statement, document or instrument as being true and correct in all respects and to fully rely thereon without any obligation or responsibility to investigate or to make any inquiries with respect to the accuracy, veracity, conclusory correctness, or validity of the same, and (ii) each Buyer upon request of Seller shall, at such Buyer's sole cost and expense, defend any claim relating to the foregoing indemnification obligations of such Buyer by counsel selected by such Buyer and reasonably satisfactory to Seller. Each Buyer, severally and for itself alone, represents to Seller that it is not a Non-Exempt Person and that neither Seller or JMB/NYC is obligated under applicable law to withhold Taxes on sums paid to it with respect to the Restated Note or otherwise pursuant to this Agreement. Contemporaneously with the execution of this Agreement, and from time to time as necessary during the term of this Agreement, each Buyer shall deliver to Seller evidence reasonably satisfactory to Seller substantiating that such Buyer is not a Non-Exempt Person and that Seller is not obligated under applicable law to withhold Taxes on sums paid to it with respect to the Restated Note or otherwise. 12. Notices. Except as otherwise provided to the contrary herein, any notice, request, demand, statement, authorization, direction, approval or consent given or made hereunder shall be in writing and shall either be hand delivered or sent by fax (with a duplicate copy being sent by another form of delivery permitted hereunder), reputable courier service or registered or certified mail, return receipt requested, and shall be deemed given in the case of hand delivery, fax or reputable courier service when delivered to or received at the following addresses, and in the case of registered or certified mail three (3) business days after being postmarked and addressed as follows: If to the Seller: Michigan Avenue, L.L.C. c/o JMB Property Management, Inc. 900 North Michigan Avenue, Suite 900 Chicago, Illinois 60611 Attention: Gary Nickele Telephone No.: (312) 915-1977 Fax No.: (312) 915-1275 If to Carlyle XIII: 900 North Michigan Avenue, Suite 1900 Chicago, Illinois 60611 Attention: Stuart C. Nathan Telephone No.: (312) 915-1040 Fax No.: (312) 915-1043 If to Carlyle XIV: 900 North Michigan Avenue, Suite 1900 Chicago, Illinois 60611 Attention: Stuart C. Nathan Telephone No.: (312) 915-1040 Fax No.: (312) 915-1043 If to Property Partners: 900 North Michigan Avenue, Suite 1900 Chicago, Illinois 60611 Attention: Stuart Nathan Telephone No.: (312) 915-1040 Fax No.: (312) 915-1043 Each party may designate a change of address, telephone number or fax number by notice to the other parties given at least 15 days before such change of address, telephone number or Fax number is to become effective. 13. Interests Not Securities or Loan. The respective interests in the Restated Note sold by Seller to the Buyers shall not be deemed to be (a) securities within the meaning of the Securities Act of 1933 or the Securities Exchange Act of 1934 or (b) loans from any Buyer to the Seller or from the Seller to any Buyer. No representations with respect to the Existing Notes and the Restated Note or JMB/NYC have been made by Seller to any Buyer except those, if any, contained herein. Each Buyer acknowledges that the Restated Note is a non-recourse obligation of JMB/NYC and is payable only to the extent of distributions made to JMB/NYC from certain entities described in the Restated Security Agreement. 14. Parties' Intent. It is the intent and purpose of the parties hereto that this Agreement represent a sale by Seller to each Buyer of a senior interest in Seller's interest in the Restated Note and the Restated Security Agreement in an amount equal to such Buyer's Percentage of Tranche A and the rights, benefits and obligations arising therefrom. The parties hereto do not intend to be and shall not be treated or considered joint venturers or partners. 15. Captions. The titles and headings of the Sections of this Agreement have been inserted for convenience of reference only and are not intended to summarize or otherwise describe the subject matter of such Sections and shall not be given any consideration in the construction of this Agreement. 16. Counterparts. This Agreement may be executed in one or more counterparts by some or all of the parties hereto, each of which counterparts shall be an original and all of which together shall constitute a single agreement. 17. Severability. If any term, covenant or provision of this Agreement shall be held to be invalid, illegal or unenforceable in any respect, this Agreement shall be construed without such term, covenant or provision. 18. Modification. This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter of this Agreement. This Agreement shall not be modified, amended or terminated, except by an agreement in writing signed by the parties hereto. 19. Due Execution. (a) Seller and each Buyer respectively represents and warrants for itself that this Agreement has been duly authorized, executed and delivered by it and constitutes its legal, valid, binding and enforceable obligation in accordance with its terms. (b) Seller represents and warrants to each Buyer that as of the date on which such Buyer purchases such Tranche A Interest, Seller owns its interest in the Restated Note free and clear of all liens and encumbrances, and Seller has the right, power and authority to sell such interest to such Buyer. (c) Each Buyer hereby represents and warrants to Seller that the purchase of the Tranche A Interest (i) is not prohibited under the laws and regulations under which such Buyer is organized and operates, and (ii) is made for such Buyer's own account and with no present intention of disposing of the same. 20. Liability of Seller. Neither Seller nor any of its directors, officers, agents or employees shall be liable to any Buyer for any action taken or not taken by it in good faith in accordance with this Agreement or with the consent or at the request of the requisite number of Buyers. Seller shall not have any fiduciary duty to any Buyer hereunder. Seller may rely upon any notice, consent, certificate, statement or other writing believed by it in good faith to be genuine or to be signed by the proper party or parties. 21. Payment Returns and Adjustments. (a) If, as a result of a miscalculation or other mistake, Seller disburses an amount to any Buyer that is less than or in excess of the amount then due to such Buyer in respect of its interest in Tranche A, then, promptly upon becoming aware of such discrepancy, Seller shall disburse to such Buyer the amount of the deficiency or such Buyer shall return to Seller the amount of the excess, as the case may be. (b) If Seller determines at any time that any amount received or collected by Seller in respect of the Restated Note must be returned to JMB/NYC or paid to any other person or entity pursuant to any insolvency law or otherwise, then, notwithstanding any other provision of this Agreement, Seller shall not be required to distribute any portion thereof to the Buyers and each Buyer shall promptly, on demand by Seller, repay any portion thereof that Seller has distributed to such Buyer, together with interest thereon at such rate and for such period, if any, as and in respect of which Seller is required to pay interest to JMB/NYC or such other person or entity. (c) The obligations of the Buyer and Seller under this Section shall survive the termination of this Agreement. 22. Place and Manner of Payments. All payments pursuant hereto shall be made by wire transfer of immediately available funds to such account as any Buyer or Seller, as the case may be, may designate in writing to the other from time to time. 23. GOVERNING LAW; SUBMISSION TO JURISDICTION. (a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF ILLINOIS. (b) SELLER AND EACH BUYER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY ILLINOIS STATE OR FEDERAL COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH ILLINOIS STATE OR FEDERAL COURT. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT. 24. Successors and Assigns. This Agreement and all its provisions shall be binding upon and inure to the benefit of the parties and their respective legal representatives, successors, and permitted assigns, and shall not benefit any person or entity other than those enumerated above. 25. Entire Agreement. This Agreement constitutes the entire agreement between the parties, integrates all the terms and conditions mentioned herein or incidental hereto, and supersedes all oral negotiations and prior writings with respect to the subject matter hereof, including, without limitation, any summary of terms and conditions, information memorandum, presentation, financial statement or any other communication. 26. WAIVER OF JURY TRIAL. SELLER AND EACH BUYER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT, THE RESTATED NOTE, ANY RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING OR STATEMENTS (WHETHER VERBAL OR WRITTEN). IN WITNESS WHEREOF, Seller and each Buyer have caused this Agreement to be duly executed as of the day and year first above written. MICHIGAN AVENUE, L.L.C. By: JMB Property Managers, Inc., Managing Member By: ___________________________________ Name: Gary Nickele Title: Vice President CARLYLE - XIII ASSOCIATES, L.P. By: Carlyle Investors, Inc., General Partner By: ___________________________________ Name: Stuart C. Nathan Title: President CARLYLE - XIV ASSOCIATES, L.P. By: Carlyle Investors, Inc., General Partner By: ___________________________________ Name: Stuart C. Nathan Title: President PROPERTY PARTNERS, L.P., By: Carlyle Investors, Inc., General Partner By: ___________________________________ Name: Stuart C. Nathan Title: President Exhibit A Exhibit B Exhibit C Exhibit D EX-21 8 EXHIBIT 21 LIST OF SUBSIDIARIES The Partnership is a 25% shareholder in Carlyle Managers, Inc., the general Partner of JMB/NYC Office Building Associates, L.P. ("JMB/NYC") and 25% shareholder in Carlyle Investors, Inc., which is the general partner of Carlyle-XIII Associates, L.P. The Partnership is a 99% limited partner in Carlyle-XIII Associates, L.P., which holds an approximate 25% limited partnership interest in JMB/NYC. JMB/NYC is a 99% limited partner in Upper Tier Associates, L.P. Reference is made to the Notes for a description of the terms of such joint venture partnerships. EX-24 9 EXHIBIT 24 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers of JMB Realty Corporation, the corporate general partner of CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII, do hereby nominate, constitute and appoint GARY NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and agents of the undersigned with full power of authority to sign in the name and on behalf of the undersigned officers a Report on Form 10-K of said partnership for the fiscal year ended December 31, 1999, and any and all amendments thereto, hereby ratifying and confirming all that said attorneys and agents and any of them may do by virtue hereof. IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney the 31st day of January, 2000. H. RIGEL BARBER - ----------------------- H. Rigel Barber Chief Executive Officer The undersigned hereby acknowledge and accept such power of authority to sign, in the name and on behalf of the above named officers, a Report on Form 10-K of said partnership for the fiscal year ended December 31, 1999, and any and all amendments thereto, the 31st day of January, 2000. GARY NICKELE ----------------------- Gary Nickele GAILEN J. HULL ----------------------- Gailen J. Hull DENNIS M. QUINN ----------------------- Dennis M. Quinn EXHIBIT 24 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers and/or directors of JMB Realty Corporation, the corporate general partner of CARLYLE REAL ESTATE LIMITED PARTNERSHIP - XIII, do hereby nominate, constitute and appoint GARY NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and agents of the undersigned with full power of authority to sign in the name and on behalf of the undersigned officer or directors a Report on Form 10-K of said partnership for the fiscal year ended December 31, 1999, and any and all amendments thereto, hereby ratifying and confirming all that said attorneys and agents and any of them may do by virtue hereof. IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney the 31st day of January, 2000. NEIL G. BLUHM - ----------------------- President and Director Neil G. Bluhm JUDD D. MALKIN - ----------------------- Chairman and Chief Financial Officer Judd D. Malkin A. LEE SACKS - ----------------------- Director of General Partner A. Lee Sacks STUART C. NATHAN - ----------------------- Executive Vice President Stuart C. Nathan Director of General Partner The undersigned hereby acknowledge and accept such power of authority to sign, in the name and on behalf of the above named officers and/or directors, a Report on Form 10-K of said partnership for the fiscal year ended December 31, 1999, and any and all amendments thereto, the 31st day of January, 2000. GARY NICKELE ----------------------- Gary Nickele GAILEN J. HULL ----------------------- Gailen J. Hull DENNIS M. QUINN ----------------------- Dennis M. Quinn EX-27 10
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED IN SUCH REPORT. 12-MOS DEC-31-1999 DEC-31-1999 2,523,388 0 41,300 0 0 2,564,688 0 0 2,669,876 100,988 0 0 0 0 (318,157) 2,669,876 0 300,152 0 12,196 560,180 0 233,008 (505,232) 0 2,286,026 980,945 (1,121,200) 0 2,145,771 5.63 5.63
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