EXHIBIT 10.1.2
RIGHTS OF PREFERRED UNITS
AND COMMON UNITS
Terms of Series 1997-A Preferred Units and Common Units of
Xxxxxxx Pacific Operating Partnership, L.P. (the "Operating Partnership")
Section 1. Designation and Amount.
Pursuant to Section 4.2.A. of the Agreement of Limited Partnership
of the Operating Partnership (the "Partnership Agreement"), the General
Partner of the Operating Partnership (the "General Partner") has designated
4,800,000 units of Limited Partnership Interest as Series 1997-A Preferred
Units (the "Series 1997-A Preferred Units"), which units shall have the
preferences, exchange, redemption and other rights, and voting powers,
restrictions, limitations as to distributions, qualifications and terms and
conditions of redemption as set forth below. All other Units of Limited
Partnership Interest shall constitute "Common Units" or "Units" that shall
collectively have all of their rights of the Limited Partners of the
Operating Partnership except for those that are expressly granted to the
Series 1997-A Preferred Units in this Exhibit C.
Section 2. Distributions.
(a) Holders of Series 1997-A Preferred Units will be entitled to
receive, when, as and if authorized by the General Partner out of funds
legally available for the payment of distributions, cumulative quarterly cash
distributions (rounded up to the nearest whole cent) equal to the greater of
(i) 2.00% (per quarter) of $25.00 per Series 1997-A Preferred Unit (such
$25.00, the "Stated Value"), and (ii) the per unit Common Stock Dividend
Amount (as hereinafter defined) for each Series 1997-A Preferred Unit,
payable in each case in arrears on the last Business Day (as hereinafter
defined) of each of March, June, September and December of each year,
commencing on the first such day after the first issuance of Series 1997-A
Preferred Units (each a "Distribution Payment Date"). The "Common Stock
Dividend Amount" applicable as of any Distribution Payment Date shall mean
the amount which is the product of (i) the dividend payable on such Dividend
Payment Date with respect to each share of Common Stock, par value $.01 per
share (the "Corporation Common Stock"), of Xxxxxxx Pacific Properties, Inc.
(the "Corporation"), and (ii) the number of shares of Corporation Common
Stock for which each Series 1997-A Preferred Unit may, at the option of the
Corporation, be exchanged, at the Common Exchange Rate (as hereinafter
defined) then in effect and otherwise as set forth herein as of the record
date established for such Distribution Payment Date (determined, for purposes
of this computation,
to the fourth decimal place); PROVIDED, HOWEVER, that the Common Stock
Dividend Amount shall be adjusted as to any Distribution Payment Date only
when and to the extent that the average amount of the dividends payable on or
most closely to such Distribution Payment Date and the three next preceding
Distribution Payment Dates exceeds the amount of the regular dividend ($.25
per share of Common Stock per quarter (as adjusted for splits, share
dividends and other similar events), as the same may from time to time be
reasonably and sustainably increased by the Board of Directors by resolution
stating that such increased dividend is "regular". Such cumulative quarterly
cash distributions will accrue daily on the basis of a 360-day year of twelve
30-day months, and will, to the extent not paid in full on a Distribution
Payment Date, together with accruals thereon at the compounded quarterly at a
rate of 2.00% from such Distribution Payment Date until payment is made,
whether or not the Operating Partnership has earnings or surplus. The
distribution payable to the holder of each Series 1997-A Preferred Unit on
the first Distribution Payment Date after such unit is issued will be the
Accrued Distributions thereon calculated from the date of issuance to such
Distribution Payment Date. If any Distribution Payment Date is not a
Business Day, the distribution due on that Distribution Payment Date will be
paid on the first Business Day immediately succeeding that Distribution
Payment Date. Each Distribution Payment Date will be on a date which is the
date fixed for payment of dividends with respect to the shares of Corporation
Common Stock or is not more than five Business Days after the date fixed for
payment of dividends with respect to the shares of Corporation Common Stock.
As used with regard to the Series 1997-A Preferred Units, the term "Dividend
Payment Amount" means, as to any quarter ending on a Distribution Payment
Date, the cash dividend amount declared and paid with respect to such quarter
on each share of Corporation Common Stock; "Business Day" means a day on
which both state and federally chartered banks in New York, New York are
required to be open for general banking business; "Accrued Distributions"
means all accrued and due distributions together with all accrued but not yet
due distributions (compounded as provided above and together with accruals
thereon) (whether or not declared or authorized); and "Outstanding
Distributions" means all accrued and due distributions (compounded as
provided above together with accruals thereon) (whether or not declared or
authorized) but excluding all accrued but not yet due distributions.
(b) Each distribution will be payable to holders of record of
Series 1997-A Preferred Units on a date (a "Record Date") selected by the
General Partner which is not less than 10 nor more than 45 days before the
Distribution Payment Date on which the distribution is to be paid. No Record
Date will precede the close of business on the date the Record Date is fixed.
(c) Unless and until all Accrued Distributions on the Series 1997-A
Preferred Units under Section 2(a) through the most recent preceding
Distribution Payment Date have been paid (or are being paid contemporaneously
therewith), the Operating Partnership may not (i) declare or pay any
distribution (other than a distribution payable solely in Common Units), or
set aside any funds or assets for payment or distribution with regard to any
Junior Units (as hereinafter defined), (ii) redeem or purchase or set aside
any funds or
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other assets for the redemption or purchase of any Junior Units or (iii)
authorize, take or cause or permit to be taken any action that will result in
(A) the declaration or payment by the Operating Partnership of any
distribution to its partners, or the setting aside of any funds or assets for
payment of any distributions to its partners, or (B) the redemption or
purchase, or the setting aside of any funds or other assets for the
redemption or purchase of, any partnership interests in the Operating
Partnership, except as otherwise set forth herein. As used herein, the term
"Junior Units" means, with regard to the Series 1997-A Preferred Units, all
partnership interests in the Operating Partnership to which the Series 1997-A
Preferred Units are prior in rank with regard to payment of distributions or
payments upon the liquidation, dissolution or winding-up of the Operating
Partnership; the term "Person" shall mean an individual, partnership,
corporation, limited liability company, business trust, joint stock company,
trust, unincorporated association, joint venture, nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government or other entity of whatever nature.
(d) While any Series 1997-A Preferred Units are outstanding, the
Operating Partnership may not pay any distribution, or set aside any funds
for the payment of a distribution, with regard to any units of any class or
series of the Operating Partnership which rank on a parity with the Series
1997-A Preferred Units as to payment of distributions unless at least a
proportionate payment is made with regard to all Accrued Distributions on the
Series 1997-A Preferred Units (except, as to any Series 1997-A Preferred
Units as to which a Notice of Redemption (as hereinafter defined) has been
furnished by the holder thereof, at the effective time of redemption) under
Section 2(a) through the most recent preceding Distribution Payment Date. A
payment of distributions with regard to the Series 1997-A Preferred Units
will be proportionate to a payment of a distribution with regard to another
class or series of units of partnership interest if the distribution per
Series 1997-A Preferred Units is the same percentage of the Accrued
Distributions (except as aforesaid) under Section 2(a) through the most
recent preceding Distribution Payment Date, with regard to a Series 1997-A
Preferred Unit that the distribution paid with regard to a unit of the other
class or series of partnership interest is of the Accrued Distributions
(except as aforesaid) under Section 2(a) through the most recent preceding
Distribution Payment Date, with regard to a unit of that other class or
series of partnership interest.
(e) Any distribution paid with regard to Series 1997-A Preferred
Units will be paid equally with regard to each outstanding Series 1997-A
Preferred Unit, except to the extent that Series 1997-A Preferred Units are
outstanding for differing amounts of time during the relevant distribution
period.
Section 3. Voting Rights.
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The voting rights of the holders of Series 1997-A Preferred Units
will be only the following:
(a) The holders of Series 1997-A Preferred Units will have the
right to vote on any matters on which the holders of Common Units are
entitled to vote on an "as converted" basis with holders of Common Units, as
though part of the same class as holders of Common Units, with such number
of Common Units deemed held of record by holders of Series 1997-A Preferred
Units on any Record Date as would be the number of Common Units into which
the Series 1997-A Preferred Units held by such holders would be entitled to
be exchanged on such Record Date (such number to be based upon the Common
Exchange Rate). The holders of Series 1997-A Preferred Units shall receive
notice of any meetings of the holders of Common Units, and all other notices
and correspondence to the holders of Common Units provided by the Operating
Partnership, and shall be entitled to take such actions, and shall have such
rights, as are set forth herein or are otherwise available to the holders of
Common Units as set forth in the Operating Partnership Agreement as are in
effect on the date hereof, in each case with the same effect as would be
taken by holders of Series 1997-A Preferred Units if deemed to be holders of
such number of Common Units determined as aforesaid.
(b) While any Series 1997-A Preferred Units are outstanding, the
Operating Partnership will not, directly or indirectly, including through a
recapitalization or a merger or consolidation with any other Person, or
otherwise, without approval of holders of at least a majority of the
outstanding Series 1997-A Preferred Units, voting separately as a class, (i)
issue in excess of 4,800,000 Series 1997-A Preferred Units; (ii) increase the
number of authorized Series 1997-A Preferred Units; (iii) combine, split or
reclassify the outstanding Series 1997-A Preferred Units into a smaller or
larger number of units; (iv) exchange any Series 1997-A Preferred Units for
other securities or the right to receive cash, or propose or require an
exchange other than as provided herein, or reclassify any Series 1997-A
Preferred Units, or authorize, create, classify, reclassify or issue any
class or series of units ranking prior to or on a parity with the Series
1997-A Preferred Units either as to distributions or upon liquidation,
dissolution or winding-up of the Operating Partnership or as to the rights of
the Series 1997-A Preferred Units set forth in this Section 3; (v) amend,
alter or repeal, or permit to be amended, altered or repealed, any provision
of this First Amendment in a manner which would affect adversely the rights
and preferences of the holders of Series 1997-A Preferred Units.
(c) While any Series 1997-A Preferred Units are outstanding, the
Operating Partnership will not, directly or indirectly, including through a
recapitalization or a merger or consolidation with any other Person, or
otherwise, without the approval of the holders of not less than a majority of
the outstanding Series 1997-A Preferred Units, voting separately as a class,
propose, authorize, take, or cause to be taken or allow to occur any of the
following actions: (i) the Transfer (as hereinafter defined) to a Person in
a single transaction or series of
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transactions of all or substantially all of the assets of the Operating
Partnership, including for such purpose to any Person (but excluding from the
applicability of this clause (i) any Person in which the Operating
Partnership has a direct or indirect minority interest such that a sale,
transfer or assignment is not within Operating Partnership's control or a
merger or consolidation of the Operating Partnership with or into a
wholly-owned subsidiary of the Operating Partnership, in which the Operating
Partnership Capitalization (as hereinafter defined) is unchanged as a result
thereof) owned directly or indirectly by the Operating Partnership to the
extent of the Operating Partnership's attributed interest in such other
Person; (ii) any reorganization or recapitalization of the Operating
Partnership in a single transaction or in more than one transaction, in or as
a result of which the Common Unit Valuation (as hereinafter defined) is not
in excess of $15.375; (iii) any merger or consolidation of the Operating
Partnership with any Person (except a merger or consolidation of the
Operating Partnership with or into a wholly owned subsidiary in which the
Operating Partnership Capitalization (as hereinafter defined) is unchanged)
in or as a result of which the Common Unit Valuation is not in excess of
$15.375; or (iv) a Change of Control (as defined in Section 4 hereof). As
used herein, "Common Unit Valuation" is the value of each Common Unit
determined, in connection with any reorganization, merger or consolidation,
absent manifest error, by reference to the opinion of a nationally-recognized
investment bank obtained by the Board of Directors of the Corporation at the
expense of the Operating Partnership for such purpose unless the Operating
Partnership and the holders of a majority in interest or the Series 1997-A
Preferred Units (exclusive of the Corporation) otherwise agree or, if no such
opinion is provided, by reference to Operating Partnership Capitalization and
assuming in each such case for the purposes of such determination that the
number of units is as assumed in the definition of Operating Partnership
Capitalization. As used herein, "Operating Partnership Capitalization" is
the total market equity capitalization of the Operating Partnership
determined by reference to (i) outstanding (assuming for this purpose the
exercise of all then outstanding and exercisable warrants or other rights to
acquire Common Units issued in the ordinary course of business and the
exercise or conversion of all other then exercisable or convertible Common
Unit equivalents not otherwise referenced below and Series 1997-A Preferred
Units) Common Units and (ii) the number of Common Units which would be issued
on Mandatory Exchange of outstanding Series 1997-A Preferred Units
(determined in accordance with Section 5(b)). As used herein, "Transfer"
means any sale, transfer by operation of law or otherwise, assignment,
disposition or arrangement, whether voluntary or involuntary, which has the
effect, directly or indirectly, of altering the holding of or causing or
permitting another Person to succeed to, any voting control or economic
interest, whether beneficial or of record or both (other than as a nominee of
the transferor), including any arrangement for collateral purposes only, or
which could, with the passage of time or the occurrence of any event, or
both, have such effect.
(d) With respect to any matter to be approved by holders of the
Series 1997-A Preferred Units, the General Partner will act in accordance
with Section 3(f) of the Articles Supplementary of the General Partner with
respect to any Series 1997-A Preferred Units held by the General Partner.
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Section 4. Change of Control; Liquidation.
(a) Upon the occurrence of any event (a "Change of Control Event")
which would permit the holders of Corporation Preferred Stock to receive a
Change of Control Preference as defined in Section 4(a) of the Articles
Supplementary of the Corporation as presently in effect, each holder of
Series 1997-A Preferred Units may, at its option, receive, and, if so
electing by written notice to the Operating Partnership to such effect, will
be entitled to receive, out of the assets of the Operating Partnership
available for distribution to its partners, whether from capital, surplus or
earnings, before any distributions made to holders of any Junior Units, an
amount per unit (the "Change of Control Preference") equal to the product of
(A) the sum of (1) Stated Value plus the per unit amount of Accrued
Distributions with regard to such Series 1997-A Preferred Unit to the date of
final distribution and (2) 5% of the sum of Stated Value and the per unit
amount of Outstanding Distributions with regard to such Series 1997-A
Preferred Unit to the date of final distribution. The Operating Partnership
shall provide proper notice to each holder of record of Series 1997-A
Preferred Units of any Change of Control Event.
(b) In the event of an involuntary liquidation, dissolution or
winding-up of the Operating Partnership, as a result of which the assets of
the Operating Partnership are sold to multiple unrelated Persons, and the
holders of the Operating Partnership's equity securities receive solely cash
in a distribution upon liquidation, each holder of Series 1997-A Preferred
Units, may at its option receive, and, if so electing by written notice to
the Operating Partnership to such effect, shall be entitled to receive, out
of the assets of the Operating Partnership available for distribution to its
partners, whether from capital, surplus or earnings, before any distributions
made to holders of any Junior Units, an amount per unit equal to the sum of
(i) Stated Value plus (ii) the per unit amount of Outstanding Distributions
with respect to such Series 1997-A Preferred Unit to the date of final
distribution. In the event of any other involuntary or a voluntary
liquidation, dissolution or winding-up of the Operating Partnership, each
holder of Series 1997-A Preferred Units may, at its option, receive, and, if
so electing by written notice to the Operating Partnership to such effect,
shall be entitled to receive, out of the assets of the Operating Partnership
available for distribution to its partners, whether from capital, surplus or
earnings, before any distributions made to holders of any Junior Units, an
amount per unit equal to the sum of (i) Stated Value plus (ii) the per unit
amount of Accrued Distributions with respect to such Series 1997-A Preferred
Unit to the date of final distribution plus (iii) 5% of the sum of the Stated
Value and the per unit amount of Outstanding Distributions. All amounts
payable under this Section 4(b) shall be payable as a liquidation preference
(the "Liquidation Preference").
(c) Holders of Series 1997-A Preferred Units other than the
Corporation as General Partner may further elect, when delivering the written
notice to the Operating Partnership with respect to the election under
Section 4(a) or Section 4(b), in lieu of receiving
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the Change of Control Preference or the Liquidation Preference, as the case
may be, to receive Corporation Preferred Stock or Common Units upon the
redemption or exchange of Series 1997-A Preferred Units, without regard to
any time restriction on exchange established in Section 5(a) hereof (but
subject to the limitations in Section 5(g) hereof), in the manner and as
provided in Section 5 hereof.
(d) If, upon any liquidation, dissolution or winding-up of the
Operating Partnership, the assets of the Operating Partnership, or proceeds
of those assets, available for distribution to the holders of Series 1997-A
Preferred Units and of units of all other classes or series which are on a
parity as to distributions on liquidation with the Series 1997-A Preferred
Units are not sufficient to pay in full the Change of Control Preference or
the Liquidation Preference, as the case may be, to the holders of Series
1997-A Preferred Units which have not elected to redeem Series 1997-A
Preferred Units as provided in Section 4(c) by reference to Section 5 hereof,
and any liquidation preference of all other classes or series of units of
Partnership Interests which are on a parity as to distributions on
liquidation with the Series 1997-A Preferred Units, then the assets, or the
proceeds of those assets, which are available for distribution to such
holders of Series 1997-A Preferred Units and of the units of all other
classes or series which are on a parity as to distributions on liquidation
with Series 1997-A Preferred Units, will be distributed to the holders of
Series 1997-A Preferred Units, and of the units of all other classes or
series which are on a parity as to distributions on liquidation with the
Series 1997-A Preferred Units, ratably in accordance with the respective
amounts of the Liquidation Preference, with respect to the Series 1997-A
Preferred Units entitled thereto, and the liquidation preferences applicable
to the units of other classes or series which are on a parity as to
distributions on liquidation with the Series 1997-A Preferred Units, with
respect to the units of any such other class or series entitled thereto.
After payment of the full amount of the Change of Control Preference or the
Liquidation Preference, as the case may be, such holders of Series 1997-A
Preferred Units will not be entitled to any further distribution of assets of
the Operating Partnership and will not be entitled to redeem their Series
1997-A Preferred Units as provided in Section 5 hereof.
As used herein, a "Change of Control" of the Operating Partnership
shall be deemed to have occurred upon a Change of Control of the Corporation
(as defined in the Articles Supplementary of the Corporation as currently in
effect).
Section 5. Redemption and Exchange.
(a) Optional Redemption. Except as otherwise set forth in clause
(iii) below, each holder of Series 1997-A Preferred Units (other than the
General Partner) shall have the right (the "Redemption Right") to require the
Operating Partnership to redeem such Units at a redemption price equal to and
in the form of the Cash Amount (as hereinafter defined) to be paid by the
Operating Partnership. Any such Redemption Right shall be exercised pursuant
to a Notice of Redemption (a "Notice of Redemption") delivered to the
Operating Partnership (with a copy to the General Partner) by the holder of
such Series 1997-
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A Preferred Unit who is exercising the Redemption Right (the "Redeeming
Holder"). A holder may exercise the Redemption Right from time to time with
respect to part or all of the Series 1997-A Preferred Units that it owns, as
selected by the holder, provided, that a holder may not exercise the
Redemption Right for less than one thousand (1,000) Series 1997-A Preferred
Units unless such holder then holds less than one thousand (1,000) Series
1997-A Preferred Units, in which event the Redeeming Holder must exercise the
Redemption Right for all of its Series 1997-A Preferred Units. "Specified
Redemption Date" means the tenth business day after receipt by the General
Partner of a Notice of Redemption; provided that if Corporation Common Stock
is not then publicly traded, Specified Redemption Date means the thirtieth
business day after receipt by the General Partner of a Notice of Redemption.
"Cash Amount" shall mean (i) an amount of cash per Series 1997-A Preferred
Unit equal to the greater of (x) the Liquidation Preference per Series 1997-A
Preferred Unit and (y) an amount of cash equal to the product of the Common
Exchange Rate and the Current Market Price (as hereinafter defined). "Common
Exchange Rate" means that number of shares of Corporation Common Stock into
which a share of Corporation Preferred Stock is then convertible, pursuant to
the Articles Supplementary of the Corporation in effect on the date hereof.
"Current Market Price" as of any date of determination will be the average of
the volume weighted average price per share of the Corporation Common Stock
(the "VWAP") on each of the twenty Trading Days (as hereinafter defined),
immediately preceding such date as the VWAP for each day is reported by a
nationally-recognized market quotation or information service that is
selected by the Corporation and approved by a majority in interest of the
holders of the Series 1997-A Preferred Units (exclusive of the units held by
the Corporation) which approval will not be unreasonably withheld. As used
herein, the term "Trading Day" means (A) if the Corporation Common Stock is
listed on at least one stock exchange, a day on which there is trading on the
principal stock exchange on the Corporation Common Stock is listed, (B) if
the Corporation Common Stock is not listed on a stock exchange, but sale
prices of the Corporation Common Stock are reported on an automated quotation
system a day on which trading is reported on the principal automated
quotation system on which sales of the Corporation Common Stock are reported,
(C) if the Corporation Common Stock is not listed on a stock exchange and
sale prices of the Corporation Common Stock are not reported on an automated
quotation system, a day on which quotations are reported by National
Quotation Bureau Incorporated, or (D) if the Corporation Common Stock is not
so listed and sale prices are not so reported, any day other than a Saturday,
a Sunday or a bank holiday in New York, New York.
(A) The Redeeming Holder shall have no right to receive any
distributions paid after the Specified Redemption Date with respect to any
Series 1997-A Preferred Units so redeemed.
(B) The assignee of any holder may exercise the rights
(subject to applicable limitations) of such holder pursuant to this Section
5, and such holder shall be deemed to have assigned such rights to such
assignee and shall be bound by the exercise of such rights by such holder's
assignee. In connection with any exercise of such
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rights by such assignee on behalf of such holder, the applicable Cash Amount
shall be paid by the Operating Partnership directly to such assignee and not
to such holder.
(C) At any time within five business days of receipt by the
General Partner of a written request of a holder of a Series 1997-A Preferred
Unit, the General Partner shall provide such holder with written notice of
the Common Exchange Rate.
(ii) General Partner Assumption of Right.
(A) If a Redeeming Holder has delivered a Notice of
Redemption, the General Partner may, in its sole and absolute discretion,
elect to assume directly and satisfy a Redemption Right (a) by paying to the
Redeeming Holder the Cash Amount or (b) issuing a number of fully paid and
non-assessable shares of Corporation Preferred Stock such that each Series
1997-A Preferred Unit will be entitled to be exchanged for one share of
Corporation Preferred Stock. Unless the General Partner, in its sole and
absolute discretion, shall exercise its right to assume directly and satisfy
the Redemption Right, the General Partner shall not have any obligation to
the Redeeming Holder or to the Operating Partnership with respect to the
Redeeming Holder's exercise of the Redemption Right. If the General Partner
shall exercise its right to satisfy the Redemption Right in the manner
described in the first sentence of this Section 5(a)(ii)(A) and shall fully
perform its obligations in connection therewith, the Operating Partnership
shall have no obligation to pay any amount to the Redeeming Holder with
respect to such Redeeming Holder's exercise of the Redemption Right, and each
of the Redeeming Holder, the Operating Partnership and the General Partner
shall, for federal income tax purposes, treat the transaction between the
General Partner and the Redeeming Holder as a sale of the Redeeming Holder's
Series 1997-A Preferred Units to the General Partner. Nothing contained in
this Section 5(a)(ii)(A) shall imply any right of the General Partner to
require any holder of Series 1997-A Preferred Units to exercise the
Redemption Right afforded to such holder pursuant to Section 5(a)(i).
(B) Each Redeeming Holder agrees to execute such documents as
the General Partner may reasonably require in connection with any issuance of
such shares of Corporation Preferred Stock upon exercise of the Redemption
Right.
(iii) Exceptions to Exercise of Redemption Right.
Notwithstanding the provisions of Sections 5(a)(i) and 5(a)(ii), a holder of
Series 1997-A Preferred Units shall not be entitled to exercise the
Redemption Right pursuant to Section 5(a)(i) if (but only as long as) the
delivery of shares of Corporation Preferred Stock to such holder on the
Specified Redemption Date (A) (i) would, based upon the advice of outside
counsel, be prohibited under the charter of the Corporation (ii) would be
prohibited under Section 5(g) hereof or (iii) would, based upon the advice of
outside counsel, be prohibited under applicable federal or state securities
laws or regulations (in each case regardless of whether the General Partner
would in fact assume and satisfy the Redemption Right) and (B) if, (x) the
holder is Blackacre
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Capital Group, L.P. ("Blackacre") or any affiliate of Blackacre, and (y)
Blackacre will at the time of redemption hold Corporation Preferred Stock that
is convertible into more than 9.8% of the Corporation Common Stock, such entity
does not provide the Corporation with a representation letter substantially in
the form attached hereto as Schedule 1.
(iv) No Liens on Series 1997-A Preferred Units Delivered for
Redemption. Each Redeeming Holder covenants and agrees with the General
Partner that all Series 1997-A Preferred Units delivered for redemption shall
be delivered to the Operating Partnership or the General Partner, as the case
may be, free and clear of all liens, and, notwithstanding anything contained
herein to the contrary, neither the General Partner nor the Operating
Partnership shall be under any obligation to redeem Series 1997-A Preferred
Units which are or may be subject to any liens.
(b) Mandatory' Exchange. Subject to Section 7 hereof, in the event
that the Corporation gives a Notice of Mandatory Conversion (as defined in
the Articles Supplementary of the Corporation relating to the right and
preferences of the Corporation Preferred Stock as in effect on the date of
the First Amendment) to holders of Corporation Preferred Stock, the Operating
Partnership shall have the right to exchange on the Mandatory Conversion Date
(as defined in such Articles Supplementary) not less than all of the
outstanding Series 1997-A Preferred Units into a number of fully paid and
non-assessable Common Units such that each Series 1997-A Preferred Unit will
be entitled to be exchanged for a number of Common Units equal to the Common
Exchange Rate (assuming, for such purpose that a Common Unit is equivalent to
a share of Common Stock). In order to elect to effect the mandatory exchange
(the "Mandatory Exchange") of Series 1997-A Preferred Units, the Operating
Partnership shall issue a notice that all Series 1997-A Preferred Units are
to be exchanged, setting forth the date of the intended exchange (such
notice, the "Notice of Mandatory Exchange," and such date, the "Mandatory
Exchange Date") to all holders of outstanding Series 1997-A Preferred Units
on a date (the "Mandatory Exchange Notice Date") at least 90 but not more
than 120 days prior to the Mandatory Exchange Date. The Notice of Mandatory
Exchange shall also specify a record date (the "Mandatory Exchange Record
Date") selected by the Board of Directors of the General Partner which is not
less than 20 but not more than 45 days before the Mandatory Exchange Date and
the number of Common Units for which each Series 1997-A Preferred Unit will
be exchanged. If the Operating Partnership gives a Notice of Mandatory
Exchange, then, provided that the computation set forth in the Notice of
Mandatory Exchange is not clearly erroneous, the outstanding Series 1997-A
Preferred Units will be automatically exchanged for Common Units at the close
of business on the Mandatory Exchange Date and on such date the Operating
Partnership will pay holders of the Series 1997-A Preferred Units an amount
equal to all Accrued Distributions thereon through the Mandatory Exchange
Date. At the close of business on the Mandatory Exchange Date, the General
Partner shall cause appropriate amendments to the Partnership Agreement to be
made to reflect the Mandatory Exchange and shall deliver to the holders of
the Series 1997-A Preferred Units a counterpart of the Partnership Agreement
to reflect the issuances of such Common Units to such holders. Any
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Common Units issued pursuant to a Mandatory Exchange shall be immediately
redeemable at any time thereafter, at the option of the holder thereof, in
accordance with the redemption provisions of the Partnership Agreement.
(c) Redemption and Exchange Procedures.
(i) If Series 1997-A Preferred Units are noticed for
redemption or exchange between the close of business on a distribution
payment Record Date and the opening of business on the corresponding
Distribution Payment Date ("Ex Record Date Units"), the distribution with
respect to those units will be payable on the Distribution Payment Date to
the holder of record of the Ex Record Date Units on the distribution payment
Record Date notwithstanding the surrender of the Ex Record Date Units for
redemption or exchange after the distribution payment Record Date and prior
to the Distribution Payment Date. The Operating Partnership will make no
payment or adjustment for Accrued Distributions on Ex Record Date Units,
whether or not in arrears, or for distributions on the Common Units or shares
of Corporation Preferred Stock issued upon redemption or exchange of the Ex
Record Date Units, other than to make payment to the holder of record thereof
on the Record Date. All Accrued Distributions payable with respect to Series
1997-A Preferred Units noticed for exchange during any period commencing with
the close of business on each Distribution Payment Date and ending with the
opening of business on the next succeeding Record Date will be paid to the
holder redeeming or exchanging such units on the related redemption or
exchange date.
(ii) As promptly as practicable after a Specified Redemption
Date, or the Mandatory Exchange Date, as the case may be, the Operating
Partnership will issue and will deliver to the holder at the office of the
holder set forth in the Notice of Election to Exchange, or on the holder's
written order, a certificate or certificates representing the number of whole
shares of Corporation Preferred Stock or a fully executed counterpart of an
amendment to the Partnership Agreement reflecting the number of Common Units
issued upon exchange of the Series 1997-A Preferred Units.
(iii) Each redemption or exchange will be deemed to have been
effected at the Specified Redemption Date or on the Mandatory Exchange Date,
as applicable, and the person in whose name a certificate for shares of
Corporation Preferred Stock, if any, or to whom a fully executed counterpart
of an amendment to the Partnership Agreement reflecting the ownership of
Common Units, if any, is to be issued upon a redemption or exchange, will be
deemed to have become the holder of record of the shares of Corporation
Preferred Stock or the Common Units represented by that certificate or
amendment, as the case may be, at such effective time. All shares of
Corporation Preferred Stock and all Common Units delivered upon redemption or
exchange of Series 1997-A Preferred Units will upon delivery be duly and
validly issued and fully paid and non-assessable, free of all liens and
charges and not subject to any preemptive rights except such preemptive
rights as may exist with respect to the Corporation Preferred Stock under the
Articles Supplementary of the
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Corporation relating thereto. The Series 1997-A Preferred Units so redeemed
or exchanged will no longer be deemed to be outstanding and all rights of the
holder with respect to those shares will immediately terminate, except the
right to receive the shares of Corporation Preferred Stock or the Common
Units to be issued or distributed as a result of the redemption or exchange
and except that such Series 1997-A Preferred Units that are redeemed or
exchanged for Corporation Preferred Stock shall become the property of the
General Partner in order to reflect the shares of Corporation Preferred Stock
issued in exchange therefor.
(d) Reclassification of Common Units. If there is a
reclassification or change of outstanding Common Units or a merger or
consolidation of the Operating Partnership with any other entity that results
in a reclassification, change, conversion, exchange or cancellation of the
outstanding Common Units, or a sale or transfer of all or substantially all
of the assets of the Operating Partnership, upon any subsequent redemption or
exchange of Series 1997-A Preferred Units, each holder of Series 1997-A
Preferred Units will be entitled to receive the kind and amount of
securities, cash and other property which the holder would have received if a
Mandatory Exchange had occurred immediately before the first of those events
and had retained all the securities, cash and other assets received as a
result of all those events. In the event that a transaction may be viewed as
causing this Section 5(d) to be applicable and create a change in the Common
Exchange Rate, then the change in the Common Exchange Rate will be applicable
and this provision will be applicable.
(e) Reservation of Corporation Preferred Stock and Corporation
Common Stock. The General Partner will at all times reserve and keep
available, free from preemptive rights, out of the authorized but unissued
shares of Corporation Preferred Stock, for the purpose of effecting the
redemption of the Series 1997-A Preferred Units (and the subsequent
conversion of Corporation Preferred Stock into Corporation Common Stock), the
maximum number of shares of Corporation Preferred Stock and Corporation
Common Stock which the General Partner would be required to deliver upon the
redemption of all the outstanding Series 1997-A Preferred Units for
Corporation Preferred Stock and the subsequent conversion of such Corporation
Preferred Stock into Corporation Common Stock. For the purposes of this
Section 5(f), the number of shares of Corporation Preferred Stock or
Corporation Common Stock which the General Partner would be required to
deliver upon the redemption of all outstanding shares of Corporation
Preferred Stock were held by a single holder.
(f) Payment of Certain Taxes. The Operating Partnership will pay
any documentary stamp or similar issue or transfer taxes payable in respect
of the issue or delivery of shares of Corporation Preferred Stock or Common
Units upon the redemption or exchange of the Series 1997-A Preferred Units;
PROVIDED, HOWEVER, that the Operating Partnership will not be required to pay
any tax which may be payable in respect of any transfer involved in the issue
or delivery of shares of Corporation Preferred Stock or of Common Units in a
name other than that of the holder of record of Series 1997-A Preferred Units
to be exchanged and no such issue or delivery will be made unless and until
the person
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requesting the issue or delivery has paid to the Operating Partnership the
amount of any such tax or has established, to the satisfaction of the
Operating Partnership, that the tax has been paid or is not payable.
(g) Notwithstanding anything to the contrary contained herein, the
Series 1997-A Preferred Units will not be redeemable in exchange for shares
of Corporation Preferred Stock, whether upon exercise of rights by the
holders of the Series 1997-A Preferred Units, the Operating Partnership, the
Corporation or otherwise, unless and until the approval by a majority of
votes cast by the holders, in person or by proxy, of the shares of capital
stock of the Corporation entitled to vote thereon is obtained, at a duly
called and held annual or special meeting of the stockholders of the
Corporation at which a quorum is present, with respect to the redemption into
Corporation Preferred Stock pursuant to the charter of the Corporation;
provided, however, that the restriction contained in this Section 5(g) shall
not apply if a redemption of the Series 1997-A Preferred Units and
Corporation Preferred Stock issued pursuant to the Preferred Stock Purchase
Agreement (as defined below) for cash pursuant to the Contribution Agreement
(as defined below) and the Preferred Stock Purchase Agreement has been
effected such that the remaining outstanding Series 1997-A Preferred Units
and Common Units issued pursuant to the Contribution Agreement together with
the outstanding shares of Corporation Preferred Stock issued pursuant to the
Stock Purchase Agreement do not, on an "as redeemed" or an "as converted"
basis exceed 19.9% of the number of shares of Corporation Common Stock
outstanding immediately prior to closing under the Contribution Agreement by
and among the Corporation, the Operating Partnership and each of the
Contributors listed on Exhibit A-1 thereto (the "Contribution Agreement").
For purposes of this Section 5(g), the term "Preferred Stock Purchase
Agreement" shall mean the Stock Purchase Agreement by and among Xxxxxxxxx
Xxxxxxx Holding, L.C.C., Xxxxxxxxx Xxxxxxx Co-holdings, L.L.C., Xxxxxxx
Pacific Properties, Inc. and Xxxxxxx Pacific Operating Partnership, L.P.
dated as of December 5, 1997.
Section 6. Status.
So long as any Series 1997-A Preferred Units are outstanding and
held by persons other than the General Partner, the Series 1997-A Preferred
Units may only be issued pursuant to the Contribution Agreement.
Section 7. Redemption After Notice of Mandatory Exchange.
(a) Notwithstanding anything to the contrary contained in Section
5, each holder of Series 1997-A Preferred Units prior to a Mandatory Exchange
Date will have the right, exercisable at any time after the Mandatory
Exchange Notice Date but prior to the Mandatory Exchange Date, to require the
Operating Partnership to redeem any or all of the number of Series 1997-A
Preferred Units specified in the Notice of Mandatory Exchange that are owned
of record by the holder (the number of units as to which each holder elects
redemption under this clause (a) being referred to as the "Identified
Redemption Units"), at a
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redemption price per share (the "Redemption Price") equal to (i) the sum of
(A) Stated Value plus (B) the per unit amount of the sum of all Accrued
Distributions with regard to the Series 1997-A Preferred Units (whether or
not declared) through the Redemption Date (as hereinafter defined) times (ii)
the percentage determined in accordance with the following table:
Redemption Date Percentage
--------------- ----------
December 31, 2002 to December 31, 2003 105%
December 31, 2003 to December 31, 2004 104%
December 31, 2004 to December 31, 2005 103%
December 31, 2005 to December 31, 2006 102%
December 31, 2006 to December 31, 2007 101%
December 31, 2007 and thereafter 100%
(b) In order to exercise a right to require the Operating
Partnership to redeem a holder's Series 1997-A Preferred Units under this
Section 7, the holder must deliver a request for redemption with respect to
the Identified Redemption Units to the Operating Partnership at any time
prior to the Mandatory Exchange Date. If such a request for redemption is
given with regard to Series 1997-A Preferred Units, promptly (but in no event
more than five Business Days) after the request for redemption is given to
the Operating Partnership, the Operating Partnership will pay the holder cash
equal to the Redemption Price of the units. The date of such payment is
referred to in this Section 7 as the "Redemption Date."
(c) (i) If a request for redemption is delivered to the Operating
Partnership, on the Redemption Date distributions will cease to accrue with
regard to the Series 1997-A Preferred Units to be redeemed, and at the close
of business on that date the holders of those units will cease to be partners
in the Operating Partnership with respect to those units, will have no
interest in or claims against the Operating Partnership by virtue of such
units (other than as described in clause (ii) below) and will have no voting
or other rights with respect to such units.
(ii) The distribution with respect to a Series 1997-A Preferred Unit
which is the subject of a request for redemption under this Section 7
delivered on a day which falls between the close of business on a Record Date
for the payment of such distribution and the opening of business on the
corresponding Distribution Payment Date will be payable on the Distribution
Payment Date to the holder of record of the Series 1997-A Preferred Unit on
the Record Date for the payment of such distribution notwithstanding the
redemption of the Series 1997-A Preferred Unit after the Record Date for the
payment of such distribution and prior to the Distribution Payment Date.
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Section 8. Ranking. The Series 1997-A Preferred Units shall, with
respect to the payment of distributions, the right to redemption, the right
to receive the Change of Control Preference, the right to receive the
Liquidation Preference and any other assets on liquidation, dissolution or
winding up of the Operating Partnership, rank senior to any other class or
series of partnership interest of the Operating Partnership.
Section 9. Mandatory Redemption in Certain Instances.
(a) If required under the rules of the New York Stock Exchange to enable
(i) the Initial Purchaser (as defined in the Articles Supplementary) to fully
convert all of the shares of Series 1997-A Convertible Preferred Stock
contemplated to be purchased by the Initial Purchaser under the Stock
Purchase Agreement and (ii) the holders of Series 1997-A Preferred Units and
Units to fully convert all of the Series 1997-A Preferred Units and Common
Units contemplated to be issued under the Contribution Agreement, the
Corporation shall seek the approval of its shareholders as to the issuance of
the Common Stock upon conversion of the Series 1997-A Convertible Preferred
Stock, the Series 1997-A Preferred Units and Common Units and any related
matters at the 1998 annual meeting of shareholders, the date of which the
Corporation will use reasonable efforts to advance in time as reasonably
possible and which shall in any event be held on or before May 12, 1998. If
such shareholder approval is not obtained at such meeting, then the
Corporation may, at its sole discretion convene a special meeting of
shareholders for such purpose, PROVIDED, that the same shall be called and
held in sufficient time to enable the Corporation to satisfy its obligations
to such holders under this Section 9. In connection with each such meeting
of shareholders, the Corporation will recommend such approval of its
shareholders, and use its best efforts (including, without limitation, the
retention of a soliciting firm for customary services in this regard) to
cause such approval to be granted. In each such case, the Corporation shall
immediately notify the holders of the Series 1997-A Preferred Units and
Common Units issued under the Contribution Agreement as to whether such
shareholder approval has been obtained. If such approval is not obtained,
the Corporation shall, upon no less than ten Business Days prior written
notice and in any event no later than June 30, 1998, redeem such number of
shares of 1997-A Preferred Units issued under the Contribution Agreement as
shall be agreed upon by the holders thereof and the Corporation in accordance
with Section 4.20 of the Contribution Agreement (the "Redeemed Units") at a
purchase price per share, in cash, paid to the holders thereof, in an amount
equal to the greater of (i) the Stated Value plus the per share amount of
Accrued Dividends (as defined in the Articles Supplementary), if any, and
(ii) the aggregate Current Market Price of a number of shares of Common Stock
(calculated to the nearest 1/100th of a share) equal to the Stated Value plus
the per share amount, if any, of Accrued Dividends as of the date of such
redemption (the "Mandatory Redemption Date") divided by the Conversion Price
then in effect (such greater amount, the "Mandatory Redemption Price").
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(b) On the Mandatory Redemption Date, dividends will cease to accrue
with regard to the Redeemed Units, and at the close of business on such date
the holders of Series 1997-A Preferred Units and Common Units issued under
the Contribution Agreement will have no interest in or claims against the
Corporation by virtue of such Redeemed Units and will have no voting or other
rights with respect to such Redeemed Units.
(c) The Mandatory Redemption Price shall be due and payable in full on
the Mandatory Redemption Date, which shall be no later than June 30, 1998.
In the event that the Corporation fails to deliver to the holders of Series
1997-A Preferred Units and Common Units issued under the Contribution
Agreement the Mandatory Redemption Price on or before such date, then the
Mandatory Redemption Price shall accrue interest on the principal amount
thereof and unpaid interest thereon, in each case at a rate equal to the
lesser of 1.25% per month and the highest lawful rate of interest, compounded
until such time as the Corporation pays to the holders of Series 1997-A
Preferred Units and Common Units issued under the Contribution Agreement all
amounts due under this Section 9.
Section 10 Miscellaneous.
(a) Except as otherwise expressly provided herein, whenever a notice or
other communication is required or permitted to be given to holders of
Preferred Units, the notice or other communication will be deemed properly
given if deposited in the United States mail, postage prepaid, addressed to
the persons shown on the books of the Operating Partnership as the holders of
the Series 1997-A Preferred Units at the addresses as they appear on the
books of the Operating Partnership, as of the Record Date or dates determined
in accordance with applicable law and with the Partnership Agreement, as in
effect from time to time, with a copy sent to Blackacre Capital Group, L.P.,
000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention: Xxxxxx X. Xxxxxx in each
case by documented overnight delivery service or, to the extent receipt is
confirmed, telecopy, telex or other electronic transmission service.
(b) Series 1997-A Preferred Units will not have any designations,
preferences, conversion or other rights, voting powers, restrictions,
limitations as to distributions and other distributions, qualifications or
terms and conditions of redemption, other than those specifically set forth
herein, in the Partnership Agreement, and as may be provided under applicable
law.
(c) The headings of the various subdivisions herein are for convenience
only and will not affect the meaning or interpretation of any of the
provisions herein.
(d) The preferences, conversion and other rights, voting powers,
restrictions, limitations as to distributions and other distributions,
qualifications and terms and conditions of redemption of the Series 1997-A
Preferred Units may be waived, and any of
16
such provisions of the Series 1997-A Preferred Units may be amended, with the
approval of holders of at least a majority of the outstanding Series 1997-A
Preferred Units (exclusive of any Series 1997-A Preferred Units held by the
Corporation and its affiliates), voting separately as a class.
17
Section 11 Severability of Provisions.
Whenever possible, each provision hereof shall be interpreted in a
manner as to be effective and valid under applicable law, but if any
provision hereof is held to be prohibited by or invalid under applicable law,
such provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating or otherwise adversely affecting the
remaining provisions hereof. If a court of competent jurisdiction should
determine that a provision hereof would be valid or enforceable if a period
of time were extended or shortened or a particular percentage were increased
or decreased, then such court may make such change as shall be necessary to
render the provision in question effective and valid under applicable law.
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Schedule 1
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