EXHIBIT 10.2(2)
Patriot American Hospitality Operating Partnership, L.P.
First Amendment to
Agreement of Limited Partnership
This First Amendment is made as of August 15, 1997 by Patriot American
Hospitality Operating Company, a Delaware corporation, as general partner (the
"General Partner") of Patriot American Hospitality Operating Partnership, L.P.,
a Delaware 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 Agreement of Limited Partnership of
the Partnership dated June 27, 1997 (the "Partnership Agreement"). All
capitalized terms used herein and not defined shall have the respective meanings
ascribed to them in the Partnership Agreement.
WHEREAS, the General Partner desires to create a series of Class A
Preferred Limited Partner Units of the Partnership;
WHEREAS, the General Partner has determined that such amendment is not
adverse to the Limited Partners;
WHEREAS, the Persons listed on Schedule A attached hereto (the
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"Contributors") have made the Capital Contributions to the Partnership
enumerated on such Schedule; and
WHEREAS, the General Partner desires to accept such Capital Contributions
and to admit the Contributors to the Partnership as Additional Limited Partners;
NOW, THEREFORE, the General Partner undertakes to implement the following
amendments to the Partnership Agreement pursuant to the authority granted to the
General Partner under Section 4.02(a) of the Partnership Agreement:
Section 1. Amendments to Text of Partnership Agreement.
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Article I, Defined Terms is amended to add the following definitions of
"Adjusted Capital Account," "Class A Preferred Unit", "Class B Preferred Unit",
"Class A Preferred Unit Holder," "Class B Preferred Unitholder" and "REIT Share"
and to replace the current definitions of "Preferred Unit", "Preferred
Unitholder", "Partnership Unit" and "Percentage Interest" with the definitions
of those terms described below. All other terms defined in Article I shall
remain in full force and effect.
"Adjusted Capital Account" means, with respect to any Partner, such
Partner's Capital Account maintained in accordance with Section 4.04
hereof, as of the end of the relevant fiscal year of the Partnership, after
giving effect to the following adjustments:
A. Credit to such Capital Account that portion of any deficit
Capital Account balance that such Partner is obligated to restore under the
terms of this Agreement or any other document, such Partner's share of
Partnership Minimum Gain and such Partner's share of Partner Nonrecourse
Debt Minimum Gain.
B. Debit to such Capital Account the items described in Treasury
Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of "Adjusted Capital Account" is intended to
comply with the provisions of Treasury Regulations Sections 1.704-1(b)(2)
and 1.704-2, and shall be interpreted consistently therewith.
"Class A Preferred Unit" means a limited partnership interest
represented by a fractional, undivided share of the Partnership Interests
of all Partners issued hereunder which has the rights, preferences and
other privileges designated herein. The allocation of Class A Preferred
Units among the Partners shall be set forth on Exhibit A, as may be amended
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from time to time.
"Class A Preferred Unitholder" means a limited partner that holds
Class A Preferred Units.
"Class B Preferred Unit" means a limited partnership interest
represented by a fractional, undivided share of the Partnership Interests
of all Partners issued hereunder which has the rights, preferences and
other privileges designated herein. The allocation of Class B Preferred
Units among the Partners shall be set forth on Exhibit A, as may be amended
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from time to time.
"Class B Preferred Unitholder" means a limited partner that holds
Class B Preferred Units.
"Partnership Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued hereunder (and includes any
series or class of Preferred Units). The allocation of Partnership Units
among the Partners shall be as set forth on Exhibit A, as may be amended
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from time to time.
"Percentage Interest" means the percentage ownership interest in the
Partnership of each Partner, as determined by dividing the Partnership
Units owned by a Partner (including any outstanding Preferred Units of any
series or class) by the total number of Partnership Units outstanding
(including any outstanding Preferred Units of any series or class). The
Percentage Interest of each Partner shall be as set forth on Exhibit A, as
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may be amended from time to time. For purposes of applying Section
5.02(a), a Partner's Percentage Interest shall be calculated with the
modifications provided in section 5.02(a)(2).
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"Preferred Unit" means a limited partnership interest (as any class or
series) represented by a fractional, undivided share of the Partnership
Interests of all Partners issued hereunder which has the rights,
preferences and other privileges designated herein.
"Preferred Unitholder" means a limited partner that holds Preferred
Units (of any class or series).
"REIT Share" means a share of common stock of Patriot REIT, par value
$.01 per share.
Section 5.01(a) of the Partnership Agreement is deleted and replaced with
the following:
5.01 Allocation of Profit and Loss.
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(a) General. Profit and Loss of the Partnership for each fiscal
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year of the Partnership shall be allocated among the Partners as follows:
(1) Profit of the Partnership shall be allocated:
(i) first, among the Class A Preferred Unitholders
until the excess of the Profit allocated to the Class A Preferred
Unitholders under this Section 5.01(a)(1)(i), over the Loss
allocated to the Class A Preferred Unitholders under Section
5.01(a)(2)(ii), is equal to zero, in each case on a cumulative
basis for all fiscal years of the Partnership;
(ii) second, among the Class A Preferred Unitholders in
proportion to their respective Percentage Interests until the
excess of the Profit allocated to the Class A Preferred
Unitholders under this Section 5.01(a)(1)(ii) over the Loss
allocated to the Class A Preferred Unitholders under Section
5.01(a)(2)(ii) is equal to the distributions to such Class A
Preferred Unitholders under Section 5.02(a)(1), in each case on a
cumulative basis for all fiscal years of the Partnership; and
(iii) third, among the Partners in accordance with their
respective Percentage Interests.
(2) Loss of the Partnership shall be allocated:
(i) first, among the Partners in accordance with their
respective Percentage Interests until the balances of their
Adjusted Capital Accounts are equal to zero (or, with respect to
the Class A
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Preferred Unitholders, their Adjusted Capital Account balances
contain only the Agreed Value of their Capital Contributions);
and
(ii) second, among the Class A Preferred Unitholders in
proportion to their respective Percentage Interests.
Section 5.02 of the Partnership Agreement is deleted and replaced with the
following:
5.02 Operating Distributions.
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(a) Except as otherwise provided in Section 5.06, cash available for
distribution by the Partnership shall be distributed as follows:
(1) First, if there are any Class A Preferred Units outstanding
on any record date for payment of a REIT Share dividend, the General
Partner shall distribute to the Class A Preferred Unitholder(s) of record
on such date (concurrently with the payment of such dividend) an amount
with respect to each such Class A Preferred Unit equal to the Class A
Preferred Distribution Amount.
(2) Second, if there are any Class B Preferred Units outstanding
on any record date for payment of a Company Share dividend, the General
Partner shall distribute to the Class B Preferred Unitholder(s) of record
on such date (concurrently with the payment of such distribution) an amount
with respect to each such Class B Preferred Unit equal to the Class B
Preferred Distribution Amount.
(3) Third, the General Partner shall distribute any remaining
cash available for distribution on a quarterly (or, at the election of the
General Partner, more frequent) basis, in an amount determined by the
General Partner in its sole discretion, to the Partners who are Partners on
the Partnership Record Date for such quarter (or other distribution period)
in accordance with their respective Percentage Interests on the Partnership
Record Date. For purposes of this Section 5.02(a)(3), Percentage Interests
shall not include any Class A Preferred Units, but shall include Class B
Preferred Units.
(b) In no event may a Partner receive a distribution of cash with
respect to a Partnership Unit if such Partner is entitled to receive a dividend
with respect to a Company Share or a REIT Share for which all or part of such
Partnership Unit has been or will be exchanged.
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Section 5.08 of the Partnership Agreement is deleted and replaced with the
following:
5.08 Additional Distributions Provisions and Definitions Relating to
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Preferred Units.
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Notwithstanding any other provision to the contrary in this
Agreement, as long as there remain any Preferred Units outstanding (of any
class or series), the following additional distribution provisions and
definitions shall apply.
(a) "Class B Preferred Distribution Amount" shall mean, for any quarter
or other period with respect to which a Company Share dividend is
paid and a distribution is required to be made pursuant to Section
5.02(a)(2), an amount equal to such amount that if it were the sole
amount distributed on a Class B Preferred Unit pursuant to Section
5.02(a)(2) for such quarter or other period would provide the Class B
Preferred Unitholder with a distribution on such Class B Preferred
Unit equal to 103% of the corresponding Company Share dividend to be
paid for such quarter or other period. Notwithstanding the foregoing,
the Class B Preferred Distribution Amount with respect to any Class B
Preferred Unitholder shall not exceed the Class B Preferred
Unitholder's Capital Account balance (after reducing such balance to
reflect the items described in Regulations section 1.704-
1(b)(ii)(2)(d)(4), (5) and (6) and after increasing such Capital
Account balance to reflect such Class B Preferred Unitholder's shares
of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum
Gain), determined as of the date of the relevant distribution.
(b) "Class A Preferred Distribution Amount" shall mean, for any quarter
or other period with respect to which a REIT Share dividend is paid
and a distribution is required to be made pursuant to Section
5.02(a)(1), an amount per Class A Preferred Unit equal to the amount
of such dividend per REIT Share. The General Partner agrees that,
without the consent of a majority of the Class A Preferred Unit
Holders (such consent not to be unreasonably withheld or delayed
provided all Class A Preferred Distribution Amounts are current), it
will use reasonable efforts to limit its borrowings from the REIT
Partnership or other sources so that the Partnership has at all times
sufficient borrowing capacity to discharge its obligations with
respect to the Class A Preferred Distribution Amounts.
Section 11.02 of the Partnership Agreement is deleted and replaced with the
following:
11.02 Voting Rights of Preferred Unitholders.
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The holders of record of any series or class of Preferred Units
shall not be entitled to vote on any matter on which Limited Partners are
entitled to vote, or on any other matters, provided that the holders of each
series or class of Preferred Units shall have the right
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to vote as a separate class of Partnership Units on the following, each of which
shall require the consent of holders of record of Preferred Units representing
more than 50% of such series or class of Preferred Units:
a) Any amendment that would adversely affect the rights of the
Preferred Unitholders of such series or class to receive the
distributions payable to them hereunder;
b) Any amendment that would alter the Partnership's allocations of
Profit and Loss to the Preferred Unitholders of such series or
class; or
c) Any amendment that would impose on the Preferred Unitholders of
such series or class any obligation to make additional Capital
Contributions to the Partnership.
Notwithstanding anything in this Section 11.02 to the contrary, Preferred
Unitholders shall not be entitled to vote on any matter regarding the issuance
of additional Partnership Interests, which matters shall be governed solely by
Article IV of this Agreement.
Section 2. Acceptance of Capital Contributions.
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(a) Each of the Contributors has made the Capital Contributions set
forth on Schedule A. Each of the Contributors is currently a Limited Partner of
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the Partnership. The General Partner hereby accepts such Capital Contributions.
In consideration of these Capital Contributions and pursuant to Section
4.02(a)(i) of the Partnership Agreement, the General Partner hereby issues to
each Contributor the number of Class A Preferred Units listed after such
Contributor's name on Schedule A attached hereto. The Agreed Value of the
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Capital Contributions of each of the Contributors shall be equal to the number
of Class A Preferred Units issued to each such Contributor, multiplied by the
average of the daily market price of Paired Shares for the ten consecutive
trading days immediately preceding the date of this First Amendment, which
market price shall be determined in accordance with the procedures set forth in
the definition of "Cash Amount" in the Partnership Agreement.
(b) The issuance of such Class A Preferred Units shall become effective
as of the date of this First Amendment, which will also be the date upon which
such issuances are recorded on the books and records of the Partnership.
Section 3. Amendment to Partnership Agreement. Pursuant to Article XI of
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the Partnership Agreement, the General Partner hereby amends the Partnership
Agreement by deleting Exhibit A in its entirety and replacing it with Exhibit A
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attached hereto.
Section 4. Defined Terms. Capitalized terms used without definition in this
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First Amendment shall have the meanings set forth in the Partnership Agreement.
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Section 5. Partnership Agreement. The Partnership Agreement and this First
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Amendment shall be read together and shall have the same effect as if the
provisions of the Partnership Agreement and this First Amendment were contained
in one document. Any provisions of the Partnership Agreement not amended by
this First Amendment shall remain in full force and effect as provided in the
Partnership Agreement immediately prior to the date hereof.
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IN WITNESS WHEREOF, the General Partner has executed this First Amendment as
of the date first written above.
GENERAL PARTNER
PATRIOT AMERICAN HOSPITALITY
OPERATING COMPANY
/s/ Xxx X. Xxxxxxx
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By: Xxx X. Xxxxxxx
Its: Chief Financial Officer
LIMITED PARTNERS
By: PATRIOT AMERICAN
HOSPITALITY OPERATING
COMPANY, as attorney-in-fact for
each of the Limited Partners
/s/ Xxx X. Xxxxxxx
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By: Xxx X. Xxxxxxx
Its: Chief Financial Officer
