EXHIBIT 10.5
FIFTH AMENDMENT TO AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
BRANDYWINE OPERATING PARTNERSHIP, L.P.
THIS FIFTH AMENDMENT, dated as of September 28, 1998 (the
"Amendment"), amends the Amended and Restated Agreement of Limited Partnership
Agreement (as heretofore amended to date, the "Partnership Agreement") of
BRANDYWINE OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (the
"Partnership"). Capitalized terms used herein but not defined herein shall
have the meanings given to such terms in the Partnership Agreement.
BACKGROUND
Pursuant to the Partnership Agreement, Brandywine Realty Trust (the
"General Partner"), as the general partner of the Partnership, has the power
and authority to issue additional Partnership Interests and Units in one or
more newly created classes of Partnership Interests to persons on such terms
and conditions as the General Partner may deem appropriate.
The General Partner, pursuant to the exercise of such power and
authority and in accordance with the Partnership Agreement, has determined to
execute this Amendment to the Partnership Agreement to create a new class of
Partnership Interests to be designated as Series B Preferred Units and to
evidence the issuance of such additional Partnership Interests and the
admission of the other signatories hereto as Limited Partners of the
Partnership in exchange for certain contributions of interests in real estate
and real estate related assets that are being made to the Partnership on the
date hereof pursuant to that certain Purchase and Contribution Agreement,
dated as of August 6, 1998, among the Partnership and the other signatories
thereto.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, hereby amend the Partnership
Agreement as follows:
1. In accordance with the Partnership Agreement, the Partnership
Agreement is hereby amended to establish, and to issue to the Persons set
forth on Schedule A attached hereto, the Series B Preferred Units having the
designations, preferences and other rights set forth below:
A. Designation and Number. A class of Partnership Interests
designated as Series B Preferred Units is hereby established. The number of
Series B Preferred Units shall be 1,950,000. The stated value of a Series B
Preferred Unit shall be $50.00 (the "Stated Value").
B. Rank. The Series B Preferred Units shall, with respect to
distribution rights and rights upon liquidation, dissolution or winding up of
the Partnership, rank (i) senior to the Class A Units and to all Partnership
Interests ranking junior to the Series B Preferred Units; (ii) on a parity
with all Partnership Interests issued by the Partnership the terms of which
specifically provide that such Partnership Interests rank on a parity with the
Series B Preferred Units including the Partnership Interests designated as
Series A Preferred Mirror Units; and (iii) junior to all Partnership Interests
the terms of which specifically provide that such Partnership Interests rank
junior to the Series B Partnership Units.
C. Distributions.
(i) Pursuant to Section 6.1 of the Partnership Agreement, the
holders of Series B Preferred Units shall be entitled to receive, out of funds
legally available for that purpose, cumulative distributions payable in cash
in an amount per Series B Preferred Unit equal to the greater of (a) $0.9063
per quarter (equivalent to $3.625 per annum) or (b) the cash distributions
paid or payable on the number of Class A Units, or portion thereof, into which
a Series B Preferred Unit is convertible, in each case with appropriate
proration for partial quarters. The amount referred in clause (b) of this
subsection C(i) with respect to each Distribution Period (as defined in
subsection J below) shall be determined as of the applicable Distribution
Payment Date (as defined in subsection J below) by multiplying the number of
Class A Units, or portion thereof calculated to the fourth decimal point, into
which a Series B Preferred Unit would be convertible at the opening of
business on such Distribution Payment Date (based on the Conversion Price (as
defined in subsection G below) then in effect) by the quarterly cash
distribution payable or paid by the Partnership for such Distribution Period
in respect of a Class A Unit outstanding as of the record date for the payment
of distributions on the Class A Units with respect to such Distribution Period
or, if different, with respect to the most recent quarterly period for which
distributions with respect to the Class A Units have been declared by the
Partnership. Such distributions shall be cumulative from the Issue Date (as
defined in subsection J below), whether or not in any Distribution Period or
Periods such distributions shall be authorized or there shall be funds of the
Partnership legally available for the payment of such distributions, and shall
be payable quarterly in arrears on the Distribution Payment Dates, commencing
on the first Distribution Payment Date after the Issue Date. Each such
distribution shall be payable in arrears to the holders of record of the
Series B Preferred Units, as they appear on the records of the Partnership at
the close of business on a record date which shall be not less than 10 and not
more than 60 days prior to the applicable Distribution Payment Date and shall
be fixed by the Partnership, acting through the General Partner, to coincide
with the record date for the regular quarterly distributions, if any, payable
by the Partnership with respect to the Class A Units. Accumulated, accrued and
unpaid distributions for any past Distribution Periods may be authorized and
paid at any time, without reference to any regular Distribution Payment Date,
to holders of record on a given date, which date shall not precede by more
than 45 days the payment date thereof, as may be fixed by the Partnership,
acting through the General Partner. The amount of accumulated, accrued and
unpaid distributions on any Series B Preferred Unit, or fraction thereof,
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at any date shall be the amount of any distributions thereon calculated at the
applicable rate to and including such date, whether or not earned or
authorized, which have not been paid in cash. The amount of distributions
payable per Series B Preferred Unit for the initial Distribution Period, or
any other period shorter or longer than a full Distribution Period, shall be
computed ratably on the basis of four 90-day quarters and a 364-day year.
(ii) No distribution on the Series B Preferred Units shall be
authorized 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 authorization, payment
or setting apart for payment or provides that such authorization, payment or
setting apart for payment would constitute a breach thereof, or a default
thereunder, or if such authorization or payment shall be restricted or
prohibited by law. No interest, or sum of money in lieu of interest, shall be
payable in respect of any distribution payment or payments on the Series B
Preferred Units which may be in arrears.
Notwithstanding the foregoing, distributions on the Series B
Preferred Units shall accumulate whether or not any of the foregoing
restrictions exist, whether or not there are funds legally available for the
payment thereof and whether or not such distributions are authorized.
Accumulated but unpaid distributions on the Series B Preferred Units shall not
bear interest and holders of the Series B Preferred Units shall not be
entitled to any distributions in excess of full cumulative distributions. Any
distribution payment made on the Series B Preferred Units shall first be
credited against the earliest accumulated but unpaid distribution due with
respect to such Series B Preferred Units which remains payable.
(iii) Except as provided in subsection C(iv) below, no
distributions (other than in Class A Units or Partnership Interests ranking
junior to the Series B Preferred Units as to distributions and upon
liquidation, dissolution or winding up of the Partnership) shall be authorized
or paid or set aside for payment nor shall any other distribution be
authorized or made upon the Class A Units or any other Partnership Interests
ranking, as to distributions or upon liquidation, dissolution or winding up of
the Partnership, on a parity with or junior to the Series B Preferred Units
for any period unless full cumulative distributions have been or
contemporaneously are authorized and paid or authorized and a sum sufficient
for the payment thereof set apart for such payment on the Series B Preferred
Units for all past distribution periods and the then current distribution
period, nor shall any Class A Units, or any Partnership Interests ranking
junior to or on a parity with the Series B Preferred Units as to distributions
or upon liquidation, dissolution or winding up of the Partnership, 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
Partnership Interests) by the Partnership or any other entity controlled
directly or indirectly by the Partnership (except by conversion into or
exchange for Partnership Interests ranking junior to the Series B Preferred
Units as to distributions and upon liquidation, dissolution or winding up of
the Partnership or for the repurchase of Class A Units held by employees,
officers or consultants of the
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Partnership (or their permitted transferees) that are subject to restrictive
share purchase agreements under which the Partnership has the option or
obligation to repurchase such shares upon the occurrence of certain events,
such as termination of employment).
(iv) When distributions are not paid in full (or a sum
sufficient for such full payment is not so set apart) upon the Series B
Preferred Units and any other Partnership Interests ranking on a parity as to
distributions with the Series B Preferred Units, all distributions authorized
with respect to the Series B Preferred Units and any other Partnership
Interests ranking on a parity as to distributions with the Series B Preferred
Units shall be authorized pro rata so that the amount of distributions
authorized with respect to the Series B Preferred Units and such other
Partnership Interests shall in all cases bear to each other the same ratio
that accumulated distributions with respect to the Series B Preferred Units
and such other Partnership Interests (which shall not include any accumulation
in respect of unpaid distributions for prior distribution periods if such
Partnership Interests do not have a cumulative distribution) bear to each
other.
(v) Holders of Series B Preferred Units shall not be entitled
to any distribution, whether payable in cash, property or shares, in excess of
full cumulative distributions on the Series B Preferred Units as described
above. Accumulated but unpaid distributions on the Series B Preferred Units
will accumulate as of the Distribution Payment Date on which they first become
payable.
D. Liquidation Preference.
(i) Upon any voluntary or involuntary liquidation, dissolution
or winding up of the affairs of the Partnership, the holders of the Series B
Preferred Units shall be entitled to receive out of the assets of the
Partnership available for distribution to the Partners pursuant to Section
13.5(a) of the Partnership Agreement a liquidation preference equal to the
Stated Value per Series B Preferred Unit, plus an amount equal to any
accumulated and unpaid distributions to the date of payment, before any
distribution of assets is made to holders of Class A Units, GP Units or any
other Partnership Interests that rank junior to the Series B Preferred Units
as to liquidation rights.
(ii) If upon any such voluntary or involuntary liquidation,
dissolution or winding up of the Partnership, the assets of the Partnership
are insufficient to pay the amount of such liquidating distributions on all
outstanding Series B Preferred Units and the corresponding amounts payable on
all other Partnership Interests ranking on a parity with the Series B
Preferred Units in the distribution of assets, then such assets shall be
allocated among the Series B Preferred Units, as a class, and each class or
series of such other Partnership Interests, as a class, in proportion to the
full liquidating distributions to which they would otherwise be respectively
entitled.
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(iii) Written notice of any 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 records of the Partnership.
(iv) After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Series B Preferred
Units shall have no right or claim to any of the remaining assets of the
Partnership.
(v) None of a consolidation or merger of the Partnership with
or into any other partnership, corporation, trust or entity or of any other
partnership, corporation, trust or other entity with or into the Partnership,
or the sale, lease or conveyance of all or substantially all of the property
or business of the Partnership shall be considered a liquidation, dissolution
or winding up of the Partnership.
E. Redemption.
(i) Cash Redemption Right. On and after January 2, 2004 and, in
addition, at any time after the Issue Date that the Current Market Price (as
defined in subsection J below) of the Common Shares (as defined in subsection
J below) has equaled or exceeded 120% of the Conversion Price for any 60
consecutive Trading Days (as defined in subsection J below), the Partnership,
upon giving notice as provided below, may redeem the Series B Preferred Units,
in whole or in part, for a redemption price per Series B Preferred Unit
payable in cash equal to the Stated Value (the "Cash Redemption Right").
(ii) Class A Unit Redemption Right. If (i) at any time during
the period commencing on the Issue Date and ending on January 1, 2004, the
Current Market Price of the Common Shares has equaled or exceeded 120% of the
Conversion Price for any 60 consecutive Trading Days or (ii) at any time on or
after January 2, 2004, the Current Market Price of the Common Shares has
equaled or exceeded 110% of the Conversion Price for 60 consecutive Trading
Days, the Partnership, upon giving notice as provided below, may redeem the
Series B Preferred Units, in whole or in part, for such number of Class A
Units as equals the Stated Value of the Series B Preferred Units to be
redeemed divided by the Conversion Price as of the opening of business on the
date set for such redemption (the " Class A Unit Redemption Right").
(iii) Limitations on Redemption.
(a) The Partnership may exercise the Cash Redemption Right
provided that the redemption price (other than the portion thereof consisting
of accumulated
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and unpaid distributions) is payable solely out of the sale proceeds of other
Partnership Interests (or of rights or options to purchase Partnership
Interests) or proceeds contributed to the Partnership from the sale of equity
securities of the General Partner, and from no other source. For purposes of
the preceding sentence, "equity securities" means any equity securities,
shares, interest, participation or other ownership interests (however
designated) and any rights (other than debt securities convertible into or
exchangeable for equity securities) or options to purchase any of the
foregoing.
(b) If fewer than all of the outstanding Series B Preferred
Units are to be redeemed, the Series B Preferred Units to be redeemed shall be
determined pro rata or by lot or in such other manner as determined by the
Partnership, acting through the General Partner.
(c) Notwithstanding anything to the contrary contained herein,
unless full cumulative distributions on all Series B Preferred Units shall
have been or contemporaneously are authorized and paid or authorized and a sum
sufficient for the payment thereof set apart for payment for all past
distribution periods and the current distribution period, no Series B
Preferred Units shall be redeemed unless all outstanding Series B Preferred
Units are simultaneously redeemed or exchanged; provided, however, that the
foregoing shall not prevent the purchase or acquisition of Series B Preferred
Units pursuant to a purchase or exchange offer made on the same terms to
holders of all outstanding Series B Preferred Units. In addition, unless full
cumulative distributions on all outstanding Series B Preferred Units have been
or contemporaneously are authorized and paid or authorized and a sum
sufficient for the payment thereof set apart for payment for all past
distributions periods and the then current distribution period, the
Partnership shall not purchase or otherwise acquire directly or indirectly any
Series B Preferred Units or any Partnership Interests ranking junior to or on
a parity with the Series B Preferred Units as to distributions or upon
liquidation, dissolution or winding up of the Partnership (except by
conversion into or exchange for Partnership Interests ranking junior to the
Series B Preferred Units as to distributions and upon liquidation, dissolution
or winding up of the Partnership or for the repurchase of Class A Units held
by employees, officers or consultants of the Partnership (or their permitted
transferees) that are subject to restrictive share purchase agreements under
which the Partnership has the option or obligation to repurchase such shares
upon the occurrence of certain events, such as termination of employment).
(d) Immediately prior to any redemption of Series B Preferred
Units, the Partnership shall pay, in cash, any accumulated and unpaid
distributions through the Redemption Date (as defined in subsection E(iv)
below), unless a Redemption Date falls after a Distribution Record Date and on
or prior to the corresponding Distribution Payment Date, in which case each
holder of Series B Preferred Units at the close of business on such
Distribution Record Date shall be entitled to the distribution payable on such
Series B Preferred Units on the corresponding Distribution Payment Date
notwithstanding the redemption of such Series B Preferred Units on or prior to
such Distribution Payment Date. Except as provided above, the
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Partnership will make no payment or allowance for unpaid distributions,
whether or not in arrears, on Series B Preferred Units for which a notice of
redemption has been given.
(iv) Procedures for Redemption.
(a) Notice of redemption shall be mailed, not less than 30 nor
more than 60 days, prior to the date fixed for redemption set forth in such
notice (the "Redemption Date") to each holder of record of Series B Preferred
Units to be redeemed, notifying such holder of the Partnership's election to
redeem such Series B Preferred Units. Such notice shall mailed to such
holder's address as the same appears on the records of the Partnership. No
failure to give such notice or any defect therein or in the mailing thereof
shall affect the validity of the proceedings for the redemption of any Series
B Preferred Units except as to the holder to whom notice was defective or not
given.
(b) In addition to any information required by law, such notice
shall state: (1) the Redemption Date, (2) with respect to the Cash Redemption
Right, the cash redemption price per Series B Preferred Unit and, with respect
to the Class A Unit Redemption Right, the number of Class A Units to be issued
with respect to each Series B Preferred Unit, (3) the number of Series B
Preferred Units to be redeemed (and, if fewer than all the Series B Preferred
Units are to be redeemed from such holder, the number of Series B Preferred
Units to be redeemed from such holder), (4) the place or places where
certificates for such Series B Preferred Units are to be surrendered for
payment of the redemption price in cash, with respect to the Cash Redemption
Right, and in certificates representing Class A Units, with respect to the
Share Redemption Right, (5) that distributions on the Series B Preferred Units
to be redeemed will cease to accumulate on such Redemption Date and (6) the
date upon which the holder's conversion rights, if any, as to such Series B
Preferred Units shall terminate.
(c) On or after the Redemption Date, each holder of Series B
Preferred Units to be redeemed shall present and surrender the certificates
evidencing its Series B Preferred Units to the Partnership at the place
designated in the notice of redemption and thereupon the redemption price (in
cash or Class A Units, as applicable) of such Series B Preferred Units shall
be paid to or on the order of the person whose name appears on such
certificate evidencing Series B Preferred Units as the owner thereof and each
surrendered certificate shall be canceled. If fewer than all the Series B
Preferred Units evidenced by any such surrendered certificate are to be
redeemed, a new certificate shall be issued evidencing the unredeemed Series B
Preferred Units.
(d) From and after the Redemption Date (unless the Partnership
defaults in payment of the redemption price), all distributions on the Series
B Preferred Units designated for redemption in such notice shall cease to
accumulate and all rights of the holders thereof, except the right to receive
the redemption price thereof (including all accumulated and
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unpaid distributions up to the Redemption Date), shall cease and terminate and
such Series B Preferred Units shall not thereafter be transferred (except with
the consent of the General Partner) on the Partnership's books, and such
Series B Preferred Units shall not be deemed to be outstanding for any purpose
whatsoever. At its election, the Partnership, acting through its General
Partner, prior to a Redemption Date, may irrevocably deposit the redemption
price (including accumulated and unpaid distributions) of the Series B
Preferred Units so called for redemption in trust for the holders thereof with
a bank or trust company, in which case the redemption notice to holders of the
Series B Preferred Units to be redeemed shall (i) state the date of such
deposit, (ii) specify the office of such bank or trust company as the place of
payment of the redemption price and (iii) require such holders to surrender
the certificates evidencing such Series B Preferred Units at such place on or
about the date fixed in such redemption notice (which may not be later than
the Redemption Date) against payment of the redemption price (including all
accumulated and unpaid distributions to the Redemption Date). At the close of
business on a Redemption Date relating to the Partnership's Class A Unit
Redemption Right, each holder of Series B Preferred Units to be so redeemed
(unless the Trust defaults in the delivery of the Class A Units payable on
such Redemption Date) shall be deemed to be the record holder of the number of
Class A Units into which such Series B Preferred Units are to be so redeemed,
regardless of whether such holder has surrendered the certificates evidencing
the Series B Preferred Units. Any monies or Class A Units so deposited which
remain unclaimed by the holders of the Series B Preferred Units at the end of
two years after the Redemption Date shall be returned by such bank or trust
company to the Trust.
F. Voting Rights.
(i) Holders of the Series B Preferred Units shall not have any
voting rights, except as described below.
(ii) Whenever distributions on any Series B Preferred Units
shall be in arrears for six or more quarterly periods (a "Preferred
Distribution Default"), the holders of the outstanding Series B Preferred
Units shall be entitled to elect two individuals (the "Preferred Unit
Representatives"), which individuals shall be entitled to vote on their behalf
on the matters set forth in subparagraph (iv) below. Such election shall be
held at a special meeting called by the holders of record of at least 10% of
the outstanding Series B Preferred Units.
(iii) If and when all accumulated distributions and the
distribution for the current distribution period on the Series B Preferred
Units shall have been paid in full or set aside for payment in full, the
holders of Series B Preferred Units, acting through the Preferred Unit
Representatives, shall be divested of the voting rights set forth in
subsection F(iv) below (subject to revesting in the event of each and every
Preferred Distribution Default) and the term of office of each Preferred Unit
Representative so elected shall terminate. So long as a Preferred Distribution
Default shall continue, any vacancy in the office of a Preferred Unit
Representative may be filled by written consent of the Preferred Unit
Representative remaining in office, or if there is no such remaining
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representative, by vote of holders of a majority of the outstanding Series B
Preferred Units. Any Preferred Unit Representative may be removed at any time
with or without cause by the vote of, and shall not be removed otherwise than
by the vote of, the holders of record of a majority of the outstanding Series
B Preferred Units when they have the voting rights set forth in subsection
F(iv) below.
(iv) For so long as a Preferred Distribution Default shall
continue, any action to be taken by the Partnership at the direction of the
General Partner and as to which the General Partner may act only upon
authorization by its Board of Trustees (the "Board") may only be taken if such
action is approved by a majority in number of the members of Board and the
Preferred Unit Representatives voting together as a group.
(v) 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 two-thirds of Series B Preferred Units outstanding at the
time, given in person or by proxy, either in writing or at a meeting, (a)
authorize or create, or increase the authorized or issued amount of, any class
or series of Partnership Interests ranking prior to 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 previously designated Partnership Interests into
such Partnership Interests, or create, authorize or issue any obligation or
Partnership Interests convertible or exchangeable into or evidencing the right
to purchase any such Partnership Interests; or (b) amend, alter or repeal the
provisions of the Partnership Agreement, whether by merger, consolidation or
otherwise, or consummate a merger or consolidation involving the Partnership
(any such merger or consolidation, an "Event"), so as to materially and
adversely affect any right, preference, privilege or voting power of such
Series B Preferred Units or the holders thereof; provided, however, with
respect to the occurrence of any of the Events set forth in (b) above, the
occurrence of any such Event shall not be deemed to materially adversely
affect such rights, preferences, privileges or voting powers of holders of
Series B Preferred Units if immediately after any such Event (i) in which the
Partnership is the surviving entity, there are outstanding no equity
securities ranking as to distribution rights or liquidation preference senior
to the Series B Preferred Units other than the securities of the Partnership
outstanding prior to such Event, (ii) in which the Partnership is not the
surviving entity, as a result of the Event, the holders of the Series B
Preferred Units receive shares of stock or other equity securities with
preferences, rights and privileges substantially similar to the preferences,
rights and privileges of the Series B Preferred Units and there are
outstanding no shares of stock or other equity securities of the surviving
entity ranking as to distribution rights or liquidation preference senior to
the Series B Preferred Units other than the securities issued in respect of
securities of the Partnership outstanding prior to such Event or (iii) whether
or not the Partnership is the surviving entity, there are no outstanding
equity securities of the Partnership or its successor (other than securities
of the Partnership outstanding prior to such Event, or securities issued in
respect of securities of the Partnership outstanding prior to such Event)
ranking as to distribution rights or liquidation preference senior to the
Series B Preferred Units; and
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provided further that any increase in the amount of authorized Preferred Units
or the creation or issuance of any class or series of Preferred Units (other
than the Series B 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, shall not be deemed
to materially and adversely affect such rights, preferences, privilege or
voting powers.
(vi) Notwithstanding anything to the contrary contained herein,
the creation or issuance of any series of Preferred Units that is subject to
mandatory redemption at a scheduled date or dates or that has the benefit of a
sinking fund or that is subject to redemption at the option of the Partnership
or the holder but that otherwise ranks 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 shall not require the affirmative vote or
consent of all or any of the holders of the Series B Preferred Units.
(vii) 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, redeemed or called for redemption upon proper notice and
sufficient funds or Class A Units, as applicable, shall have been deposited in
trust to effect such redemption.
G. Conversion.
(i) Each whole (but not fractional) Series B Preferred Unit
shall be convertible at any time, at the option of the holder thereof, into
such number of Class A Units as is equal to the quotient that results from
dividing (i) the sum of (X) the Stated Value plus (Y) accrued and unpaid
distributions on such Class B Preferred Unit (other than such accrued and
unpaid distributions that the General Partner elects to pay in cash at the
time of conversion) by (ii) a conversion price (the "Conversion Price") of
$28.00 per Series B Preferred Unit; provided, however, that if the average
Current Market Price of the Common Shares during the 60-Trading Day period
ending on December 31, 2003 is $23.00 or lower then the Conversion Price shall
automatically be reduced from $28.00 to $26.50, subject to adjustment as
described in subsection G(v) below; provided, further, that the right to
convert Series B Preferred Units called for redemption pursuant to subsection
E above shall terminate at the close of business on the Redemption Date,
unless the Partnership shall default in making payment of the redemption
price.
(ii) To exercise the conversion right, the holder of each
Series B Preferred Unit to be converted shall surrender the certificate
evidencing such Series B Preferred Unit, duly endorsed or assigned to the
Partnership or in blank, at the principal office of the Partnership
accompanied by written notice to the Partnership that the holder thereof
elects to convert such Series B Preferred Unit. Unless the Class A Units
issuable on conversion are to be issued in the same name
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as the name in which such Series B Preferred Unit is registered, in which case
the Partnership shall bear the related taxes, each Series B Preferred Unit
surrendered for conversion shall be accompanied by instruments of transfer, in
form satisfactory to the General Partner, 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 General Partner
demonstrating that such taxes have been paid).
(iii) Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which the
certificates for Series B Preferred Units shall have been surrendered and such
notice (and if applicable, payment of an amount equal to the distribution
payable on such shares) received by the Partnership as aforesaid, and the
person or persons in whose name or names any certificate or certificates for
Class A Units shall be issuable upon such conversion shall be deemed to have
become the holder or holders of record of the Class A Units evidenced thereby
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 unit 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 unit transfer books
are open, but such conversion shall be at the Conversion Price in effect on
the date on which such shares have been surrendered and such notice received
by the Partnership.
(iv) Holders of Series B Preferred Units at the close of
business on a Distribution Record Date shall be entitled to receive the
distribution payable on such Series B Preferred Units on the corresponding
Distribution Payment Date notwithstanding the conversion of such Series B
Preferred Units following such Distribution Record Date and prior to such
Distribution Payment Date. However, certificates evidencing Series B Preferred
Units surrendered for conversion during the period between the close of
business on any Distribution Record Date and ending with the opening of
business on the corresponding Distribution Payment Date (except shares
converted after the issuance of a notice of redemption with respect to a
Redemption Date during such period or coinciding with such Distribution
Payment Date) shall be accompanied by payment of an amount equal to the
distribution payable on such Series B Preferred Units on such Distribution
Payment Date. A holder of Series B Preferred Units on a Distribution Record
Date who (or whose transferee) tenders any such Series B Preferred Units for
conversion into Class A Units on such Distribution Payment Date shall receive
the distribution payable by the Partnership on such Series B Preferred Units
on such date, and the converting holder need not include payment of the amount
of such distribution upon surrender of certificates representing such Series B
Preferred Units for conversion. Except as provided above, the Partnership
shall make no payment or allowance for unpaid distributions, whether or not in
arrears, on converted Series B Preferred Units or for distribution on the
Class A Units that are issued upon such conversion.
As promptly as practicable after the surrender of certificates for
Series B Preferred Units as aforesaid, the Partnership shall issue and shall
deliver at such office to such holder, or on
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such holder's written order, a certificate or certificates for the number of
full Class A Units issuable upon the conversion of such Series B Preferred
Units in accordance with the provisions of this Subsection G.
(v) Reclassification of Class A Units; Conversion Price Adjustment.
(a) (1) In the event of any adjustment to the number of
outstanding Class A Units pursuant to Section 15.4 of the Partnership
Agreement, the Conversion Price in effect at the opening of business on the
day following the day on which such adjustment becomes effective shall be
adjusted so that the holder of any Series B Preferred Units thereafter
surrendered for conversion shall be entitled to receive the number of Class A
Units that such holder would have been entitled to receive after the effective
date of such adjustment had such Series B Preferred Units been converted
immediately prior to the effective date of such adjustment.
(2) If the Partnership shall after the Issue Date (A) pay or
make a distribution to all holders of its Class A Units and GP Units in Class
A Units and GP Units, as applicable, (B) subdivide its outstanding Class A
Units and GP Units into a greater number of units, (C) combine its outstanding
Class A Units and GP Units into a smaller number of units or (D) issue any
units by reclassification of its Class A Units and GP Units, in each case
other than in connection with an adjustment under Section 15.4 of the
Partnership Agreement (or any successor provision), the Conversion Price in
effect at the opening of business on the day following the date fixed for the
determination of holders of Class A Units and GP Units entitled to receive
such distribution or at the opening of business on the day 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 Units thereafter surrendered for conversion shall be entitled to
receive the number of Class A Units 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 Units 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 (2) shall become effective immediately after the
opening of business on the day next following the record date (except as
provided in subsection G(v)(d) below) in the 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.
(b) (1) If the Trust shall issue after the Issue Date
rights, options or warrants to all holders of Common Shares entitling them
(for a period expiring within 45 days after the record date mentioned below)
to subscribe for or purchase Common Shares at a price per share less than the
Fair Market Value per Common Share on the record date fixed for the
determination of shareholders entitled to receive such rights, options or
warrants (any of the foregoing being hereinafter in this subsection (1)
sometimes called the "Securities"), then the Conversion Price shall be
adjusted so that it shall equal the price determined by multiplying (I) the
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Conversion Price in effect immediately prior to the close of business on the
record date fixed for the determination of shareholders entitled to receive
such distribution by (II) a fraction, the numerator of which shall be the sum
of (A) the number of Common Shares outstanding on the close of business on the
record date fixed for the determination of shareholders entitled to receive
such distribution and (B) the number of shares that the aggregate proceeds to
the Trust from the issuance and the exercise of such rights, options or
warrants for Common Shares would purchase at such Fair Market Value, and the
denominator of which shall be the sum of (A) the number of Common Shares
outstanding on the close of business on the record date fixed for the
determination of shareholders entitled to receive such distribution and (B)
the number of additional Common Shares offered for subscription or purchase
pursuant to such rights, options or warrants. Such adjustment shall become
effective immediately upon the opening of business on the business day next
following the record date fixed for the determination of shareholders entitled
to receive such distribution (subject to paragraph G(v)(d) below). In
determining whether any rights, options or warrants entitle the holders of
Common Shares to subscribe for or purchase Common Shares at less than such
Fair Market Value, there shall be taken into account any consideration
received by the Trust upon issuance and upon exercise of such rights, options
or warrants, the value of such consideration, if other than cash, to be
determined by the General Partner, whose determination shall be conclusive.
For the purposes of this subsection (1), the distribution of a Security, which
is distributed not only to the holders of the Common Shares on the record date
fixed for the determination of shareholders entitled to receive such
distribution of such Security, but also is distributed or distributable with
each Common Share issued or issuable upon redemption of each Class A Unit
issued or issuable upon redemption or conversion of Series B Preferred Units
after such determination date, shall not require an adjustment of the
Conversion Price pursuant to this subsection (1); provided that on the date,
if any, on which a person receiving Common Shares issued or issuable upon
redemption of Class A Units issued or issuable upon redemption or conversion
of Series B Preferred Units would no longer be entitled to receive such
Security with a Common Share (other than as a result of the termination of all
such Securities), a distribution of such Securities shall be deemed to have
occurred, and the Conversion Price shall be adjusted as provided in this
subsection (1) (and such day shall be deemed to be "the record date fixed for
the determination of the shareholders entitled to receive such distribution"
within the meaning of this subsection (1)). For the purposes of this
subsection (1), if in connection with the distribution of a Security to the
holders of the Common Shares an adjustment is made to the Conversion Price
pursuant to subsection G(v)(a)(1) above that reflects the anti-dilution
provisions of this subsection (1), no additional adjustment to the Conversion
Price need be made pursuant to this subsection (1). In the event that any such
rights, options or warrants expire unexercised or are canceled prior to
exercise, the Conversion Price (if previously adjusted on account of the
issuance of such rights, options or warrants) shall be adjusted so that it
shall equal the price it would have been had such rights, options or warrants
not been issued.
(2) If the Partnership shall issue after the Issue Date
rights, options or warrants to all holders of Class A Units and GP Units
entitling them (for a period expiring within 45 days after the record date
mentioned below) to subscribe for or purchase Class
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A Units or GP Units, as applicable, at a price per unit less than the fair
market value per Class A Unit (as determined by the General Partner, the
"Class A Unit Fair Market Value") on the record date fixed for the
determination of holders of Class A Units and GP Units entitled to receive
such rights, options or warrants (any of the foregoing being hereinafter in
this subsection (2) sometimes called the "Securities"), then 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 record date fixed for the determination of holders of Class
A Units and GP Units entitled to receive such distribution by (II) a fraction,
the numerator of which shall be the sum of (A) the number of Class A Units and
GP Units outstanding on the close of business on the record date fixed for the
determination of holders of Class A Units and GP Units entitled to receive
such distribution and (B) the number of Class A Units that the aggregate
proceeds to the Partnership from the issuance and the exercise of such rights,
options or warrants issued to holders of Class A Units and GP Units would
purchase at such Class A Unit Fair Market Value, and the denominator of which
shall be the sum of (A) the number of Class A Units and GP Units outstanding
on the close of business on the record date fixed for the determination of
holders of Class A Units and GP Units entitled to receive such distribution
and (B) the number of additional Class A Units and GP Units offered for
subscription or purchase pursuant to such rights, options or warrants. Such
adjustment shall become effective immediately upon the opening of business on
the business day next following the record date fixed for the determination of
holders of Class A Units and GP Units entitled to receive such distribution
(subject to subsection G(v)(d) below). In determining whether any rights,
options or warrants entitle the holders of Class A Units and GP Units to
subscribe for or purchase Class A Units or GP Units, as applicable, at less
than such Class A Unit 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 by the General Partner, whose determination shall
be conclusive. For the purposes of this subsection (2), the distribution of a
Security, which is distributed not only to the holders of the Class A Units
and GP Units on the record date fixed for the determination of holders of
Class A Unit and GP Units entitled to receive such distribution of such
Security, but also is distributed or distributable with each Class A Unit
delivered or deliverable to a person converting a Series B Preferred Unit or
having a Series B Preferred Unit redeemed after such determination date, shall
not require an adjustment of the Conversion Price pursuant to this subsection
(2); provided that on the date, if any, on which a person converting a Series
B Preferred Unit or having a Series B Preferred Unit redeemed would no longer
be entitled to receive such Security with a Class A Unit (other than as a
result of the termination of all such Securities), a distribution of such
Securities shall be deemed to have occurred, and the Conversion Price shall be
adjusted as provided in this subsection (2) (and such day shall be deemed to
be "the record date fixed for the determination of the holders of Class A
Units and GP Units entitled to receive such distribution" within the meaning
of this subsection (2)). For the purposes of this subsection (2), if in
connection with the distribution of a Security to the holders of the Class A
Units and GP Units an adjustment is made to the Conversion Price pursuant to
subsection G(v)(a) above that reflects the anti-dilution provisions of this
subsection (2), no additional adjustment to the Conversion Price need be made
pursuant to this subsection (2). In
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the event that any such rights, options or warrants expire unexercised or are
canceled prior to exercise, the Conversion Price (if previously adjusted on
account of the issuance of such rights, options or warrants) shall be adjusted
so that it shall equal the price it would have been had such rights, options
or warrants not been issued.
(c) (1) If the Trust shall distribute to all holders of its
Common Shares any evidence of its indebtedness or assets (excluding cash
distributions paid out of current or accumulated funds from operations to the
extent the same results in a payment of at least equal cash distributions to
the holders of Series B Preferred Units) or rights, options and warrants to
subscribe for or purchase any of its securities (excluding those rights,
options and warrants issued to all holders of Common Shares entitling them for
a period expiring within 45 days after the record date referred to in
subparagraph G(v)(b)(1) above to subscribe for or purchase Common Shares,
which rights, options and warrants are referred to in and treated under
subparagraph G(v)(b)(1) above) (any of the foregoing being hereinafter in this
subsection (1) sometimes 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 record date fixed for the determination of
shareholders entitled to receive such distribution by (II) a fraction, the
numerator of which shall be the Fair Market Value per Common Share on the
record date fixed for the determination of shareholders entitled to receive
such distribution less the then fair market value (as determined by the
General Partner, whose determination shall be conclusive) of the portion of
the shares of beneficial interest or assets or evidences of indebtedness so
distributed or of such rights, options or warrants applicable to one Common
Share, and the denominator of which shall be the Fair Market Value per Common
Share on the record date fixed for the determination of shareholders entitled
to receive such distribution. Such adjustment shall become effective
immediately at the opening of business on the business day next following the
record date fixed for the determination of shareholders entitled to receive
such distribution (except as provided in subsection G(v)(d) below). For the
purposes of this subsection (1), the distribution of a Security, which is
distributed not only to the holders of the Common Shares on the record date
fixed for the determination of shareholders entitled to such distribution of
such Security, but also is distributed or distributable with each Common Share
issued or issuable upon redemption of each Class A Unit issued or issuable
upon redemption or conversion of Series B Preferred Units after such
determination date, shall not require an adjustment of the Conversion Price
pursuant to this subsection (1); provided that on the date, if any, on which a
person receiving Common Shares issued or issuable upon redemption of Class A
Units issued or issuable upon redemption or conversion of Series B Preferred
Units would no longer be entitled to receive such Security with a Common Share
(other than as a result of the termination of all such Securities), a
distribution of such Securities shall be deemed to have occurred, and the
Conversion Price shall be adjusted as provided in this subsection (1) (and
such day shall be deemed to be "the record date fixed for the determination of
the shareholders entitled to receive such distribution" within the meaning of
within the meaning of this subsection (1)). In the event that any such rights,
options or warrants expire unexercised or are canceled prior to exercise, the
Conversion Price (if previously
-15-
adjusted on account of the issuance of such rights, options or warrants) shall
be adjusted so that it shall equal the price it would have been had such
rights, options or warrants not been issued.
(2) If the Partnership shall distribute to all holders of
its Class A Units and GP Units any LP Units (other than Class A Units) or
evidence of its indebtedness or assets (excluding cash distributions paid out
of current or accumulated funds from operations to the extent the same results
in a payment of at least equal cash distributions to the holders of Series B
Preferred Units) or rights, options and warrants to subscribe for or purchase
any LP Units (excluding those rights, options and warrants issued to all
holders of Class A Units and GP Units entitling them for a period expiring
within 45 days after the record date referred to in subsection G(v)(b)(2)
above to subscribe for or purchase Class A Units or GP Units, as applicable,
which rights, options and warrants are referred to in and treated under
subparagraph G(v)(b)(2) above)(any of the foregoing being hereinafter in this
subsection (2) sometimes 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 record date fixed for the determination of holders of
Class A Units and GP Units entitled to receive such distribution by (II) a
fraction, the numerator of which shall be the Class A Fair Market Value per
Class A Unit on the record date fixed for the determination of holders of
Class A Units and GP Units entitled to receive such distribution less the then
fair market value (as determined by the General Partner, whose determination
shall be conclusive) of the portion of the LP Units or assets or evidences of
indebtedness so distributed or of such rights, options or warrants applicable
to one Class A Unit, and the denominator of which shall be the Class A Unit
Fair Market Value per Class A Unit on the record date fixed for the
determination of holders of Class A Units and GP Units entitled to receive
such distribution (except as provided in subsection G(v)(d) below). Such
adjustment shall become effective immediately at the opening of business on
the business day next following the record date fixed for the determination of
holders of Class A Units and GP Units entitled to receive such distribution.
For the purposes of this subsection (2), the distribution of a Security, which
is distributed not only to the holders of the Class A Units and GP Units on
the record date fixed for the determination of holders of Class A Unit and GP
Units entitled to receive such distribution of such Security, but also is
distributed or distributable with each Class A Unit delivered or deliverable
to a person converting a Series B Preferred Unit or having a Series B
Preferred Unit redeemed after such determination date, shall not require an
adjustment of the Conversion Price pursuant to this subsection (2); provided
that on the date, if any, on which a person converting a Series B Preferred
Unit or having a Series B Preferred Unit redeemed would no longer be entitled
to receive such Security with a Class A Unit (other than as a result of the
termination of all such Securities), a distribution of such Securities shall
be deemed to have occurred, and the Conversion Price shall be adjusted as
provided in this subsection (2) (and such day shall be deemed to be "the
record date fixed for the determination of the holders of Class A Units and GP
Units entitled to receive such distribution" within within the meaning of this
subsection (2)). In the event that any such rights, options or warrants expire
unexercised or are canceled prior to exercise, the Conversion
-16-
Price (if previously adjusted on account of the issuance of such rights,
options or warrants) shall be adjusted so that it shall equal the price it
would have been had such rights, options or warrants not been issued.
(d) In any case in which this subsection G(v) 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 (A) issuing to the holder of any Series B Preferred Units converted
after such record date and before the occurrence of such event the additional
Class A Units issuable upon such conversion by reason of the adjustment
required by such event over and above the Class A Units issuable upon such
conversion before giving effect to such adjustment and (B) fractionalizing any
Series B Preferred Units and/or paying to such holder any amount of cash in
lieu of any fraction.
(e) Notwithstanding anything to the contrary contained in
this subsection G(v), in the event that any event described in this subsection
G(v) has a simultaneous effect on the Common Shares and the Class A Units,
only one adjustment to the Conversion Price shall be made pursuant to this
subsection G(v) so long as such adjustment refelects the intended operation of
this subsection G(v). All decisions with respect to any adjustments to be made
to the Conversion Price upon the occurrence of any such events shall be made
by the General Partner in its reasonable discretion. In the case of any
ambiguity or uncertainty in the application of any provision of this
subsection G(v), the General Partner shall have the authority to interpret
such provision in such manner as it in good faith reasonably believes
correctly reflects the intended operation of such provision.
(f) 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 (f) 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 subsection G(v) (other than this subsection (f)) 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 Shares. Notwithstanding any other
provisions of this subsection G(v), the Partnership shall not be required to
make any adjustment of the Conversion Price as a result of the issuance of any
Common Shares by the Trust pursuant to any plan providing for the reinvestment
of distributions or interest payable on securities of the Trust and the
investment of additional optional amounts in Common Shares under such plan.
All calculations under this subsection G(v) shall be made to the nearest cent
with ($.005 being rounded upward) or to the nearest one-tenth of a share (with
.05 of a share being rounded upward), as the case may be. Anything in this
subsection G 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 G, as the
General Partner in its discretion shall determine to be advisable in order
that any share distributions, subdivision of shares,
-17-
reclassification or combination of shares, distribution of rights, options or
warrants to purchase shares or securities, or a distribution of other assets
(other than cash distributions) hereafter made by the Trust to its
shareholders shall not be taxable.
(g) If the Partnership shall be a party to any transaction
(including, without limitation, a merger or consolidation, sale of all or
substantially all of the Partnership's assets or (each of the foregoing being
referred to herein as a "Transaction"), in each case as a result of which
Class A Units shall be converted into the right to receive 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
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 Class A Units into which one Series B Preferred Unit
was convertible immediately prior to such Transaction. The Partnership shall
not be a party to any Transaction unless the terms of such Transaction are
consistent with the provisions of this subsection G(v), 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 the Series B Preferred
Units that remain outstanding after such Transaction to convert into the
consideration received by holders of Class A Units at the Conversion Price in
effect immediately prior to such Transaction. The provisions of this
subsection G(v) shall similarly apply to successive Transactions.
H. Transfer Restrictions. The Series B Preferred Units are subject
to the restrictions on transferability set forth in Article XI of the
Partnership Agreement. In addition, except to Affiliates of the Admitted
Partners (as defined below) or Lazard Freres Real Estate Investors, L.L.C. or
upon the written consent of the General Partner (such consent not to be
unreasonably withheld), none of the Series B Preferred Units, the Class A
Units issuable upon conversion or redemption of the Series B Preferred Units
(the "Underlying Class A Units"), nor the Common Shares issuable upon
redemption of the Underlying Class A Units may be sold, assigned, exchanged,
pledged or otherwise transferred prior to January 2, 2004; provided, however,
that (notwithstanding the restriction contained in this sentence, but subject
to the other restrictions on transfer applicable to such securities) the
Series B Preferred Units, the Underlying Class A Units and the Common Shares
issuable upon redemption of the Underlying Class A Units may be pledged to,
and, upon default of the obligations pursuant to which such securities are
pledged, if any, transferred to any lender (a "Lender") in connection with the
financing needs of Lazard Freres Real Estate Investors, L.L.C. and its
Affiliates, which Lender following any such transfer shall be subject to the
transfer restrictions of this subsection. This subsection H shall not restrict
a sale of the direct or indirect equity interests of the holders of the Series
B Preferred Units. Any Series B Preferred Units, Underlying Class A Units and
Common Shares issued upon redemption of Underlying Class A Units shall bear a
restrictive legend evidencing the transfer restrictions set forth in this
subsection H.
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I. Allocations. Allocations of the Partnership's items of income,
gain, loss and deduction shall be allocated among holders of Series B
Preferred Units in accordance with Article VII of the Partnership Agreement.
J. Definitions.
"Common Shares" shall mean the common shares of beneficial interest,
par value $.01 per share, of the Trust.
"Current Market Price" of publicly traded Common Shares or any other
class of shares of beneficial interest or other security of the Trust or any
other issuer for any day shall mean the last reported sales price, regular
way, on such day, or, if no sale takes place on such day, the average of the
reported closing bid and asked prices on such day, regular way, in either case
as reported on the New York Stock Exchange ("NYSE") or, if such security is
not listed or admitted for trading on the NYSE, on the principal national
securities exchange on which such security is listed or admitted for trading
or, if not listed or admitted for trading on any national securities exchange,
on the NASDAQ National Market or, if such security is not quoted on such
NASDAQ National Market, the average of the closing bid and asked prices on
such day in the over-the-counter market as reported by NASDAQ or, if bid and
asked prices for such security on such day shall not have been reported
through NASDAQ, the average of the bid and asked prices on such day as
furnished by any NYSE member firm regularly making a market in such security
selected for such purpose by Partnership, acting through the General Partner.
"Distribution Payment Date" shall mean, with respect to each
Distribution Period, the fifteenth day of January, April, July and October in
each year, commencing, on October 15, 1998; provided, however, that if any
Distribution Payment Date falls on any day other than a business day, the
distribution payment due on such Distribution Payment Date shall be paid on
the business day immediately following such Distribution Payment Date.
"Distribution Periods" shall mean quarterly distribution periods
commencing on January 1, April 1, July 1 and October 1 of each year and ending
on and including the day preceding the first day of the next succeeding
Distribution Period (other than the initial Distribution Period, which shall
commence on the Issue Date and end on and include September 30, 1998).
"Fair Market Value" shall mean the average of the daily Current
Market Prices per Common Share 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 earlier of the day in question and the
day before the "ex" date with respect to the issuance or distribution
requiring such computation. The term " 'ex' date," when used with respect to
any issuance or distribution, means the first day on which the Common Shares
trade regular way, without the right to receive such
-19-
issuance or distribution, on the exchange or in the market, as the case may
be, used to determine that day's Current Market Price.
"Issue Date" shall mean the date on which Series B Preferred Units
are first issued by the Partnership.
"Trading Day" shall mean any day on which the securities in question
are traded on the NYSE or, if such securities are not listed or admitted for
trading on the NYSE, on the principal national securities exchange on which
such securities are listed or admitted or, if not listed or admitted for
trading on any national securities exchange, on the NASDAQ National Market or,
if such securities are not quoted on such NASDAQ National Market, in the
applicable securities market in which the securities are traded.
The "Trust" means Brandywine Realty Trust, a Maryland real estate
investment trust.
2. The Partnership Agreement is hereby amended to reflect the
admission as a Limited Partners on the date hereof of the Persons set forth on
Schedule A attached hereto (the "Admitted Partners") and the ownership by such
Persons of the number of Series B Preferred Units listed opposite each
Person's name on Schedule A. Attached as Schedule B is a list of the Partners
of the Partnership prior to the admission of the Admitted Partners, together
with the number and class of Partnership Interests owned by such partners.
3. The "Redemption Right" granted to holders of Class A Units in
Article XV of the Partnership Agreement shall not be exercisable by the
holders of the Class A Units issuable upon redemption or conversion of Series
B Preferred Units until the first anniversary of the date hereof, except that
if a Change of Control (as defined below) of the General Partner occurs, the
foregoing restriction on exercise of the Redemption Right shall automatically
terminate with respect to all of such Class A Units.
As used herein, the term "Change of Control" shall mean:
(i) the acquisition in one or more transactions by any "Person"
(as the term person is used for purposes of Sections 13(d) or 14(d) of the
Exchange Act) of "Beneficial ownership" (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of twenty-five percent (25%) or more of
the combined voting power of the General Partner's then outstanding voting
securities (the "Voting Securities"), provided that for purposes of this
clause (i) Voting Securities acquired directly from the General Partner by any
Person shall be excluded from the determination of such Person's Beneficial
ownership of Voting Securities (but such Voting Securities shall be included
in the calculation of the total number of Voting Securities then outstanding);
or
-20-
(ii) approval by shareholders of the General Partner of:
(A) a merger, reorganization or consolidation involving the
General Partner if the shareholders of the General Partner immediately before
such merger, reorganization or consolidation do not or will not own directly
or indirectly immediately following such merger, reorganization or
consolidation, more than fifty percent (50%) of the combined voting power of
the outstanding voting securities of the General Partner resulting from or
surviving such merger, reorganization or consolidation in substantially the
same proportion as their ownership of the Voting Securities outstanding
immediately before such merger, reorganization or consolidation; or
(B) a complete liquidation or dissolution of the General
Partner; or
(C) an agreement for the sale or other disposition of all or
substantially all of the assets of the General Partner; or
(iii) acceptance by shareholders of the General Partner of shares
in a share exchange if the shareholders of the General Partner immediately
before such share exchange do not or will not own directly or indirectly
immediately following such share exchange more than fifty percent (50%) of the
combined voting power of the outstanding voting securities of the entity
resulting from or surviving such share exchange in substantially the same
proportion as their ownership of the Voting Securities outstanding immediately
before such share exchange.
4. By execution of this Amendment to the Partnership Agreement by the
General Partner, the Admitted Partners agree to be bound by each and every
term of the Partnership Agreement as amended from time to time in accordance
with the terms of the Partnership Agreement. The General Partner confirms that
the provisions in Section 18.1(a) of the Partnership Agreement shall apply to
the Admitted Partners notwithstanding Section 18.7 of the Partnership
Agreement.
5. On the date of this Amendment, each of the Admitted Partners shall
execute and deliver to Brandywine Realty Trust an Irrevocable Proxy coupled
with an Interest in the form set forth on Exhibit 1 hereto attached.
6. Except as expressly set forth in this Amendment to the Partnership
Agreement, the Partnership Agreement is hereby ratified and confirmed in each
and every respect.
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IN WITNESS WHEREOF, this Amendment to the Partnership
Agreement has been executed and delivered as of the date first above written.
GENERAL PARTNER:
BRANDYWINE REALTY TRUST
By:/s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxx
Its: President and Chief Executive Officer
ADMITTED PARTNERS:
COMMONWEALTH ATLANTIC COMMONWEALTH ATLANTIC
OPERATING PROPERTIES INC. LAND IV INC.
By:/s/ Xxxxx X. Xxxxx By:/s/ Xxxxx X. Xxxxx
------------------------- ---------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: Vice President Title: Vice President
COMMONWEALTH ATLANTIC COMMONWEALTH ATLANTIC
LAND II INC. DEVELOPMENT INC.
By:/s/ Xxxxx X. Xxxxx By:/s/ Xxxxx X. Xxxxx
------------------------- ---------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxx
Title: Vice President Title: Vice President
COMMONWEALTH ATLANTIC
LAND COMPANY
By:/s/ Xxxxx X. Xxxxx
------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
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SCHEDULE "A"
ADMITTED NUMBER OF SERIES B
PARTNERS PREFERRED UNITS
---------- -------------------
Commonwealth Atlantic Operating Properties Inc. 1,140,527
Commonwealth Atlantic Land IV Inc. 0
Commonwealth Atlantic Land II Inc. 283,731
Commonwealth Atlantic Development Inc. 43,725
Commonwealth Atlantic Land Company 82,017
