Exhibit 10.1
HOME PROPERTIES OF NEW YORK, L.P.
AMENDMENT NO. 9
TO
AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP
WHEREAS, the Amended and Restated Agreement of Limited
Partnership (as subsequently amended, the "Partnership
Agreement") of Home Properties of New York, L.P. (the
"Partnership") was entered into as of August 4, 1994;
WHEREAS, Section 3.03 of the Partnership Agreement authorizes the
General Partner to issue additional Partnership Interests
consisting of such classes and having such rights and powers as
shall be determined by the General Partner;
WHEREAS, Section 9.10 of the Partnership Agreement empowers the
General Partner to amend the Agreement without the consent of the
Limited Partners to set forth the rights, powers, duties and
preferences of the holders of any additional Partnership
Interests issued pursuant to Section 3.03 of the Partnership
Agreement;
WHEREAS, the General Partner has determined that it will cause
the Partnership to issue an additional class of Partnership
Interest (the "Class A Interest") and does hereby amend the
Partnership Agreement to set forth the rights, powers, duties and
preferences of the holder(s) of the Interest (the "Class A
Interest Holders"); and
WHEREAS, the State Treasurer of the State of Michigan, Custodian
of Michigan Public School Employees' Retirement System, State
Employees' Retirement System, Michigan State Police Retirement
System, and Michigan Judges' Retirement System ("SMRS") wishes to
purchase, on the terms and subject to the conditions set forth in
that certain Partnership Interest Purchase Agreement by and
between the Partnership, the General Partner and SMRS, the
entire Class A Interest described in this Amendment No. 9 and to
execute this Amendment to reflect its admission to the
Partnership as a limited partner and holder of the entire Class A
Interest.
NOW THEREFORE, the Partnership Agreement is hereby amended as
follows:
1. Defined Terms. All capitalized terms used herein and not
defined shall have the meaning given them in the Partnership
Agreement.
2. Allocation of Income or Loss.
(a) Section 4.01 of the Agreement is hereby amended and
restated in its entirety as follows:
"Section 4.01 Allocations of Income or Loss.
(a) Except as provided in Sections 4.02, 4.03 and
4.04, Income shall be allocated as follows: (i) first, to
each Class A Interest Holder to the extent of, and in
proportion to, the excess of the cumulative Losses allocated
to such Class A Interest Holder pursuant to Section
4.01(b)(ii) hereof over the cumulative amount of Income
allocated to such Class A Interest Holders pursuant to this
Section 4.01(a)(i); and (ii) thereafter, to the Partners who
hold Units, pro rata in accordance with their respective
Percentage Interests.
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(b) Except as provided in Sections 4.02, 4.03 and
4.04, Loss shall be allocated as follows: (i) first, to
the Partners who hold Units, pro rata in accordance with
their respective Percentage Interests, until each such
Partner has a zero Capital Account; (ii) second, to the
Class A Interest Holders to the extent of, and in proportion
to, the positive balance in their Capital Accounts and
(iii) thereafter, to the Partners pro rata in accordance
with their respective Percentage Interest.
(b) The following shall be added to the Partnership
Agreement as Section 4.02(h):
"(h) Preferred Return. For each Fiscal Year or other
applicable period, Income, and if necessary gross income, (after
taking into account any adjustments allocated to each Class A
Interest Holder to the extent not included in the computation of
Income) shall be allocated to each Class A Interest Holder to the
extent of, and in proportion to, the excess of the cumulative
Preferred Return, Accrued Return or other distributions paid to
such Class A Interest Holder pursuant to Section 10.04 hereof
over the cumulative amount of Income allocated to such Class A
Interest Holder pursuant to this Section 4.02(h)."
3. Article X. The following shall be added to the Partnership
Agreement as Article X.
ARTICLE X
CLASS A LIMITED PARTNERSHIP INTERESTS
Section 10.01 Name. Pursuant to Section 3.03 of this
Partnership Agreement there is hereby created and issued a new
class of Partnership Interest to be known as the Class A Limited
Partnership Interest (the "Class A Interest").
Section 10.02 Capital Contribution. State Treasurer of the
State of Michigan, Custodian of Michigan Public School
Employees' Retirement System, State Employees' Retirement System,
Michigan State Police Retirement System and Michigan Judges'
Retirement System ("SMRS") shall contribute $35,000,000 (the
"Original Investment") to the Partnership in consideration for
the issuance to it by the Partnership of the Class A Interest.
The Original Investment shall be deemed to be the Capital
Contribution of the Class A Interest Holder(s).
Section 10.03 Status of Holders. Holder(s) of all or any
portion of the Class A Interest shall be Limited Partners of the
Partnership and, except as otherwise provided herein, shall be
entitled to all of the rights and privileges of the other Limited
Partners, as well as the additional rights and privileges
described below. For purposes of voting on matters that must be
approved by the Limited Partners, the Class A Interest Holder(s)
shall be deemed to hold the number of Units equal to $35,000,000
divided by the Conversion Price times the percentage of the Class
A Interest originally issued hereby that has not been converted
into HP Shares (as defined in, and subject to adjustment in
accordance with, Section 10.06(b) below).
Section 10.04 Preferred Return.
(a) The Partnership shall pay the Class A Interest
Holder(s) on a quarterly basis in accordance with Section
10.04(c), prior to payment of any Distributions to the
holders of any Units, including but not limited to the
General Partner, a distribution equal to the preferred
return described below (the "Preferred Return"). Except as
described in this Section 10.04, the Partnership shall not
be obligated to pay to the Class A Interest Holder(s) any
Distributions pursuant to Section 4.05 of this Partnership
Agreement.
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(i) Commencing on the date that the Class A Interest
is originally issued (the "Closing Date") and continuing to
the second anniversary of the Closing Date (the "9.25%
Preferred Return Period"), the holders of the Class A
Interest shall receive, on a quarterly basis in accordance
with Section 10.04(c), a distribution equal to the greater
of: (a) $809,375; or (b) an amount equal to the dividends
and other distributions that would have been paid on the
number of HP Shares equal to $35,000,000 divided by the
Conversion Price (the "9.25% Preferred Return").
(ii) Commencing on the date following the end of the
9.25% Preferred Return Period and, except as provided below
in this subparagraph (ii), continuing to the seventh
anniversary of the Closing Date (the "9.0% Preferred Return
Period"), the holders of the Class A Interest shall
receive, on a quarterly basis in accordance with Section
10.04(c), a distribution equal to the greater of: (x)
$787,500 or (y) an amount equal to the dividends and other
distributions that would have been paid on the number of HP
Shares equal to $35,000,000 divided by the Conversion Price
(the "9.0% Preferred Return"). Notwithstanding the above,
if on the seventh anniversary of the Closing Date the Class
A Interest Holder(s) have not been paid actual distributions
of at least $809,375 on each of the prior eight (8)
consecutive Preferred Return Payment Dates (defined below)
or any distribution of a Preferred Return from any prior
period remains unpaid, the 9.0% Preferred Return Period
shall continue until the Preferred Return Payment Date which
shall be the eighth (8th) consecutive Preferred Return
Payment Date thereafter occurring on which the Class A
Interest Holder(s) have been paid actual distributions of
at least $809,375 and until there remains outstanding no
unpaid distribution of a Preferred Return.
(b) After the end of the periods described in (i) and (ii)
above, the holders of the Class A Interest shall continue to
receive, on a quarterly basis in accordance with Section
10.04(c), a distribution equal to the dividends and other
distributions that would have been paid on the number of HP
Shares equal to $35,000,000 divided by the Conversion Price times
the percentage of the Class A Interest originally issued hereby
that has not been converted into HP Shares.
(c) The distributions required by this Section 10.04 shall
be payable to the holders of the Class A Interest on a quarterly
basis on the same date that the General Partner pays a quarterly
dividend or other distribution to the holders of HP Shares. If
the General Partner does not pay a distribution to the holders of
HP Shares, the distributions required by this Section 10.04 shall
be payable on the fourth Tuesday of each of February, May, August
and November or on the next Business Day thereafter if such day
shall not be a Business Day. Each of the dates on which such a
distribution shall be so payable shall be a "Preferred Return
Payment Date." The first Preferred Return Payment Date shall be
determined in accordance with this paragraph (c) and shall occur
in the first calendar quarter following the Closing Date. The
first distribution payable to the holders of the Class A Interest
shall be pro-rated for the number of days occurring from the
Closing Date to and including the last day of the calendar
quarter in which the Closing Date occurs. To the extent that the
Closing Date is not the last day of a calendar quarter, the
following rules shall apply to the proration of any distribution
of a Preferred Return in those calendar quarters in which the
rate of payment of such distribution is adjusted pursuant to
Section 10.04(a) and (b); (i) the distribution payable with
respect to the quarter in which the second anniversary of the
Closing Date occurs shall be pro-rated such that the 9.25%
Preferred Return shall be payable for the number of days
occurring between the first day of that quarter to and including
the second anniversary of the Closing Date and the 9.0% Preferred
Return shall be payable for the number of days occurring from the
day after the second anniversary of the Closing Date to and
including the last day of quarter in which the second anniversary
of the Closing Date occurs; and (ii) the distribution payable
with respect to the quarter in which the 9.0% Preferred Return
Period terminates shall be pro-rated such that the
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9.0% Preferred
Return shall be payable for the number of days occurring from the
first day of that quarter to and including the day on which the
9.0% Preferred Return Period terminates and the distribution
described in paragraph (b) of this Section 10.04 shall be payable
for the number of days occurring from the day after the day on
which the 9.0% Preferred Return Period terminates to and
including the last day of the quarter in which the 9.0% Preferred
Return Period terminates.
(d) To the extent that the Class A Interest Holder(s)
convert any portion of the Class A Interest held by them to HP
Shares as permitted by Section 10.06 below, the distributions
described in subparagraphs (i) and (ii) of paragraph (a) above
shall terminate with respect to the portion of the Class A
Interest so converted.
(e) To the extent that a distribution required by this
Section 10.04 is not paid on any Preferred Return Payment Date,
the amount not paid shall accrue interest at the rate of 9.25%
per annum during the 9.25% Preferred Return Period and at the
rate of 9.0% per annum during the 9.0% Preferred Return Period,
compounded quarterly on each Preferred Return Payment Date that
it remains unpaid (the "Accrued Return"). Thereafter, any
distributions paid by the Partnership shall first be applied to
pay any Accrued Return previously due, but not paid. While any
distribution owing to the holders of the Class A Interest remains
unpaid, no distributions shall be paid to the holders of any
Units, including but not limited to the General Partner.
Section 10.05 Transfer Rights. The Class A Interest may be
transferred at any time providing that: (a) no transfer of all
or a portion of the Class A Interest may be made to a person if,
in the written opinion of legal counsel to the Partnership, it
would result in the Partnership being treated as an association
taxable as a corporation; (b) such transfer is effectuated
through an "established securities market" or a "secondary
market" (or substantial equivalent thereof) within the meaning of
Section 7704 of the Code; and (c) no transfer of all or a portion
of the Class A Interest shall be valid and effective and the
Partnership shall not recognize the same for the purpose of
payment of the Preferred Return, allocation of Income or Loss or
Approval Rights (as hereafter defined) until an Assignment of
Class A Interest is delivered to the General Partner. The
Assignment of Class A Interest shall be in substantially the form
attached to this Partnership Agreement as Exhibit B. With
respect to the transfer of all or any portion of the Class A
Interest, the provisions of this Section 10.05 shall apply in
substitution for the provisions of Sections 6.05 and 6.06 of the
Partnership Agreement. Upon receipt of a duly executed
Assignment of Class A Interest, and the furnishing of the
additional documents described in Section 3.05 of the Partnership
Agreement, the General Partner shall execute an amendment to this
Partnership Agreement adding the name or names of such Persons to
Schedule A and the assignee shall be admitted to the Partnership
as an Additional Limited Partner.
Section 10.06 Conversion Rights.
(a) Any Class A Interest Holder shall have the right to
convert all or any portion of its Class A Interest into HP
Shares (the "Conversion Right"). In the event that any Class A
Interest Holder wishes to exercise its Conversion Right, it shall
so notify the General Partner in writing (the "Conversion
Notice"), specifying the percentage of the Class A Interest that
it wishes to convert. Within ten (10) days after the receipt of
a Conversion Notice (the "Conversion Date"), the General Partner
will issue and deliver to the holder, on the holder's written
order, a certificate or certificates representing the number of
full HP Shares issuable upon the conversion of the specified
portion of the Class A Interest. Any fractional HP Shares
arising upon a conversion will be settled as provided in
paragraph (e) of this Section 10.06. Each conversion will be
deemed to have been effected on the Conversion Date and the
person in whose name a certificate for HP Shares is to be issued
upon a conversion will be deemed to
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have become the holder of
record of the HP Shares represented by that certificate at such
effective time. All HP Shares delivered upon conversion of all
or any portion of the Class A Interest will, upon delivery, be
duly and validly issued and fully paid and nonassessable, free of
all liens and charges and not subject to any preemptive rights.
The portion of the Class A Interest so converted will no longer
be deemed to be outstanding and all rights of the holder with
respect to that portion so converted will immediately terminate,
except the right to receive the HP Shares and any Accrued Return.
(b) Upon conversion, the holder of the Class A Interest so
converted will receive that number of HP Shares as shall equal
the percentage of the Class A Interest originally issued hereby
represented by such Class A Interest so converted times
$35,000,000 divided by the conversion price, which will initially
be $21.00 and will be adjusted as follows from time to time if
any of the events described below occurs (the "Conversion
Price"):
(i) If the General Partner: (x) pays a dividend or
makes a distribution on HP Shares in HP Shares; (y) subdivides
the outstanding HP Shares into a greater number of HP Shares; or
(z) combines the outstanding HP Shares into a smaller number of
HP Shares, the Conversion Price in effect immediately prior to
that event will be adjusted so that the holder of all or a
portion of the Class A Interest to be converted after that event
will receive the number of HP Shares which such holder would have
received as a result of the event if the portion of the Class A
Interest to be converted had been converted immediately before
the happening of such event (or, if there is more than one such
event, if the portion of the Class A Interest to be converted had
been converted immediately before the first of those events and
the holder had retained all the HP Shares or other securities or
assets received after the conversion). An adjustment made
pursuant to this Section 10.6(b)(i) will become effective
immediately after the record date in the case of a dividend or
distribution, and will become effective immediately after the
effective date in the case of a subdivision or combination. If
such dividend or distribution is declared but is not paid or
made, the Conversion Price then in effect will be appropriately
readjusted. However, a readjustment of the Conversion Price will
not affect any conversion which takes place before the
readjustment.
(ii) If the General Partner issues rights or warrants
to the holders of the HP Shares as a class entitling them to
subscribe for or purchase HP Shares at a price per share less
than the Conversion Price in effect on the record date for the
determination of shareholders entitled to receive the rights or
warrants, the Conversion Price in effect immediately before the
issuance of the rights or warrants will be reduced in accordance
with the equation set forth on Exhibit C hereto, which is hereby
incorporated by reference herein. The adjustment provided for in
this Section 10.6(b)(ii) will be made successively whenever any
rights or warrants are issued, and will become effective
immediately after each record date. In determining whether any
rights or warrants entitle the holders of HP Shares to subscribe
for or purchase HP Shares at less than the Conversion Price, and
in determining the aggregate sale price of the HP Shares issuable
on the exercise of rights or warrants, there will be taken into
account any consideration received by the General Partner for the
rights or warrants, with the value of that consideration, if
other than cash, to be determined by the Board of Directors of
the General Partner (whose determination, if made in good faith,
will be conclusive). If any rights or warrants which lead to an
adjustment of the Conversion Price expire or terminate without
having been exercised, the Conversion Price than in effect will
be appropriately readjusted. However, a readjustment of the
Conversion Price will not affect any conversions which take place
before the readjustment.
(iii) If the General Partner distributes to the
holders of the HP Shares as a class any shares of stock of the
General Partner (other than HP Shares) or evidences of
indebtedness or assets (other than cash dividends or
distributions) or rights or warrants (other than those referred
to in Section 10.6(b)(ii)) to subscribe for or purchase any of
its securities,
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then, in each such case, the Conversion Price
will be reduced so that it will equal the price determined by
multiplying the Conversion Price in effect immediately prior to
the record date for the distribution by a fraction of which the
numerator is the Market Value of the HP Shares on the record date
for the distribution less the then fair market value (as
determined by the Board of Directors, whose determination, if
made in good faith, will be conclusive) of the stock, evidences
of indebtedness, assets, rights or warrants which are distributed
with respect to one HP Share, and of which the denominator is the
Market Value of the HP Shares on that record date. Each
adjustment will become effective immediately after the record
date for the determination of the shareholders entitled to
receive the distribution. If any distribution is declared but
not made, or if any rights or warrants expire or terminate
without having been exercised, effective immediately after the
decision is made not to make the distribution or the rights or
warrants expire or terminate, the Conversion Price then in effect
will be appropriately readjusted. However, a readjustment will
not affect any conversions which take place before the
readjustment.
(iv) If the General Partner issues or sells (or the
Partnership issues or sells) any equity or debt securities which
are convertible, directly or indirectly, into or exchangeable for
HP Shares ("Convertible Securities") or any rights, options
(other than the issuance or exercise after the date hereof of
stock options covering no more than 699,778 HP Shares, the
exercise price of which will be no less than the Market Value of
the HP Shares on the date of grant as determined in good faith by
the Board of Directors, which number of HP Shares shall be
subject to appropriate adjustment to the extent that the
Corporation: (x) pays a dividend or makes a distribution on the
HP Shares in HP Shares; (y) subdivides the outstanding HP Shares
into a greater number of shares; or (z) combines the outstanding
HP Shares into a smaller number of shares, issued to employees or
directors of the General Partner and its subsidiaries under the
General Partner's existing employee stock incentive plans) or
warrants to purchase HP Shares at a conversion, exchange or
exercise price per share which is less than the Conversion Price,
unless the provisions of Section 10.6(b)(ii) or (iii) are
applicable, the General Partner will be deemed to have issued or
sold, on the later of the date on which the Convertible
Securities, rights, options or warrants are issued or the date on
which they first may be converted, exchanged or exercised, the
maximum number of HP Shares into or for which the Convertible
Securities may then be converted or exchanged or which are then
issuable upon the exercise of the rights, options or warrants
immediately prior to the close of business on the later of the
date on which the Convertible Securities, rights, options or
warrants are issued or the date on which they may first be
converted, exchanged or exercised, and the Conversion Price shall
be adjusted downward as if it were an event covered by Section
10.6(b)(v). However, no further adjustment of the Conversion
Price will be made as a result of the actual issuance of HP
Shares upon conversion, exchange or exercise of the Convertible
Securities, rights, options or warrants. If any Convertible
Securities, rights, options or warrants to which this Section
applies are redeemed, retired or otherwise extinguished or expire
without any HP Shares having been issued upon conversion,
exchange or exercise thereof, effective immediately after the
Convertible Securities, rights, options or warrants expire, the
Conversion Price then in effect will be readjusted to what it
would have been if those Convertible Securities, rights, options
or warrants had not been issued. However, a readjustment will
not affect any conversion which takes place before the
readjustment. For the purposes of this Section 10.6(b)(iv), (x)
the price of HP Shares issued or sold upon conversion or exchange
of Convertible Securities or upon exercise of rights, options or
warrants will be: (A) the consideration paid to the General
Partner for the Convertible Securities, rights, options or
warrants, plus; (B) the consideration contemplated to be paid to
the General Partner upon conversion, exchange or exercise of the
Convertible Securities, rights, options or warrants, with the
value of the consideration, if other than cash, to be determined
by the Board of Directors of the General Partner (whose
determination, if made in good faith, will be conclusive) and (y)
any change in the conversion or exchange price of Convertible
Securities or the exercise price of rights, options or warrants
will be treated as an extinguishment, when the change becomes
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effective, of the Convertible Securities, rights, options or
warrants which had the old conversion, exchange or exercise price
and an immediate issuance of new Convertible Securities, rights,
options or warrants with the new conversion, exchange or exercise
price.
(v) If the General Partner issues or sells any HP
Shares (other than on conversion or exchange of Convertible
Securities or exercise of rights, options or warrants to which
Section 10.6(b)(ii), (iii) or (iv) applies) for a consideration
per share less than the Conversion Price on the date of the
issuance or sale (or on exercise of options or warrants, for less
than the Conversion Price on the day the options or warrants are
issued), upon consummation of the issuance or sale, the
Conversion Price in effect immediately prior to the issuance or
sale will be reduced in accordance with the equation set forth on
Exhibit C hereto, which is hereby incorporated by reference
herein.
(vi) If there is a reclassification or change of
outstanding HP Shares (other than a change in par value, or as a
result of a subdivision or combination), or a merger or
consolidation of the General Partner with any other entity that
results in a reclassification, change, conversion, exchange or
cancellation of outstanding HP Shares, or a sale or transfer of
all or substantially all of the assets of the Corporation, upon
any subsequent conversion of any portion of the Class A Interest,
each holder of the Class A Interest so converted will be entitled
to receive the kind and amount of securities, cash and other
property which the holder would have received if the holder had
converted the Class A Interest into HP Shares immediately before
the first of any of the foregoing events and had retained all the
securities, cash and other assets received as a result of such
events. In the event that a transaction may be viewed as causing
this Section 10.6(b)(vi) to be applicable and Section
10.6(b)(iii) is also applicable, then Section 10.6(b)(iii) will
be applied and this Section 10.6(b)(vi) will not be applied.
(vii) Notwithstanding anything to the contrary
above, no adjustment in the Conversion Price will be required in
the following situations: (x) the General Partner issues (or the
Partnership issues) any HP Shares or Partnership Interests or any
equity or debt securities which are convertible, directly or
indirectly, into or exchangeable for HP Shares at a price or
exchange or exercise price per share which is less than the
Conversion Price as consideration for all or a portion of the
purchase price in connection with the acquisition of property or
real estate operating businesses; (y) the General Partner issues
or sells (or the Partnership issues or sells) to the Class A
Interest Holders any HP Shares or Partnership Interests or any
equity or debt securities which are convertible, directly or
indirectly, into or exchangeable for HP Shares at a price or
exchange or exercise price per share which is less than the
Conversion Price; and (z) the General Partner issues HP Shares at
less than the Conversion Price pursuant to the dividend
reinvestment portion of the General Partner's Dividend
Reinvestment, Stock Purchase, Resident Stock Purchase and
Employee Stock Purchase Plan.
(viii) No adjustment in the Conversion Price will be
required unless the adjustment would require a change of at least
1% in the Conversion Price; provided, however, that any
adjustments which are not made because of this Section
10.6(b)(viii) will be carried forward and taken into account in
any subsequent adjustments. All calculations under this Section
10.06 will be made to the nearest cent or to the nearest one
hundredth of a share, as the case may be.
(ix) Whenever the Conversion Price is adjusted, the
Corporation will promptly send each Class A Interest Holder a
notice of the adjustment of the Conversion Price setting forth
the adjusted Conversion Price and the date on which the
adjustment becomes effective and containing a brief description
of the events which caused the adjustment.
(c) If any one of the events in Section 10.6(b)(i) through
10.6(b)(vi) occurs, then the General Partner will mail to each of
the Class A Interest Holders of record, no later than 15
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Business
Days after the applicable date specified below, a notice stating,
as applicable, one of the following: (i) the date on which a
record was taken for the purpose of the dividend, distribution or
grant of rights or warrants, or, if no record was taken, the date
as of which the holders of HP Shares of record who were entitled
to the dividend, distribution or rights or warrants was
determined; (ii) the date on which the Convertible Securities
were issued or the date on which the change in the conversion,
exchange or exercise price of the Convertible Securities, rights,
options or warrants was effective; (iii) the date on which the
General Partner sold HP Shares for less than the Conversion Price
on the date of the sale; or (iv) the date on which the
reclassification, consolidation, merger, share exchange, sale,
transfer, dissolution, liquidation or winding up became
effective, and the date on which holders of record of HP Shares
were entitled to exchange their HP Shares for securities or other
property deliverable upon the reclassification, consolidation,
merger, share exchange, sale, transfer, dissolution, liquidation
or winding up. Failure to give any such notice or any defect in
the notice will not affect the legality or validity of the
reclassification, consolidation, merger, share exchange, sale,
transfer, dissolution, liquidation or winding up.
(d) (i) The General Partner will at all times reserve and
keep available, free from preemptive rights, out of the
authorized but unissued HP Shares, for the purpose of effecting
conversion of the Class A Interest, the maximum number of HP
Shares which the General Partner would be required to deliver
upon the conversion of all the outstanding Class A Interest. For
the purpose of this Section 10.6(d)(i), the number of HP Shares
which the General Partner would be required to deliver upon the
conversion of all the outstanding Class A Interests will be
computed as if at the time of the computation all the outstanding
Class A Interests were held by a single holder.
(d) (ii) Before taking any action which would cause an
adjustment reducing the Conversion Price below the then par value
(if any) of the HP Shares deliverable upon conversion of the
Class A Interest, the General Partner will take all corporate
action which may, in the written opinion of its counsel, be
necessary in order that the General Partner may validly and
legally issue fully paid and non-assessable HP Shares at the
adjusted Conversion Price.
(e) No fractional HP Shares will be issued upon conversion
of the Class A Interest. Any fractional interest in an HP Share
resulting from conversion of the Class A Interest will be paid in
cash (computed to the nearest cent) based on the Market Value of
the HP Shares on the trading day next preceding the Conversion
Date.
(f) As of the Closing Date, the HP Shares to be issued upon
conversion of all or any portion of the Class A Interest will be
approved for listing on the New York Stock Exchange subject to
official notice of issuance. After the Closing Date, the General
Partner will continue the listing of the HP Shares required to be
delivered upon conversion of all or any portion of the Class A
Interest on the New York Stock Exchange or on each national
securities exchange, if any, upon which the outstanding HP Shares
are listed at the time of delivery.
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(g) With respect to Conversion Dates occurring on or after
the fifth anniversary of the Issuance Date, the Class A Interest
Holder of the portion of the Class A Interest so converted shall
receive, in addition to the HP Shares to be issued pursuant to
Section 10.6(b), that additional number of HP Shares, if any, as
shall be necessary in order that such holder will receive, on the
next date on which dividends are paid by the General Partner with
respect to HP Shares, dividends equal to $7,875 for each 1% of
the Class A Interest converted, assuming that the dividend paid
per HP Share did not change from that applicable on the dividend
payment date immediately preceding the Conversion Date.
Section 10.07 Voting Rights.
(a) As used in this Section 10.07 and elsewhere in this
Partnership Agreement, the following terms shall have the
indicated meanings:
(i) Affiliate of SMRS. Any Person that controls, is
controlled by or is under common control with SMRS, as evidenced
by contract or agreement.
(ii) Approval Rights. The Right Holders' right to
approve certain matters as described in Section 10.07 of this
Partnership Agreement and pursuant to Section 6 of the
Partnership Interest Agreement.
(iii) Change of Control. The occurrence of any of
the following events: (i) the General Partner takes or fails to
take any action such that it ceases to be required to file
reports under Section 13 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or any successor to that
Section; (ii) any "person" (as defined in Sections 13(d) and
14(d) of the Exchange Act) is permitted by the General Partner or
the Subsidiaries, or their respective Boards of Directors, to
become the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of either (a) 30% or more
of the outstanding HP Shares, or (b) 30% or more (by right to
vote or grant or withhold any approval) of the outstanding
securities of any other class or classes which individually or
together have the power to elect a majority of the members of
such Board of Directors; (iii) either of the Boards of Directors
of the General Partner or the Subsidiaries determine to recommend
the acceptance of any proposal set forth in a tender offer
statement or proxy statement filed by any person with the
Securities and Exchange Commission which indicates the intention
on the part of that person to acquire, or acceptance of which
would otherwise have the effect of that person acquiring, control
of the General Partner or the Subsidiaries; (iv) the General
Partner ceases to be the sole general partner of the Partnership
or grants or sells to any third party the power to control or
direct the actions of the Partnership as if such third party were
a general partner of the Partnership; or (v) the Partnership is a
party to any entity conversion or any merger or consolidation in
which the Partnership is not the surviving entity in such merger
or consolidation.
(iv) Equity Capitalization. The aggregate of the Value
of the Interest, the Value of the Units not owned by the General
Partner and the Market Value of all outstanding HP Shares at the
time the determination is made.
(v) HP Conversion Shares. The HP Shares received on
conversion of all or any portion of the Class A Interest that
have not previously been sold or otherwise transferred on a
Public Basis.
(vi) Investor Group Representative. The Person
appointed by the Rights Holders to act as their representative as
described in paragraph (c) of this Section 10.07.
(vii) Market/Offer Price. The product of : (i)
the greater of (a) the highest price (or value of other
consideration) per HP Share agreed upon during such 12-month
period pursuant to any Business Combination Transaction, which
was made during such 12-month period and was not terminated or
withdrawn prior to the end of such period; and (b) the average
closing price per HP Share as shown on the composite tape of the
New York Stock Exchange over such 12-month period; and (ii) the
number of such HP Shares
(viii) Market Value. As defined in Section 1.41 of
this Partnership Agreement, provided that the Rights Holders, by
accepting the issuance or assignment to them of all or a portion
of the Class A Interest or the HP Conversion Shares, covenant and
agree that, during the ten (10) consecutive trading days
immediately preceding the date on which the Market
Page 9
Value is to be
determined, they will not purchase or sell any HP Shares, cause
the purchase and sale of any HP Shares or take any other actions
that are intended to or that actually affect the market price of
HP Shares.
(ix) Partnership Interest Agreement. The Partnership
Interest Purchase Agreement, dated as of December 20th, 1996 by
and between the Partnership, the General Partner and SMRS.
(x) Public Basis. The sale of any HP Shares by means
of any public stock exchange or in any Public Offering.
(xi) Public Offering. A public offering of HP Shares,
preferred shares of the General Partner or Partnership Interests
(including Units), other than a registration relating solely to
the sale of securities to participants in a dividend reinvestment
plan, a registration on Form S-4 relating to a business
combination or similar transaction permitted to be registered on
such Form S-4, a registration on Form S-8 relating solely to the
sale of securities to participants in a stock or employee benefit
plan, or a registration permitted under Rule 462 under the
Securities Act registering additional securities of the same
class as were included in an earlier registration statement for
the same offering and declared effective.
(xii) Related Entity. The Partnership, the General
Partner or any Person in which the Partnership or the General
Partner has beneficial ownership, whether direct or indirect, of:
(x) 50% or more of the outstanding shares of any class of stock
or any class of other ownership interest or (y) such lower
percentage of the outstanding shares of any class of stock or any
class of such other ownership interest as is sufficient to render
such Person a subsidiary of the Partnership or the General
Partner for purposes of generally accepted accounting principles
as in effect at the time of determination of the status of such
Person for purposes of this definition.
(xiii) Rights Holders. The Class A Interest Holders
and the holders of the HP Conversion Shares.
(xiv) Rights Termination Date. The date on which
the combined Value of the Class A Interest and the Value of the
HP Conversion Shares held by the Rights Holders: (i) shall be
less than $35,000,000; and (ii) cease to exceed 8% of the Equity
Capitalization of the Partnership for a period of 30 consecutive
trading days.
(xv) Total Capitalization. The aggregate of the Equity
Capitalization plus the aggregate outstanding principal amount at
the time the determination is made of all liabilities of the
Partnership and the General Partner arising from the borrowing of
any money or the deferral of any of the purchase price of any
asset or pursuant to any capital lease.
(xvi) Value of the HP Conversion Shares. Market
Value of the equivalent number of HP Shares.
(xvii) Value of the Class A Interest. Market Value
of the HP Shares to which the Class A Interest can be converted.
(xviii) Value of the Units. Market Value of the HP Shares
to which the outstanding Units can be converted.
(b) Prior to the Rights Termination Date, the General
Partner or the Partnership, as the case may be, shall not take
any of the actions described in Section 6.4 of the Partnership
Page 10
Interest Agreement or any of the following actions without
obtaining the prior written approval of the Rights Holders,
voting as a group:
(i) permit the outstanding principal liabilities of
Related Entities arising from the borrowing of any money
(for this purpose, any indebtedness or other liability which
is guaranteed, endorsed or discounted with recourse by a
Related Entity shall be deemed to be a principal liability
of such Related Entity) or the deferral of the purchase
price of any asset or pursuant to any capital lease to
exceed 50% of the Total Capitalization;
(ii) purchase any assets in a single transaction or
series of related transactions (including by way of merger,
consolidation or other combination with any other Person or
the purchase of equity interests in the entity owning such
assets) if the consideration to be paid for those assets
exceeds 25% of Total Capitalization;
(iii) sell, exchange, lease or otherwise dispose of
any assets or securities in a single transaction or a
series of related transactions (including by way of merger,
consolidation or other combination with any other Person or
the sale of equity interests in the entity owning such
assets) if the assets or securities to be sold, exchanged,
leased or otherwise disposed of have a value exceeding 25%
of the Total Capitalization;
(iv) amend any provision of the Articles of
Incorporation or By-laws of the General Partner or this
Partnership Agreement if such amendment would adversely
affect the rights of the Class A Interest Holders;
(v) liquidate or dissolve any Related Entity;
(vi) with respect to any Related Entity, commence a
voluntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or consent
to the entry of an order for relief in an involuntary case
under any such law;
(vii) terminate the election, or take any action
which would cause termination other than by election, of the
General Partner as a real estate investment trust under the
Code;
(viii) alter any business purpose (as may be stated
in the Articles of Incorporation of the General Partner and
the Subsidiaries, the Partnership Agreement or otherwise)
of, or allow a Change in Control to occur with respect to,
any Related Entity;
(ix) create or issue any security which would be pari
passu or senior in right, either as to distributions or upon
liquidation, to the Class A Interest or reclassify the Class
A Interest or any Units if such creation, issuance or
reclassification would adversely affect the rights or
benefits of the holders of the Class A Interest;
(x) increase the size of the Board of Directors of the
General Partner, except to the extent necessary to add an
Investor Nominee (as defined in the Partnership Interest
Agreement) pursuant to the Partnership Interest Agreement;
and
(xi) except as otherwise provided in this Amendment No.
9, require the exchange of the Class A Interest for other
securities.
(c) The General Partner shall provide the Investor Group
Representative with a written request for the approval of any
matter described in paragraph (b) of this Section 10.07. Such
written notice shall include a reasonable description of the
matter for which approval is sought and shall be made in
accordance with the provisions of Section 10.11. If the Investor
Page 11
Group Representative does not respond within fifteen (15)
Business Days after the date of receipt of such a written
request the Rights Holders shall be deemed to have approved the
matter as to which their approval was sought.
(d) With respect to their approval rights pursuant to
paragraph (b) of this Section 10.07, the Rights Holders shall
only be permitted to act as a group. In the event that there is
more than one Rights Holder, the Rights Holder shall select one
Person to act as their Investor Group Representative and shall so
notify the General Partner. SMRS shall be the initial Investor
Group Representative. Upon failure of the Rights Holders to
select an Investor Group Representative, the largest single
holder of Class A Interests shall be designated by the General
Partner as the Investor Group Representative. The General
Partner and the Partnership shall be entitled and obligated to
rely on any and all notifications and directions given to it by
the Investor Group Representative and shall have no obligation to
verify that such notifications and directions constitute the
consensus of the Rights Holders. In addition, upon receipt of
notice from any or all other Rights Holders that such
notifications and directions do not constitute the consensus of
the Rights Holders, the General Partner and the Partnership shall
still be obligated to follow the directions of the Investor Group
Representative.
(e) In addition to their rights under this Section 10.07,
the Rights Holders shall have the right to appoint and nominate
one or more Investor Nominees and to approve the other matters as
described in Section 6 of the Partnership Interest Agreement.
(f) If the General Partner solicits the approval of the
Rights Holders for any of the matters described in paragraph (b)
of Section 6.4 of the Partnership Interest Agreement or this
Section 10.07 of this Agreement and is informed by the Investor
Group Representative that the Rights Holders do not approve of
the matter submitted, then the Partnership shall have the right
to purchase the remaining portion of the Class A Interest from
the holders thereof at a price (the "Interest Purchase Price")
that is equal to 105% of the greater of: (i) the Value of the
Class A Interest as of the date of purchase (the "Purchase
Closing"), including any Accrued Return; and (ii) the Original
Investment, including any Accrued Return, times the percentage of
the Class A Interest originally issued hereby that has not been
converted to HP Shares. Upon full payment of the purchase right
described in this paragraph (f) of Section 10.07 (the "Purchase
Right") the holder of any HP Conversion Shares shall cease to be
a Rights Holder and a Class A Interest Holder for purposes of
this Partnership Agreement and the Partnership Interest
Agreement. If the Partnership intends to exercise its Purchase
Right, it shall so notify the Class A Interest Holders in writing
within five (5)Business Days after receipt of notice that the
Rights Holders have not approved any matter submitted to them for
approval pursuant to Section 10.07 of this Partnership Agreement
or Section 6.4 of the Partnership Interest Agreement. Payment
of the Interest Purchase Price as described above shall be made
in cash within twenty (20) Business Days after receipt of that
notice by the Class A Interest Holders. In the event that the
Partnership exercises its Purchase Right in connection with the
refusal of the Rights Holders to approve any tender or exchange
offer or merger, consolidation, share exchange, business
combination, or similar transaction involving the General Partner
(each, a "Business Combination"), then at the completion of the
12-month period following the Purchase Closing, the General
Partner shall determine the Market/Offer Price for such HP
Shares.. If the Market/Offer Price is higher than the Interest
Purchase Price paid at the Purchase Closing, the Partnership
shall pay over to the holders of record of the Class A Interest
as of the date of the Purchase Closing, an additional amount (the
"Additional Amount") equal to such difference. The payment of
the Additional Amount shall be due on the earlier of: (i) ten
days after the end of such 12-month period; or (ii) the closing
date of any Business Combination Transaction closed during such
period. In the event that the Rights Holders on two occasions do
not approve a matter submitted for their approval pursuant to
paragraph (b) of Section 6.4 of the Partnership Interest Purchase
Agreement or this Section 10.07 and the Partnership does not
exercise its Purchase Right, then the Rights Holders may request
from the General Partner a
Page 12
waiver of the Volume Limitation, as
defined in the letter agreement from SMRS to the General Partner
whereby SMRS acknowledges certain restrictions on the sale of HP
Shares received on conversion of all or a portion of the Class A
Interest. The General Partner shall not unreasonably withhold
its approval of such a waiver, provided that it shall not be
unreasonable for the General Partner to withhold its approval if
the sale of HP Shares beyond the Volume Limitation is reasonably
anticipated to have a material negative effect on the market for,
and the market price of, HP Shares.
Section 10.08 Calculation of Percentage Interest. The Percentage
Interest of the entire Class A Interest shall initially be
58.07838. That percentage is calculated based on total
Partnership Interests (including Units) deemed to be outstanding,
as of the date hereof, of 2,869,686. To the extent that the
number of Units or other Partnership Interests changes (thus
changing the denominator), or any portion of the Class A Interest
is converted to HP Shares (thus changing the numerator), the
Percentage Interest associated with the Class A Interest shall
be proportionately adjusted.
Section 10.09 Liquidation. Notwithstanding the provisions of
Section 7.02 of this Partnership Agreement, upon liquidation of
the Partnership, the General Partner shall, to the extent of
funds available, pay to the holder(s) of the Class A Interest
prior to making any distribution to any other security holder in
the aggregate the amount of the Original Investment times the
percentage of the Class A Interest originally issued hereby that
has not been converted into HP Shares as described in Section
10.06 above, plus any Accrued Return. Such payment is to be made
to each such holder in proportion to its then current percentage
interest in the remaining Class A Interest and such payment to be
made prior to and in lieu of the payment to Partners described in
sub-paragraph (4) of paragraph (a) of Section 7.02 of this
Partnership Agreement. For purposes of this Section 10.09, a
consolidation or a merger of the Partnership with another entity
wherein the Partnership is not the surviving entity, or a sale of
all or substantially all of the Partnership's assets for cash or
securities, will be considered a liquidation of the Partnership.
Section 10.10 Redemption of the Class A Limited Partnership
Interest. From and after the tenth anniversary of the Issuance
Date, the Partnership shall have the right to redeem the
remaining portion of the Class A Interest for a redemption price
equal to 100% of the amount of Original Investment times the
percentage of the Class A Interest that had not as yet been
converted into HP Shares as described in Section 10.06 above (the
"Redemption Price"), plus any Accrued Return. The Partnership
shall give the Interest Holder(s) no less than thirty-five (35)
Business Days prior written notice of its intention to exercise
the redemption right described above. Within thirty (30)Business
Days after receipt of the above described notice of intention
from the Partnership, the Interest Holder(s) shall notify the
Partnership as to whether they plan to exercise their Conversion
Right with respect to the remaining portion of the Class A
Interest prior to the redemption of the Class A Interest. If the
holder(s) do not so exercise their Conversion Right, then upon
payment of the Redemption Price, all of the rights of the holders
of the Class A Interest, under this Partnership Agreement and the
Partnership Interest Agreement shall terminate.
Section 10.11 Notices. All notices and other communications
under this Article X shall be sufficiently given for all purposes
hereunder if in writing and delivered personally, sent by
documented overnight delivery service or, to the extent receipt
is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below.
Notices to the General Partner and the Partnership shall be
addressed to:
Page 13
Home Properties of New York, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Attn: Xxx X. Xxxx
(000) 000-0000
Telecopier No.: (000) 000-0000
with a copy to:
Xxx X. XxXxxxxxx, Esq.
c/o Home Properties of New York, Inc.
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
(000) 000-0000
Telecopier No.: (000) 000-0000
or at such other address and to the attention of such other
person as the General Partner or the Partnership may designate by
written notice to SMRS. Notices to SMRS shall be addressed to:
Express Mail:
Mortgage and Real Estate Division
Michigan Department of Treasury
000 Xxxx Xxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Administrator
(000) 000-0000
Telecopier No.: (000) 000-0000
Other Mail:
Mortgage and Real Estate Division
Michigan Department of Treasury
X.X. Xxx 00000
Xxxxxxx, Xxxxxxxx 00000
Attn: Administrator
with a copy to:
Michigan Department of Attorney General
Finance and Development Division
One Michigan Avenue Building
000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Assistant in Charge
(000) 000-0000
Telecopier No.: (000) 000-0000
and an additional copy to:
Xxxxxx & Xxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxx Xxxxxxxxx
Page 14
or at such other address and to the attention of such other
person as SMRS may designate by written notice to the General
Partner.
Notices to other Rights Holders, holders of the Class A Interest
and the Investor Group Representative shall be by the above means
and to such addresses and to the attention of such person as the
Rights Holders, holders of the Class A Interest and the Investor
Group Representative may designate by written notice to the
General Partner.
For purposes of this Agreement, the Investor Group Representative
will only be deemed to have received any notice upon the written
acknowledgment by one individual designated by the Investor Group
Representative with authority to acknowledge such receipt or upon
refusal by any such designee to accept receipt of any notice.
The Investor Group Representative shall at all times provide the
General Partner with a written designation of at least two
individuals or titles of positions that are so designated with
authority to acknowledge receipt of written notice.
In all cases where a failure by the Rights Holders, Class A
Interest Holders and/or the Investor Group Representative to
respond within a specified time frame shall be deemed to be their
approval pursuant to this Partnership Agreement, then the written
notice or request provided by the General Partner shall
specifically state that a failure to respond within the indicated
time frame shall be deemed to be an approval of the matter for
which approval was sought."
4. Effectiveness of this Amendment No. 9. The terms of this
Amendment No. 9 shall not be effective and the Class A Interest
shall not be issued until the Partnership has received the
Original Investment from SMRS. Upon receipt by the Partnership
of the Original Investment, the terms of this Amendment No. 9
shall be immediately and automatically effective and the Class A
Interest shall be issued to SMRS without any further action on
the part of SMRS or the Partnership. The Partnership covenants
and agrees that promptly after receipt of the Original Investment
that it shall forward to SMRS written confirmation of such
receipt. Failure by the Partnership to forward such confirmation
to SMRS upon receipt of the Original Investment shall in no way
be deemed to impair the effectiveness of this Amendment No. 9 or
the issuance of the Class A Interest to SMRS.
5. Miscellaneous. As modified herein, the Partnership
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, this Amendment No. 9 to the Partnership
Agreement is hereby executed as of the 23rd day of December,
1996.
GENERAL PARTNER
HOME PROPERTIES OF NEW YORK, INC.
/s/ Xxx X. Xxxx
Xxx X. Xxxx
Executive Vice President
Page 15
LIMITED PARTNERS
See Schedule A attached hereto
By: HOME PROPERTIES OF NEW YORK, INC.
under power of attorney
/s/ Xxx X. Xxxx
Xxx X. Xxxx
Executive Vice President
STATE TREASURER OF THE STATE OF MICHIGAN,
CUSTODIAN OF MICHIGAN PUBLIC SCHOOL
EMPLOYEES' RETIREMENT SYSTEM, STATE EMPLOYEES'
RETIREMENT SYSTEM, MICHIGAN STATE POLICE
RETIREMENT SYSTEM, AND MICHIGAN JUDGES'
RETIREMENT SYSTEM
By: /s/ Xxxxxx X. Xxx Xxxxxx
Xxxxxx X. Xxx Xxxxxx
Administrator
Mortgage and Real Estate Division
Page 16
EXHIBIT C
AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP
HOME PROPERTIES OF NEW YORK, L.P.
CLASS A LIMITED PARTNERSHIP INTEREST
Adjustment Formula Pursuant to Section 10.06(b)(ii) and (v)
("Adjustment Formula")
OBJECTIVE: To keep the Class A Interest Holders' relative
ownership percentage constant (as compared to a transaction
consummated at the Conversion Price), upon the issuance of a
"New Dilutive Security" (see definition below), the then
applicable Conversion Price of the Class A Interest will be
adjusted as follows:
PRIOR CONVERSION ANTI-DILUTION ADJUSTED
PRICE ADJUSTMENT CONVERSION PRICE
FORMULA
PCP x (A+B+C)+EX = ACP
(A+B+C*)+EX*
. .. must be solved for per
calculation included in example below
DEFINITIONS:
PCP - Conversion Price of Class A Interest prior to
issuance of "New Dilutive Security."
"New Dilutive Security" - A common stock or common stock
equivalent issuance at a price below PCP.
ACP - Conversion Price of Class A Interest adjusted for
issuance of "New Dilutive Security".
A - The number of common stock equivalent shares
outstanding which includes: (i) HP Shares issued and outstanding;
(ii) all Dilutive (defined below) convertible securities outstanding,
excluding Units and the number of HP Shares issuable upon conversion
of the Class A Interest;
and (iii) all Dilutive options issued and outstanding
on an as-exercised basis (excluding stock options covering 699,778
shares of Common Stock) prior to issuance of "New Dilutive Security".
For purposes of this definition, a security described under (ii) or
(iii) will be considered "Dilutive"
in all subsequent applications of the Adjustment Formula if it
triggers the Adjustment Formula upon issuance.
B - HP Shares issuable upon conversion of all
Units outstanding prior to issuance of "New Dilutive
Security"
C - HP Shares issuable upon conversion of the entire Class A
Interest, assuming the prior Conversion Price (or PCP).
C* - HP Shares issuable upon conversion of the entire Class A
Interest, assuming the adjusted Conversion Price for
the New Dilutive Security issuance (or ACP).
EX - "New Dilutive Security" equivalent common shares,
assuming the prior Conversion Price (or PCP).
EX* - "New Dilutive Security" equivalent common shares,
based on actual conversion of security.
EXAMPLE:
Assume a 1.5 million share common stock issuance at
$19.50/share (the "New Dilutive Security") following an
investment of $35 million for the Class A Interest at a
$21.00 Conversion Price:
SOLUTION:
Prior to solving for C*, the following table must be
created:
POST NEW DILUTIVE POST NEW DILUTIVE
SECURITY ISSUANCE AT SECURITY ISSUANCE AT
$19.50/SHARE UNADJUSTED $21.00/SHARE
SHARE # OF SHARES PERCENTAGE # OF SHARES PERCENTAGE
CAPITALIZATION
HP Shares (A) 5,900,000 58.0328 5,900,000 58.6509
Partnership 1,100,000 10.8197 1,100,000 10.9349
Units (B)
Class A 1,666,667 16.3934 1,666,667 16.5681
Interest
Equivalent
Shares(C)
New Dilutive
Security Shares 1,500,000 14.7541 1,392,857 13.8461
(EX*/EX)
TOTAL 10,166,667 100.00% 10,059,524 100.00%
C* is the number of HP Shares into which the outstanding
Class A Interest must convert in order to maintain the Class
A Interest Holders' ownership percentage at 16.5681 (i.e.,
as if the issuance were done at the Conversion Price prior
to the issuance (or PCP) given the New Dilutive Security
issuance at $19.50 per common share. To solve for C*, the
following calculations must be made:
# OF COMMON EQUIVALENT SHARES
Share Capitalization, post 10,166,667
New Dilutive Security
Issuance as issued at $19.50
per share and unadjusted
- (C) (1,666,667)
= Share Capitalization less 8,500,000
Class A Interest/(100% - .834319
16.5681) or 100% less
ownership percentage holders
of Class A Interest are to
maintain
= Total Share Capitalization 10,187,950
Required for Class A Interest
to maintain ownership
percentage at 16.5681%
x Required ownership 16.5681%
percentage pursuant to above
=C* 1,687,950
GIVEN C*, ONE SOLVES FOR ACP AS FOLLOWS:
PRICE ADJUSTMENT FORMULA
CONVERSION
PRICE OR PCP
$21.00 X (5,900,000+1,100,000+1,666,667)+($29,250,000/21)
(5,900,000+1,100,000+1,687,950)+($29,250,000/19.50) =
$21.00 X 98.7394% =
$20.74 = ACP
PROOF OF CALCULATION:
POST-NEW DILUTIVE SECURITY ISSUANCE AS
ISSUED AT $19.50 PER SHARE AND AS
ADJUSTED
# of Shares %
Share 5,900,000 57.9115
Capitalization of
HP Shares (A)
Partnership Units 1,100,000 10.7971
(B)
Class A Interest 1,687,950 16.5681
Equivalent Shares
(C*/C)
New Dilutive 1,500,000 14.7233
Security Shares
(EX*/EX)
TOTAL 10,187,950 100.00%
NOTE: Some of the numbers included in this Exhibit C are
not the actual numbers and are included for illustration
purposes only.
