EXHIBIT 10.5
FOURTH AMENDMENT
TO
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
GGP LIMITED PARTNERSHIP
THIS FOURTH AMENDMENT (the "Fourth Amendment") is made and entered into
on the 10th day of July, 2002, by and among the undersigned parties.
W I T N E S S E T H:
WHEREAS, a Delaware limited partnership known as GGP Limited
Partnership (the "Partnership") exists pursuant to that certain Second Amended
and Restated Agreement of Limited Partnership of GGP Limited Partnership dated
as of April 1, 1998, as amended by that certain First Amendment thereto dated as
of June 10, 1998, that certain Second Amendment thereto dated as of June 29,
1998, that certain Third Amendment thereto dated as of February 15, 2002 and
that certain Amendment dated as of April 24, 2002 (such Second Amended and
Restated Agreement of Limited Partnership, as so amended, the "Second Restated
Partnership Agreement"), and the Delaware Revised Uniform Limited Partnership
Act;
WHEREAS, General Growth Properties, Inc., a Delaware corporation, is
the general partner of the Partnership (the "General Partner");
WHEREAS, upon the closing of the transactions contemplated pursuant to
that certain Agreement and Plan of Merger dated as of March 3, 2002, among the
Partnership, the General Partner and the other parties thereto (the "Merger
Agreement"), the parties who are designated as "New Limited Partners" on the
signature pages hereto (collectively, the "New Limited Partners") are to receive
Series B Preferred Units (as defined below); and
WHEREAS, the parties hereto, being the sole general partner of the
Partnership, the holders of a Majority-in-Interest of the Common Units (as
defined in the Second Restated Partnership Agreement) and the New Limited
Partners, desire to amend the Second Restated Partnership Agreement to effect
the creation and issuance of the Series B Preferred Units, to reflect the
issuance of additional Common Units to the General Partner and a certain
transfer of Common Units and to reflect certain other understandings among them
as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do hereby agree
as follows:
1. CAPITALIZED TERMS. Capitalized terms used but not defined herein
(including without limitation in attached Schedule A) shall have the definitions
assigned to such terms in the Second Restated Partnership Agreement, as amended
hereby.
2. ADDITIONAL DEFINITIONS. Section 1.1 of the Second Restated
Partnership Agreement is hereby amended by inserting the following new
definitions:
"Aggregate Protected Amount" shall mean, with respect to the
Obligated Partners, as a group, the aggregate amount of the Protected
Amounts, if any, of the Obligated Partners, as determined on the date
in question.
"Indirect Owner" shall mean, in the case of an Obligated Partner
that is an entity that is classified as a partnership or disregarded
entity for federal income tax purposes, any person owning an equity
interest in such Obligated Partner, and, in the case of any Indirect
Owner that itself is an entity that is classified as a partnership or
disregarded entity for federal income tax purposes, any person owning
an equity interest in such entity.
"Obligated Partner" shall mean that or those Limited Partners
listed as Obligated Partners on Exhibit D attached hereto and made a
part hereof, as such Exhibit may be amended from time to time by the
General Partner, whether by express amendment to this Agreement or by
execution of a written instrument by and between any additional
Obligated Partner being directly affected thereby and the General
Partner acting on behalf of the Partnership and without the prior
consent of the Limited Partners (other than the Obligated Partners
being affected thereby).
"Partner Nonrecourse Debt" shall mean a liability as defined in
Regulations Section 1.704-2(b)(4).
"Protected Amount" shall mean, with respect to any Obligated
Partner, the amount set forth opposite the name of such Obligated
Partner on Exhibit D hereto and made a part hereof, as such Exhibit may
be amended from time to time by an amendment to the Partnership
Agreement or by execution of a written instrument by and between any
Obligated Partners being affected thereby and the General Partner,
acting on behalf of the Partnership and without the prior consent of
the Limited Partners (other than the Obligated Partners being affected
thereby); provided, however, that, in the case of an Obligated Partner
that is an entity that is classified as a partnership or disregarded
entity for federal income tax purposes, upon the date nine months after
the death of any Indirect Owner in such Obligated Partner, or upon a
fully taxable sale or exchange of all of an Indirect Owner's equity
interest in such Obligated Partner (i.e., a sale or exchange in which
the transferee's basis in the Indirect Owner's equity interest in the
Obligated Partner is not determined, in whole or in part, by reference
to the Indirect Owner's basis in the Obligated Partner), the Protected
Amount of such Obligated Partner shall be reduced to the extent of the
Indirect Owner's allocable share of the Obligated Partner's Protected
Amount. The principles of the preceding sentence shall apply in the
same manner in the case of any Indirect Owner that itself is an entity
that is classified as a partnership or disregarded entity for federal
income tax purposes.
"Recourse Liabilities" shall mean, as of the date of
determination, the amount of indebtedness of the Partnership on that
date other than Nonrecourse Liabilities and Partner Nonrecourse Debt.
3. ESTABLISHMENT AND ISSUANCE OF SERIES B PREFERRED UNITS. A new
series of Preferred Units designated as the "8.5% Series B Cumulative
Convertible Preferred Units" (the
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"Series B Preferred Units") is hereby established and shall have such rights,
preferences, limitations and qualifications as are described on Schedule A,
attached hereto and by this reference made a part hereof (in addition to the
rights, preferences, limitations and qualifications contained in the Second
Restated Partnership Agreement to the extent applicable). Pursuant to the Merger
Agreement, the Partnership hereby issues to each New Limited Partner the number
of Series B Preferred Units set forth opposite its name on Exhibit A, attached
hereto and by this reference made a part hereof. Each New Limited Partner is
hereby admitted as a Limited Partner in respect of the Series B Preferred Units
issued to it, and such New Limited Partner hereby agrees to be bound by the
provisions of the Second Restated Partnership Agreement, as the same is amended
hereby and as the same may be amended from time to time, with respect to such
Series B Preferred Units (including without limitation the provisions of
Sections 8.2, 8.4, 9.1, 9.2 and 9.3 thereof).
4. NEGATIVE CAPITAL ACCOUNTS. The following new Section 7.8 is
hereby added to the Second Restated Partnership Agreement:
"7.8 NEGATIVE CAPITAL ACCOUNTS.
(a) Except as provided in the next sentence and Section 7.8(b),
no Partner shall be liable to the Partnership or to any other partner
for any deficit or negative balance which may exist in its Capital
Account. Upon liquidation of any Obligated Partner's interest in the
Partnership, whether pursuant to a liquidation of the Partnership or by
means of a distribution to the Obligated Partner by the Partnership, if
such Obligated Partner has a deficit balance in its Capital Account,
after giving effect to all contributions, distributions, allocations
and adjustments to Capital Accounts for all periods, each such
Obligated Partner shall contribute to the capital of the Partnership an
amount equal to its respective deficit balance. Each Obligated Partner
having such an obligation to restore a deficit Capital Account shall
satisfy such obligation by the end of the fiscal year of liquidation
(or, if later, within ninety (90) days following the liquidation and
dissolution of the Partnership). Any such contribution by an Obligated
Partner shall be used to make payments to creditors of the Partnership
and such Obligated Partners (i) shall not be subrogated to the rights
of any such creditor against the General Partner, the Partnership,
another Partner, or any Person related thereto, and (ii) hereby waive
any right to reimbursement, contribution or similar right to which such
Obligated Partners might otherwise be entitled as a result of the
performance of their obligations under this Agreement.
(b) Notwithstanding any other provision of this Agreement, an
Obligated Partner shall cease to be an Obligated Partner upon the
earlier of (i) nine months after the death of such Obligated Partner or
(ii) six months after (A) any date after the third anniversary date of
the date hereof which is selected by the Obligated Partner as the date
upon which such Obligated Partner's obligation hereunder shall
terminate (and for which notice of such date shall be given at least 60
days prior to such selected date) or (B) an exchange of all of such
Obligated Partner's remaining Units for shares of Common Stock or
preferred stock of the General Partner (pursuant to a Rights Agreement)
or in an otherwise taxable sale or exchange of all of such Obligated
Partner's Units provided that at the time of, or during such six-month
period following such event set forth in (ii)(A)
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or (B), there has not been: (X) an entry of a decree or order for
relief in respect of the Partnership by a court having jurisdiction
over a substantial part of the Partnership's assets, or the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or other similar official) of the Partnership or of any substantial
part of its property, or ordering the winding up or liquidation of the
Partnership's affairs, in an involuntary case under the federal
bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar
law; or (Y) the commencement against the Partnership of an involuntary
case under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law; or (Z) the commencement by the
Partnership of a voluntary case under the federal bankruptcy laws, as
now or hereafter constituted, or any other applicable federal or state
bankruptcy, insolvency or other similar law, or the consent by it to
the entry of an order for relief in an involuntary case under any such
law or the consent by it to the appointment of or taking possession by
a receiver, liquidator, assignee, custodian, trustee, sequestrator (or
other similar official) of the Partnership or of any substantial part
of its property, or the making by it of a general assignment for the
benefit of creditors, or the failure of the Partnership generally to
pay its debts as such debts become due or the taking of any action in
furtherance of any of the foregoing. Following the passage of the
six-month period after the event set forth in clause (ii)(A) or (B) of
this paragraph, an Obligated Partner shall cease to be an Obligated
Partner at the first time, if any, that all of the conditions set forth
in (X) through (Z) above are no longer in existence."
5. NEW EXHIBIT A. Exhibit A to the Second Restated Partnership
Agreement, identifying the Partners, the number and class or series of Units
owned by them and their respective Percentage Interests, if any, is hereby
deleted in its entirety and the Exhibit A in the form attached hereto is hereby
inserted in its place and stead.
6. ALLOCATIONS. Exhibit C of the Second Restated Partnership
Agreement, describing the allocations of the Net Income, Net Loss and/or other
Partnership items, is hereby deleted in its entirety and the Exhibit C in the
form attached hereto is hereby inserted in its place and stead.
7. OTHER PROVISIONS UNAFFECTED. Except as expressly amended hereby,
the Second Restated Partnership Agreement shall remain in full force and effect
in accordance with its terms.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned have executed this Fourth Amendment
on the day and year first above written.
GENERAL PARTNER:
GENERAL GROWTH PROPERTIES, INC.,
a Delaware corporation
By: /s/ Xxxx Xxxxx
--------------------------------------------
Xxxx Xxxxx, Senior Vice
President
LIMITED PARTNERS:
M.B. CAPITAL PARTNERS III, a South
Dakota general partnership
By: GENERAL TRUST COMPANY, not
individually but solely as Trustee
of Xxxxxx Investment Trust G, a partner
By: /s/ Xxxxxxxx X. Xxxxxxxxx
----------------------------------------
Xxxxxxxx X. Xxxxxxxxx, President
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NEW LIMITED PARTNERS:
GGP LIMITED PARTNERSHIP, a
Delaware limited partnership, as
attorney-in-fact for each of the
following New Limited Partners:
Cache Valley Mall Partnership, Ltd.
Xxxxx Xxxxxxx
Xxxx Xxxxxxx
Xxxxx Xxxxxxx
Xxxx Xxxxxx
Fairfax Holding, LLC
G. Xxx Xxxxxxx
Xxxxxxx Xxxx
Xxxx Investment Company
Xxxxxxx Xxxxxx
King American Hospital, Ltd.
Xxxxxxxx Xxxx
Xxxxxx X. Xxxx
Xxxx X. Xxxxxxxxxx
Xxx Xxxxxx
North Plains Development Company, Ltd.
North Plains Land Company, Ltd.
Xxxx X. Xxxxx
Xxxxxx X. Xxxxxxxx
Pine Ridge Land Company, Ltd.
Price Fremont Company, Ltd.
Xxxxxxx Xxxxx
Xxxx Xxxxx
Xxxxxx Xxxxx
Red Cliffs Mall Investment Company
Taycor Ltd.
Xxxxxxxx Xxxxxx
Xxxxx Xxxxxxxx
Xxxx Xxxxxxx, as Trustee of the Xxxx Xxxxxxx
Revocable Trust
By: GENERAL GROWTH PROPERTIES, INC.,
a Delaware corporation, its general partner
By: /s/ Xxxx Xxxxx
-------------------------------------------
Xxxx Xxxxx, Executive Vice President
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EXHIBIT A
PARTNERS
SEE ATTACHED
A-1
EXHIBIT C
ALLOCATIONS
1. Allocation of Net Income and Net Loss.
(a) Net Income. Except as otherwise provided herein, Net Income for
any fiscal year or other applicable period shall be allocated in the following
order and priority:
(1) First, to the General Partner to the extent the cumulative
Net Loss allocated to the General Partner pursuant to subparagraph
(b)(5) below exceeds the cumulative Net Income allocated to the General
Partner pursuant to this subparagraph (a)(1);
(2) Second, to each Partner in proportion to and to the extent of
the amount by which the cumulative Net Loss allocated to such Partner
pursuant to subparagraph (b)(4) exceeds the cumulative Net Income
allocated to such Partner pursuant to this subparagraph (a)(2);
(3) Third, to the General Partner until the cumulative Net Income
allocated to the General Partner pursuant to this subparagraph (a)(3)
equals the cumulative Net Loss allocated to the General Partner
pursuant to subparagraph (b)(3);
(4) Fourth, to each holder of Preferred Units to the extent of
and in proportion to the excess of (I) the cumulative amount of
distributions made in respect of such Preferred Units, reduced by in
the case of the Series B Preferred Units the cumulative Common Unit
Reallocated Amounts, and increased by in the case of the Series B
Preferred Units the cumulative Series B Preferred Unit Reallocated
Amounts, pursuant to the provisos below, over (II) the cumulative
amount of Net Income allocated to each holder of Preferred Units
pursuant to this subparagraph (a)(4) and subparagraph (a)(5) for such
period and all prior periods reduced by the cumulative amount of Net
Loss allocated to such holder of Preferred Units pursuant to
subparagraph (b)(2) below for all prior periods; provided, however,
that in the event the cumulative Net Income allocable to the holders of
the Common Units pursuant to this subparagraph (a)(4) and subparagraph
(a)(5) below for such period and all prior periods (before application
of this proviso for such period) exceeds the cumulative distributions
made to the holders of Common Units with respect to such Units for such
period and all prior periods, the Series B Preferred Unit Reallocated
Amount shall be reallocated pro rata to the holders of Series B
Preferred Units; and
(5) Thereafter, to the holders of Common Units pro rata in
accordance with their Percentage Interests; provided, however, that in
the event the cumulative distributions made to the holders of Common
Units with respect to such Units for such period and all prior periods
exceed the cumulative Net Income allocable to the holders of the Common
Units pursuant to subparagraph (a)(4) and this subparagraph (a)(5) for
such period and all prior periods (before application of this proviso
for such period), the Common Unit Reallocated Amount shall be
reallocated pro rata to the holders of Common Units.
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The term "Common Unit Reallocated Amount" shall mean an amount equal to
the difference between (I) the amount of Net Income allocable to the
Series B Preferred Units pursuant to subparagraph (a)(4) with respect
to such fiscal year or other period, and (II) the product obtained by
multiplying (A) a fraction, the numerator of which is the number of the
Common Units into which the Series B Preferred Units are convertible
and the denominator of which is the sum of the number of Common Units
into which the Series B Preferred Units are convertible plus the number
of Common Units and (B) the sum of (i) the Net Income allocable to the
Series B Preferred Units pursuant to subparagraph (a)(4) with respect
to such fiscal year or other period and (ii) the Net Income allocable
to the Common Units pursuant to subparagraph (a)(5) with respect to
such fiscal year or other period. The Common Unit Reallocated Amount
shall be calculated based on the amounts of Net Income allocable under
subparagraphs (a)(4) and (a)(5) prior to the application of the
provisos contained in such subparagraphs with respect to such fiscal
year or other period.
The term "Series B Preferred Unit Reallocated Amount" shall mean the
difference between (I) the amount of Net Income allocable to the Common
Units pursuant to subparagraph (a)(5) with respect to such fiscal year
or other period, and (II) the product obtained by multiplying (A) a
fraction, the numerator of which is the number of Common Units and the
denominator of which is the sum of the number of Common Units into
which the Series B Preferred Units are convertible plus the number of
Common Units and (B) the sum of (i) Net Income allocable to the Series
B Preferred Units pursuant to subparagraph (a)(4) with respect to such
fiscal year or other period and (ii) the Net Income allocable to the
Common Units pursuant to this subparagraph (a)(5) with respect to such
fiscal year or other period; provided, however, that to the extent the
allocation of the Series B Preferred Unit Reallocated Amount to the
holders of Series B Preferred Units would cause such holders on a
cumulative basis to have been allocated Net Income in excess of
distributions, the Series B Preferred Unit Reallocated Amount shall be
reduced by such excess. The Series B Preferred Unit Reallocated Amount
shall be calculated based on the amounts of Net Income allocable
pursuant to subparagraphs (a)(4) and (a)(5) prior to the application of
the provisos contained in such subparagraphs with respect to such
fiscal year or other period.
It is the intention of the parties that the application of
subparagraphs (a)(4) and (a)(5) above will result in corresponding
return of capital distributions (per Unit) to the Series B Preferred
Units (on an as-converted basis) and Common Units on a cumulative basis
and shall be applied and interpreted consistently therewith.
(b) Net Loss. Except as otherwise provided herein, Net Loss of the
Partnership for each fiscal year or other applicable period shall be allocated
as follows:
(1) First, to the holders of Common Units, in proportion to their
respective Percentage Interests provided that the Net Loss allocated to
a holder of Common Units pursuant to this Section (b)(1) shall not
exceed the maximum amount of Net Loss that can be allocated without
causing a holder of Common Units to have an Adjusted Capital Account
Deficit (excluding for this purpose any increase to such Adjusted
Capital Account Deficit for a holder's actual obligation to fund a
deficit Capital Account balance,
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including the obligation of an Obligated Partner to fund a deficit
Capital Account Balance pursuant to Section 7.8 hereof and also
excluding for this purpose the balance of such holder's Capital Account
attributable to such holder's Preferred Units, if any);
(2) Second, to the holders of Preferred Units in proportion to
each such holder's Capital Account balance in such Preferred Units,
provided that the Net Loss allocated to a holder of Preferred Units
pursuant to this Section (b)(1) shall not exceed the maximum amount of
Net Loss that can be allocated without causing any holder of Preferred
Units to have an Adjusted Capital Account Deficit (excluding for this
purpose any increase to such Adjusted Capital Account Deficit for a
holder's actual obligation to fund a deficit Capital Account balance,
including the obligation of an Obligated Partner to fund a deficit
Capital Account Balance pursuant to Section 7.8 hereof);
(3) Third, to the General Partner, until the General Partner's
Adjusted Capital Account Deficit (excluding for this purpose any
increase to such Adjusted Capital Account Deficit for the obligation of
the General Partner to actually fund a deficit Capital Account balance,
including any deemed obligation pursuant to Regulation Section
1.704-(1)(b)(2)(ii)(c)) equals the excess of (i) the amount of Recourse
Liabilities over (ii) the Aggregate Protected Amount;
(4) Fourth, to the Obligated Partners, in proportion to their
respective Protected Amounts, until such time as the Obligated Partners
have been allocated an aggregate amount of Net Loss pursuant to this
subparagraph (b)(4) equal to the Aggregate Protected Amount; and
(5) Thereafter, to the General Partner.
2. Special Allocations.
Notwithstanding any provisions of paragraph 1 of this Exhibit C, the
following special allocations shall be made in the following order:
(a) Minimum Gain Chargeback (Nonrecourse Liabilities). If there is a
net decrease in Partnership Minimum Gain for any Partnership fiscal year (except
as a result of conversion or refinancing of Partnership indebtedness, certain
capital contributions or revaluation of the Partnership property as further
outlined in Regulation Sections 1.704-2(d)(4), (f)(2) or (f)(3)), each Partner
shall be specially allocated items of Partnership income and gain for such year
(and, if necessary, subsequent years) in an amount equal to that Partner's share
of the net decrease in Partnership Minimum Gain. The items to be so allocated
shall be determined in accordance with Regulation Section 1.704-2(f). This
paragraph (a) is intended to comply with the minimum gain chargeback requirement
in said section of the Regulations and shall be interpreted consistently
therewith. Allocations pursuant to this paragraph (a) shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant hereto.
(b) Minimum Gain Attributable to Partner Nonrecourse Debt. If there
is a net decrease in Minimum Gain Attributable to Partner Nonrecourse Debt
during any fiscal year (other than due to the conversion, refinancing or other
change in the debt instrument causing it to become partially or wholly
nonrecourse, certain capital contributions, or certain revaluations of
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Partnership property as further outlined in Regulation Section 1.704-2(i)(4)),
each Partner shall be specially allocated items of Partnership income and gain
for such year (and, if necessary, subsequent years) in an amount equal to that
Partner's share of the net decrease in the Minimum Gain Attributable to Partner
Nonrecourse Debt. The items to be so allocated shall be determined in accordance
with Regulation Section 1.704-2(i)(4) and (j)(2). This paragraph (b) is intended
to comply with the minimum gain chargeback requirement with respect to Partner
Nonrecourse Debt contained in said section of the Regulations and shall be
interpreted consistently therewith. Allocations pursuant to this paragraph (b)
shall be made in proportion to the respective amounts required to be allocated
to each Partner pursuant hereto.
(c) Qualified Income Offset. In the event a Limited Partner
unexpectedly receives any adjustments, allocations or distributions described in
Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6), and such Limited
Partner has an Adjusted Capital Account Deficit, items of Partnership income and
gain shall be specially allocated to such Partner in an amount and manner
sufficient to eliminate the Adjusted Capital Account Deficit as quickly as
possible. This paragraph (c) is intended to constitute a "qualified income
offset" under Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
(d) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions
for any fiscal year or other applicable period shall be specially allocated to
the Partner that bears the economic risk of loss for the debt (i.e., the Partner
Nonrecourse Debt) in respect of which such Partner Nonrecourse Deductions are
attributable (as determined under Regulation Section 1.704-2(b)(4) and (i)(1)).
(e) Allocations With Respect to Preferred Unit Redemptions. After
giving effect to the special allocations set forth above, Net Income of the
Partnership shall be allocated to the holders of Preferred Units, at the time of
redemption of such Preferred Units (other than in the case of a redemption
occurring pursuant to a final liquidation of the Partnership), in an amount
equal to the portion of any redemption distribution that exceeds the Liquidation
Preference Amount (other than any accrued but unpaid distribution thereon) per
Preferred Unit established for such Preferred Unit in the applicable Preferred
Unit designation. The character of the items of Net Income allocated to the
holders of Preferred Units pursuant to this subparagraph (e) shall
proportionately reflect the relative amounts of the items of Partnership income
and gain as determined for federal income tax purposes under Section 703(a) of
the Code.
(f) Tax Treatment of Conversion of Preferred Units. Upon conversion
of a Preferred Unit(s) into Common Unit(s), the Company will specially allocate
to the converting Partner any Net Income or Net Loss attributable to an
adjustment of Gross Asset Values under subparagraph (b) of the definition of
"Gross Asset Value" until the portion of such Partner's Capital Account
attributable to each Common Unit received upon conversion equals the Capital
Account attributable to a Common Unit at the time of conversion. To the extent
that such allocation is insufficient to bring the portion of the Capital Account
attributable to each Common Unit received upon conversion by the converting
Partner to the Capital Account attributable to a Common Unit at the time of
conversion, a portion of the Capital Account of the non-converting Partners will
be shifted, pro rata in accordance with their relative Capital Account balances,
to the converted Partner and such transaction shall be treated by the
Partnership and the Converting Partner as a transaction defined in Section 721
of the Code.
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(g) Curative Allocations. The Regulatory Allocations shall be taken
into account in allocating other items of income, gain, loss, and deduction
among the Partners so that, to the extent possible, the cumulative net amount of
allocations of Partnership items under paragraphs 1 and 2 of this Exhibit C
shall be equal to the net amount that would have been allocated to each Partner
if the Regulatory Allocations had not occurred. This subparagraph (g) is
intended to minimize to the extent possible and to the extent necessary any
economic distortions which may result from application of the Regulatory
Allocations and shall be interpreted in a manner consistent therewith. For
purposes hereof, "Regulatory Allocations" shall mean the allocations provided
under subparagraphs 2(a) through (d).
3. Tax Allocations.
(a) Generally. Subject to paragraphs (b) and (c) hereof, items of
income, gain, loss, deduction and credit to be allocated for income tax purposes
(collectively, "Tax Items") shall be allocated among the Partners on the same
basis as their respective book items.
(b) Sections 1245/1250 Recapture. If any portion of gain from the
sale of property is treated as gain which is ordinary income by virtue of the
application of Code Sections 1245 or 1250 ("Affected Gain"), then (A) such
Affected Gain shall be allocated among the Partners in the same proportion that
the depreciation and amortization deductions giving rise to the Affected Gain
were allocated and (B) other Tax Items of gain of the same character that would
have been recognized, but for the application of Code Sections 1245 and/or 1250,
shall be allocated away from those Partners who are allocated Affected Gain
pursuant to Clause (A) so that, to the extent possible, the other Partners are
allocated the same amount, and type, of capital gain that would have been
allocated to them had Code Sections 1245 and/or 1250 not applied. For purposes
hereof, in order to determine the proportionate allocations of depreciation and
amortization deductions for each fiscal year or other applicable period, such
deductions shall be deemed allocated on the same basis as Net Income and Net
Loss for such respective period.
(c) Allocations Respecting Section 704(c) and Revaluations; Curative
Allocations Resulting from the Ceiling Rule. Notwithstanding paragraph (b)
hereof, Tax Items with respect to Partnership property that is subject to Code
Section 704(c) and/or Regulation Section 1.704-1(b)(2)(iv)(f) (collectively
"Section 704(c) Tax Items") shall be allocated in accordance with said Code
section and/or Regulation Section 1.704-1(b)(4)(i), as the case may be. The
allocation of Tax Items shall be in accordance with the "traditional method" set
forth in Treas. Reg. ss.1.704-3(b)(1), unless otherwise determined by the
General Partner, and shall be subject to the ceiling rule stated in Regulation
Section 1.704-3(b)(1). The General Partner is authorized to specially allocate
Tax Items (other than Section 704(c) Tax Items) to cure for the effect of the
ceiling rule. The intent of this Section 3(c) is that each Partner who
contributed to the capital of the Partnership a partnership interest in an
existing Property Partnership will bear, through reduced allocations of
depreciation and increased allocations of gain or other items, the tax
detriments associated with any precontribution gain and this Section 3(c) shall
be interpreted consistently with such intent.
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4. Allocations Upon Final Liquidation.
With respect to the fiscal year in which the final liquidation of the
Partnership occurs in accordance with Section 7.2 of the Agreement, and
notwithstanding any other provision of Sections 1, 2, or 3 hereof, items of
Partnership income, gain, loss and deduction shall be specially allocated to the
Partners in such amounts and priorities as are necessary so that the positive
capital accounts of the Partners shall, as closely as possible, equal the
amounts that will be distributed to the Partners pursuant to Section 7.2.
C-6
EXHIBIT D
OBLIGATED PARTNERS
SEE ATTACHED
D-1
SCHEDULE A
1. DEFINITIONS. As used herein, the following terms shall have the
meanings set forth below, unless the context otherwise requires:
"Distribution Period" shall mean the quarterly period that is then the
dividend period with respect to the Common Stock or, if no such dividend period
is established, the calendar quarter shall be the Dividend Period; provided that
(a) the initial distribution period shall commence on July 10, 2002 and end on
and include September 30, 2002 and (b) the distribution period in which the
final liquidation payment is made pursuant to Section 7.2 of the Second Restated
Partnership Agreement shall commence on the first day following the immediately
preceding Distribution Period and end on the date of such final liquidation
payment.
"Distribution Payment Date" shall mean, with respect to any
Distribution Period, the payment date for the distribution declared by the
General Partner on its shares of Common Stock for such Distribution Period or,
if no such distribution payment date is established, the last business day of
such Distribution Period.
"Fair Market Value" shall mean the average of the daily Closing Price
during the five consecutive Trading Days selected by the General Partner
commencing not more than 20 Trading Days before, and ending not later than, the
day in question with respect to the issuance or distribution requiring such
computation.
"Fifteenth Anniversary Date" shall mean July 10, 2017.
2. DESIGNATION AND NUMBER; ETC. The Series B Preferred Units have
been established and shall have such rights, preferences, limitations and
qualifications as are described herein (in addition to the rights, preferences,
limitations and qualifications contained in the Second Restated Partnership
Agreement to the extent applicable). The authorized number of Series B Preferred
Units shall be 1,426,392.6660. Notwithstanding anything to the contrary
contained herein, in the event of a conflict between the provisions of this
Schedule A and any other provision of the Second Restated Partnership Agreement,
the provisions of this Schedule A shall control. For purposes of this Amendment,
the rights of the Series B Preferred Units shall be construed to include their
rights under the Redemption Rights Agreement (Common Units) and Redemption
Rights Agreement (Series B Preferred Units).
3. RANK. The Series B Preferred Units shall, with respect to the
payment of distributions and the distribution of amounts upon voluntary or
involuntary liquidation, dissolution or winding-up of the Partnership, rank as
follows:
(a) senior to all classes or series of Common Units and to all Units
the terms of which provide that such Units shall rank junior to such Series B
Preferred Units;
(b) on a parity with the Series A Preferred Units and each other series
of Preferred Units issued by the Partnership which does not provide by its
express terms that it ranks junior in right of payment to the Series B Preferred
Units with respect to payment of distributions or amounts upon liquidation,
dissolution or winding-up; and
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(c) junior to any class or series of Preferred Units issued by the
Partnership that ranks senior to the Series B Preferred Units in accordance with
Section 4 of this Schedule A.
4. VOTING.
(a) Holders of Series B Preferred Units shall not have any voting
rights, except as provided by applicable law and as described below in this
Section 4.
(b) So long as any Series B Preferred Units remain outstanding, the
Partnership shall not, without the affirmative vote or consent of the holders of
at least a majority of the Series B Preferred Units outstanding at the time,
given in person or by proxy, either in writing or at a meeting (such series
voting separately as a class), (i) authorize, create, issue or increase the
authorized or issued amount of, any class or series of partnership interests in
the Partnership ranking prior to the Series B Preferred Units with respect to
the payment of distributions or the distribution of assets upon voluntary or
involuntary liquidation, dissolution or winding-up of the Partnership or
reclassify any Common Units into such partnership interests, or create,
authorize or issue any obligation or security convertible or exchangeable into
or evidencing the right to purchase any such partnership interests; or (ii)
amend, alter or repeal the provisions of the Partnership Agreement, whether by
merger or consolidation or otherwise (an "Event"), so as to materially and
adversely affect any right, preference, privilege or voting power of the Series
B Preferred Units or the holders thereof. Notwithstanding anything to the
contrary contained herein, none of the following shall be deemed to materially
and adversely affect any such right, preference, privilege or voting power or
otherwise require the vote or consent of the holders of the Series B Preferred
Units: (X) the occurrence of any Event so long as either (1) the Partnership is
the surviving entity, such entity is the principal direct subsidiary of a
publicly traded REIT whose common equity is traded on the New York Stock
Exchange and the Series B Preferred Units remain outstanding with the terms
thereof materially unchanged or (2) interests in an entity having substantially
the same rights and terms as the Series B Preferred Units are substituted for
the Series B Preferred Units and such entity is the principal direct subsidiary
of a publicly traded REIT whose common equity is traded on the New York Stock
Exchange, (Y) any increase in the amount of the authorized Preferred Units or
Common Units or the creation or issuance of any other series or class of
Preferred Units or Common Units or any increase in the amount of Common Units or
any other series of Preferred Units, in each case ranking on a parity with or
junior to the Series B Preferred Units with respect to payment of distributions
and the distribution of assets upon voluntary or involuntary liquidation,
dissolution or winding-up of the Partnership and (Z) the dissolution,
liquidation and/or winding up of the Partnership.
The foregoing voting provisions shall not apply if, at or prior to the
time when the act with respect to which such vote would otherwise be required
shall be effected, all outstanding Series B Preferred Units shall have been
converted or redeemed.
For purposes of the foregoing provisions of this Section 4, each Series
B Preferred Unit shall have one (1) vote. Except as otherwise required by
applicable law or as set forth herein, the Series B Preferred Units shall not
have any voting rights or powers and the consent of the holders thereof shall
not be required for the taking of any action.
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5. DISTRIBUTIONS.
(a) With respect to each Distribution Period and subject to the rights
of the holders of Preferred Units ranking senior to or on parity with the Series
B Preferred Units, the holders of Series B Preferred Units shall be entitled to
receive, when, as and if declared by the General Partner, out of assets of the
Partnership legally available for the payment of distributions, quarterly
cumulative cash distributions in an amount per Series B Preferred Unit equal to
the greater of (i) $1.0625 and (ii) the amount of the regular quarterly cash
distribution for such Distribution Period upon the number of Common Units (or
portion thereof) into which such Series B Preferred Unit is then convertible in
accordance with Section 7 of this Schedule A (but, with respect to any
Distribution Period ending after the Fifteenth Anniversary Date, no amount shall
be paid in respect of clause (ii) of this paragraph in respect of the portion of
such Distribution Period occurring after the Fifteenth Anniversary Date).
Notwithstanding anything to the contrary contained herein, the amount of
distributions described under each of clause (i) and (ii) of this paragraph for
the initial Distribution Period, or any other period shorter than a full
Distribution Period, shall be prorated and computed on the basis of twelve
30-day months and a 360-day year. The distributions upon the Series B Preferred
Units for each Distribution Period shall, if and to the extent declared or
authorized by the General Partner on behalf of the Partnership, be paid in
arrears (without interest or other amount) on the Distribution Payment Date with
respect thereto, and, if not paid on such date, shall accumulate, whether or not
there are funds legally available for the payment thereof and whether or not
such distributions are declared or authorized. The record date for distributions
upon the Series B Preferred Units for any Distribution Period shall be the same
as the record date for the distributions upon the Common Units for such
Distribution Period (or, if no such record is set for the Common Units, the
fifteenth day of the calendar month in which the applicable Distribution Payment
Date falls). Accumulated and unpaid distributions for any past Distribution
Periods may be declared and paid at any time, without reference to any
Distribution Payment Date, to holders of record on such date, not exceeding 45
days preceding the payment date thereof, as may be fixed by the General Partner.
Any distribution payment made upon the Series B Preferred Units shall first be
credited against the earliest accumulated but unpaid distributions due with
respect to such Units which remains payable. No interest, or sum of money in
lieu of interest, shall be owing or payable in respect of any distribution
payment or payments on the Series B Preferred Units, whether or not in arrears,
including, without limitation, any distribution payment that is deferred
pursuant to Section 5(g) of this Schedule A.
(b) No distribution on the Series B Preferred Units shall be declared
by the General Partner or paid or set apart for payment by the Partnership at
such time as the terms and provisions of any agreement of the Partnership,
including any agreement relating to its indebtedness, prohibits such
declaration, payment or setting apart for payment or provides that such
declaration, payment or setting apart for payment would constitute a breach
thereof, or a default thereunder, or if such declaration or payment shall be
restricted or prohibited by law. Notwithstanding the foregoing, distributions on
the Series B Preferred Units shall accumulate whether or not any of the
foregoing restrictions exist.
(c) Except as provided in Section 5(d) of this Schedule A, so long as
any Series B Preferred Units are outstanding, (i) no distributions (other than
in Common Units or other Units ranking junior to the Series B Preferred Units as
to payment of distributions and amounts upon
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liquidation, dissolution or winding-up of the Partnership) shall be declared or
paid or set apart for payment upon the Common Units or any other class or series
of partnership interests in the Partnership or Units ranking, as to payment of
distributions or amounts distributable upon liquidation, dissolution or
winding-up of the Partnership, on a parity with or junior to the Series B
Preferred Units, for any period and (ii) no Common Units or other Units ranking
junior to or on a parity with the Series B Preferred Units as to payment of
distributions or amounts upon liquidation, dissolution or winding-up of the
Partnership, shall be redeemed, purchased or otherwise acquired for any
consideration (or any monies be paid to or made available for a sinking fund for
the redemption of any such Units) by the Partnership (except by conversion into
or exchange for other Units ranking junior to the Series B Preferred Units as to
payment of distributions and amounts upon liquidation, dissolution or winding-up
of the Partnership or by redemptions pursuant to Rights Agreements) unless, in
the case of either clause (i) or (ii), full cumulative distributions have been
or contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for such payment on the Series B Preferred Units
for all Distribution Periods ending on or prior to the distribution payment date
for the Common Units or such other class or series of Unit or the date of such
redemption, purchase or other acquisition.
(d) When distributions are not paid in full (or a sum sufficient for
such full payment is not set apart for such payment) upon the Series B Preferred
Units and any other partnership interests in the Partnership or Units ranking on
a parity as to payment of distributions with the Series B Preferred Units, all
distributions declared upon the Series B Preferred Units and any other
partnership interests in the Partnership or Units ranking on a parity as to
payment of distributions with the Series B Preferred Units shall be declared pro
rata so that the amount of distributions declared per Unit of Series B Preferred
Units and such other partnership interests in the Partnership or Units shall in
all cases bear to each other the same ratio that accrued distributions per Unit
on the Series B Preferred Units and such other partnership interests in the
Partnership or Units (which shall not include any accumulation in respect of
unpaid distributions for prior distribution periods if such Units do not have
cumulative distributions) bear to each other.
(e) Holders of Series B Preferred Units shall not be entitled to any
distributions, whether payable in cash, property or Units, in excess of the
cumulative distributions described in Section 5(a) above.
(f) Distributions with respect to the Series B Preferred Units are
intended to qualify as permitted distributions of cash that are not treated as a
disguised sale within the meaning of Treasury Regulation ss.1.707-4 and the
provisions of this Schedule A shall be construed and applied consistently with
such Treasury Regulations.
(g) Notwithstanding anything to the contrary contained herein (but
subject to the last sentence of Section 5(a) hereof), if the distributions with
respect to the Series B Preferred Units made on or prior to the second
anniversary of the issuance of the Series B Preferred Units would result in any
holder of Series B Preferred Units receiving an annual return on such holder's
"unreturned capital" (as defined for purposes of Treasury Regulation Section
1.707-4(a)) for a fiscal year (treating the fiscal year in which such second
anniversary occurs as ending on such date) in excess of the Safe Harbor Rate (as
defined below), then the distributions to such holder
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in excess of such Safe Harbor Rate will be deferred, will cumulate and will be
paid, if and to the extent declared or authorized by the General Partner on
behalf of the Partnership and subject to the provisions of Section 5(b) hereof,
on the earlier to occur of (i) the disposition of the Series B Preferred Units
to which such deferred distributions relate in a transaction in which the
disposing holder recognizes taxable gain thereon or (ii) the first distribution
payment date with respect to the Series B Preferred Units following the second
anniversary of the issuance of the Series B Preferred Units. For purposes of the
foregoing, the "Safe Harbor Rate" shall equal 150% of the highest applicable
federal rate, based on annual compounding, in effect for purposes of Section
1274(d) of the Code at any time between the date of the issuance of the Series B
Preferred Units and the date on which the relevant distribution payment is made.
Notwithstanding anything to the contrary contained herein, any distributions
that are deferred under this Section 5(g) shall be deemed to have been paid in
full for purposes of Sections 5(c) and (d) of this Schedule A until the end of
the Distribution Period during which they are to be paid as provided above.
(h) For any quarterly period, any amounts paid with respect to the
Series B Preferred Units in excess of the amount that would have been paid with
respect to such Units for such period had they been converted into Common Units
in accordance with the terms of Section 7 of this Schedule A are intended to
constitute guaranteed payments within the meaning of Section 707(c) of the Code
and shall not be treated as distributions for purposes of allocating Net Income
and Net Loss or otherwise maintaining Capital Accounts.
6. LIQUIDATION PREFERENCE.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the Partnership, before any payment or distribution
of the assets of the Partnership (whether capital or surplus) shall be made to
or set apart for the holders of Common Units or any other partnership interests
in the Partnership or Units ranking junior to the Series B Preferred Units as to
the distribution of assets upon the liquidation, dissolution or winding-up of
the Partnership, the holders of the Series B Preferred Units shall, with respect
to each such Unit, be entitled to receive, out of the assets of the Partnership
available for distribution to Partners after payment or provision for payment of
all debts and other liabilities of the Partnership, an amount equal to the
greater of (i) $50.00, plus an amount equal to all distributions (whether or not
earned or declared) accrued and unpaid thereon to the date of final distribution
and (ii) the amount that a holder of such Series B Preferred Unit would have
received upon final distribution in respect of the number of Common Units into
which such Series B Preferred Unit was convertible immediately prior to such
date of final distribution (but no amount shall be paid in respect of the
foregoing clause (ii) after the Fifteenth Anniversary Date). If, upon any such
voluntary or involuntary liquidation, dissolution or winding-up of the
Partnership, the assets of the Partnership, or proceeds thereof, distributable
among the holders of the Series B Preferred Units are insufficient to pay in
full the preferential amount aforesaid on the Series B Preferred Units and
liquidating payments on any other Units or partnership interests in the
Partnership of any class or series ranking, as to payment of distributions and
amounts upon the liquidation, dissolution or winding-up of the Partnership, on a
parity with the Series B Preferred Units, then such assets, or the proceeds
thereof, shall be distributed among the holders of Series B Preferred Units and
any such other Units or partnership interests in the Partnership ratably in
accordance with the respective amounts that would be payable on such Series B
Preferred Units and such other Units or partnership interests in the Partnership
if all amounts payable thereon were paid in full. For the
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purposes of this Section 6, none of (i) a consolidation or merger of the
Partnership with or into another entity, (ii) a merger of another entity with or
into the Partnership or (iii) a sale, lease or conveyance of all or
substantially all of the Partnership's assets, properties or business shall be
deemed to be a liquidation, dissolution or winding-up of the Partnership.
(b) Written notice of such liquidation, dissolution or winding-up of
the Partnership, stating the payment date or dates when, and the place or places
where, the amounts distributable in such circumstances shall be payable, shall
be given by first class mail, postage pre-paid, not less than 30 nor more than
60 days prior to the payment date stated therein, to each record holder of the
Series B Preferred Units at the respective addresses of such holders as the same
shall appear on the transfer records of the Partnership.
(c) After payment of the full amount of liquidating distributions to
which they are entitled as provided in Section 6(a) of this Schedule A, the
holders of Series B Preferred Units shall have no right or claim to any of the
remaining assets of the Partnership.
7. CONVERSION. Holders of Series B Preferred Units shall have the
right to convert all or a portion of such Units into Common Units, as follows:
(a) A holder of Series B Preferred Units shall have the right, at such
holder's option, at any time (subject to the proviso contained in the
immediately succeeding sentence), to convert any whole number of Series B
Preferred Units, in whole or in part, into Common Units. Each Series B Preferred
Unit shall be convertible into the number of Common Units determined by dividing
(i) the $50 face amount per Unit, plus an amount equal to all distributions
(whether or not earned or declared) accrued and unpaid thereon to the end of the
last Distribution Period (but without duplication of the distributions, if any,
which the holder of such Series B Preferred Unit is entitled to receive for such
last Distribution Period pursuant to the third paragraph of Section 7(b) of this
Schedule A or in respect of the Common Units into which such Series B Preferred
Unit is converted) by (ii) a conversion price of $50.00 per Common Unit
(equivalent to an initial conversion rate of one Common Unit for each Series B
Preferred Unit), subject to adjustment as described in Section 7(c) hereof (the
"Conversion Price"); provided, however, that the right to convert Series B
Preferred Units may not be exercised after the Fifteenth Anniversary Date. No
fractional Common Units will be issued upon any conversion of Series B Preferred
Units. Instead, the number of Common Units to be issued upon each conversion
shall be rounded to the nearest whole number of Common Units.
(b) To exercise the conversion right, the holder of each Series B
Preferred Unit to be converted shall execute and deliver to the General Partner,
at the principal office of the Partnership, a written notice (the "Conversion
Notice") indicating that the holder thereof elects to convert such Series B
Preferred Unit. Unless the Units issuable on conversion are to be issued in the
same name as the name in which such Series B Preferred Unit is registered, each
Series B Preferred Unit surrendered for conversion shall be accompanied by
instruments of transfer, in form reasonably satisfactory to the Partnership,
duly executed by the holder or such holder's duly authorized attorney and an
amount sufficient to pay any transfer or similar tax (or evidence reasonably
satisfactory to the Partnership demonstrating that such taxes have been paid).
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As promptly as practicable after delivery of the Conversion Notice as
aforesaid, the Partnership shall amend the Partnership Agreement to reflect the
conversion and the issuance of Common Units issuable upon the conversion of such
Series B Preferred Units in accordance with the provisions of this Section 7. In
addition, the Partnership shall deliver to the holder at its address as
reflected on the records of the Partnership, a copy of such amendment.
A holder of Series B Preferred Units at the close of business on the
record date for any Distribution Period shall be entitled to receive the
distribution payable on such Units on the corresponding Distribution Payment
Date notwithstanding the conversion of such Series B Preferred Units following
such record date and prior to such Distribution Payment Date and shall have no
right to receive any distribution for such Distribution Period in respect of the
Common Units into which such Series B Preferred Units were converted. Except as
provided herein, the Partnership shall make no payment or allowance for unpaid
distributions, whether or not in arrears, on converted Series B Preferred Units
or for distributions on the Common Units that are issued upon such conversion.
Each conversion shall be deemed to have been effected immediately prior
to the close of business on the date on which the Conversion Notice is received
by the Partnership as aforesaid, and the person or persons in whose name or
names any Common Units shall be issuable upon such conversion shall be deemed to
have become the holder or holders of record of such Units at such time on such
date, and such conversion shall be at the Conversion Price in effect at such
time and on such date unless the transfer books of the Partnership shall be
closed on that date, in which event such person or persons shall be deemed to
have become such holder or holders of record at the close of business on the
next succeeding day on which such transfer books are open, but such conversion
shall be at the Conversion Price in effect on the date on which such Units have
been surrendered and such notice received by the Partnership.
(c) The Conversion Price shall be adjusted from time to time as
follows:
(i) If the Partnership shall, after the date on which the Series
B Preferred Units are first issued (the "Issue Date"), (A) pay or make
a distribution to holders of its partnership interests or Units in
Common Units, (B) subdivide its outstanding Common Units into a greater
number of Units or distribute Common Units to the holders thereof, (C)
combine its outstanding Common Units into a smaller number of Units or
(D) issue any partnership interests or Units by reclassification of its
Common Units, the Conversion Price in effect at the opening of business
on the day following the date fixed for the determination of holders
entitled to receive such distribution or at the opening of business on
the day next following the day on which such subdivision, combination
or reclassification becomes effective, as the case may be, shall be
adjusted so that the holder of any Series B Preferred Unit thereafter
surrendered for conversion shall be entitled to receive the number of
Common Units or other partnership interests or securities that such
holder would have owned or have been entitled to receive after the
happening of any of the events described above had such Series B
Preferred Unit been converted immediately prior to the record date in
the case of a distribution or the effective date in the case of a
subdivision, combination or reclassification. An adjustment made
pursuant to this subsection (i) shall become effective immediately
after the opening of business on the day next following the record date
(except as provided in subsection (g) below) in the
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case of a distribution and shall become effective immediately after the
opening of business on the day next following the effective date in the
case of a subdivision, combination or reclassification.
(ii) If the Partnership shall issue after the Issue Date rights,
options or warrants to all holders of Common Units entitling them to
subscribe for or purchase Common Units (or securities convertible into
or exchangeable for Common Units) at a price per Unit less than the
Fair Market Value per Common Unit on the record date for the
determination of holders of Common Units entitled to receive such
rights, options or warrants, then the Conversion Price in effect at the
opening of business on the day next following such record date shall be
adjusted to equal the price determined by multiplying (I) the
Conversion Price in effect immediately prior to the opening of business
on the day following the date fixed for such determination by (II) a
fraction, the numerator of which shall be the sum of (A) the number of
Common Units outstanding at the close of business on the date fixed for
such determination and (B) the number of Common Units that the
aggregate proceeds to the Partnership from the exercise of such rights,
options or warrants for Common Units would purchase at such Fair Market
Value, and the denominator of which shall be the sum of (A) the number
of Common Units outstanding at the close of business on the date fixed
for such determination and (B) the number of additional Common Units
offered for subscription or purchase pursuant to such rights, options
or warrants. Such adjustment shall become effective immediately after
the opening of business on the day next following such record date
(except as provided in subsection (g) below). In determining whether
any rights, options or warrants entitle the holders of Common Units to
subscribe for or purchase Common Units at less than the Fair Market
Value, there shall be taken into account any consideration received by
the Partnership upon issuance and upon exercise of such rights, options
or warrants, the value of such consideration, if other than cash, to be
determined in good faith by the Board of the General Partner.
(iii) If the Partnership shall distribute after the Issue Date to
all holders of Common Units any other securities or evidences of its
indebtedness or assets (excluding those rights, options and warrants
referred to in and treated under subsection (ii) above, and excluding
distributions paid exclusively in cash) (any of the foregoing being
hereinafter in this subsection (iii) called the "Securities"), then in
each case the Conversion Price shall be adjusted so that it shall equal
the price determined by multiplying (I) the Conversion Price in effect
immediately prior to the close of business on the date fixed for the
determination of holders of Common Units entitled to receive such
distribution by (II) a fraction, the numerator of which shall be the
Fair Market Value per Common Unit on the record date mentioned below
less the then fair market value (as determined in good faith by the
Board of the General Partner) of the portion of the Securities so
distributed applicable to one Common Unit, and the denominator of which
shall be the Fair Market Value per Common Unit on the record date
mentioned below. Such adjustment shall become effective immediately at
the opening of business on the business day next following (except as
provided in subsection (g) below) the record date for the determination
of holders of Common Units entitled to receive such distribution. For
the purposes of this subsection (iii), a distribution in the form of a
Security, which is distributed not only to the holders of the Common
Units on the date
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fixed for the determination of holders of Common Units entitled to such
distribution of such Security, but also is distributed with each Common
Unit delivered to a person converting a Series B Preferred Unit after
such determination date, shall not require an adjustment of the
Conversion Price pursuant to this subsection (iii); provided that on
the date, if any, on which a person converting a Series B Preferred
Unit would no longer be entitled to receive such Security with a Common
Unit, a distribution of such Securities shall be deemed to have
occurred, and the Conversion Price shall be adjusted as provided in
this subsection (iii) (and such day shall be deemed to be "the date
fixed for the determination of the holders of Common Units entitled to
receive such distribution" and "the record date" within the meaning of
the two preceding sentences).
(iv) No adjustment in the Conversion Price shall be required
unless such adjustment would require a cumulative increase or decrease
of at least 1% in such price; provided, however, that any adjustments
that by reason of this subsection (iv) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment until made; and provided, further, that any adjustment shall
be required and made in accordance with the provisions of this Section
7 (other than this subsection (iv)) not later than such time as may be
required in order to preserve the tax-free nature of a distribution to
the holders of Common Units. Notwithstanding any other provisions of
this Section 7, the Partnership shall not be required to make any
adjustment to the Conversion Price for the issuance of any Common Units
pursuant to any plan providing for the reinvestment of distributions or
interest payable on securities of the Partnership and the investment of
additional optional amounts in Common Units under such plan. All
calculations under this Section 7 shall be made to the nearest cent
(with $.005 being rounded upward) or to the nearest one-tenth of a Unit
(with .05 of a Unit being rounded upward), as the case may be. Anything
in this subsection (c) to the contrary notwithstanding, the Partnership
shall be entitled, to the extent permitted by law, to make such
reductions in the Conversion Price, in addition to those required by
this subsection (c), as it in its discretion shall determine to be
advisable in order that any Unit distributions, subdivision of Units,
reclassification or combination of Units, distribution of rights,
options or warrants to purchase Units or securities, or a distribution
consisting of other assets (other than cash distributions) hereafter
made by the Partnership to its holders of Units shall not be taxable
but any such adjustment shall not adversely affect the value of the
Series B Preferred Units.
(d) If the Partnership shall be a party to any transaction (including,
without limitation, a merger, consolidation, self tender offer for all or
substantially all of the Common Units, sale of all or substantially all of the
Partnership's assets or recapitalization of the Common Units and excluding any
transaction as to which subsection (c)(i) of this Section 7 applies) (each of
the foregoing being referred to herein as a "Transaction"), in each case as a
result of which Common Units shall be converted into the right to receive other
partnership interests, shares, stock, securities or other property (including
cash or any combination thereof), each Series B Preferred Unit which is not
converted into the right to receive other partnership interests, shares, stock,
securities or other property in connection with such Transaction shall
thereafter be convertible into the kind and amount of shares, stock, securities
and other property (including cash or any combination thereof) receivable upon
the consummation of such Transaction by a holder of that number of Common Units
into which one Series B Preferred Unit was convertible immediately
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prior to such Transaction, assuming such holder of Common Units is not a Person
with which the Partnership consolidated or into which the Partnership merged or
which merged into the Partnership or to which such sale or transfer was made, as
the case may be (a "Constituent Person"), or an affiliate of a Constituent
Person. The Partnership shall not be a party to any Transaction unless the terms
of such Transaction are consistent with the provisions of this subsection (d),
and it shall not consent or agree to the occurrence of any Transaction until the
Partnership has entered into an agreement with the successor or purchasing
entity, as the case may be, for the benefit of the holders of the Series B
Preferred Units that will contain provisions enabling the holders of Series B
Preferred Units that remain outstanding after such Transaction to convert into
the consideration received by holders of Common Units at the Conversion Price in
effect immediately prior to such Transaction (with the holder having the option
to elect the type of consideration if a choice was offered in the Transaction).
The provisions of this subsection (d) shall similarly apply to successive
Transactions.
(e) If:
(i) the Partnership shall declare a distribution on the Common
Units (other than a cash distribution) or there shall be a
reclassification, subdivision or combination of Common Units; or
(ii) the Partnership shall authorize the granting to the holders
of the Common Units of rights, options or warrants to subscribe for or
purchase any Units of any class or any other rights, options or
warrants; or
(iii) there shall be any reclassification of the Common Units or
any consolidation or merger to which the Partnership is a party and for
which approval of any partners of the Partnership is required,
involving the conversion or exchange of Common Units into securities or
other property, or a self tender offer by the Partnership for all or
substantially all of the Common Units, or the sale or transfer of all
or substantially all of the assets of the Partnership as an entirety;
or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding-up of the Partnership,
then the Partnership shall cause to be mailed to the holders of the Series B
Preferred Units at their addresses as shown on the records of the Partnership,
as promptly as possible a notice stating (A) the date on which a record is to be
taken for the purpose of such distribution of rights, options or warrants, or,
if a record is not to be taken, the date as of which the holders of Common Units
of record to be entitled to such distribution of rights, options or warrants are
to be determined or (B) the date on which such reclassification, subdivision,
combination, consolidation, merger, sale, transfer, liquidation, dissolution or
winding-up is expected to become effective, and the date as of which it is
expected that holders of Common Units of record shall be entitled to exchange
their Common Units for securities or other property, if any, deliverable upon
such reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding-up. Failure to give or receive such notice or any defect
therein shall not affect the legality or validity of the proceedings described
in this Section 7.
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(f) Whenever the Conversion Price is adjusted as herein provided, the
Partnership shall prepare a notice of such adjustment of the Conversion Price
setting forth the adjusted Conversion Price and the effective date such
adjustment becomes effective and shall mail such notice of such adjustment of
the Conversion Price to the holder of each Series B Preferred Unit at such
holder's last address as shown on the records of the Partnership.
(g) In any case in which subsection (c) of this Section 7 provides that
an adjustment shall become effective on the date next following the record date
for an event, the Partnership may defer until the occurrence of such event
issuing to the holder of any Series B Preferred Unit converted after such record
date and before the occurrence of such event the additional Common Units
issuable upon such conversion by reason of the adjustment required by such event
over and above the Common Units issuable upon such conversion before giving
effect to such adjustment.
(h) For purposes of this Section 7, the number of Common Units at any
time outstanding shall not include any Common Units then owned or held by or for
the account of the Partnership. The Partnership shall not make any distribution
on Common Units held in the treasury of the Partnership.
(i) If any action or transaction would require adjustment of the
Conversion Price pursuant to more than one subsection of this Section 7, only
one adjustment shall be made, and such adjustment shall be the amount of
adjustment that has the highest absolute value.
(j) If the Partnership shall take any action affecting the Common
Units, other than action described in this Section 7, that in the reasonable
judgment of the General Partner would materially and adversely affect the
conversion rights of the holders of the Series B Preferred Units, the Conversion
Price for the Series B Preferred Units may be adjusted, to the extent permitted
by law, in such manner, if any, and at such time, as the General Partner
determines to be equitable in the circumstances.
(k) The Partnership covenants that Common Units issued upon conversion
of the Series B Preferred Units shall be validly issued, fully paid and
nonassessable and the holder thereof shall be entitled to rights of a holder of
Common Units specified in the Partnership Agreement. Prior to the delivery of
any securities that the Partnership shall be obligated to deliver upon
conversion of the Series B Preferred Units, the Partnership shall endeavor to
comply with all federal and state laws and regulations thereunder requiring the
registration of such securities with, or any approval of or consent to the
delivery thereof, by any governmental authority.
(l) The Partnership will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of Common
Units or other securities or property on conversion of the Series B Preferred
Units pursuant hereto; provided, however, that the Company shall not be required
to pay any tax that may be payable in respect of any transfer involved in the
issue or delivery of Common Units or other securities or property in a name
other than that of the holder of the Series B Preferred Units to be converted,
and no such issue or delivery shall be made unless and until the person
requesting such issue or delivery has paid to the Partnership the amount of any
such tax or established, to the reasonable satisfaction of the Partnership, that
such tax has been paid.
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(m) Notwithstanding anything to the contrary contained herein, the
adjustment provisions contained in this Section 7 shall be applied so that there
is no duplication of adjustments made pursuant to any other document.
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