EXHIBIT 10.7
RECKSON ASSOCIATES REALTY CORP.
SUPPLEMENT TO THE AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
RECKSON OPERATING PARTNERSHIP, L.P.
ESTABLISHING
SERIES E PREFERRED PARTNERSHIP UNITS
OF
LIMITED PARTNERSHIP INTEREST
In accordance with Sections 4.2 and 14.1 B(3) of the Amended and Restated
Agreement of Limited Partnership, dated as of June 2, 1995, as amended on
December 6, 1995, April 13, 1998, June 30, 1998 and May 24, 1999 (the
"Partnership Agreement"), the Partnership Agreement is hereby supplemented to
establish a series of up to 6,000,000 preferred units of limited partnership
interest of Reckson Operating Partnership, L.P. (the "Partnership") which shall
be designated "Series E Preferred Units" having the rights, preferences, powers,
privileges and restrictions, qualifications and limitations granted to or
imposed upon the Series B Convertible Cumulative Preferred Stock issued by
Reckson Associates Realty Corp. (the "Company" or "Corporation") (the "Series B
Preferred Stock") as set forth below and which shall be issued to the Company.
Capitalized terms used and not otherwise defined herein shall have the meanings
set forth in the Partnership Agreement.
WHEREAS, the Company, the Partnership, Stichting Pensioenfonds ABP, The
Travelers Insurance Company, The Travelers Life and Annuity Company, The
Standard Fire Insurance Company and Travelers Casualty and Surety Company (the
"Initial Purchasers") executed a purchase agreement on May 27, 1999;
WHEREAS, on this date the Company is issuing 6,000,000 shares of Series B
Preferred Stock pursuant to the Articles Supplementary of the Company, as filed
with the Maryland State Department of Assessments and Taxation on May 28, 1999
(the "Articles Supplementary");
WHEREAS, on this date the Company is making a Capital Contribution to the
Partnership in an amount equal to the proceeds raised in connection with the
issuance of the Series B Preferred Stock; and
WHEREAS, pursuant to Section 4.2 of the Partnership Agreement, the
Partnership desires to issue additional Partnership Units to the Company with
substantially similar designations, preferences and other rights to the Series B
Preferred Stock.
NOW THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
Section 1. Issuance of Series E Preferred Units
Pursuant to Section 4.2 of the Partnership Agreement, the Partnership
hereby issues 6,000,000 additional Partnership Interests (the "Series E
Preferred Units") to the Company. The Series E Preferred Units will have
substantially the same designations, preferences and other rights of the Series
B Preferred Stock, as specified in this amendment and in Exhibit I hereto. In
consideration for the issuance of the Series E Preferred Units, the Company has
made a Capital Contribution to the Partnership in an amount equal to the
proceeds raised in connection with the issuance of the Series B Preferred Stock.
Section 2. Amendment to Partnership Agreement
Pursuant to Section 14.1.B(3) of the Partnership Agreement, the General
Partner, as general partner of the Partnership and as attorney-in-fact for its
Limited Partners, hereby amends the Partnership Agreement as follows:
(a) Article 1 of the Partnership Agreement is hereby amended by adding the
following definition of "Series E Preferred Units":
"Series E Preferred Units" means the units of limited partnership interest
issued to the Company on June 2, 1999, in connection with the issuance of the
Series B Preferred Stock by the Company.
Section 3. Continuation of Partnership Agreement
The Partnership Agreement and this Amendment shall be read together and
shall have the same force and effect as if the provisions of the Partnership
Agreement and this Amendment were contained in one document. Any provisions of
the Partnership Agreement not amended by this Amendment shall remain in full
force and effect as provided in the Partnership Agreement immediately prior to
the date hereof.
2
IN WITNESS WHEREOF, the parties hereto have executed this Supplement to
the Partnership Agreement as of the 2nd day of June, 1999.
GENERAL PARTNER:
RECKSON ASSOCIATES REALTY CORP.
By:_____________________________________
Name:
Title:
EXISTING LIMITED PARTNERS:
By: Reckson Associates Realty Corp.,
as Attorney-in-Fact for the Limited Partners
By:_______________________________
Name:
Title:
Series E Preferred Unit Holder
RECKSON ASSOCIATES REALTY CORP.
By:_____________________________________
Name:
Title:
3
EXHIBIT I
RECKSON OPERATING PARTNERSHIP, L.P.
DESIGNATION OF THE VOTING POWERS, DESIGNATIONS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL OR OTHER SPECIAL RIGHTS AND
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS
OF THE SERIES E PREFERRED PARTNERSHIP UNITS
The following are the terms of the Series E Preferred Partnership Units
established pursuant to this Amendment:
(1) Number. The maximum number of authorized Series E Preferred Partnership
Units (the "Series E Preferred Units") shall be 6,000,000.
(2) Rank. The Series E Preferred Units will, with respect to distribution
rights and rights upon liquidation, dissolution or winding up of the
Partnership, rank: (a) senior to all classes or series of common units of the
Partnership ("Common Units") and to all equity securities issued by the
Partnership the terms of which provide that such equity securities shall rank
junior to such Series E Preferred Units; (b) on a parity with all equity
securities issued by the Partnership other than those referred to in clauses (a)
and (c); and (c) junior to all equity securities issued by the Partnership that
rank senior to the Series E Preferred Units in accordance with Section 6(d). The
term "equity securities" shall not include convertible debt securities.
(3) Distributions.
(a) For any quarterly period, holders of Series E Preferred Units shall be
entitled to receive, if, when and as authorized by the General Partner, out of
funds legally available for the payment of distributions, cumulative cash
distributions in an amount per unit equal to (i) in the case of the period from
and including the date of original issue to but excluding April 30, 2000, 7.85%
per annum of the liquidation preference per unit (equivalent to $1.9625 per
annum per unit), (ii) in the case of the period from and including April 30,
2000 to but excluding April 30, 2001, 8.35% per annum of the liquidation
preference per unit (equivalent to $2.0875 per annum per unit) and (iii) in the
case of the period from and including April 30, 2001 and thereafter until any
applicable redemption or conversion, 8.85% per annum of the liquidation
preference per unit (equivalent to $2.2125 per annum per unit) (the "Series E
Convertible Dividend Amount"). Distributions on the Series E Preferred Units, if
authorized, shall be cumulative from the date of original issue and shall be
payable quarterly in arrears on January 31, April 30, July 31 and October 31 of
each year or, if not a Business Day, the next succeeding Business Day,
commencing July 31, 1999 (each, a "Distribution Payment Date"). Any distribution
payable on the Series E Preferred Units for a partial distribution period will
be computed on the basis of a 360-day year consisting of twelve 30-day months.
Distributions will be payable to holders of record of Series E Preferred Units
as it appears in the records of the Partnership at the close of business on the
applicable record date, which shall be such date designated by the General
Partner for the payment of distributions that is not more than 30 nor
less than 10 days prior to such Distribution Payment Date (each, a "Distribution
Payment Record Date").
(b) No distributions on the Series E Preferred Units shall be authorized by
the General Partner or be paid or set apart for payment by the Partnership at
such time as the terms and provisions of any agreement of the Partnership,
including any agreement relating to its indebtedness, prohibits such
authorization, payment or setting apart for payment or provides that such
authorization, payment or setting apart for payment would constitute a breach
thereof or a default thereunder, or if such authorization or payment shall be
restricted or prohibited by law.
(c) Distributions on the Series E Preferred Units will accumulate whether
or not the Partnership has earnings, whether or not there are funds legally
available for the payment of such distributions and whether or not such
distributions are authorized. Accumulated but unpaid distributions on the Series
E Preferred Units will not bear interest and holders of the Series E Preferred
Units will not be entitled to any distributions in excess of full cumulative
distributions as described above.
(d) No full distributions will be authorized or paid or set apart for
payment on any equity securities of the Partnership ranking, as to
distributions, on a parity with or junior to the Series E Preferred Units for
any period unless full distributions have been or contemporaneously are
authorized and paid or authorized and a sum sufficient for the payment thereof
is set apart for such payment on the Series E Preferred Units for all past
distribution periods and the then current distribution period. When
distributions are not paid in full or a sum sufficient for such full payment is
not so set apart upon the Series E Preferred Units and the other equity
securities of the Partnership ranking on a parity as to distributions with the
Series E Preferred Units, all distributions authorized upon the Series E
Preferred Units and any other equity securities of the Partnership ranking on a
parity as to distributions with the Series E Preferred Units shall be authorized
pro rata so that the amount of distributions authorized per Series E Unit and
such other equity securities shall in all cases bear to each other the same
ratio that accumulated distributions per Series E Unit and such other equity
securities (which shall not include any accumulation in respect of unpaid
distributions for prior distribution periods if such equity securities do not
have cumulative distributions) bear to each other. No interest, or sum of money
in lieu of interest, shall be payable in respect of any distribution payment or
payments on Series E Preferred Units which may be in arrears.
(e) Except as provided in Section 3(d), unless full distributions on the
Series E Preferred Units have been or contemporaneously are authorized and paid
or authorized and a sum sufficient for the payment thereof is set apart for
payment for all past distribution periods and the then current distribution
period, no distributions (other than in common units or other equity securities
of the Partnership ranking junior to the Series E Preferred Units as to
distributions and upon liquidation) shall be authorized or paid or set aside for
payment or other distribution shall be authorized or made upon the Common Units
or any other equity securities of the Partnership ranking junior to or on a
parity with the Series E Preferred Units as to distributions or upon
liquidation, nor shall any Common Units or any other equity securities of the
Partnership ranking junior to or on a parity with the Series E Preferred Units
as to distributions or upon liquidation be redeemed, purchased or otherwise
acquired for any consideration (or any monies be paid to or made available for a
sinking fund for the redemption
2
of any such units) by the Partnership (except (1) by conversion into or exchange
for other units of the Partnership ranking junior to the Series E Preferred
Units as to distributions and upon liquidation or (2) redemptions for the
purpose of preserving the Company's status as a real estate investment trust (a
"REIT") under the Code).
(f) Any distribution payment made on Series E Preferred Units shall first
be credited against the earliest accumulated but unpaid distribution due with
respect to such units which remains payable.
(4) Liquidation Preference.
(a) Upon any voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Partnership (referred to herein as a "liquidation"),
the holders of the Series E Preferred Units will be entitled to be paid out of
the assets of the Partnership legally available for distribution to its
unitholders liquidating distributions, in cash or property at its fair market
value as determined by the General Partner, in the amount of a liquidation
preference of $25.00 per unit, plus an amount equal to any accumulated and
unpaid distributions to the date of such liquidation, before any distribution or
payment is made to holders of Common Units or any other equity securities of the
Partnership ranking junior to the Series E Preferred Units as to the
distribution of assets upon a liquidation. After payment of the full amount of
the liquidating distributions to which they are entitled, the holders of Series
E Preferred Units will have no right or claim to any of the remaining assets of
the Partnership.
(b) In the event that, upon any liquidation of the Partnership, the
available assets of the Partnership are insufficient to pay the amount of the
liquidating distributions on all outstanding Series E Preferred Units and the
corresponding amounts payable on all other equity securities of the Partnership
ranking on a parity with Series E Preferred Units in the distribution of assets
upon a liquidation, then the holders of Series E Preferred Units and all other
such equity securities shall share ratably in any such distribution of assets in
proportion to the full liquidating distributions per unit to which they would
otherwise be respectively entitled.
(c) The consolidation or merger of the Partnership with or into any other
entity, or the merger of another entity with or into the Partnership, or a
statutory unit exchange by the Partnership, or the sale, lease or conveyance of
all or substantially all of the property or business of the Partnership, shall
not be deemed to constitute a liquidation of the Partnership.
(d) The liquidation preference of the outstanding Series E Preferred Units
will not be added to the liabilities of the Partnership for the purpose of
determining whether under the Delaware Revised Uniform Limited Partnership Act a
distribution may be made to unitholders of the Partnership whose preferential
rights upon dissolution of the Partnership are junior to those of holders of
Series E Preferred Units. This section 4(d) shall be without prejudice to the
provisions of Sections 3(a) and 4(a) hereof.
(5) Redemption.
(a) The Partnership shall redeem the Series E Preferred Units, in such a
number and at such time as Series B Preferred Stock is redeemed by the Company,
at a redemption price per share in cash equal to (i) in the case of a redemption
from and including March 2, 2002 to
3
and including June 2, 2003, an amount that provides an annual rate of return in
respect of such unit of 15% calculated based on the timing and amount of all
payments (including all distributions other than liquidated damages) made to and
including the date of redemption, relative to the liquidation preference
thereof, (ii) in the case of a redemption from and including June 2, 2003 to and
including June 2, 2004, $25.50 and (iii) in the case of a redemption from and
including June 2, 2004 and thereafter, $25.00, plus, in each case, all
accumulated and unpaid distributions thereon to the date of redemption (the
"Cash Redemption Right").
In addition to the Cash Redemption Right, on or after March 2, 2002, the
Partnership shall redeem the Series E Preferred Units in exchange for Common
Units, in such a number and at such time as Series B Preferred Stock is redeemed
by the Company in exchange for shares of the Company's Common Stock pursuant to
Section 5 of the Articles Supplementary establishing the Series B Preferred
Stock (the "Stock Redemption Right").
(b) At its election, the Company may require that the Partnership, prior to
the Series E Unit Redemption Date, deliver the redemption price to the Company
so that the Company may irrevocably deposit the redemption price (including
accumulated and unpaid distributions) of the Series B Preferred Stock it has
called for redemption in trust for the holders thereof with a bank or trust
company. Any monies so deposited which remain unclaimed by the holders of the
Series B Preferred Stock at the end of two years after the Series E Unit
Redemption Date will be returned by such bank or trust company to the Company
and the Company shall promptly deliver such funds to the Partnership.
(c) From and after the Series E Unit Redemption Date (unless the
Partnership defaults in payment of the redemption price), all distributions on
the Series E Preferred Units subject to such redemption will cease to accumulate
and all rights of the holders thereof, except the right to receive the
redemption price thereof (including all accumulated and unpaid distributions to
the Series E Unit Redemption Date), will cease and terminate and such units will
not thereafter be transferred (except with the consent of the Partnership) on
the Partnership's records, and such units shall not be deemed to be outstanding
for any purpose whatsoever.
(d) Unless full distributions on all Series E Preferred Units shall have
been or contemporaneously are authorized and paid or authorized and a sum
sufficient for the payment thereof is set apart for payment for all past
distribution periods and the then current distribution period, no Series E
Preferred Units shall be redeemed unless all outstanding Series E Preferred
Units are simultaneously redeemed; provided, however, that the foregoing shall
not prevent the redemption of Series E Preferred Units (i) in order to preserve
the REIT status of the Company or (ii) pursuant to a purchase or exchange offer
made by the Company with respect to shares of the Series B Preferred Stock on
the same terms to holders of all outstanding shares of Series B Preferred Stock.
(e) Unless full distributions on all Series E Preferred Units have been or
contemporaneously are authorized and paid or authorized and a sum sufficient for
the payment thereof is set apart for payment for all past distribution periods
and the then current distribution period, the Partnership shall not purchase or
otherwise acquire, directly or indirectly, any Series E Preferred Units (except
by conversion into or exchange for equity securities of the Partnership ranking
junior to the Series E Preferred Units as to distributions and upon
liquidation); provided,
4
however, that the foregoing shall not prevent the redemption of Series E
Preferred Units (i) in order to preserve the REIT status of the Company or (ii)
pursuant to a purchase or exchange offer made by the Company with respect to
shares of the Series B Preferred Stock on the same terms to holders of all
outstanding shares of Series B Preferred Stock.
(f) Immediately prior to any redemption of Series E Preferred Units, the
Partnership shall pay, in cash, any accumulated and unpaid distributions to the
Series E Unit Redemption Date, unless such Series E Unit Redemption Date falls
after a Distribution Payment Record Date and on or prior to the corresponding
Distribution Payment Date, in which case each holder of Series E Preferred Units
at the close of business on such Distribution Payment Record Date shall be
entitled to the distribution payable on such units on the corresponding
Distribution Payment Date notwithstanding the redemption of such units on or
prior to such Distribution Payment Date. Except as provided above, the
Partnership will make no payment or allowance for unpaid distributions, whether
or not in arrears, on Series E Preferred Units for which a notice of redemption
has been given.
(g) Any Series E Preferred Units that have been redeemed shall, after such
redemption, have the status of authorized but unissued Preferred Units, without
designation as to series, until such units are once more designated as part of a
particular series by the General Partner.
(h) No fractional Common Units will be issued upon redemption of Series E
Preferred Units pursuant to the Partnership's Stock Redemption Right. Instead of
any fractional interest in a Common Unit that would otherwise be deliverable
upon the redemption of Series E Preferred Units, the Partnership will pay to the
holder of such Series E Preferred Units an amount in cash in respect of such
fractional interest (computed to the nearest cent) based upon the Current Market
Price of Common Units on the Trading Day immediately preceding the Series E
Redemption Date. If more than one Series E Unit shall be surrendered for
redemption at one time by the same holder, the number of full shares of Common
Units issuable upon redemption thereof shall be computed on the basis of the
aggregate number of Series E Preferred Units so surrendered.
(i) The Series E Preferred Units will not have a stated maturity date and
will not be subject to any sinking fund or mandatory redemption provisions.
(6) Voting Rights.
(a) Holders of the Series E Preferred Units will not have any voting
rights, except as set forth below. In any matter in which the Series E Preferred
Units are entitled to vote, including any action by written consent, each Series
E Unit shall be entitled to one vote.
(b) So long as any Series E Preferred Units remain outstanding, the
Partnership shall not, without the affirmative vote or consent of the holders of
record of at least two-thirds of the outstanding Series E Preferred Units given
in person or by proxy, either in writing or at a meeting (such series voting
separately as a class), (i) authorize or create, or increase the authorized or
issued amount of, any equity securities ranking senior to the Series E Preferred
Units with respect to payment of distributions or the distribution of assets
upon a liquidation of
5
the Partnership or reclassify any authorized units of the Partnership into any
such equity securities, or create, authorize or issue any obligation or security
convertible into or evidencing the right to purchase any such unit or (ii)
amend, alter or repeal the provisions of the Partnership Agreement, whether by
merger, consolidation or otherwise (an "Event"), so as to materially and
adversely affect any right, preference, privilege or voting power of the Series
E Preferred Units or the holders thereof; provided, however, that the holders of
the Series E Preferred Units shall not be entitled to any voting rights in
connection with an Event if as a result of such Event (a) Series E Preferred
Units remain outstanding with the terms thereof materially unchanged or (b) the
Partnership is not the surviving entity but the surviving entity issues to the
holders of the Series E Preferred Units the same number of units of a separate
class of preferred units with rights, preferences, privileges and voting powers
that are materially unchanged from the preferences, rights, privileges and other
terms of the Series E Preferred Units; and provided, further, that (x) any
increase in the amount of the authorized Series E Preferred Units or the
creation or issuance of any other series of Preferred Units or (y) any increase
in the amount of authorized units of such series, in each case ranking on a
parity with or junior to the Series E Preferred Units with respect to payment of
distributions or the distribution of assets upon a liquidation of the
Partnership, shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers.
(c) The foregoing voting provisions will not apply if, at or prior to the
time when the act with respect to which such vote would otherwise be required
shall be effected, all outstanding Series E Preferred Units shall have been
converted, redeemed or called for redemption upon proper notice and sufficient
funds shall have been deposited in trust to effect such redemption.
(7) Conversion.
(a) Subject to Section 8, Series E Preferred Units will be convertible at
any time, at the option of the holders thereof, into Common Units at a
conversion price of $26.05 per Common Unit (equivalent to a conversion rate of
.9597 Common Units for each Series E Unit), subject to adjustment as described
below (the "Conversion Price"); provided, however, that the right to convert
Series E Preferred Units called for redemption will terminate at the close of
business on the fifth Business Day prior to the Series E Unit Redemption Date.
(b) Unless the units issuable on conversion are to be issued in the same
name as the name in which such Series E Preferred Units are registered, in which
case the Partnership shall bear the related taxes, each unit surrendered for
conversion shall be accompanied by instruments of transfer, in form satisfactory
to the Partnership, duly executed by the holder or such holder's duly authorized
attorney and an amount sufficient to pay any transfer or similar tax (or
evidence reasonably satisfactory to the Partnership demonstrating that such
taxes have been paid or that such taxes are not due).
(c) Each conversion shall be deemed to have been effected immediately prior
to the close of business on the date on which such notice (and if applicable,
payment of an amount equal to the distribution payable on such units) is
received by the Partnership as aforesaid, and the person or persons in whose
name or names that the Common Units shall be issuable upon such conversion shall
be deemed to have become the holder or holders of record of the units
6
represented thereby at such time on such date, and such conversion shall be at
the Conversion Price in effect at such time and on such date unless the records
of the Partnership shall be closed on that date, in which event such person or
persons shall be deemed to have become such holder or holders of record at the
close of business on the next succeeding day on which such records are open, but
such conversion shall be at the Conversion Price in effect on the date on which
such notice is received by the Partnership.
(d) Holders of Series E Preferred Units at the close of business on a
Distribution Payment Record Date shall be entitled to receive the distribution
payable on such units on the corresponding Distribution Payment Date
notwithstanding the conversion of such units following such Distribution Payment
Record Date and prior to such Distribution Payment Date. A holder of Series E
Preferred Units on a Distribution Payment Record Date who (or whose transferee)
tenders any such units for conversion into Common Units on such Distribution
Payment Date shall receive the distribution payable by the Partnership on such
Series E Preferred Units on such date, and the converting holder need not
include payment of the amount of such distribution upon the conversion of the
Series E Preferred Units. Except as provided above, the Partnership shall make
no payment or allowance for unpaid distributions, whether or not in arrears, on
converted units or for distribution on the Common Units that are issued upon
such conversion.
Any fractional interest in respect of a Common Unit arising upon conversion
in accordance with the terms of this Section 7 shall be settled as provided in
Section 7(e).
(e) No fractional Common Units shall be issued upon conversion of Series E
Preferred Units. Instead of any fractional Common Unit that would otherwise be
issuable upon the conversion of a Series E Unit, the Partnership shall pay to
the holder of such unit an amount in cash in respect of such fractional interest
based upon the Current Market Price of a Common Unit on the Trading Day
immediately preceding the date of conversion. If more than one Series E Unit
shall be surrendered for conversion at one time by the same holder, the number
of full Common Units issuable upon conversion thereof shall be computed on the
basis of the aggregate number of Series E Preferred Units so surrendered.
(f) The Conversion Price shall be adjusted from time to time as follows:
(i) If the Partnership shall after the date on which Series E
Preferred Units are first issued (the "Issue Date") (A) pay or make a
distribution in Common Units to holders of its equity securities,
(B) subdivide its outstanding Common Units into a greater number of units,
(C) combine its outstanding Common Units into a smaller number of units or
(D) issue any equity securities by reclassification of its Common Units,
then the Conversion Price in effect at the opening of business on the day
following the record date for the determination of unitholders entitled to
receive such distribution or at the opening of business on the day
following the day on which such subdivision, combination or
reclassification becomes effective, as the case may be, shall be adjusted
so that the holder of any Series E Unit thereafter surrendered for
conversion shall be entitled to receive the number of Common Units that
such holder would have owned or have been entitled to receive after the
happening of any of the events
7
described above had such units been converted immediately prior to the
record date in the case of a distribution or the effective date in the case
of a subdivision, combination or reclassification. An adjustment made
pursuant to this subsection (i) shall become effective immediately after
the opening of business on the day following such record date (except as
provided in Section 7(i)) in the case of a distribution and shall become
effective immediately after the opening of business on the day next
following the effective date in the case of a subdivision, combination or
reclassification.
(ii) If the Partnership shall issue after the Issue Date rights,
options or warrants to all holders of Common Units entitling them to
subscribe for or purchase Common Units (or securities convertible into or
exchangeable for Common Units) at a price per unit less than the Fair
Market Value per Common Unit on the record date for the determination of
unitholders entitled to receive such rights, options or warrants, then the
Conversion Price in effect at the opening of business on the day following
such record date shall be adjusted to equal the price determined by
multiplying (I) the Conversion Price in effect immediately prior to the
opening of business on the day following the record date for such
determination by (II) a fraction, the numerator of which shall be the sum
of (A) the number of Common Units outstanding on the close of business on
the record date for such determination and (B) the number of units that the
aggregate proceeds to the Partnership from the exercise of such rights,
options or warrants for Common Units would purchase at such Fair Market
Value, and the denominator of which shall be the sum of (A) the number of
Common Units outstanding on the close of business on the record date for
such determination and (B) the number of additional Common Units offered
for subscription or purchase pursuant to such rights, options or warrants.
Such adjustment shall become effective immediately after the opening of
business on the day following such record date (except as provided in
Section 7(i)). In determining whether any rights, options or warrants
entitle the holders of Common Units to subscribe for or purchase Common
Units at less than the Fair Market Value, there shall be taken into account
any consideration received by the Partnership upon issuance and upon
exercise of such rights, options or warrants, the value of such
consideration, if other than cash, to be determined by the General Partner.
(iii) If the Partnership shall distribute to all holders of its Common
Units any equity securities of the Partnership (other than Common Units) or
evidences of its indebtedness or assets (excluding Permitted Common Unit
Cash Distributions and those rights, options and warrants referred to in
and treated under subsection (ii) above), then the Conversion Price shall
be adjusted so that it shall equal the price determined by multiplying (I)
the Conversion Price in effect immediately prior to the close of business
on the record date for the determination of unitholders entitled to receive
such distribution by (II) a fraction, the numerator of which shall be the
Fair Market Value per Common Unit on the record date for such determination
less the then fair market value (as determined by the General Partner,
whose determination shall be conclusive) of the portion of the equity
securities, evidences of indebtedness or assets so distributed applicable
to one
8
Common Unit, and the denominator of which shall be the Fair Market Value
per Common Unit on the record date for such determination. Such adjustment
shall become effective immediately at the opening of business on the day
following such record date (except as provided in Section 7(i)). For the
purposes of this subsection (iii), the distribution of equity securities,
evidences of indebtedness or assets which are distributed not only to the
holders of Common Units on the record date for the determination of
unitholders entitled to such distribution, but also are distributed with
each Common Unit delivered to a person converting a Series E Unit after
such record date, shall not require an adjustment of the Conversion Price
pursuant to this subsection (iii), provided that on the date, if any, on
which a person converting a Series E Unit would no longer be entitled to
receive such equity securities, evidences of indebtedness or assets with a
Common Unit (other than as a result of the termination of all such equity
securities, evidences of indebtedness or assets), a distribution of such
equity securities, evidences of indebtedness or assets shall be deemed to
have occurred and the Conversion Price shall be adjusted as provided in
this subsection (iii) (and such day shall be deemed to be "the record date
for the determination of the unitholders entitled to receive such
distribution" within the meaning of the two preceding sentences).
(iv) No adjustment in the Conversion Price shall be required unless
such adjustment would require a cumulative increase or decrease of at least
1% in the Conversion Price; provided, however, that any adjustments that by
reason of this subsection (iv) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment until made; and
provided, further, that any adjustment shall be required and made in
accordance with the provisions of this Section 7 (other than this
subsection (iv)) not later than such time as may be required in order to
preserve the tax-free nature of a distribution to the holders of Common
Units. Notwithstanding any other provisions of this Section 7, the
Partnership shall not be required to make any adjustment of the Conversion
Price for the issuance of any Common Units pursuant to any plan providing
for the reinvestment of distributions or interest payable on securities of
the Partnership and the investment of additional optional amounts in Common
Units under such plan. All calculations under this Section 7 shall be made
to the nearest cent with ($.005 being rounded upward) or to the nearest
one-tenth of a unit (with .05 of a unit being rounded upward), as the case
may be. Anything in this subsection (f) to the contrary notwithstanding,
the Partnership shall be entitled, to the extent permitted by law, to make
such reductions in the Conversion Price, in addition to those required by
this subsection (f), as it in its discretion shall determine to be
advisable in order that any unit distributions, subdivision,
reclassification or combination of units, distribution of rights, options
or warrants to purchase units or securities, or a distribution of other
assets (other than cash distributions) hereafter made by the Partnership to
its unitholders shall not be taxable.
(g) Except as otherwise provided for in Section7(f), if the Partnership
shall be a party to any transaction (including, without limitation, a merger,
consolidation, statutory unit exchange, tender offer for all or substantially
all of the Common Units or sale of all or
9
substantially all of the Partnership's assets), in each case as a result of
which Common Units shall be converted into the right to receive units, stock,
securities or other property (including cash or any combination thereof (each of
the foregoing being referred to herein as a "Transaction")), each Series E Unit,
if convertible after the consummation of the Transaction, which is not converted
into the right to receive units, stock, securities or other property in
connection with such Transaction shall thereafter be convertible into the kind
and amount of units, stock, securities and other property (including cash or any
combination thereof) receivable upon the consummation of such Transaction by a
holder of that number of Common Units into which one Series E Unit was
convertible immediately prior to such Transaction, assuming such holder of
Common Units (i) is not a Person with which the Partnership consolidated or into
which the Partnership merged or which merged into the Partnership or to which
such sale or transfer was made, as the case may be (a "Constituent Person"), or
an affiliate of a Constituent Person and (ii) failed to exercise his rights of
the election, if any, as to the kind or amount of units, stock, securities and
other property (including cash or any combination thereof) receivable upon such
Transaction (each, a "Non-Electing Unit") (provided that if the kind and amount
of units, stock, securities and other property (including cash or any
combination thereof) receivable upon consummation of such Transaction is not the
same for each Non-Electing Unit, the kind and amount receivable by each
Non-Electing Unit shall be deemed to be the kind and amount receivable per unit
by a plurality of the Non-Electing Units). The Partnership shall not be a party
to any Transaction unless the terms of such Transaction are consistent with the
provisions of this subsection (g), and it shall not consent or agree to the
occurrence of any Transaction until the Partnership has entered into an
agreement with the successor or purchasing entity, as the case may be, for the
benefit of the holders of the Series E Preferred Units that will contain
provisions enabling holders of Series E Preferred Units that remain outstanding
after such Transaction to convert into the consideration received by holders of
Common Units at the Conversion Price in effect immediately prior to such
Transaction. The provisions of this subsection (g) shall similarly apply to
successive Transactions.
(h) If:
(i) the Partnership shall declare a distribution on the Common Units
(other than Permitted Common Unit Cash Distributions) or there shall be a
reclassification, subdivision or combination of the Common Units; or
(ii) the Partnership shall grant to the holders of the Common Units
rights, options or warrants to subscribe for or purchase Common Units at
less than Fair Market Value; or
(iii) the Partnership shall enter into a Transaction; or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Partnership,
then the Partnership shall notify the Company and shall cause to be mailed
to holders of Series E Preferred Units at their addresses as shown on the
records of the Partnership, as promptly as possible, but at least 15 days
prior to the applicable date hereinafter specified, a notice stating
(A) the date on which a record is to be taken for the purpose of
10
such distribution or rights, options or warrants, or, if a record is not to
be taken, the date as of which the holders of Common Units of record to be
entitled to such distribution or rights, options or warrants are to be
determined or (B) the date on which such reclassification, subdivision,
combination, Transaction or liquidation, dissolution or winding up is
expected to become effective, and the date as of which it is expected that
holders of Common Units of record shall be entitled to exchange their
Common Units for securities or other property, if any, deliverable upon
such reclassification, subdivision, combination, Transaction or
liquidation, dissolution or winding up. Failure to give or receive such
notice or any defect therein shall not affect the legality or validity of
the proceedings described in this Section 7.
(i) In any case in which Section 7(f) provides that an adjustment shall
become effective on the day following the record date for an event, the
Partnership may defer until the occurrence of such event (A) issuing to the
holder of any Series E Unit converted after such record date and before the
occurrence of such event the additional Common Units issuable upon such
conversion by reason of the adjustment required by such event over and above the
Common Units issuable upon such conversion before giving effect to such
adjustment and (B) fractionalizing any Series E Unit and/or paying to such
holder any amount of cash in lieu of any fraction pursuant to Section 7(e).
(j) There shall be no adjustment of the Conversion Price in case of the
issuance of any equity securities of the Partnership in a reorganization,
acquisition or other similar transaction except as specifically set forth in
this Section 7. If any action or transaction would require adjustment of the
Conversion Price pursuant to more than one subsection of Section 7(f), only one
adjustment shall be made, and such adjustment shall be the amount of adjustment
that has the highest absolute value.
(k) If the Partnership shall take any action affecting the Common Units,
other than action described in this Section 7, that in the opinion of the
General Partner would materially adversely affect the conversion rights of the
holders of the Series E Preferred Units, the Conversion Price for the Series E
Preferred Units may be adjusted, to the extent permitted by law, in such manner,
if any, and at such time, as the Officers of the Partnership, in their sole
discretion, may determine to be equitable in the circumstances.
(l) The Partnership shall at all times reserve and keep available, free
from preemptive rights, for the purpose of effecting conversion of the Series E
Preferred Units, the full number of Common Units deliverable upon the conversion
of all outstanding Series E Preferred Units not theretofore converted.
(m) The Partnership will pay any and all documentary stamp or similar issue
or transfer taxes payable in respect of the issue or delivery of Common Units or
other securities or property on conversion of the Series E Preferred Units
pursuant hereto; provided, however, that the Partnership shall not be required
to pay any tax that may be payable in respect of any transfer involved in the
issue or delivery of Common Units or other securities or property in a name
other than that of the record holder of the Series E Preferred Units to be
converted, and no such issue or delivery shall be made unless and until the
person requesting such issue or delivery has paid to the Partnership the amount
of any such tax or established, to the reasonable satisfaction of the
Partnership, that such tax has been paid.
11
(8) Ownership Limitations.
The Series E Preferred Units shall be owned and held solely by the General
Partner.
(9) General.
The rights of the General Partner, in its capacity as holder of the Series
E Preferred Units, are in addition to and not in limitation on any other rights
or authority of the General Partner, in any other capacity, under the
Partnership Agreement. In addition, nothing contained herein shall be deemed to
limit or otherwise restrict any rights or authority of the General Partner under
the Partnership Agreement, other than in its capacity as the holder of the
Series E Preferred Units.
(10) Definitions.
"Business Day" shall mean any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions in The City of
New York are authorized or required by law, regulation or executive order to
close.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Current Market Price" of any equity security of the Company or the
Partnership or any other issuer for any day shall mean the last reported sales
price, regular way, on such day, or, if no sale takes place on such day, the
average of the reported closing bid and asked prices on such day, regular way,
in either case as reported on the NYSE or, if such security is not listed or
admitted for trading on the NYSE, on the principal national securities exchange
on which such security is listed or admitted for trading or, if not listed or
admitted for trading on any national securities exchange, on the Nasdaq National
Market or, if such security is not quoted on the Nasdaq National Market, the
average of the closing bid and asked prices on such day in the over-the-counter
market as reported by Nasdaq or, if bid and asked prices for such security on
such day shall not have been reported through Nasdaq the average of the bid and
asked prices on such day as furnished by any NYSE member firm regularly making a
market in such security selected for such purpose by the General Partner;
provided however, that the Current Market Price for the Common Units shall be
deemed to be the Current Market Price of the Company's Common Stock, par value
$0.01 per share, multiplied by the applicable Conversion Factor.
"Fair Market Value" shall mean the average of the daily Current Market
Prices per share of the Company's Common Stock during the ten consecutive
Trading Days selected by the Company commencing not more than 20 Trading Days
before, and ending not later than, the earlier of the day in question and the
day before the "ex-date" with respect to the issuance or distribution requiring
such computation. The term "ex-date," when used with respect to any issuance or
distribution, means the first day on which the shares of the Company's Common
Stock trade regular way, without the right to receive such issuance or
distribution, on the exchange or in the market, as the case may be, for purposes
of determining that day's Current Market Price.
12
"Market Price" as to any date shall mean the average of the last sales
price reported on the NYSE of the Company's Common Stock, on the ten trading
days immediately preceding the relevant date, or if not then traded on the NYSE,
the average of the last reported sales price of the Company's Class B Common
Stock on the ten trading days immediately preceding the relevant date as
reported on any exchange or quotation system over which the Common Stock may be
traded, or if not then traded over any exchange or quotation system, then the
market price of the Company's Common Stock on the relevant date as determined in
good faith by the General Partner.
"Person" shall mean an individual, corporation, partnership, estate, trust
(including a trust qualified under Section 401(a) or 501(c)(17) of the Code), a
portion of a trust permanently set aside for or to be used exclusively for the
purposes described in Section 642(c) of the Code, association, private
foundation within the meaning of Section 509(a) of the Code, joint stock company
or other entity, and also includes a group as that term is used for purposes of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended; but does
not include an underwriter which participates in a public offering of the Series
E Preferred Units or any interest therein, provided that such ownership by such
underwriter would not result in the Partnership being "closely held" within the
meaning of Section 856(h) of the Code.
"Set apart for payment" shall be deemed to include, without any further
action, the following: the recording by the Partnership in its accounting
ledgers of any accounting or bookkeeping entry which indicates, pursuant to an
authorization of a distribution by the General Partner, the allocation of funds
to be so paid on any series or class of units of the Partnership.
"Trading Day" shall mean any day on which the securities in question are
traded on the NYSE or, if such securities are not listed or admitted for trading
on the NYSE, on the principal national securities exchange on which such
securities are listed or admitted or, if not listed or admitted for trading on
any national securities exchange, on the Nasdaq National Market or, if such
securities are not quoted on the Nasdaq National Market, on the applicable
securities market in which the securities are traded.
13
