Republic Plaza Properties Partnership, PFI Republic Limited, Inc., Tax Matters Partner - Page 35

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          TIAA the TIAA letter of credit for the benefit of TIAA in order             
          to secure payment of Partnership's obligations under the TIAA               
          term loan, (2) BCE deliver to Partnership the Partnership letter            
          of credit for the benefit of Partnership in order "to secure the            
          Partnership's obligations under the TIAA Letter of Credit", and             
          (3) Partnership collaterally assign the Partnership letter of               
          credit to CIBC.  Although the lease agreement recited that the              
          Partnership letter of credit that BCE delivered to Partnership,             
          as required by the purchase agreement, was to serve as security             
          for BCE's obligations under the lease agreement, including its              
          obligation to pay rent, the purchase agreement is the operative             
          document that obligated BCE to deliver the Partnership letter of            
          credit to Partnership and that obligated Partnership to assign              
          collaterally the Partnership letter of credit to CIBC.21                    


          21  Under the lease agreement, BCE was required to extend the               
          Partnership letter of credit periodically through a date not to             
          exceed 60 days after Apr. 30, 1991.  Thus, the Partnership letter           
          of credit related to certain annual lease periods following the             
          11.5-month period of zero rent.  We believe that when the lease             
          agreement recited that the Partnership letter of credit was                 
          delivered as security for the payment of basic rent, it was                 
          referring to the annual lease periods following the 11.5-month              
          period of zero rent that ended no later than June 30, 1991,                 
          during which the lease agreement obligated BCE to pay monthly               
          prescribed amounts of basic rent, and not to the first 11.5                 
          months of the lease term during which BCE was not obligated by              
          that agreement to pay any rent.  We also note that, during the              
          11.5-month period of zero rent, the TIAA letter of credit and the           
          Partnership letter of credit, both of which were effective on               
          June 15, 1988, were intended to secure the obligation of BCE                
          and/or of PFI, the partners of Partnership, to make additional              
          capital contributions to Partnership during that period as                  
                                                             (continued...)           




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