Exhibit 10.1(3)
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[FORM OF AMENDMENT]
PATRIOT AMERICAN HOSPITALITY PARTNERSHIP, L.P.
SECOND AMENDMENT TO
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
This Second Amendment is made as of [Closing], 1997 by PAH GP, Inc., a
Delaware corporation, as general partner (the "General Partner") of Patriot
American Hospitality Partnership, L.P., a Virginia limited partnership (the
"Partnership"), and as attorney-in-fact for each of the limited partners of the
Partnership (collectively, the "Limited Partners") for the purpose of amending
the Second Amended and Restated Agreement of Limited Partnership of the
Partnership dated as of the 2nd day of October, 1995, as amended to date (the
"Partnership Agreement"). All capitalized terms used herein and not defined
shall have the respective meanings ascribed to them in the Partnership
Agreement.
WHEREAS, upon an election by a Limited Partner to redeem units of limited
partner interest in the Partnership ("Partnership Units"), the General Partner
or Patriot American Hospitality, Inc. ("Patriot REIT") has the option to acquire
such Partnership Units in exchange for shares of the common stock of Patriot
REIT;
WHEREAS, pursuant to a merger of Patriot REIT with and into California
Jockey Club, a Delaware corporation to be renamed as Patriot American
Hospitality, Inc. ("New Patriot REIT"), the holders of the common stock of
Patriot REIT are entitled to receive 0.51895 shares of the common stock of New
Patriot REIT plus 0.51895 shares of the common stock of Bay Xxxxxxx Operating
Company, a Delaware corporation to be renamed as Patriot American Hospitality
Operating Company, Inc., a Delaware corporation ("Patriot Operating Company"),
which shares are paired for purposes of trading on the public securities markets
(each paired share of the common stock of New Patriot REIT and Patriot Operating
Company, a "Paired Share");
WHEREAS, in connection with the merger transaction, the Limited Partners
other than PAH LP, Inc. have become limited partners in Patriot American
Hospitality Operating Partnership, L.P., a Delaware limited partnership
("Management Partnership"), the general partner of which is Patriot Operating
Company, and have redemption rights with respect to their units of limited
partner interest in Management Partnership ("Management Units") that permit
Patriot Operating Company to purchase Management Units tendered for redemption
in exchange for shares of its common stock;
WHEREAS, it is necessary and desirable to coordinate the exercise of the
redemption rights granted pursuant to the Partnership Agreement with those
granted pursuant to the agreement of limited partnership of the Management
Partnership (the "Management Partnership Agreement") so that Property Units and
Management Units may be exchanged for publicly traded Paired Shares, and the
General Partner is authorized pursuant to Section
7.01(d) of the Partnership Agreement to modify the Redemption Right of the
Limited Partners to reflect the kind and amount of securities issuable to a
holder of REIT Shares upon the occurrence of a merger;
WHEREAS, it is also necessary and desirable to impose certain restrictions
on the exercise of the redemption rights granted under the Partnership Agreement
so that the Partnership may avoid treatment as a publicly traded partnership,
and the General Partner is authorized pursuant to Article III and Section
8.05(f) of the Partnership Agreement to make such amendments;
WHEREAS, the General Partner desires to make certain other conforming
amendments in connection with the foregoing, which amendments may be made in the
General Partner's discretion pursuant to Section 11.01 of the Partnership
Agreement;
NOW, THEREFORE, the General Partner undertakes to implement the following
amendments to the Partnership Agreement:
Section 1. Amendments to Text of Partnership Agreement.
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A. Article I, Defined Terms, is amended to add the following definitions of
"LP Unit Percentage," "New Cash Amount," "Paired Share," "Private Transfer,"
"New Redemption Right," and "Notice 88-75."
"LP UNIT PERCENTAGE" means a percentage of the total interests in
Partnership capital or Partnership profits (whichever is greater)
determined without regard to Partnership Units held by the General Partner
and any other person related to the General Partner within the meaning of
Section 267(b) or 707(b)(1) of the Code (and after applying the rules of
Section 856(i) of the Code), all as determined under Regulations Section
1.7704-1(k) and Section II.F of Notice 88-75 using any reasonable method
selected by the General Partner.
"MANAGEMENT PARTNERSHIP UNIT" means a unit of limited partner
interest in Patriot American Hospitality Operating Partnership, L.P., a
Delaware limited partnership ("Management Partnership").
"NEW CASH AMOUNT" means an amount of cash per Partnership Unit equal
to the value of the REIT Shares Amount on the Specified Redemption Date.
The value of the REIT Shares Amount on the date of such valuation shall be
determined in the manner provided in the definition of "Cash Amount."
"NEW REDEMPTION RIGHT" has the meaning provided in Section 8.05(g)
hereof.
"NOTICE 88-75" means IRS Notice 88-75, 1988-2 C.B. 386, regarding
certain safe harbors from treatment as a publicly traded partnership.
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"PAIRED SHARE" means a share of common stock of the Company, par
value $.01 per share as paired to a share of common stock of Patriot
American Hospitality Operating Co., Inc., par value $.01 per share.
"PRIVATE TRANSFER" means a Transfer described in one of the
following clauses:
(i) A Transfer in which the basis of the Partnership Unit
in the hands of the transferee is determined, in whole or in part, by
reference to its basis in the hands of the transferor Partner or is
determined under Section 732 of the Code;
(ii) A Transfer at death;
(iii) A Transfer between members of a family as defined
under Section 267(c)(4) of the Code, (i.e., to the Partner's brother,
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sister (by whole or half blood), spouse, ancestor or lineal
descendant);
(iv) A Transfer involving a distribution from a retirement
plan qualified under Section 401(a) of the Code; or
(v) A Transfer that, when aggregated with other Transfers
by the Partner and any related persons (within the meaning of Section
267(b) or 707(b)(1) of the Code) during any 30 calendar day period,
represents a Transfer of Partnership Units representing an LP Unit
Percentage of more than five percent (5%).
The foregoing definition of "Private Transfer" is intended to include
only such Transfers as would be disregarded in determining whether
Partnership Units are readily tradable on a secondary market or the
substantial equivalent thereof pursuant to Treasury Regulations
Section 1.7704-1(e) (i), (ii), (iii), (v) and (vi) and pursuant to
Section II.B of Notice 88-75, and shall be construed and administered
in accordance therewith. The General Partner may modify this
definition of Private Transfer from time to time in its discretion to
ensure that the terms of the definition comply and continue to comply
with such requirements.
B. Article I, Defined Terms, is amended to replace the definitions of "Cash
Amount," "Company", "Redeeming Partner" and "REIT Share" with the following
definitions. All other terms defined in Article I shall remain in full force and
effect.
"CASH AMOUNT" means an amount of cash per Partnership Unit equal to
the value of the REIT Shares Amount on the date of receipt by the Company
of a Notice of Redemption. The value of the REIT Shares Amount shall be
equal to the REIT Shares Percentage (as defined below) times the average of
the daily market price of Paired Shares for the ten consecutive trading
days immediately preceding the date of such
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valuation. The market price for each such trading day shall be: (i) if the
Paired Shares are listed or admitted to trading on any securities exchange
or the NYSE, the sale price, regular way, on such day, or if no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, on such day, (ii) if the Paired Shares are not listed or
admitted to trading on any securities exchange or the NYSE, the last
reported sale price on such day or, if no sale takes place on such day, the
average of the closing bid and asked prices on such day, as reported by a
reliable quotation source designated by the Company, or (iii) if the Paired
Shares are not listed or admitted to trading on any securities exchange or
the NYSE and no such last reported sale price or closing bid and asked
prices are available, the average of the reported high bid and low asked
prices on such day, as reported by a reliable quotation source designated
by the Company, or if there shall be no bid and asked prices on such day,
the average of the high bid and low asked prices, as so reported, on the
most recent day (not more than ten days prior to the date in question) for
which prices have been so reported; provided that if there are no bid and
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asked prices reported during the ten days prior to the date in question,
the value of the Paired Shares shall be determined by the Company acting in
good faith on the basis of such quotations and other information as it
considers, in its reasonable judgment, appropriate. In the event the REIT
Shares Amount includes rights that a holder of Paired Shares would be
entitled to receive, then the value of such rights shall be determined by
the Company acting in good faith on the basis of such quotations and other
information as it considers, in its reasonable judgment, appropriate. For
purposes of this definition, the "REIT Shares Percentage" shall equal the
percentage of the value of a Paired Share that is represented by a REIT
Share, as determined pursuant to that certain Pairing Agreement dated as of
February 17, 1983, as amended from time to time, by and between the Company
and Patriot American Hospitality Operating Company. In the event that the
REIT Shares are no longer paired with shares of the common stock of Patriot
American Hospitality Operating Company, the REIT Shares Amount shall be
based on the value of REIT Shares as determined in accordance with the
principles applied to the valuation of Paired Shares.
"COMPANY" means Patriot American Hospitality, Inc., a Delaware
corporation, and its successors.
"REDEEMING PARTNER" has the meanings provided in Sections 8.05(a) and
8.05(g) hereof, as the context so requires.
"REIT SHARE" means a share of common stock of the Company, $.01 par
value per share.
C. Article VIII, Rights and Obligations of the Limited Partners, shall be
amended to replace the first phrase of the first sentence of Section 8.05(a)
with the following phrase:
"Subject to Sections 8.05(b), 8.05(c), 8.05(d), 8.05(e), 8.05(f),
8.05(g), 8.05(i) and 8.05(j),"
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D. Article VIII, Rights and Obligations of the Limited Partners, shall be
amended to append the following phrase to the end of the Section 8.05(e):
"and shall be subject to any other restrictions imposed on the exercise by
a Limited Partner of the Redemption Right or the New Redemption Right as
set forth in this Section 8.05."
E. Article VIII, Rights and Obligations of the Limited Partners, shall be
amended to add paragraphs (h), (i) and (j) to section 8.05, as follows:
(h) New Redemption Rights. Subject to certain other provisions
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of this Article VIII as provided below, each Limited Partner, other than
PAH LP, shall have the right (the "New Redemption Right"), on or after the
first anniversary of the date on which he acquires Partnership Units (or
such later or earlier date as shall be determined in the sole and absolute
discretion of the General Partner at the time of the issuance of the
Partnership Units), to require the Partnership to redeem on a Specified
Redemption Date all or a portion of the Partnership Units held by such
Limited Partner at a redemption price equal to and in a form of the New
Cash Amount to be paid by the Partnership. The New Redemption Right shall
be exercised pursuant to a Notice of Redemption delivered to the
Partnership (with a copy to the General Partner) by the Limited Partner who
is exercising the New Redemption Right (the "Redeeming Partner"); provided,
however, that the Partnership shall not be obligated to satisfy such
Redemption Right if the Company and/or the General Partner elects to
purchase the Partnership Units subject to the Notice of Redemption pursuant
to Section 8.05(b); and provided, further, that no Limited Partner may
deliver more than two Notices of Redemption during each calendar year. A
Limited Partner may not exercise the New Redemption Right for less than
1,000 Partnership Units or, if such Limited Partner holds less than 1,000
Partnership Units, all of the Partnership Units held by such Partner,
unless the General Partner consents, in its sole discretion. The Redeeming
Partner shall have no right, with respect to any Partnership Units so
redeemed, to receive any distribution paid with respect to Partnership
Units if the record date for such distribution is on or after the Specified
Redemption Date.
The foregoing New Redemption Right shall be subject to the provisions of
Section 8.05(b), reading "New Redemption Right" for "Redemption Right" and
"New Cash Amount" for "Cash Amount"; provided that if the General Partner
and/or the Company shall elect to exercise its right to purchase
Partnership Units under Section 8.05(b) with respect to a Notice of
Redemption under this Section 8.05(h), the General Partner and/or the
Company shall not be required to so notify the Redeeming Partner until five
Business Days prior to the Specified Redemption Date. The foregoing New
Redemption Right shall also be subject to the provisions of Sections
8.05(c), 8.05(d), 8.05(e), 8.05(f) and 8.05(g), also reading "New
Redemption Right" for "Redemption Right" and "New Cash Amount" for "Cash
Amount" where the context requires. The foregoing New Redemption Right
also shall be subject to Sections 8.05(i) and 8.05(j) below.
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The foregoing New Redemption Right is intended to comply with the
requirements of Regulations Section 1.7704-1(f) and Section II.E.1 of
Notice 88-75 and shall be construed and administered in accordance
therewith. The General Partner may modify the New Redemption Right from
time to time in its discretion to ensure that the terms of the New
Redemption Right comply and continue to comply with such requirements.
(i) Restrictions on Exercise of Redemption Right and New
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Redemption Right.
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(i) Notwithstanding the provisions of Sections 8.05(a) and
8.05(b), a Limited Partner shall be entitled to exercise the
Redemption Right only if the redemption or purchase of the Limited
Partner's Partnership Units would constitute a Private Transfer
(within the meaning of clause (v) of the definition of Private
Transfer).
(ii) Notwithstanding the provisions of Sections 8.05(h) and
8.05(b), a Limited Partner shall be entitled to exercise the New
Redemption Right only if (x) the redemption or purchase of the Limited
Partner's Partnership Units would constitute a Private Transfer
(within the meaning of clause (v) of the definition of Private
Transfer) or (y) the number of Partnership Units to be purchased or
redeemed, when aggregated with other Transfers of Partnership Units
within the same taxable year of the Partnership (but not including
Private Transfers), would constitute an LP Unit Percentage of ten
percent (10%) or less.
(iii) The General Partner may establish such policies and
procedures as it may deem necessary or desirable in its sole
discretion to administer the 10% LP Unit Percentage limit set forth in
subparagraph (ii) above, including without limitation imposing further
limitations on the number of LP Units with respect to which the New
Redemption Right may be exercised during any period of time shorter
than a calendar year and establishing procedures to allocate the
ability to exercise the New Redemption Right among the Limited
Partners.
(iv) The restrictions set forth in this paragraph (i) shall
continue in effect until such time as the Partnership is no longer
potentially subject to classification as a publicly traded
partnership, as defined in Section 7704 of the Code, in the absence of
such restrictions, as determined by the General Partner in its
discretion. The restrictions set forth in this paragraph (i),
together with the restrictions on the Transfer of Partnership Units
set forth in Section 9.02, are intended to limit transfers of
interests in the Partnership in such a manner as to permit the
Partnership to qualify for the safe harbors from treatment as a
publicly traded partnership set forth in both Treasury Regulations
Sections 1.7704-1(d), (e), (f) and (j) and Sections II.B, II.C.2 and
II.E.1 of Notice 88-75 and shall be construed and administered in
accordance therewith.
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The General Partner may modify the restrictions set forth in this
paragraph (i), and the provisions of Section 9.02, from time to time
in its discretion to ensure that the Partnership complies and
continues to comply with such requirements.
(j) Paired Shares. Notwithstanding the provisions of Sections
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8.05(a), 8.05(b) and 8.05(h), a Limited Partner shall not be entitled to
exercise the Redemption Right or the New Redemption Right with respect to
any Partnership Units unless the Limited Partner is entitled to exercise
and simultaneously exercises its redemption right under the Management
Partnership Agreement with respect to an equal number of Management
Partnership Units of the same class or series so that the General Partner
and/or the Company, in cooperation with Patriot Operating Company, may
deliver Paired Shares in redemption of such Partnership Units and
Management Partnership Units. The restriction set forth in this paragraph
(j) shall continue in effect until such time as the provisions of that
certain Pairing Agreement, dated as of February 17, 1983, as amended from
time to time, by and between Patriot American Hospitality, Inc. and Patriot
American Hospitality Operating Co., Inc. shall terminate and be of no
further force or effect.
F. Article IX, Transfers of Limited Partnership Interests, shall be amended to
replace the first sentence of Section 9.02(a) with the following:
Subject to Sections 9.02(b), 9.02(c), 9.02(d) and 9.02(e), a Limited
Partner may offer, sell, assign, hypothecate, pledge or otherwise transfer
all or any portion of his Limited Partnership Interest or any of such
Limited Partner's economic rights as a Limited Partner, whether voluntarily
(including by exercise of any redemption or conversion rights) or by
operation of law or at judicial sale or otherwise (collectively, a
"Transfer") with or without the consent of the General Partner; provided
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however that upon Transfer of any Preferred Units, the holder thereof shall
not be entitled to the additional UBTI Adjuster distribution as set forth
in Section 5.08(b).
G. Article IX, Transfers of Limited Partnership Interests, shall be amended to
redesignate Section 9.02(e) as Section 9.02(f) and to insert the following new
Section 9.02(e):
(e) No Limited Partner may effect a Transfer of its Limited
Partnership Interest, in whole or in part, unless (i) the Transfer is a
Private Transfer, (ii) the Transfer is a redemption or sale permitted by
the provisions of Section 8.05, or (iii) the Transfer satisfies both of the
following tests, (x) when aggregated with other Transfers of Partnership
Units within the same taxable year of the Partnership (but not including
Private Transfers or Transfers pursuant to exercises of the New Redemption
Right), the Transfer would constitute an LP Unit Percentage of two percent
(2%) or less, and (y) when aggregated with other Transfers of Partnership
Units within the same taxable year of the Partnership (but not including
Private Transfers), the Transfer would constitute an LP Unit Percentage of
ten percent (10%) or less. The General Partner may establish such policies
and procedures as it may deem necessary or desirable in its sole discretion
to administer the 2% and 10% LP Unit Percentage limits
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set forth in the foregoing subclause (iii) in the manner described in
Section 8.05(i)(iii). Solely for purposes of this paragraph (e), the term
"Transfer" shall not include (except as provided in the following clause)
the mere pledge, hypothecation or grant of a security interest in a
Partnership Unit, but shall include any transfer of a Partnership Unit
within the meaning of Treasury Regulations Section 1.7704-1(a)(3) (other
than transfers that have not been recognized by the Partnership) or any
transaction treated as a transfer for purposes of Notice 88-75. The
restrictions set forth in this paragraph (e) shall continue in effect until
such time as the Partnership is no longer potentially subject to
classification as a publicly traded partnership, as defined in Section 7704
of the Code, as determined by the General Partner in its discretion.
H. Exhibit B to the Agreement, Form of Notice of Exercise of Redemption Right,
shall be replaced with Exhibit B appended hereto.
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Section 2. Effective Date. The amendments to the text of the Partnership
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Agreement provided in Section 1 of this First Amendment shall take effect as of
the date first set forth above. Except as amended by Section 1 of this First
Amendment, the terms of the Agreement shall remain in full force and effect.
[End of Page]
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IN WITNESS WHEREOF, the General Partner has executed this First Amendment
as of the date first written above.
GENERAL PARTNER
PAH GP, INC.
__________________________________
By: Xxxxxx X. Xxxxxx
LIMITED PARTNERS
By: PAH GP, Inc. as attorney-in-fact
for each of the Limited Partners
___________________________________
By: Xxxxxx X. Xxxxxx
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EXHIBIT B
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NOTICE OF EXERCISE OF REDEMPTION RIGHT
In accordance with Section 8.05 of the Second Amended and Restated
Agreement of Limited Partnership (the "REIT Partnership Agreement") of Patriot
American Hospitality Partnership, L.P. (the "REIT Partnership"), and Section
8.05 of the Agreement of Limited Partnership (the "Management Partnership
Agreement") of Patriot American Hospitality Operating Partnership, L.P. (the
"Management Partnership"), the undersigned hereby irrevocably: (i) presents for
redemption ________ Partnership Units in the REIT Partnership and _________
Partnership Units in the Management Partnership in accordance with the terms of
the REIT Partnership Agreement and the Management Partnership Agreement; (ii)
surrenders such Partnership Units and all right, title and interest therein;
(iii) directs that the Cash Amount, New Cash Amount or Paired Shares (as defined
in the REIT Partnership Agreement and/or the Management Partnership Agreement,
as applicable), as determined by the General Partners of the REIT Partnership
and the Management Partnership to be deliverable upon exercise of the Redemption
Right or New Redemption Right (as defined in the REIT Partnership Agreement
and/or the Management Partnership Agreement, as applicable), be delivered to the
address specified below; and (iv) if Paired Shares are to be delivered, such
Paired Shares be registered or placed in the name(s) and at the address(es)
specified below.
This Notice applies to (check one):
___ An exercise of the Redemption Rights granted under Section 8.05(a) of
the REIT Partnership Agreement and the Management Partnership
Agreement.
___ An exercise of the New Redemption Right and Deferred Redemption Right
under Section 8.05(h) of the REIT Partnership Agreement and the
Management Partnership Agreement, respectively.
Name of Limited Partner: Signature Guaranteed by:
_________________________________ __________________________
(Signature of Limited Partner)
_________________________________ Dated:________ __, _____
(Mailing Address)
_________________________________
(City) (State) (Zip Code)
If Paired Shares are to be issued, issue to:
Please insert social security or identifying number:
Name:
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