1
EXHIBIT 3.1
SEVENTEENTH AMENDMENT
TO AGREEMENT OF LIMITED PARTNERSHIP OF
SUMMIT PROPERTIES PARTNERSHIP, L.P.
THIS SEVENTEENTH AMENDMENT TO AGREEMENT OF LIMITED PARTNERSHIP OF
SUMMIT PROPERTIES PARTNERSHIP, L.P. (the "Amendment") is dated as of September
3, 1999, and entered into by and among Summit Properties Inc., a Maryland
corporation (the "Company"), and the persons whose names are set forth on
Exhibit A attached hereto (the "Limited Partners").
WHEREAS, the Company and the Limited Partners (other than the Class C
New Partner (as hereinafter defined)) are partners of Summit Properties
Partnership, L.P., a Delaware limited partnership (the "Partnership"), pursuant
to an Agreement of Limited Partnership dated as of January 29, 1994, as
previously amended (the "Agreement"); and
WHEREAS, the General Partner desires to cause the Partnership to issue
additional Partnership Units of a new class and series, with the designations,
preferences and relative, participating, optional or other special rights,
powers and duties provided for in this Amendment in accordance with Section 4.2A
of the Agreement; and
WHEREAS, the General Partner may amend the Agreement by executing a
written instrument setting forth the terms of such amendment without the consent
of the Limited Partners pursuant to Section 14.1B of the Agreement; and
WHEREAS, the General Partner desires by this Amendment to so amend the
Agreement as of the date first set forth above to provide for the designation
and issuance of such new class and series of Partnership Units designated 8.75%
Series C Cumulative Redeemable Perpetual Preferred Units ("Series C Preferred
Units"); and
WHEREAS, desires to contribute $55,000,000 in
cash to the Partnership in exchange for the issuance to (the "Class
C New Partner") of 2,200,000 Series C Preferred Units, and its admission to the
Partnership pursuant to Section 12.2 of the Agreement;
WHEREAS, the Company and the Limited Partners desire to amend the
Agreement to reflect the issuance of the Series C Preferred Units to the Class C
New Partner and its admission as a Limited Partner.
NOW, THEREFORE, in accordance with the provisions of Sections 4.2, 12.2
and 12.3 of the Agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Limited Partners
and the Company hereby amend the Agreement as follows:
9
2
SECTION 1 DEFINED TERMS.
1.1 The following terms shall, for all purposes, unless otherwise
clearly indicated to the contrary and notwithstanding any contrary definitions
heretofore set forth therefor in the Agreement have the meanings hereinbelow
ascribed to them.
"Series C Certificate of Designations" means the Certificate of
Designations attached hereto as Exhibit G setting forth the designations,
rights, powers, duties and preferences of Partners holding Series C Preferred
Units.
"Series C Preferred Unit" means a limited partnership interest
represented by a fractional, undivided share of the Partnership Interests of all
Partners issued hereunder which is designated as an 8.75% Series C Cumulative
Redeemable Perpetual Preferred Unit and which has the rights, preferences and
other privileges designated herein in respect of Series C Preferred Unitholders
and designated in the Certificate of Designations for Series C Preferred Units
attached hereto. The allocation of Series C Preferred Units among the Partners
shall be set forth on Exhibit A, as may be amended from time to time.
"Series C Preferred Unitholder" means a Partner that holds Series C
Preferred Units.
SECTION 2 AMENDMENTS TO CERTAIN SECTIONS OF THE AGREEMENT.
The following sections of the Agreement shall be amended as set forth
below.
2.1 Amendment to Section 6.1. The text of the final paragraph of
Section 6.1B of the Agreement shall be amended to read in its entirety as
follows:
"To the extent permitted under Section 704 of the Code, solely
for purposes of allocating Net Income or Net Losses in any taxable year (or a
portion thereof) to Partners holding Series B Preferred Units and Series C
Preferred Units pursuant to Section 6.1 hereof, items of Net Income or Net
Losses, as the case may be, shall not include Depreciation with respect to
properties that are "ceiling limited" in respect of Partners holding Series B
Preferred Units or Series C Preferred Units. For purposes of the preceding
sentence, Partnership property shall be considered "ceiling limited" in respect
of a Partner holding Series B Preferred Units or Series C Preferred Units if
Depreciation attributable to such Partnership property which would otherwise be
allocable to such Partner, without regard to this paragraph, exceeds
depreciation determined for federal income tax purposes attributable to such
Partnership property which would otherwise be allocable to such Partner by more
than 5%."
2.2 Amendment to Article 11.
(a) Section 11.1A of the Agreement is amended by inserting the
words "or Section 9 of the Series C Certificate of Designations" after the words
"Series B Certificate of Designations" in the last sentence thereof.
10
3
(b) Section 11.6A of the Agreement is amended by inserting the
words "or Section 9 of the Series C Certificate of Designations" after the words
"Series B Certificate of Designations" in the last sentence thereof.
(c) Section 11.6B of the Agreement is amended by inserting the
words "or Section 9 of the Series C Certificate of Designations" after the words
"Series B Certificate of Designations" in the last sentence thereof.
(d) The proviso at the end of Section 11.6C of the Agreement
is replaced in its entirety by the following: "; provided, however, that a
Series B Preferred Unitholder or Series C Preferred Unitholder, respectively,
may make a transfer to an Affiliate of such Series B Preferred Unitholder or
Series C Preferred Unitholder in accordance with the provisions of Section 11.3A
hereof without regard to such limitation."
(e) Section 11.6D of the Agreement is amended: (i) by
inserting the words "or Section 9 of the Series C Certificate of Designations"
after the words "Series B Certificate of Designations" in the first sentence
thereof and (ii) by inserting the words "or Series C Preferred Unit Partnership
Record Date (as defined in the Series C Certificate of Designations), after the
words "Series B Certificate of Designations" in the last sentence thereof.
SECTION 3 SERIES C CERTIFICATE OF DESIGNATIONS.
The Agreement shall be amended by the adoption of the Series C
Certificate of Designations attached hereto as Attachment 1 and to be attached
to the Agreement as Exhibit G, in accordance with Section 4.2A of the Agreement,
setting forth the designations, rights, powers, duties and preferences of
Partners holding Series C Preferred Units.
SECTION 4 ADMISSION OF CLASS C NEW PARTNER.
(a) The Agreement is hereby amended by substituting that
Exhibit A attached hereto for the Exhibit A heretofore attached to the
Agreement.
(b) Pursuant to and in accordance with Section 12.2 of the
Agreement, the General Partner hereby consents to the admission of the Class C
New Partner as an Additional Limited Partner of the Partnership and the Class C
New Partner hereby adopts, accepts, ratifies, confirms and agrees to be bound by
all of the terms of the Agreement, as hereby amended, applicable to it as a
Limited Partner, including, without limitation, the provisions of Section 2.4
and any other provision of the Agreement appointing the General Partner or the
Liquidator as attorney-in-fact for such Class C New Partner
SECTION 5 MISCELLANEOUS.
(a) Except as amended by the provisions hereof, the Agreement,
as previously amended, shall remain in full force and effect in accordance with
its terms and is hereby ratified, confirmed and reaffirmed by the undersigned
for all purposes and in all respects.
11
4
(b) This Amendment shall be binding upon and shall inure to
the benefit of the parties hereto, their respective legal representatives,
successors and assigns.
(c) This Amendment may be executed in counterparts, all of
which together shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
12
5
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
GENERAL PARTNER:
SUMMIT PROPERTIES INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President and General
Counsel
CLASS C NEW PARTNER:
By:
-------------------------------------
S-1
6
EXHIBIT A
I. Holders of Common Units
II. Holders of Series B Preferred Units
III. Holder of Series C Preferred Units
7
ATTACHMENT 1 TO SEVENTEENTH AMENDMENT
AND
EXHIBIT G TO PARTNERSHIP AGREEMENT
SUMMIT PROPERTIES PARTNERSHIP, L.P.
CERTIFICATE OF DESIGNATIONS AMENDING THE
AGREEMENT OF LIMITED PARTNERSHIP
(EFFECTIVE AS OF SEPTEMBER 3, 1999)
SERIES C CUMULATIVE REDEEMABLE PERPETUAL PREFERRED UNITS
SECTION 1. Definitions. The following terms shall have the
meanings herein below ascribed thereto for purposes of this Certificate of
Designations, and all other capitalized terms used herein shall have the
meanings thereto ascribed in the Agreement (as hereinafter defined):
"Affiliate Parity Placement" shall have the meaning set forth
therefor in Section 7(b) hereof.
"Agreement" shall mean that Agreement of Limited Partnership
of Summit Properties Partnership, L.P., a Delaware limited partnership (the
"Partnership"), dated as of January 29, 1994, as amended.
"Charter" shall have the meaning set forth therefor in Section
3(d) hereof.
"Class C New Partner Affiliate" shall mean a Person who holds
an interest, directly or indirectly, in the Class C New Partner as of the date
hereof.
"Contribution Agreement" shall mean that certain Contribution
Agreement, dated as of September 3, 1999, by and among the Company, the
Partnership, and the Class C New Partner.
"control" shall mean the power to direct the actions of a
Person, regardless of whether the same shall involve an ownership interest in
such Person.
"Excess Units" shall have the meaning set forth therefor in
Section 9(a)(iii) hereof.
"Exchange Notice" shall have the meaning set forth therefor in
Section 9(b) hereof.
"Exempt Affiliate Parity Placement" shall have the meaning set
forth therefor in Section 7(b) hereof.
"Junior Units" shall have the meaning set forth therefor in
Section 3(d) hereof.
8
"Parent" shall mean the direct or indirect parent of a Class C
New Partner.
"Parity Units" shall mean any class or series of Partnership
Interests of the Partnership now or hereafter authorized, issued or outstanding
expressly designated by the Partnership to rank on a parity with Series C
Preferred Units with respect to distributions and rights upon voluntary or
involuntary liquidation, winding-up or dissolution of the Partnership. Without
limiting the foregoing, the Series C Preferred Units and the Partnership's 8.95%
Series B Cumulative Redeemable Perpetual Preferred Units are hereby expressly
designated by the Partnership to rank on a parity with each other with respect
to distributions and rights upon voluntary or involuntary liquidation,
winding-up or dissolution of the Partnership.
"Partnership Affiliate" shall mean any Person controlled by,
controlling or under common control with the Partnership.
"Priority Return"shall mean, an amount equal to 8.75% per
annum, determined on the basis of a 360-day year of twelve (12) 30-day months
(or actual days for any month which is shorter than a full monthly period),
cumulative to the extent not distributed for any given distribution period
pursuant to Section 3 hereof, of the stated value of $25.00 per Series C
Preferred Unit, commencing on the date of issuance of such Series C Preferred
Unit.
"PTP" shall mean a "publicly traded partnership" within the
meaning of Section 7704 of the Code.
"Series C Exchange Price" shall have the meaning set forth
therefor in Section 9(a)(i) hereof.
"Series C Redemption Price" shall have the meaning set forth
therefor in Section 6(a) hereof.
"Series C Preferred Articles Supplementary" shall mean those
certain Articles Supplementary designating the Series C Preferred Stock,
executed by the Company as of September 3, 1999.
"Series C Preferred Stock" shall have the meaning set forth
therefor in Section 9(a)(i) hereof.
"Series C Preferred Unit Distribution Payment Date" shall have
the meaning set forth therefor in Section 3(a) hereof.
"Series C Preferred Unit Partnership Record Date" shall have
the meaning set forth therefor in Section 3(a) hereof.
"Series C Preferred Units" shall have the meaning set forth
therefor in Section 2 hereof.
2
9
SECTION 2. Designation and Number. Pursuant to Section 4.2A of
the Agreement, a series of Partnership Units in the Partnership designated as
the "8.75% Series C Cumulative Redeemable Perpetual Preferred Units" (the
"Series C Preferred Units") is hereby established. The number of Series C
Preferred Units shall be 2,200,000.
SECTION 3. Distributions. (a) Payment of Distributions. The
Series C Preferred Units shall rank on a parity with the Series B Preferred
Units with respect to payment of distributions and the distribution of assets
upon liquidation, dissolution or winding-up. Subject to the rights of holders of
Parity Units and holders of Units ranking senior to the Series C Preferred Units
as to the payment of distributions, holders of Series C Preferred Units shall be
entitled to receive, when, as and if declared by the Partnership acting through
the General Partner, out of Available Cash, pursuant to Article 5 of the
Agreement, cumulative preferential cash distributions at the rate per annum of
8.75% of the original Capital Contribution per Series C Preferred Unit. Such
distributions shall be cumulative, shall accrue from the original date of
issuance and will be payable: (i) quarterly in arrears, for the first three
quarters on the last day (or, if not a Business Day (as hereinafter defined),
the next succeeding Business Day) of each of March, June and September, and for
the last quarter on December 21st (or if not a Business Day, the next succeeding
Business Day), commencing on September 30, 1999 (each, a "Series C Preferred
Unit Distribution Payment Date"), and (ii) in the event of (A) an exchange of
Series C Preferred Units into Series C Preferred Stock, or (B) a redemption of
Series C Preferred Units, on the exchange date or redemption date, as
applicable. The amount of the distribution payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months and for any
period shorter than a full quarterly period for which distributions are
computed, the amount of the distribution payable will be computed on the basis
of the actual number of days elapsed in such period; provided, however, that for
each calendar year (x) the amount of the distribution for the period November 1
through December 21 shall be computed on the basis of two 30-day months plus
twenty-one (21) days and (y) the amount of the distribution for the period
December 22 through March 31 shall be computed on the basis of three 30-day
months plus nine (9) days. If any date on which distributions are to be made on
the Series C Preferred Units is not a Business Day, then payment of the
distribution to be made on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay) except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such date.
Distributions on the Series C Preferred Units will be made to the holders of
record of the Series C Preferred Units on the relevant record dates to be fixed
by the Partnership acting through the General Partner, which record dates shall
be the twentieth (20th) day of the calendar month in which the applicable Series
C Preferred Unit Distribution Payment Date falls or on such earlier date
designated by the Board of Directors of the General Partner as the record date
for such distribution that is not more than thirty (30) days prior to such
Series C Preferred Unit Distribution Payment Date (the "Series C Preferred Unit
Partnership Record Date").
3
10
(b) Prohibition on Distribution. No distributions on Series C Preferred
Units shall be authorized by the General Partner or paid or set apart for
payment by the Partnership at any such time as the terms and provisions of any
agreement of the Partnership or the Company, including any agreement relating to
their 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 to the
extent that such authorization or payment shall be restricted or prohibited by
law.
(c) Distributions Cumulative. Notwithstanding the provisions of Section
3(b) hereof, distributions on the Series C Preferred Units will accrue whether
or not the terms and provisions of any agreement of the Partnership, including
any agreement relating to its indebtedness, at any time prohibit the current
payment of distributions, 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. Accrued but unpaid
distributions on the Series C Preferred Units will accumulate as of the date on
which they first become payable pursuant to Section 3(a) (without reference to
Section 3(b)). Distributions on account of arrears for any past distribution
periods may be declared and paid at any time, without reference to a regular
Series C Preferred Unit Distribution Payment Date to holders of record of the
Series C Preferred Units on the record date fixed by the Partnership acting
through the General Partner, which date shall not exceed thirty (30) days prior
to the payment date. Accumulated and unpaid distributions will not bear
interest.
(d) Priority as to Distributions. (i) So long as any Series C Preferred
Units are outstanding, no distribution of cash or other property shall be
authorized, declared, paid or set apart for payment on or with respect to any
class or series of Partnership Interest ranking junior as to the payment of
distributions or rights upon a voluntary or involuntary liquidation, dissolution
or winding-up of the Partnership to the Series C Preferred Units (collectively,
"Junior Units"), nor shall any cash or other property (other than capital stock
of the General Partner which corresponds in ranking to the Partnership Interests
being acquired) be set aside for or applied to the purchase, redemption or other
acquisition for consideration of any Series C Preferred Units, any Parity Units
or any Junior Units, unless, in each case, all distributions accumulated on all
Series C Preferred Units and all classes and series of outstanding Parity Units
have been paid in full (or a sum sufficient for such full payment has been
irrevocably deposited in trust for payment). The foregoing sentence will not
prohibit (A) distributions payable solely in Junior Units, (B) the conversion of
Junior Units or Parity Units into Junior Units, or (C) the redemption of
Partnership Interests corresponding to any Series C Preferred Stock, Parity
Preferred Stock or Junior Stock to be purchased by the Company pursuant to
Section 4.5 of the Amended and Restated Articles of Incorporation of the Company
(the "Charter") to preserve the Company's status as a real estate investment
trust, provided that such redemption shall be upon the same terms as the
corresponding purchase pursuant to Article IV of the Charter.
(ii) At any time when the Partnership is in arrears on the
payment of distributions on the Series C Preferred Units for a prior
distribution period (and a sum
4
11
sufficient for the full distribution then payable is not irrevocably deposited
in trust for payment), all distributions authorized and declared on the Series C
Preferred Units and all classes or series of outstanding Parity Units shall be
authorized and declared so that the amount of distributions authorized and
declared per Series C Preferred Unit and such other classes or series of Parity
Units shall in all cases bear to each other the same ratio that accrued and
unpaid distributions per Series C Preferred Unit and such other classes or
series of Parity Units (which shall not include any accumulation in respect of
unpaid distributions for prior distribution periods if such class or series of
Parity Units do not have cumulative distribution rights) bear to each other. Any
distribution payment made on the Series C Preferred Units shall first be
credited against the earliest accrued but unpaid distribution due with respect
to such Series C Preferred Units which remains payable.
(e) No Further Rights. Holders of Series C Preferred Units shall not be
entitled to any distributions with respect to such Series C Preferred Units,
whether payable in cash, other property or otherwise, in excess of the full
cumulative distributions described herein (it being understood that such holder
may have additional rights or claims to the remaining assets of the Partnership
as a result of its ownership of Partnership Units of other classes or series or
its status as General Partner).
SECTION 4. Allocations. The Series C Preferred Units shall be
subject to all of the provisions of Article 6 of the Agreement.
SECTION 5. Liquidation Proceeds. (a) Upon voluntary or
involuntary liquidation, dissolution or winding-up of the Partnership,
distributions on the Series C Preferred Units shall be made in accordance with
Section 13.2 of the Agreement.
(b) Notice. Written notice of any such voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership, stating the payment
date or dates when, and the place or places where, the amounts distributable in
such circumstances shall be payable, shall be given by (i) fax and (ii) by first
class mail, postage pre-paid, not less than thirty (30) and not more than sixty
(60) days prior to the payment date stated therein, to each holder of record of
the Series C Preferred Units at the respective addresses of such holders as the
same shall appear on the transfer records of the Partnership.
(c) No Further Rights. After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of Series C
Preferred Units will have no right or claim to any of the remaining assets of
the Partnership with respect to such Series C Preferred Units (it being
understood that such holder may have additional rights or claims to the
remaining assets of the Partnership as a result of its ownership of Partnership
Units of other classes or series or its status as General Partner).
(d) Consolidation, Merger or Certain Other Transactions. The voluntary
sale, conveyance, lease, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the property
or assets of the Company or the
5
12
Partnership to, or the consolidation or merger or other business combination of
the Partnership or the Company with or into, any corporation, partnership,
limited liability company, trust or other entity (or of any corporation,
partnership, limited liability company, trust or other entity with or into the
Partnership) or a statutory share exchange of the Company shall not be deemed to
constitute a liquidation, dissolution or winding-up of the Partnership.
SECTION 6. Optional Redemption. (a) Right of Optional
Redemption. (i) Except as otherwise expressly provided in this Section 6, the
Series C Preferred Units may not be redeemed prior to the fifth (5th)
anniversary of the issuance date. On or after such date, the Partnership shall
have the right to redeem the Series C Preferred Units, in whole or in part, at
any time or from time to time, upon not less than thirty (30) nor more than
sixty (60) days' written notice, at a redemption price (the "Series C Redemption
Price"), payable in cash, equal to the Capital Account balance of such holder of
Series C Preferred Units attributable to such redeemed Units; provided, however,
that no redemption pursuant to this Section 6 will be permitted if the Series C
Redemption Price does not equal or exceed the original Capital Contribution with
respect to such Units plus the cumulative Priority Return thereon, whether or
not declared, to the redemption date to the extent not previously distributed.
If fewer than all of the outstanding Series C Preferred Units are to be
redeemed, the Series C Preferred Units to be redeemed shall be selected pro rata
(as nearly as practicable without creating fractional Partnership Units).
(ii) In the event that (1) any Series C Preferred Units shall,
at any time, be transferred to any Substituted Limited Partner and (2) the
General Partner shall determine in good faith that such transfer to such Person
has caused, would cause, or would likely cause, the Partnership to be a PTP
(taking into account the admission of any Partners or the transfer of any Units
to any other Person under any agreements of which the General Partner is then
aware or contemplating), such transferred Units shall be subject to the right of
the Partnership to redeem such Units, in whole but not in part, at any time and
from time to time, including without limitation, as of the end of the day
immediately preceding the day of the effectiveness of such transfer, for the
Series C Redemption Price of such Units payable in (y) such number of shares of
Series C Preferred Stock to which the Partner holding such Units being redeemed
(excluding Excess Units) would be entitled if redeemed at the Series C Exchange
Price then in effect pursuant to Section 9 hereof and (z) cash, with respect to
any such Units that would be Excess Units.
(b) Limitation on Redemption. (i) The Redemption Price of the Series C
Preferred Units (other than the portion thereof attributable to accumulated but
unpaid distributions) will be payable solely out of the sale proceeds of capital
stock of the Company that are contributed by the Company to the Partnership as
additional capital contributions, or out of the sale of Partnership Interests,
and from no other source. For purposes of the preceding sentence, "capital
stock" means any equity securities (including Common Stock and Preferred Stock
(as such terms are defined in the Charter)), shares, depository receipts,
participation or other ownership interests (however designated) and any rights
(other than debt securities convertible into or exchangeable for equity
securities) or options to purchase any of the foregoing.
6
13
(ii) The Partnership may not redeem fewer than all of the
outstanding Series C Preferred Units unless all accumulated and unpaid
distributions have been paid on all Series C Preferred Units for all quarterly
distribution periods terminating on or prior to the date of redemption.
(c) Procedures for Redemption. (i) Notice of redemption will be (A)
faxed, and (B) mailed by the Partnership, by certified mail, postage prepaid,
not less than thirty (30) nor more than sixty (60) days prior to the redemption
date, addressed to the respective holders of record holding the Series C
Preferred Units at their respective addresses as they appear on the records of
the Partnership. No failure to give or defect in such notice shall affect the
validity of the proceedings for the redemption of any Series C Preferred Units
except as to any holder to whom such notice was defective or not given. In
addition to any information required by law, each such notice shall state: (m)
the redemption date, (n) the Redemption Price, (o) the aggregate number of
Series C Preferred Units to be redeemed and, if fewer than all of the
outstanding Series C Preferred Units are to be redeemed, the number of Series C
Preferred Units to be redeemed held by such holder, which number shall equal
such holder's pro rata share (based on the percentage of the aggregate number of
outstanding Series C Preferred Units the total number of Series C Preferred
Units held by such holder represents) of the aggregate number of Series C
Preferred Units to be redeemed, (p) the place or places where such Series C
Preferred Units are to be surrendered for payment of the Redemption Price, (q)
that distributions on the Series C Preferred Units to be redeemed will cease to
accumulate on such redemption date and (r) that payment of the Redemption Price
will be made upon presentation and surrender of such Series C Preferred Units.
(ii) If the Partnership gives a notice of redemption in
respect of Series C Preferred Units (which notice will be irrevocable) then, by
12:00 noon, New York City time, on the redemption date, the Partnership will
deposit irrevocably in trust for the benefit of the Series C Preferred Units
being redeemed funds sufficient to pay the applicable Redemption Price and will
give irrevocable instructions and authority to pay such Redemption Price to the
holders of the Series C Preferred Units upon surrender of the Series C Preferred
Units by such holders at the place designated in the notice of redemption. If
the Series C Preferred Units are evidenced by a certificate and if fewer than
all Series C Preferred Units evidenced by any certificate are being redeemed, a
new certificate shall be issued upon surrender of the certificate evidencing all
such Series C Preferred Units, evidencing the unredeemed Series C Preferred
Units, without cost to the holder thereof. On and after the date of redemption,
distributions will cease to accumulate on the Series C Preferred Units or
portions thereof called for redemption, unless the Partnership defaults in the
payment or deposit, in accordance with the foregoing, of the Redemption Price.
If any date fixed for redemption of Series C Preferred Units is not a Business
Day, then payment of the Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If payment of the Redemption Price is
improperly withheld or refused and not paid by the Partnership,
7
14
distributions on such Series C Preferred Units will continue to accumulate from
the original redemption date to the date of payment, in which case the actual
payment date will be considered the date fixed for redemption for purposes of
calculating the applicable Redemption Price.
SECTION 7. Voting Rights. (a) General. Partners holding the
Series C Preferred Units will not have any voting rights or right to consent to
any matter requiring the consent or approval of the Limited Partners, except as
set forth in this Section 7. In connection with the foregoing, the references in
Sections 14.1A and 14.2A of the Agreement to Partnership Interests shall exclude
the Series C Preferred Units.
(b) Certain Voting Rights. So long as any Series C Preferred Units
remain outstanding, the Partnership shall not, without the affirmative vote of
the Partners holding at least two-thirds of the Series C Preferred Units
outstanding at the time:
(i) authorize, create, or increase the authorized or issued
amount of any class or series of Partnership Interests ranking
senior to the Series C Preferred Units with respect to payment
of distributions or rights upon liquidation, dissolution or
winding-up or reclassify any Partnership Interests into any
such senior Partnership Interest, or create, authorize or
issue any obligations or security convertible into or
evidencing the right to purchase any such senior Partnership
Interests;
(ii) issue any Parity Units to a Partnership Affiliate,
reclassify any Partnership Interest held by a Partnership
Affiliate into any such Parity Unit or issue any obligation or
security convertible into or evidencing the right to purchase
any such Parity Unit to a Partnership Affiliate (any such
issuance or reclassification, referred to as an "Affiliate
Parity Placement"); provided, however, that notwithstanding
the foregoing provisions of this clause (ii) the Partnership
may effect any Affiliate Parity Placement to the extent such
placement is either (A) in connection with the issuance by the
Company of corresponding preferred stock to persons who are
not Partnership Affiliates or (B) upon terms no more favorable
to such Partnership Affiliates than those that the General
Partner, in the good faith determination of its Board of
Directors, would be willing to offer to an unrelated party in
an arm's length transaction (such placement, an "Exempt
Affiliate Parity Placement");
(iii) either (A) consolidate, merge into or with, or convey,
transfer or lease its assets substantially as an entirety to,
any corporation or other entity or (B) amend, alter or repeal
the provisions of the Agreement, whether by merger,
consolidation or otherwise, in each case in a transaction or
manner that would materially and adversely affect the powers,
special rights, preferences, privileges or voting powers of
the Series C Preferred Units or the Partners
8
15
holding such Units as set forth in the Agreement and this
Certificate of Designations; or
(iv) enter into any contract, mortgage, loan or other
agreement that (A) prohibits or restricts a holder of Series C
Preferred Units from exercising any rights it has pursuant to
Section 9 hereof (subject to all remaining terms and
provisions hereof) to effect an exchange of Series C Preferred
Units or (B) expressly prohibits the Company from making an
offering of "capital stock" pursuant to Section 6(b)(i) hereof
which the Company must make in order to satisfy an obligation
to pay for Excess Units pursuant to Section 9 hereof;
provided, however, that the foregoing restriction shall not
apply to any agreement of the Company entered into with an
underwriter in connection with an offering of securities or,
except as otherwise provided herein, any agreement of the
Company entered into in connection with any proposed merger,
consolidation, sale of assets or similar transaction;
provided, however, that with respect to the occurrence of a merger,
consolidation or a sale or lease of all of the Partnership's assets as an
entirety, so long as (l) the Partnership is the surviving entity and the Series
C Preferred Units remain outstanding with the terms thereof unchanged, or (2)
the resulting, surviving or transferee entity is a partnership, limited
liability company or other pass-through entity organized under the laws of any
state and substitutes the Series C Preferred Units for other interests in such
entity having substantially the same terms and rights as the Series C Preferred
Units, including with respect to distributions, voting rights and rights upon
liquidation, dissolution or winding-up, then the occurrence of any such event
shall be deemed not to materially and adversely affect such powers, special
rights, preferences, privileges or voting powers of the Series C Preferred Units
or the Partners holding such Units; provided further that any increase in the
amount of Partnership Interests or the creation or issuance of any other class
or series of Partnership Interests or obligation or security convertible into or
evidencing the right to purchase any such Partnership Interests, in each case
ranking (y) junior to the Series C Preferred Units with respect to payment of
distributions and the distribution of assets upon liquidation, dissolution or
winding-up, or (z) on a parity to the Series C Preferred Units with respect to
payment of distributions and the distribution of assets upon liquidation,
dissolution or winding-up (other than for Affiliate Parity Placements that are
not Exempt Affiliate Parity Placements) shall be deemed not to materially and
adversely affect such powers, special rights, preferences, privileges or voting
powers of the Series C Preferred Units or the Partners holding such Units; and
provided further, that any agreement pursuant to which a transaction that
satisfies the conditions in either of the foregoing two provisos is to be
effected shall be deemed not to be an agreement requiring consent under the
foregoing clause (iv).
In addition to the foregoing, so long as any Series C Preferred Stock
or Series C Preferred Units remains outstanding, the Company shall not, without
the affirmative vote of the holders of the Series C Preferred Stock outstanding
and the Series C Preferred Units outstanding at the time, if any, which if the
Series C Preferred Stock and Series C Preferred
9
16
Units voted together as a single class would represent two-thirds of the
combined outstanding Series C Preferred Stock and Series C Preferred Units: (i)
designate or create, or increase the authorized or issued amount of, any class
or series of shares ranking senior to the Series C Preferred Stock with respect
to payment of distributions or rights upon liquidation, dissolution or
winding-up or reclassify any authorized shares of the Company into any such
shares, or create, authorize or issue any obligations or security convertible
into or evidencing the right to purchase any such shares; (ii) issue any shares
of Parity Stock to a Company Affiliate (as hereinbelow defined), reclassify any
authorized shares of the Company held by a Company Affiliate into any such
shares of Parity Stock or issue any obligation or security convertible into or
evidencing the right to purchase any such shares of Parity Stock to a Company
Affiliate (any such issuance or reclassification, referred to as a "Company
Affiliate Parity Placement"); provided, however, that notwithstanding the
foregoing provisions of this clause (ii) the Company may effect any Company
Affiliate Parity Placement to the extent such placement is upon terms no more
favorable to such Company Affiliate than those that Company, in the good faith
determination of its Board of Directors, would be willing to offer to an
unrelated party in an arm's length transaction (such placement, an "Exempt
Company Affiliate Parity Placement"); or (iii) either (A) consolidate, merge
into or with, or convey, transfer or lease its assets substantially as an
entirety, to any corporation or other entity, or (B) amend, alter or repeal the
provisions of the Charter (including the Series C Preferred Articles
Supplementary) or Bylaws, whether by merger, consolidation or otherwise, in each
case in a transaction or manner that would materially and adversely affect the
powers, special rights, preferences, privileges or voting powers of the Series C
Preferred Stock or the holders thereof as set forth in the Series C Preferred
Articles Supplementary; provided, however, that with respect to the occurrence
of a merger, consolidation or a sale or lease of all of the Company's assets as
an entirety, so long as (1) the Company is the surviving entity and the Series C
Preferred Stock remains outstanding with the terms thereof unchanged, or (2) the
resulting, surviving or transferee entity is organized under the laws of any
state and substitutes the Series C Preferred Stock for other preferred stock or
interests having substantially the same terms and same rights as the Series C
Preferred Stock, including with respect to distributions, voting rights and
rights upon liquidation, dissolution or winding-up, then the occurrence of any
such event shall be deemed not to materially and adversely affect such powers,
special rights, preferences, privileges or voting powers of the Series C
Preferred Stock or the holders thereof and provided further that any increase in
the amount of authorized Preferred Stock or the creation or issuance of any
other class or series of Preferred Stock or obligation or security convertible
into or evidencing the right to purchase any such Preferred Stock, or any
increase in an amount of authorized shares of each class or series, in each case
ranking either (y) junior to the Series C Preferred Stock with respect to
payment of distributions and the distribution of assets upon liquidation,
dissolution or winding-up, or (z) on a parity with the Series C Preferred Stock
with respect to payment of distributions and the distribution of assets upon
liquidation, dissolution or winding-up (other than for Company Affiliate Parity
Placements that are not Exempt Company Affiliate Parity Placements) shall be
deemed not to materially and adversely affect such powers, special rights,
preferences, privileges or voting powers of the Series C Preferred Stock or the
holders thereof. For purposes hereof (i) "Company Affiliate" shall mean any
Person controlled by, controlling or under common control with the Company; (ii)
"control"
10
17
means the power to direct the actions of a Person, regardless of whether the
same shall involve an ownership interest in such Person and (iii) "Person" means
a natural person, partnership (whether general or limited), trust, estate,
association, corporation, limited liability company, unincorporated
organization, custodian, nominee or any other individual entity in its own or
representative capacity.
In the event of any conflict between the provisions of Article 14 of
the Agreement and the provisions of this Section 7, the provisions of this
Section 7 shall control.
(c) No General Partner Voting Rights. Notwithstanding anything to the
contrary, in no event shall the General Partner or any Partnership Affiliate
have any voting, consent or approval rights in respect of any Series C Preferred
Units it or they may hold that have been exchanged or redeemed pursuant to
Sections 6 or 9 hereof, and any percentage or portion of outstanding Series C
Preferred Units that may be required hereunder for any vote, consent or approval
of holders thereof shall be determined as if all such Series C Preferred Units
then held by the General Partner or any Partnership Affiliates that have been
exchanged or redeemed pursuant to Sections 6 or 9 hereof were not outstanding.
SECTION 8. Transfer Restrictions. Notwithstanding anything to
the contrary set forth in Article 11 of the Agreement, in the event any Partner
should desire to effect a transfer of any Series C Preferred Units and such
proposed transfer of all or any portion of the Series C Preferred Units
(A) would not violate the provisions of Section 11.3C or 11.3D of the
Agreement,
(B) would effect a transfer to an accredited investor within the
meaning of Regulation D under the Securities Act,
(C) (i) in the event that the Partnership shall satisfy the private
placement safe harbor of Treasury Regulation Section 1.7704-1(h)
(taking into account any person treated as a partner under Treasury
Regulation Section 1.7704-1(h) (3)), would not cause the total number
of such persons holding Series C Preferred Units to exceed five (5),
(ii) for so long as the Partnership is satisfying the safe harbor
provisions of Notice 88-75 (1988-2 C.B. 386), would not cause the
aggregate number of partners holding Series C Preferred Units,
determined on a look-through basis (as provided in such notice)
("Look-Through Partners"), to exceed 75 and (iii) would either satisfy
the definition of a "block transfer" as defined in Treasury Regulation
Section 1.7704-1(e) as in effect on the date hereof or otherwise
qualify as a transfer not involving trading within the meaning of
Treasury Regulation Section 1.7704-1(e) as in effect on the date hereof
and
(D) with respect to such proposed transfer, the transferor and
transferee, as applicable, represent to the General Partner in an
ownership certificate (the "Ownership Certificate") in such form as is
reasonably acceptable to the General Partner
11
18
(i) in the event that the Partnership is complying with
the safe harbor of Notice 88-75 (1988-2 C.B. 386) at
the time of such proposed transfer, the maximum
number of Look-Through Partners (as hereinafter
defined) in the transferee;
(ii) that (A) such transferee would not cause the Company
to fail to satisfy the requirements of Section
856(a)(6) and 856(h) of the Code assuming that (I)
all Series C Preferred Units, including those to be
transferred to such transferee, were exchanged for
Series C Preferred Stock (as defined below), and (II)
such determination was made during the last half of
the Company's taxable year, and
(B) with respect to such transferee's
ownership of such Series C Preferred Stock (I) no
"individual" would be treated as owning more than 50%
of the outstanding shares of Series C Preferred Stock
owned by the transferee and (II) no "individual"
would be treated as owning more than 8% of the value
of the outstanding shares of the Company's Stock (as
defined in the Charter) applying, in each case, the
provisions of Section 542(a)(2) of the Code and
Section 544 of the Code, as modified by Section
856(h) of the Code;
(iii) in the event that the Partnership is complying with
the safe harbor of Notice 88-75 (1988-2 C.B. 386) at
the time of such proposed transfer, such purported
transferee's undertaking not to allow the number of
Look-Through Partners certified in clause (i) to
increase without the General Partner's prior written
consent;
(iv) such purported transferee's undertaking not to permit
the fact stated in clause (ii) to become untrue; and
(v) such purported transferee's undertaking to become a
Substituted Limited Partner and to be bound by the
terms of the Partnership Agreement,
the General Partner shall consent to the transfer of such Units to such
transferee as of the date of such Ownership Certificate (the "Consent Date") and
(a) such transferee shall be considered a Substituted Limited Partner
upon receipt by the General Partner of a written agreement of such
transferee to become a Substituted Limited Partner and to be bound by
the terms of the Agreement and
(b) the Partnership and the General Partner shall treat such
Substituted Limited Partner as the absolute owner of the Series C
Preferred Units transferred in all respects;
12
19
provided, however, that notwithstanding the foregoing, in the event a transfer
to a transferee which is not a Class C New Partner Affiliate effects a transfer
to a person or entity which is not able to satisfy the provisions of clause (ii)
above at the time such transferee exercises any right to cause an exchange of
such Units pursuant to Section 9 hereof and
(A) such transferee has acquired (directly or indirectly) any
additional equity interest in the stock of the Company subsequent to
the Consent Date or
(B) any individual to whom such Series C Preferred Stock would be
attributed (applying the provisions of Section 544 of the Code as
modified by Section 856(h) of the Code) would be deemed to own more of
the Company's stock than such individual was deemed to own on the
Consent Date (applying the provisions of Section 544 of the Code as
modified by Section 856(h) of the Code),
then such transferee shall not have the benefits set forth in Section 9(a)(iii)
hereof with respect to "Excess Units." For purposes of this Section 8 "transfer"
shall have the meaning thereto attributed in Section 11.1A of the Agreement;
provided, however, that nothing contained in this provision shall prevent the
right to pledge any Series C Preferred Units as such right is set forth in the
Contribution Agreement.
SECTION 9. Exchange Rights. (a) Right to Exchange. (i) Series
C Preferred Units will be exchangeable, subject to Section 9(a)(v) hereof
(A) in whole or in part at any time on or after the tenth (10th)
anniversary of the date of issuance, at the option of the holders
thereof, for authorized but previously unissued shares of 8.75% Series
C Cumulative Redeemable Perpetual Preferred Stock of the Company
("Series C Preferred Stock") at an exchange rate of one share of Series
C Preferred Stock for one Series C Preferred Unit, subject to
adjustment as described below (the "Series C Exchange Price"),
(B) with respect to (y) below, at any time, and with respect to (z)
below, at any time prior to December 31, 2004, in each case, in whole
or in part, at the option of the holders of Series C Preferred Units
for Series C Preferred Stock if
(y) at any time full distributions shall not have been timely
made on any Series C Preferred Unit with respect to six (6)
prior quarterly distribution periods, whether or not
consecutive (provided that a distribution in respect of Series
C Preferred Units shall be considered timely made if made
within two (2) Business Days after the applicable Series C
Preferred Unit Distribution Payment Date if at the time of
such late payment there shall not be any prior quarterly
distribution periods in respect of which full distributions
were not timely made), or
13
20
(z) upon receipt by a holder of or holders of Series C
Preferred Units of (1) notice from the General Partner that
the General Partner has become aware of facts that will or
will likely cause the Company to become a PTP in such taxable
year and (2) an opinion rendered by an outside nationally
recognized independent counsel familiar with such matters
addressed to a holder of or holders of Series C Preferred
Units, that the Partnership is or likely is, or upon the
occurrence of a defined event in the immediate future will be
or likely will be, a PTP,
(C) in whole or in part, at the option of any holder of Series C
Preferred Units prior to the tenth (10th) anniversary of the issuance
date and after the third (3rd) anniversary thereof if such holder of
Series C Preferred Units shall deliver to the General Partner either
(1) a private letter ruling addressed to such Partner or (2) an opinion
of independent counsel reasonably acceptable to the General Partner and
based on the enactment of temporary or final Treasury Regulations or
the publication of a Revenue Ruling, in either case to the effect that
an exchange of the Series C Preferred Units at such earlier time would
not cause the Series C Preferred Units to be considered "stock and
securities" within the meaning of Section 351(e) of the Code for
purposes of determining whether the holder of such Series C Preferred
Units is an "investment company" under Section 721(b) of the Code if an
exchange were permitted at such earlier date, and
(D) in whole but not in part for Series C Preferred Stock if at any
time, (i) the Class C New Partner concludes based on results or
projected results that there exists (in the reasonable judgment of the
Class C New Partner) an imminent and substantial risk that the Class C
New Partner's interest in the Partnership represents or will represent
more than 18.0% of the total profits of or capital interests in the
Partnership for a taxable year, (ii) the Class C New Partner delivers
to the General Partner an opinion of nationally recognized independent
counsel, reasonably acceptable to the General Partner to the effect
that there is a substantial risk that its interest in the Partnership
does not or will not satisfy the 18.0% limit and (iii) the General
Partner agrees with the conclusions referred to in clauses (i) and (ii)
of this sentence, such agreement not to be unreasonably withheld.
(ii) Notwithstanding anything to the contrary set forth in
Section 9(a)(i) hereof, if an Exchange Notice has been delivered to the General
Partner, then the General Partner may, at its option, elect to redeem or cause
the Partnership to redeem all or a portion of the outstanding Series C Preferred
Units for cash in an amount equal to the original Capital Contribution per
Series C Preferred Unit to be redeemed and all accrued and unpaid distributions
thereon to the date of redemption. The General Partner may exercise its option
to redeem the Series C Preferred Units for cash pursuant to this Section
9(a)(ii) by giving each holder of record of Series C Preferred Units notice of
its election to redeem for cash, within ten (10) Business Days after receipt of
the Exchange Notice, by (m) fax, and (n) registered mail, postage paid, at the
address of each such holder as it may appear on the records of the
14
21
Partnership stating (A) the redemption date, which shall be no later than sixty
(60) days following the receipt of the Exchange Notice, (B) the redemption
price, (C) the place or places where the Series C Preferred Units are to be
surrendered for payment of the redemption price, (D) that distributions on the
Series C Preferred Units will cease to accrue on such redemption date; (E) that
payment of the redemption price will be made upon presentation and surrender of
the Series C Preferred Units and (F) the aggregate number of Series C Preferred
Units to be redeemed, and if fewer than all of the outstanding Series C
Preferred Units are to be redeemed, the number of Series C Preferred Units to be
redeemed held by such holder, which number shall equal such holder's pro-rata
share (based on the percentage of the aggregate number of outstanding Series C
Preferred Units the total number of Series C Preferred Units held by such holder
represents) of the aggregate number of Series C Preferred Units being redeemed.
(iii) In the event an exchange on any date (which such date
shall be referred to as the "Exchange Date") of all or a portion of Series C
Preferred Units pursuant to Section 9(a)(i) hereof would violate the Ownership
Limit (as hereinafter defined), after giving effect to the terms of the form of
waiver of ownership limitation attached hereto (the "Waiver"), which Waiver
shall be granted to the Class C New Partners in connection with and not later
than 60 days subsequent to their acquisition of the Series C Preferred Units or
a similar Waiver granted to a transferee of the Class C New Partners pursuant to
Section 8 hereof, the General Partner shall give written notice thereof to each
holder of record of Series C Preferred Units that delivers an Exchange Notice,
within ten (10) Business Days following receipt of the Exchange Notice, by (m)
fax, and (n) registered mail, postage prepaid, at the address of each such
holder set forth in the records of the Partnership. In such event, and provided
that (A) the General Partner does not elect to waive provisions on ownership
limitation of the Company set forth in Article IV of the Charter (the "Ownership
Limit"), with respect to such holders of Series C Preferred Units (which such
determination shall be made in the sole and absolute discretion of the General
Partner) and (B) each holder of such units represents to the General Partner
that as of the Exchange Date such holder has not (a) acquired (directly or
indirectly) any additional equity interest in the Stock of the Company
subsequent to the date such holder acquired the Series C Preferred Units (the
"Consent Date") and (b) no individual to whom such Series C Preferred Stock
would be attributed (applying the provisions of Section 544 of the Code as
modified by Section 856(h) of the Code) would be deemed to own more of the
Company's Stock than such individual was deemed to own on the Consent Date
(applying the provisions of Section 544 of the Code as modified by Section
856(h) of the Code), each such holder of Series C Preferred Units shall be
entitled to exchange, pursuant to the provisions of Section 9(b) hereof a number
of Series C Preferred Units which would comply with the Ownership Limit (taking
into account any waiver of the Ownership Limit granted by the General Partner).
Any Series C Preferred Units held by a Partner that are not so exchangeable (the
"Excess Units") shall be redeemed by the Partnership for cash in an amount equal
to the original Capital Contribution per Excess Unit, plus any accrued and
unpaid distributions thereon, whether or not declared, to the date of
redemption. Notwithstanding anything to the contrary above in the Agreement, the
Contribution Agreement, or any other agreement among the parties in effect as of
the date hereof, if the General Partner fails to deliver the Waiver to the
15
22
Class C New Partners within 60 days of their acquisition of the Class C
Preferred Units pursuant to the Contribution Agreement, then, any Class C
Preferred Units tendered for exchange by any holder pursuant to this Section 9
shall be redeemed for cash without regard to the limitations of Sections
9(a)(iv) or 6(b)(i). The written notice of the General Partner shall state (A)
the number of Excess Units held by such holder, (B) the redemption price of the
Excess Units, (C) the date on which such Excess Units shall be redeemed, which
date shall be no later than sixty (60) days following the receipt of the
Exchange Notice, (D) the place or places where such Excess Units are to be
surrendered for payment of the Redemption Price, (E) that distributions on the
Excess Units will cease to accrue on such redemption date, and (F) that payment
of the redemption price will be made upon presentation and surrender of such
Excess Units.
(iv) The redemption of Series C Preferred Units described in
Sections 9(a)(ii) and 9(a)(iii) hereof shall be subject to the provisions of
Sections 6(b)(i) and Section 6(c)(ii) hereof; provided, however, that the term
"redemption price" in such Section shall be read to mean the original Capital
Contribution per Series C Preferred Unit being redeemed plus all accrued and
unpaid distributions to the redemption date.
(v) Notwithstanding anything to the contrary set forth
hereinabove, (A) no amount of Series C Preferred Units held by any holder and
tendered for exchange at any time will be exchangeable hereunder for Series C
Preferred Stock to the extent the exchange of such amount of Series C Preferred
Units would cause such holder of such Series C Preferred Units, after giving
effect to such exchange, to violate the Ownership Limit, taking into account the
Waiver; provided, however, that the Company may waive the foregoing limitation
in its sole and absolute discretion and (B) at no time may exchange rights be
exercised for fewer than 25% of the amount of Series C Preferred Units issued on
the date hereof, unless the total number of outstanding Series C Preferred Units
not previously surrendered shall be less than 25% of the amount of Series C
Preferred Units issued on the date hereof at such time, in which case exchange
rights may be exercised for no fewer than all such outstanding Series C
Preferred Units, subject, in any event, to the provisions in the foregoing
clause (A).
(b) Procedure for Exchange. (i) Any exchange shall be exercised
pursuant to a notice of exchange (the "Exchange Notice") delivered to the
General Partner by the holder who is exercising such exchange right, by (y) fax
and (z) by certified mail postage prepaid. Except as otherwise provided in
Sections 9(a)(ii) and 9(a)(iii) hereof, the General Partner and the Partnership
shall effect any exchange of Series C Preferred Units by delivering to each
holder of record of Series C Preferred Units, within ten (10) Business Days
following receipt of the Exchange Notice, (A) certificates representing the
Series C Preferred Stock being issued in exchange for the Series C Preferred
Units of such holder being exchanged and (B) a written notice stating (1) the
exchange date, which may be the date of such written notice or any other date
which is not later than fifteen (15) Business Days following the receipt of the
Exchange Notice, (2) the Series C Exchange Price, and (3) that distributions on
the Series C Preferred Units will cease to accrue on such exchange date. As a
condition to the exchange, the General Partner may require the holders of Series
C Preferred Units to make such representations as
16
23
may be reasonably necessary for the General Partner to establish that the
issuance of Series C Preferred Stock pursuant to the exchange shall not be
required to be registered under the Securities Act of 1933, as amended, or any
state securities laws. Any shares of Series C Preferred Stock issued pursuant to
this Section 9 shall be duly authorized, validly issued, fully paid and
nonassessable, and shall be delivered free of any pledge, lien, encumbrance or
restriction other than those provided in the Charter, the Bylaws of the Company,
the Securities Act of 1933, as amended and relevant state securities or blue sky
laws or created by the exchanging holder of Series C Preferred Units. Each
Series C Preferred Unit exchanged hereunder for a share of Series C Preferred
Stock shall be transferred to and acquired by the General Partner and shall not
be canceled or redeemed while such share of Series C Preferred Stock is
outstanding.
The certificates representing the Series C Preferred Shares
issued upon exchange of the Series C Preferred Units shall contain the following
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT") OR (B) IF THE
CORPORATION HAS BEEN FURNISHED WITH A SATISFACTORY
OPINION OF COUNSEL FOR THE HOLDER OF THE SHARES
REPRESENTED HEREBY, OR OTHER EVIDENCE SATISFACTORY TO
THE CORPORATION, THAT SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION
5 OF THE ACT AND THE RULES AND REGULATIONS
THEREUNDER.
(ii) In the event of an exchange of Series C Preferred Units
for shares of Series C Preferred Stock, an amount equal to the accrued and
unpaid distributions, whether or not declared, to the date of exchange on any
Series C Preferred Units tendered for exchange shall continue to accrue on such
Series C Preferred Units, which shall remain outstanding following such
exchange, with the General Partner as the holder of such Series C Preferred
Units. Notwithstanding anything to the contrary set forth herein, in no event
shall a holder of a Series C Preferred Unit that was validly exchanged into
Series C Preferred Stock pursuant to this section (other than the General
Partner now holding such Series C Preferred Unit), be entitled to receive a
distribution out of Available Cash with respect to such exchanged Unit, if such
holder, after such exchange, is entitled to receive a distribution from the
Company with respect to the share of Series C Preferred Stock for which such
Series C Preferred Unit was exchanged or redeemed.
17
24
(iii) Fractional shares of Series C Preferred Stock shall not
to be issued upon any exchange hereunder but, in lieu thereof, the General
Partner will pay a cash adjustment based upon the fair market value of the
Series C Preferred Stock on the day prior to the exchange date as determined in
good faith by the Board of Directors of the General Partner.
(c) Adjustment of Exchange Price. (i) The Series C Exchange Price is
subject to adjustment upon certain events, including, (a) subdivisions,
combinations and reclassifications of the Series C Preferred Stock, and (b)
distributions to all holders of Series C Preferred Stock of evidences of
indebtedness of the Company or assets (including securities, but excluding
dividends and distributions paid in cash out of equity applicable to Series C
Preferred Stock).
(ii) In case the General Partner shall be a party to any
transaction (including, without limitation, a merger, consolidation, statutory
share exchange, tender offer for all or substantially all of the General
Partner's capital stock or sale of all or substantially all of the General
Partner's assets), in each case as a result of which the Series C Preferred
Stock will be converted into the right to receive shares of capital stock, other
securities or other property (including cash or any combination thereof), each
Series C Preferred Unit will thereafter be exchangeable into the kind and amount
of shares of capital stock and other securities and property receivable
(including cash or any combination thereof) upon the consummation of such
transaction by a Partner holding that number of shares of Series C Preferred
Stock or fraction thereof into which one Series C Preferred Unit was
exchangeable immediately prior to such transaction. The General Partner may not
become a party to any such transaction if any shares of Series C Preferred Stock
or any Series C Preferred Units are then outstanding if the terms thereof are
inconsistent with the foregoing. In the event of any conflict between the
provisions of this Section 9(c)(ii) and Sections 7.3 or 14.1 or Article 16 of
the Agreement, the provisions of this Section 9(c)(ii) shall control.
SECTION 10. No Conversion Rights. The holders of the Series C
Preferred Units shall not have any rights to convert such Units into Units of
any other class or series of Units or into any other securities of, or interest
in, the Partnership.
SECTION 11. No Sinking Fund. No sinking fund shall be
established for the retirement or redemption of Series C Preferred Units.
SECTION 12. No Preemptive or Other Rights. The holders of
Series C Preferred Units shall have no preemptive rights, including preemptive
rights with respect to any Units or other Partnership Interest of the
Partnership convertible into or carrying rights or options to purchase any such
Series C Preferred Units and including the provisions of Section 4.4 of the
Agreement.
18
