EXHIBIT 10.9
FOURTH AMENDMENT TO AGREEMENT OF LIMITED
PARTNERSHIP OF CORNERSTONE PROPERTIES LIMITED PARTNERSHIP
THIS FOURTH AMENDMENT TO AGREEMENT OF LIMITED PARTNERSHIP OF
CORNERSTONE PROPERTIES LIMITED PARTNERSHIP (this "AMENDMENT") is made and
entered into as of the 16th of December, 1998, by CORNERSTONE PROPERTIES INC., a
Nevada corporation, as general partner (the "GENERAL PARTNER") of Cornerstone
Properties Limited Partnership (the "PARTNERSHIP"), for itself and on behalf of
the Limited Partners of the Partnership, and the New Partners admitted to the
Partnership pursuant to this Amendment under the following circumstances:
WHEREAS, the Partnership was formed by the filing of that certain
Certificate of Limited Partnership with the Delaware Secretary of State on
December 23, 1997 and is organized pursuant to the provisions of the Delaware
Revised Uniform Limited Partnership Act and pursuant to that certain Agreement
of Limited Partnership of Cornerstone Properties Limited Partnership, dated as
of December 23, 1997, as amended by First Amendment to Agreement of Limited
Partnership of Cornerstone Properties Limited Partnership, dated as of January
29, 1997 [sic], by Amendment to First Amendment to Agreement of Limited
Partnership of Cornerstone Properties Limited Partnership, dated as of January
29, 1998, by Second Amendment to Agreement of Limited Partnership of Cornerstone
Properties Limited Partnership, dated as of April 28, 1998, and by Third
Amendment to Agreement of Limited Partnership dated as of June 3, 1998 (the
"PARTNERSHIP AGREEMENT");
WHEREAS, on even date herewith, the parties identified as "New
Partners" on the signature page hereto (the "NEW PARTNERS") have made Capital
Contributions to the Partnership in exchange for an aggregate of 16,213,009
Class A Partnership Common Units of limited partnership interest in the
Partnership;
WHEREAS, each New Partner desires to become a party to the Partnership
Agreement as a Limited Partner and to be bound by all terms, conditions and
other provisions of this Amendment and the Partnership Agreement; and
WHEREAS, the parties desire to amend the Partnership Agreement to
reflect the admission of each New Partner as an Additional Limited Partner and
holder of a certain number of Units and certain other matters as herein
provided;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. DEFINITIONS. The terms used in this Amendment with an initial
capital letter or letters shall have the same meanings in this Amendment as the
meanings ascribed thereto in the Partnership Agreement.
2. ADMISSION OF NEW PARTNERS. Each New Partner is hereby admitted as
an Additional Limited Partner in accordance with Section 12.2 of the Partnership
Agreement holding such number of Units as is set forth on EXHIBIT A. Each New
Partner hereby agrees to become a party to the Partnership Agreement as a
Limited Partner and to be bound by all the terms, conditions and other
provisions of the Partnership Agreement, including but not limited to the power
of attorney set forth in Section 2.4 of the Partnership Agreement. Pursuant to
Section 12.2.B of the Partnership Agreement, the General Partner hereby consents
to the admission of each New Partner as an Additional Limited Partner of the
Partnership. The admission of each New Partner shall become effective as of the
date of this Amendment, which shall also be the date on which the name of each
New Partner is recorded on the books and records of the Partnership.
3. RESTATEMENT OF EXHIBIT A. EXHIBIT A to the Partnership Agreement
is hereby amended and restated by replacing EXHIBIT A with EXHIBIT A attached to
this Amendment.
4. EXTRAORDINARY TRANSACTION. Section 1 of the Partnership Agreement
is hereby amended by deleting clause (i) of the definition of "Extraordinary
Transaction" in its entirety and substituting the following in its place:
"(i) a merger (including a triangular merger), consolidation
or other combination into another Person if, as the result of
which, the Company is not the surviving Person, unless such
merger (including a triangular merger), consolidation or other
combination into such other Person where the Company is not the
surving Person is effected solely to change the domicile or state
of incorporation of the Company;"
5. VALUE. Section 1 of the Partnership Agreement is hereby amended
by deleting the definition of "Value" in its entirety and substituting the
following in its place:
"VALUE" means, with respect to a REIT Share, the average of
the daily market price for the ten (10) consecutive trading days
immediately preceding the Valuation Date. The Market for each
such trading day shall be: (i) if the REIT Shares are listed or
admitted to trading on the New York Stock Exchange ("NYSE"), the
closing price on the NYSE on such day, or if no such sale takes
place on such day, the average of the closing bid and asked
prices, regular way, on such day; (ii) if the REIT Shares are not
listed on the NYSE but are listed or admitted to trading on any
other securities exchange or the Nasdaq National Market System,
the General Partner shall designate one of such exchanges or the
Nasdaq National Market System, and the market price shall be the
closing price on such exchange so designated by the General
Partner on such day, or if no such sale takes place on such day,
the average of the closing bid and asked prices on such day;
(iii) if the REIT Shares are not listed or admitted to trading on
any securities exchange or the Nasdaq National Market System, the
last reported sale price on such day or, if no sale takes place
on such day, the average of the closing bid and asked prices on
such day, as reported by a reliable quotation source designated
by the General Partner; or (iv) if the REIT Shares are not listed
or admitted to trading on any securities exchange or the Nasdaq
National Market System and no such last reported sale price or
closing bid and asked prices are available, the average of the
reported high bid and low asked prices on such day, as reported
by a reliable quotation source designated by the General Partner,
or if there shall be no bid and asked prices on such day, the
average of the high bid and low asked prices, as so reported, on
the most recent day (not more than ten (10) days prior to the
date in question) for which prices have been so reported,
PROVIDED that if there are no bid and asked prices reported
during the ten (10) days prior to the date in question, the Value
of the REIT Shares shall be determined by the General Partner
acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment,
appropriate. In the event the REIT Shares Amount includes Rights,
then the Value of such Rights shall be determined by the General
Partner acting in good faith on the basis of such quotations and
other information as it considers, in its reasonable judgment,
appropriate, PROVIDED that the Value of any Rights issued
pursuant to a 'Shareholder Rights Plan' shall be deemed to have
no value unless a 'triggering event' shall have occurred (I.E.,
if the Rights issued pursuant thereto are no longer 'attached' to
the REIT Shares and are able to trade independently)."
6. TERM. Section 2.5 of the Partnership Agreement is hereby amended
by inserting the following immediately following the date "December 31, 2096,":
-2-
". . . unless the General Partner, in its sole and absolute
discretion, and on as many occasions as the General Partner may
elect, extends such date by written notice to the Limited
Partners given prior to such date, or . . ."
7. DISTRIBUTIONS. Section 5.1 of the Partnership Agreement is hereby
deleted in its entirety and the following substituted in its place:
"SECTION 5.1 REQUIREMENT AND CHARACTERIZATION OF DISTRIBUTIONS
The General Partner shall cause the Partnership to distribute
at least quarterly all or a portion of Available Cash generated by the
Partnership during such quarter or shorter period, in such amounts as
the General Partner shall determine in its sole and absolute
discretion; PROVIDED, HOWEVER, that all such distributions shall be
made to the Partners who are Partners on the Partnership Record Date
with respect to such quarter or shorter period in the following order:
(1) first, at the time and in the manner set forth in the
applicable Partnership Unit Designation, to each holder of Partnership
Interests of a class or series that is entitled to a preference in
distribution, in accordance with the rights of such class or series of
Partnership Interests (and, within such class or series, pro rata in
proportion to the respective Partnership Interests on such Partnership
Record Date); and
(2) second, to the extent the amount of Available Cash which
the General Partner has determined to distribute exceeds the amount
required for payment of any preference in distribution under the
foregoing clause (1), such excess shall be distributed to the holders
of Partnership Interests that are not entitled to any preference in
distribution, pro rata to each class or series in accordance with the
terms of such class or series (and within each class or series pro rata
in proportion to their respective Percentage Interests on such
Partnership Record Date).
Unless otherwise expressly provided for herein or in an
agreement at the time a new class or series of Partnership Interests is
created in accordance with ARTICLE 4, no Partnership Interest shall be
entitled to a distribution in preference to any other Partnership
Interests. Unless otherwise specifically agreed to by the General
Partner, distributions payable with respect to any Partnership Units
that were not outstanding during the entire quarterly or shorter period
in respect of which distribution is made shall be prorated based on the
portion of the period that such Units were outstanding. Notwithstanding
anything to the contrary contained herein, in no event shall a Partner
receive a distribution out of Available Cash with respect to a
Partnership Unit if such Partner is entitled to receive a distribution
out of such Available Cash with respect to a REIT Share for which such
Partnership Unit has been exchanged or redeemed.
The General Partner shall take such reasonable efforts, as
determined by it in its sole and absolute discretion and consistent
with the Company's qualification as a REIT, to distribute Available
Cash (a) to the Limited Partners so as to preclude any such
distribution or portion thereof from being treated as part of a sale of
property to the Partnership by a Limited Partner under Section 707 of
the Code or the Regulations thereunder; PROVIDED that the General
Partner and the Partnership shall not have liability to a Limited
Partner under any circumstances as a result of any distribution to a
Limited Partner being so treated and (b) to the Company in amounts
sufficient to enable the Company to pay shareholder dividends that will
(1) satisfy the requirements for qualifying or reelecting as a REIT
under the Code and Regulations and (2) avoid any federal income or
excise tax liability for the Company; PROVIDED, HOWEVER, that the
General Partner may in its sole discretion from time to time elect not
to cause the Partnership to distribute sufficient amounts to enable the
Company to pay shareholder dividends that will avoid any federal income
or excise tax liability of the Company so long as to do so would not be
disadvantageous to the Limited Partners. Except as set forth in the
immediately preceding sentence, nothing contained herein shall require
the General Partner to cause the Partnership to distribute any
particular portion of Available Cash. The Partners acknowledge that the
Partnership expects in the future to undertake the construction and
development of property, to acquire additional property through
purchase for cash, debt and equity
-3-
securities, issuance of indebtedness, merger or other means, to make
other investments utilizing, inter alia, income and gain of the
Partnership, and to establish reserves for the purpose of making such
future expenditures, thereby reducing the amounts of Available Cash
that would otherwise be available for distribution to the Partners."
8. DEFICIT MAKE-UP; TAX ALLOCATIONS. The Partnership Agreement is
hereby amended in the following respects:
(a) A new Section 6.1.E is hereby added to the Partnership
Agreement immediately following Section 6.1.D thereof as follows:
"E. ELECTION TO UNDERTAKE DEFICIT RESTORATION LIABILITY. A
Limited Partner who wishes to bear the economic risk of loss as
to a portion of the Partnership's recourse indebtedness by
undertaking the obligation to restore a portion of its negative
Capital Account balance upon liquidation of such Partner's
interest in the Partnership, as provided in SECTION 13.3 hereof,
shall provide a written notice to the General Partner specifying
the dollar amount of recourse debt of the Partnership as to which
such Limited Partner agrees to bear the economic risk of loss by
undertaking a deficit capital account restoration obligation of
the same amount (the "RECOURSE DEBT AMOUNT"). The total of such
dollar amounts elected by all Limited Partners shall equal the
"AGGREGATE RECOURSE DEBT AMOUNT" and shall be set forth on
EXHIBIT E, as amended from time to time. Such election shall
become effective upon the receipt thereof by the General Partner
unless the General Partner reasonably determines, based on the
advice of its tax advisors and after consulting with the Limited
Partner and its tax advisors, that the amount specified in a
Limited Partner's election substantially exceeds the amount
necessary to cause the Limited Partner to be allocated sufficient
Partnership debt under Section 752 of the Code (taking into
account the effect of anticipated reductions in Partnership debt
on such Partner's allocable share of debt) to cover such
Partner's negative tax capital account and reasonably projected
changes therein. Upon becoming effective, such election shall be
irrevocable, cannot be reduced, and shall be binding upon
successive transferees of the Limited Partner except as provided
in the final paragraph of SECTION 13.3 hereof."
(b) Paragraphs (4) and (5) of Section 6.1.B of the Partnership
Agreement are hereby deleted in their entirety and the following
substituted in their place:
"(4) Fourth, to the General Partner until the General
Partner's Adjusted Capital Account Deficit is equal to
the excess, if any, of the aggregate recourse
liabilities of the Partnership at the end of the fiscal
year for which such allocation is being made over the
Aggregate Recourse Debt Amount as set forth on EXHIBIT
E, as appropriately amended from time to time;
(5) Fifth, to the Limited Partners listed on EXHIBIT E in
proportion to their respective `Recourse Debt
Percentages' (such percentages being derived, in the
case of each Limited Partner, by dividing such Limited
Partner's Recourse Debt Amount by the Aggregate
Recourse Debt Amount), until the sum of such Limited
Partners' Adjusted Capital Account Deficits equals the
Aggregate Recourse Debt Amount; and"
(c) Section 1 of the Partnership Agreement is hereby amended by
deleting the definition of "RECOURSE DEBT AMOUNT" in its entirety and
adding new definitions of "RECOURSE DEBT AMOUNT" and "AGGREGATE
RECOURSE DEBT AMOUNT" as follows:
"AGGREGATE RECOURSE DEBT AMOUNT" has the meaning set forth
in SECTION 6.1.E."
"RECOURSE DEBT AMOUNT" has the meaning set forth in SECTION
6.1.E."
-4-
(d) Exhibit E of the Partnership Agreement is hereby amended by
adding the phrase "(Aggregate Recourse Debt Amount)" immediately after
the word "Total."
9. GENERAL PARTNER ACTION TO MAINTAIN REIT STATUS OR AVOID TAXATION
OF COMPANY. Section 7.9.D of the Partnership Agreement is hereby amended by
deleting clause (iii) thereof in its entirety and substituting the following in
its place:
". . . (iii) to ensure that the Partnership at all times
satisfies the 90% qualifying income exception of Section 7704(c) of
the Code, unless the Partnership obtains an opinion of counsel to the
effect that the Partnership is not properly classified as a `publicly
traded partnership' under Section 7704(b) of the Code, is expressly
authorized under this Agreement and is deemed approved by all of the
Limited Partners. . . ."
10. REDEMPTION RIGHT. The first sentence of Section 8.6.A is hereby
amended to read as follows:
"A. GENERAL. Subject to SECTION 8.6.B and 8.6.C, at any time
(i) on or after the day following the first (1st) anniversary of the
date of issuance of a Partnership Unit to a Limited Partner pursuant to
ARTICLE 4, or, in the case of Partnership Units issued to an Additional
Limited Partner admitted to the Partnership pursuant to the Fourth
Amendment to Agreement of Limited Partnership of the Partnership dated
as of December 16, 1998, at any time on or after the day following the
first to occur of (a) the first (1st) anniversary of the date of
issuance of a Partnership Unit to such Limited Partner pursuant to
ARTICLE 4, or (b) a "CHANGE IN CONTROL" of the Company (as such term is
defined in the Registration Rights and Lock-up Agreement, dated as of
the date of this Amendment, by and among the Company and the parties
set forth in Exhibit A thereto), or (ii) on or after such date prior to
the date determined in accordance with the foregoing clause (i) as the
General Partner, in its sole and absolute discretion, designates with
respect to any Units then outstanding, each Limited Partner (other than
the Company) shall have the right (the "REDEMPTION RIGHT") to require
the Partnership to redeem on a Special Redemption Date all or a portion
of the Partnership Units held by such Limited Partner at a redemption
price per Unit equal to and in the form of the Cash Amount to be paid
by the Partnership."
11. TAX-EXEMPT LIMITED PARTNERS. A new Section 10.6 is hereby added
to the Partnership Agreement immediately following Section 10.5 as follows:
"SECTION 10.6 NOTIFICATION OF TAX-EXEMPT STATUS
Any Limited Partner that is a tax-exempt organization shall, upon
its admission to the Partnership, notify the Partnership of such
status, the provision of the Code under which such Limited Partner
claims tax-exempt status and whether the Limited Partner is a
'qualified organization' under Section 514(c)(9)(C) of the Code, and
shall promptly notify the Partnership of any change in such status."
12. TRANSFER RESTRICTIONS. Section 11.3.D of the Partnership
Agreement is hereby amended in the following respects:
(A) Section 11.3.D of the Partnership Agreement is hereby amended
by inserting the following at the end of clause (i) thereof:
". . . PROVIDED, HOWEVER, that the General Partner may, in its
sole discretion, waive such restriction on proposed transfers that
cause a tax termination of the Partnership if the General Partner
otherwise determines that such transfers are in the best interest of
the Partnership; . . ."
(B) Section 11.3.D of the Partnership Agreement is hereby amended
by inserting the following at the end of clause (iii) thereof:
-5-
". . . PROVIDED, HOWEVER, that the foregoing restriction shall
not prohibit a transfer in connection with the exercise of a Limited
Partner's Redemption Right; . . ."
(C) Section 11.3.D of the Partnership Agreement is hereby amended
by adding a new clause (vii) as follows:
". . . ; or (vii) such transfer would cause the Partnership or
the Company to be treated as deriving rents from a related party
tenant described in Section 856(d)(2)(B) of the Code, taking into
account the applicable constructive ownership rules. . "
13. COMPLIANCE WITH TIMING REQUIREMENTS OF REGULATIONS. Section 13.3
of the Partnership Agreement is hereby amended and restated in its entirety as
follows:
"SECTION 13.3 COMPLIANCE WITH TIMING REQUIREMENTS OF REGULATIONS
In the event the Partnership is "liquidated" within the meaning
of Treasury Regulations Section 1.704-1(b)(2)(ii)(g), distributions
shall be made pursuant to this ARTICLE 13 to the General Partner and
Limited Partners who have positive Capital Accounts in compliance with
Treasury Regulations Section 1.704-1(b)(2)(ii)(b)(2). In that event,
(i) if the General Partner has a deficit balance in its Capital
Account (after giving effect to all contributions, distributions and
allocations for all Partnership Years or portions thereof, including
the year during which such liquidation occurs), the General Partner
shall contribute to the capital of the Partnership the amount
necessary to restore such deficit balance to zero in compliance with
Treasury Regulations Section 1.704-1(b)(2)(ii)(b)(3); and (ii) if any
Limited Partner has a deficit balance in its Capital Account (after
giving effect to all contributions, distributions and allocations for
all Partnership Years or portions thereof, including the year during
which such liquidation occurs) and has been allocated a Limited
Partner Recourse Debt Percentage, each such Limited Partner shall be
obligated to contribute cash to the capital of the Partnership in an
amount equal to the lesser of (A) the amount required to increase its
Capital Account balance as of such date to zero or (B) such Limited
Partner's Recourse Debt Amount. Any such contribution required of a
Partner hereunder shall be made on or before the later of (i) the end
of the Partnership Year in which the interest of such Partner is
liquidated or (ii) the ninetieth (90th) day following the date of such
liquidation. Notwithstanding any provision hereof to the contrary, all
amounts so contributed by a Limited Partner to the capital of the
Partnership shall, upon liquidation of the Partnership under ARTICLE
13, be paid only to any then creditors of the Partnership, including
Partners that are Partnership creditors (in the order provided in
SECTION 13.2), and shall not be distributed to the other Partners then
having positive balances in their respective Capital Accounts.
If a Limited Partner's interest in the Partnership is
"liquidated" within the meaning of Treasury Regulations Section
1.704-1(b)(2)(ii)(g) (other than in connection with a liquidation of
the Partnership), which term shall include a redemption by the
Partnership of such Limited Partner's interest upon exercise of a
Redemption Right, then the Limited Partner shall be required to
contribute cash to the capital of the Partnership equal to the lesser
of (i) the amount required to increase its Capital Account balance as
of such date to zero, or (ii) such Limited Partner's Recourse Debt
Amount. For this purpose, (i) the Limited Partner's deficit Capital
Account shall be determined by taking into account all contributions,
distributions and allocations for the portion of the Partnership Year
ending on the date of the liquidation or redemption, and (ii) solely
for purposes of determining such Limited Partner's Capital Account
balance, the General Partner shall redetermine the Carrying Value of
the Partnership's assets on such date based on the principles set
forth in SECTION 1.D(3) and (4) of EXHIBIT B hereto, and shall take
into account the Limited Partner's allocable share of any Unrealized
Gain or Unrealized Loss resulting from such redetermination in
determining the balance of its Capital Account. The amount of any
payment required hereunder shall be due and payable within the time
periods specified in the penultimate sentence of the preceding
paragraph.
After the death of a Limited Partner, the executor of the estate
of such Limited Partner may elect to reduce (or eliminate) the deficit
Capital Account restoration obligation of such Limited Partner
pursuant to this SECTION 13.3. Such elections may be made by such
executor by delivering to the General Partner
-6-
within two hundred seventy (270) days of the death of such Limited
Partner a written notice setting forth the maximum deficit balance in
its Capital Account that such executor agrees to restore under SECTION
13.3, if any. If such executor does not make a timely election
pursuant to this SECTION 13.3 (whether or not the balance in its
Capital Account is negative at such time), then such Limited Partner's
estate (and the beneficiaries thereof who receive distributions of
Partnership Interests therefrom) shall be deemed to have a deficit
Capital Account restoration obligation as set forth pursuant to the
terms of SECTION 13.3. Any Limited Partner which is itself a
partnership may likewise elect, after the date of its respective
partner's death, to reduce (or eliminate) its deficit Capital Account
restoration obligation pursuant to SECTION 13.3 by delivering a
similar written notice to the General Partner within the time period
specified herein. Any such partnership that does not make any such
timely election shall similarly be deemed to have a deficit Capital
Account restoration obligation as set forth pursuant to the terms of
SECTION 13.3."
14. ALLOCATION OF NONRECOURSE DEDUCTIONS. Section 1.D of Exhibit C to
the Partnership Agreement is hereby amended by inserting the words ". . .in the
Partnership . . . " at the end of the first sentence thereof.
15. MISCELLANEOUS. This Amendment shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
The Partners hereby ratify and confirm the Partnership Agreement, as amended by
this Amendment. This Amendment shall be governed by and construed in conformity
with the laws of the State of Delaware. This Amendment may be executed in
counterparts, each of which shall be an original, and all of which shall
constitute one and the same instrument.
CORNERSTONE PROPERTIES INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Operating Officer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇
Vice President
-7-
Alameda Associates
Boron Westcoast B.V.
201 California Inc.
▇.▇. ▇▇▇▇ Contractor
Commerce Way Associates
The Congress Group, Inc.
DFS Holdings LLC
Elohssa Realty Limited Partnership
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
Memeno - 1789 Corporation
Noro-Hibernia Holding B.V.
Noro-Palisades Holding Company B.V.
Noro-Wilshire Holding Company B.V.
Palisades Associates
▇▇▇▇ California/Front Associates
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ California/Front Associates
Wynken Corp.
Corpro Real Estate Management, Inc.
BY: CORNERSTONE PROPERTIES INC.,
pursuant to the Consent of the Limited Partners approving the
amendment of the Partnership Agreement as set forth in the
Amendment
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Operating Officer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇
----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇
Vice President
-8-
The "New Partners" set forth on Schedule 1
By: WW Holdings, LLC a California limited liability company,
as attorney-in-fact pursuant to separate powers of attorney
By: /s/ ▇▇▇ ▇▇▇ ▇▇▇▇▇
----------------------------
Name: ▇▇▇ ▇▇▇ ▇▇▇▇▇
Title: Manager
-9-
