AMENDMENT TO THE
AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
THIS AMENDMENT (this "Amendment") is made as of the 20th day of April,
1998, by and among CHATEAU PROPERTIES, INC., a Maryland corporation (the
"Company"), ROC COMMUNITIES, INC., a Maryland corporation (ROC") (the Company
and ROC being individually referred to as a "General Partner" and collectively
the "General Partners"), and each of the limited partners of CP Limited
Partnership (the "Limited Partners"). The General Partners and the Limited
Partners are hereinafter sometimes individually referred to as a "Partner" or
collectively as the "Partners."
WITNESSETH:
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WHEREAS, CP Limited Partnership, a Maryland limited partnership (the
"Partnership"), was formed under the laws of the State of Maryland pursuant to
a Certificate of Limited Partnership filed September 16, 1993 with the Maryland
Department of Assessments and Taxation and an Agreement of Limited Partnership
dated September 16, 1993, as thereafter amended and restated on January 22,
1997, as further amended (the "Partnership Agreement");
WHEREAS, on the date hereof, Belair Capital Fund LLC, a Massachusetts
limited liability company ("Contributor"), has made a capital contribution of
$75,000,000, in cash to the Partnership in exchange for which Contributor is
entitled to receive an aggregate of 1,500,000 8.125% Series A Cumulative
Redeemable Preferred Units (the "Series A Preferred Units") in the Partnership
with the rights, preferences, exchange and other rights, voting powers and
restrictions, limitations as to distributions, qualifications and terms and
conditions as set forth in the Partnership Agreement, as amended hereby;
WHEREAS, Contributor desires to become a party to the Partnership
Agreement as a Limited Partner and to be bound by the terms, conditions and
other provisions of the Partnership Agreement;
WHEREAS, the Partnership Agreement is hereby amended to reflect (i) the
issuance of the Series A Preferred Units, (ii) the admission of Contributor as
a Limited Partner and holder of 1,500,000 Series A Preferred Units, and (iii)
other matters described herein;
WHEREAS, Article Twelve of the Partnership Agreement provides that the
Partnership Agreement may be amended with the consent of the General Partners
and those Limited Partners constituting a Majority-in-Interest (as defined in
the Partnership Agreement); and
WHEREAS, the undersigned include the General Partners and those Limited
Partners constituting a Majority-in-Interest.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Partnership Agreement is hereby amended as follows:
1. Paragraph 1.34 is hereby deleted from the Partnership Agreement and the
following Paragraph 1.34 is inserted in its place:
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1.34 "PERCENTAGE INTEREST" of a Partner in the Partnership (other than as
a holder of Preferred Units) shall mean the percentage interest of such Partner
as stated in Exhibit A of this Agreement, as such percentage interest may be
adjusted from time to time in accordance with the provisions of this Agreement.
Holders of Preferred Units shall have a Percentage Interest within each class
or series of Preferred Units in an amount shown on Exhibit A hereto.
2. Paragraph 4.3 is hereby renumbered as Paragraph 4.2, Paragraph 4.4 is
hereby deleted and the following Paragraph 4.3 is hereby added to the
Partnership Agreement:
"4.3 ISSUANCE AND CONVERSION OF UNITS.
A. The interest of a Partner in the Partnership is sometimes
referred to as being evidenced by one or more "Units." Units may be
either "OP Units" or "Preferred Units:"
(i) An "OP Unit" is a unit of Partnership Interest that, as
more particularly provided for below in this Paragraph 4.3, and
subject to certain restrictions including those contained in
Paragraph 4.3(C), may be converted into one (1) share of common
stock of the Company ("Common Stock").
(ii) A "Preferred Unit" is a unit of Partnership Interest
having such rights, preferences, exchange rights, voting powers and
restrictions, limitations as to distributions, qualifications and
terms and conditions as may be determined by the General Partners in
their sole and absolute discretion (but not in violation of the
provisions of Paragraph 4.3(B) or the terms of any other Preferred
Unit(s)). There may be more than one series or classes of Preferred
Units having differing terms and conditions, but all Preferred Units
within a given series or class shall have the same rights,
preferences, exchange rights, voting powers and restrictions,
limitations as to distributions, qualifications and terms and
conditions as set forth in this Amendment. Subject to the terms of
any other Preferred Units, with respect to each series or class of
Preferred Units, the General Partners may, in their discretion,
determine and fix, among other terms and conditions, any of the
following: (a) the series to which such Preferred Units shall
belong, (b) the distribution rate thereon (or the method of
determining such distribution rate), (c) the price at and the terms
and conditions on which such Preferred Units may be redeemed, (d)
the amount payable in respect of such Preferred Units in the event
of involuntary or voluntary liquidation of the Partnership, and (e)
the terms and conditions on which such Preferred Units may be
converted or exchanged for other securities of the Partnership or
the General Partners.
B. From time to time, the General Partners, subject to the
provisions of this Paragraph 4.3(B) and the terms of any other Preferred
Units, shall cause the Partnership to issue:
i. OP Units to the Company upon the issuance by the Company
of additional shares of its common stock ("Common Stock") not in
connection with the exchange of OP Units as provided in Paragraph
4.3(C) hereof, provided that any net proceeds received by the
Company as a result of the issuance of such additional shares of
Common Stock are contributed to the Partnership as additional
Capital Contributions, in accordance with Paragraph 4.4(B) hereof
(it being understood that the Company may issue shares of Common
Stock in connection with stock option plans, restricted stock plans
or other employee benefit plans without receiving any proceeds and
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that the issuance of such shares shall nonetheless entitle the
Company to additional OP Units). The number of OP Units issued to
the Company under this subparagraph 4.3(B)(i) shall be equal to the
number of shares of Common Stock issued;
ii. Preferred Units to the Company upon the issuance by the
Company of shares of its preferred stock ("Preferred Stock") not in
connection with an exchange of Preferred Units for Preferred Stock
as may be specified in the amendment to the Partnership Agreement
designating such Preferred Units, provided that any net proceeds
received by the Company as a result of the issuance of such
additional shares of Preferred Stock are contributed to the
Partnership as additional Capital Contributions, in accordance with
Paragraph 4.4(C) hereof. The number of Preferred Units issued to
the Company under this subparagraph 4.3(B)(ii) shall be equal to the
number of shares of Preferred Stock issued and shall have the
rights, preferences and restrictions, limitations as to
distributions, qualifications and terms and conditions substantially
consistent with the Preferred Stock that is issued.
iii. OP Units and/or Preferred Units, as determined by the
General Partners, in their discretion, to existing or newly-admitted
Partners (including themselves), in exchange for the contribution by
such Partner (the "Contributing Partner") of additional Capital
Contributions to the Partnership. The number of OP Units issued to
a Contributing Partner under this subparagraph 4.3(B)(iii) shall be
equal to the quotient (rounded to the nearest whole number) arrived
at by dividing (x) the initial Gross Asset Value of the property
contributed as additional Capital Contributions (net of any debt to
which such property is subject or assumed by the Partnership in
connection with such contribution) by (y) such price as may be
determined by the General Partners in connection with such
contributions. The number of Preferred Units issued to a
Contributing Partner under this subparagraph 4.3(B)(iii) shall be
equal to the quotient (rounded to the nearest whole number) arrived
at by dividing (x) the initial Gross Asset Value of the property
contributed as additional Capital Contributions (net of any debt to
which such property is subject or assumed by the Partnership in
connection with such contribution) by (y) such price as may be
determined by the General Partners in connection with such
contributions.
iv. The terms, conditions, rights, preferences and privileges
of the Series A Preferred Units shall be as specified in Paragraph
4.8 below. The terms, conditions, rights, preferences and
privileges of each other class or series of Preferred Units shall be
specified in a further amendment to this Partnership Agreement which
may be adopted by the General Partners without the consent of any
Limited Partner (except to the extent required by any outstanding
class or series of Preferred Units).
Upon the issuance of OP Units or Preferred Units, as the case may be, or
upon the exchange of OP Units for Common Stock or Preferred Units for Preferred
Stock as provided herein, the Percentage Interest of each of the Partners shall
be accordingly adjusted by the General Partners. Notwithstanding anything to
the contrary contained herein, in no event shall any additional OP Units or
additional Preferred Units be issued (pursuant to this Paragraph 4.3(B) or
otherwise) to the extent that the effect of such issuance would be to reduce
the General Partners' Percentage Interest to less than one (1%) percent.
C. Subject to the further provisions of this Paragraph 4.3(C), the
Company hereby grants to each Limited Partner other than Chateau Estates,
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a Michigan co-partnership, J. Xxxxx Xxxxxxxxxxx and Ministrelli
Construction Company, a Michigan corporation, (together referred to herein
as the "Initial Limited Partners") the right to exchange any or all of the
OP Units held by the Partner for shares of Common Stock. In the case of
an exchange of OP Units pursuant to this Paragraph 4.3(C), one OP Unit
shall be exchangeable for one share of Common Stock. Such right may be
exercised by a Limited Partner from time to time upon not less than ten
(10) days prior written notice to the Company. The Initial Limited
Partners may, however, exchange OP Units for shares of Common Stock only
in accordance with the Formula defined in the Appendix to the Private
Letter Ruling dated April 5, 1996, issued by the Internal Revenue Service
to the Company. The Company shall at all times reserve and keep available
out of its authorized but unissued shares of Common Stock, such number of
shares of Common Stock as shall from time to time be sufficient to effect
the conversion of all outstanding OP Units subject to conversion and not
owned by the Company. No Limited Partner shall, by virtue of being the
holder of one or more OP Units, be deemed to be a shareholder of or have
any other interest in the Company. In the event of any change in the
outstanding shares of Common Stock by reason of any stock dividend, split,
recapitalization, merger, consolidation, combination, exchange of shares
or other similar corporate change, the number of OP Units held by each
Partner shall be proportionately adjusted so that one OP Unit remains
exchangeable for one share of Common Stock without dilution. In the event
the Company issues any Common Stock in exchange for OP Units pursuant to
this Paragraph 4.3(C), any such OP Units so acquired by the Company shall
immediately thereafter be converted in the hands of the Company into
General Partnership Interests. Notwithstanding the foregoing provisions
of this Paragraph 4.3(C), a Limited Partners shall not have the right to
exchange OP Units for Common Stock if (i) in the opinion of counsel to the
Company, acceptable to such Limited Partner and the Company, the Company
would, as a result of such exchange (or the right to effectuate such
exchange), no longer qualify (or it would be likely that the Company no
longer would qualify) as a real estate investment trust under the Code; or
(ii) such exchange (or the right to effectuate such exchange) would
violate the ownership limitations set forth in the Articles of
Incorporation of the Company; or (iii) such exchange would not, in the
opinion of counsel acceptable to such Limited Partner and the Company, be
an exempt transaction under applicable securities laws.
D. The right of Limited Partners holding Preferred Units to
exchange such Units for any other class or series of Units or class or
series of Preferred Stock of the Company shall be set forth in the
amendment to the Partnership Agreement designating such class or series of
Preferred Units.
3. Paragraph 4.5 is hereby renumbered as Paragraph 4.4, Paragraph 4.4(A) is
hereby deleted and the following Paragraph 4.4(A) is inserted in its place:
"4.4 ADDITIONAL CAPITAL CONTRIBUTIONS.
A. No Partner shall be assessed or, except as provided in Paragraph
4.3 above, required to contribute additional funds or other property to
the Partnership. Any additional funds or other property required by the
General Partners in their sole discretion, may, at the option of the
General Partners and without any obligation to do so (except as provided
for in Paragraph 4.3 above), be contributed by the General Partners as
additional Capital Contributions. If and when the General Partners or any
other Partner makes additional Capital Contributions to the Partnership,
each such Partner shall receive additional OP Units or Preferred Units as
provided for in Paragraph 4.3 above. The General Partners shall also have
the right (but not the obligation) to raise any additional funds required
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for the Partnership by causing the Partnership to borrow the necessary
funds from third parties on such terms and conditions as the General
Partners shall deem appropriate in their sole discretion. If the General
Partners elect to cause the Partnership to borrow the additional funds,
they may cause one or more of the Partnership's assets to be encumbered to
secure the loan. No Limited Partner shall have the right to contribute
additional Capital Contributions to the Partnership without the prior
written consent of the General Partners."
4. Paragraph 4.6 is hereby deleted from the Partnership Agreement and the
following Paragraph 4.5 is inserted in its place:
"4.5 RETURN OF CAPITAL. Except as expressly provided for in this
Partnership Agreement or in an amendment to this Partnership Agreement
specifying the terms, conditions, rights, preferences and privileges of
any class or series of Preferred Units, no Partner shall have the right to
demand or to receive the return of all or any part of his Capital
Contributions to the Partnership and there shall be no priority of one
Partner over another as to the return of Capital Contributions or
withdrawals or distributions of Net Profits and Net Losses. No Partner
shall have the right to demand or receive property other than cash in
return for the contributions of such Partner to the Partnership."
5. Paragraphs 4.7 and 4.8 are hereby renumbered Paragraphs 4.6 and 4.7,
respectively.
6. The following new Paragraph 4.8 is hereby added to this Partnership
Agreement:
4.8 SERIES A CUMULATIVE REDEEMABLE PREFERRED UNITS. A new series of
Preferred Units to be designated 8.125% Series A Cumulative Redeemable
Preferred Units is hereby established which shall have the rights, preferences,
exchange rights, voting powers and restrictions, limitations as to
distributions, qualifications and terms and conditions specified on Schedule A
to this Amendment to the Partnership Agreement, provided that such designation
will change accordingly to reflect any change in the dividend rate as set forth
on Schedule A.
7. The reference to Paragraph 4.5(B) in Paragraph 5.9 of the Partnership
Agreement is deemed to be a reference to Paragraph 4.4(B).
8. Paragraph 6.1.1 is hereby deleted from the Partnership Agreement and the
following Paragraph 6.1.1 is inserted in its place:
"6.1.1 NET PROFITS. After giving effect to the allocations set forth in
Paragraphs 6.4 and 6.5, Net Profits for each Partnership fiscal year shall be
allocated to the Partners in the following order of priority:
(a) First, to each General Partner to the extent of and in proportion
to the amount that the cumulative Net Losses allocated to such General
Partner pursuant to Paragraph 6.1.2(e) exceed the cumulative Net Profits
allocated to such Partner pursuant to this Paragraph 6.1.1(a);
(b) Second, to each Obligated Partner to the extent of and in
proportion to the amount by which the cumulative Net Losses allocated to
such Partner pursuant to Paragraph 6.1.2(d) exceed the cumulative Net
Profits allocated to such Obligated Partner pursuant to this Paragraph
6.1.1(b);
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(c) Third, to each General Partner to the extent of and in proportion
to the amount by which the cumulative Net Losses allocated to such
General Partner pursuant to Paragraph 6.1.2(c) exceed the cumulative Net
Profits allocated to such General Partner pursuant to this Paragraph
6.1.1(c);
(d) Fourth, to each Partner holding Preferred Units to the extent of
and in proportion to the amount by which the cumulative Net Losses
allocated to such Partner pursuant to Paragraph 6.1.2(b) exceed the
cumulative Net Profits allocated to such Partner pursuant to this
Paragraph 6.1.1(d);
(e) Fifth, to each Partner (other than a Partner holding Preferred
Units) to the extent of and in proportion to the amount by which the
cumulative Net Losses allocated to such Partner pursuant to Paragraph
6.1.2(a) exceed the cumulative Net Profits allocated to such Partner
pursuant to this Paragraph 6.1.1(e); and
(f) Thereafter, to the Partners (other than a Partner holding
Preferred Units) in accordance with their respective Percentage
Interests.
9. Paragraph 6.1.2 is hereby deleted from the Partnership Agreement and the
following Paragraph 6.1.2 is inserted in its place:
6.1.2 NET LOSSES. After giving effect to the allocations set forth in
Paragraphs 6.4 and 6.5, Net Losses for each Partnership fiscal year shall be
allocated to the Partners in the following order of priority:
(a) First, to the Partners (other than the Partner holding Preferred
Units), in proportion to their respective Percentage Interests; provided
that Net Losses allocated pursuant to this Paragraph 6.1.2(a) shall not
exceed the maximum amount of Net Losses that can be allocated without
causing any such Partner to have an Adjusted Capital Account Deficit
(excluding for this purpose any increase to such Adjusted Capital
Account Deficit for a Partner'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 Paragraph
4.7 hereof);
(b) Second, to the Partner holding Preferred Units, provided that Net
Losses allocated pursuant to this Paragraph 6.1.2(b) shall not exceed
the maximum amount of Net Losses that can be allocated without causing
such Partner to have an Adjusted Capital Account Deficit;
(c) Third, to the General Partners, in proportion to their respective
Percentage Interests, until the combined General Partners' Adjusted
Capital Account Deficits (excluding for this purpose any increase to
such Adjusted Capital Account Deficits for the obligation of any General
Partner to actually fund a deficit Capital Account balance) equal the
excess of (i) the amount of Recourse Liabilities over (ii) the Aggregate
Restoration Amount;
(d) Fourth, to the Obligated Partners, in proportion to their
respective Restoration Amounts, until such time as the Obligated
Partners have been allocated an aggregate amount of Net Losses pursuant
to this Paragraph 6.1.2.(d) equal to the Aggregate Restoration Amount;
and
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(e) Thereafter, to the General Partners, in accordance with their
respective Percentage Interests.
10. Paragraph 6.2 is hereby deleted from the Partnership Agreement and the
following Paragraph 6.2 is inserted in its place:
"6.2 DISTRIBUTIONS OF OPERATING CASH FLOW. As used in this
Agreement, Operating Cash Flow shall mean and be defined as the Net
Profits or Net Losses (a net Loss being treated as a negative Net Profit
amount) during the period in question of the Partnership increased by the
following:
(a) Any receipts, but excluding Capital Cash Flow and
excluding the proceeds of any additional Capital Contributions to
the Partnership pursuant to Paragraphs 4.1 and 4.3 hereof, which are
not included in Net Profits including, but not limited to, capital
contributions and withdrawals from operating reserves established by
the General Partners; and
(b) Any non-cash charges (such as Depreciation and
amortization) deducted in determining Net Profits and Net Losses;
---and decreased by the following:
(c) All expenditures, including any principal payments with
respect to any indebtedness of the Partnership, which are not
deducted in determining net Profits or Net Losses; and
(d) Any amounts set aside by the General Partners to provide
a reserve for working capital needs, improvements, repairs or
replacements or such other purposes as the General Partners shall
determine in their sole discretion, including but not limited to
reserves of cash held for future acquisitions.
Operating Cash Flow of the Partnership shall be determined by the
General Partners not less frequently than quarterly and (except as
provided in an amendment to this Partnership Agreement specifying the
rights, preferences, exchange rights, voting powers and restrictions,
limitations as to distributions, qualifications and terms and conditions
of a class or series of Preferred Units) shall be distributed not later
than fifteen (15) days following the end of each calendar quarter as
follows:
(i) first to those Partners holding Preferred Units to the
extent of the unpaid cumulative Priority Return (as defined in
Schedule A attached hereto); and
(ii) the balance pro rata among the Partners holding OP Units
in proportion to their respective Percentage Interests calculated
without taking into account ownership of Preferred Units.
11. Paragraph 6.3 is hereby deleted from the Partnership Agreement and the
following Paragraph 6.3 is inserted in its place:
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"6.3 CAPITAL CASH FLOW. As used in this Agreement, "Capital Cash
Flow" shall mean and be defined as collectively (a) gross proceeds
realized in connection with the sale of any assets of the Partnership, (b)
gross financing or refinancing proceeds, (c) gross condemnation proceeds
(excluding condemnation proceeds applied to the restoration of remaining
Partnership property) and (d) gross insurance proceeds (excluding rental
insurance proceeds applied to restoration of Partnership property), less
(a) applicable closing costs, (b) the cost to discharge any Partnership
financing encumbering or otherwise associated with the asset(s) involved
in any such transaction, (c) the establishment of reserves (as determined
by the General Partners in their sole discretion, and which may include
cash held for future acquisitions or indebtedness which may thereafter
become due or indebtedness which may thereafter become due), and (d) other
expenses of the Partnership then due and owing. Subject to Paragraph 8.1
below, if applicable, Capital Cash Flow shall be determined not less
frequently than quarterly and (except as provided in an amendment to the
Partnership Agreement specifying the rights, preferences, exchange rights,
voting powers and restrictions, limitations as to distributions,
qualifications and terms and conditions of a class or series of Preferred
Units) shall be distributed not later than fifteen (15) days following the
date of each such determination as follows:
(i) first to the Partners holding Preferred Units to the
extent of the unpaid cumulative Priority Return (as defined in
Schedule A attached hereto); and
(ii) the balance pro rata among the Partners holding OP Units
in proportion to their respective Percentage Interests calculated
without taking into account ownership of Preferred Units.
12. Paragraph 6.4(f) is hereby deleted from the Partnership Agreement and the
following Paragraph 6.4(f) is inserted in its place:
"(f) Syndication Expenses for any Fiscal Year of the Partnership or
other period shall be allocated to the Partners (other than the
Partners holding Preferred Units) in proportion to their Partnership
Interests, provided that if additional Partners are admitted to the
Partnership on different dates, all Syndication Expenses shall be
divided among the Partners who own Partnership Interests from time
to time so that, to the extent possible, the cumulative Syndication
Expenses are allocated with respect to each Partner in proportion to
their respective Partnership Interests. In the event the General
Partners determine that such result is not likely to be achieved
through future allocations of Syndication Expenses, the General
Partners may allocate a portion of Net Profits or Net Losses so as
to achieve the same effect in the Capital Accounts of the Partners,
notwithstanding any other provision within this Agreement."
13. Paragraph 6.4(g) is hereby deleted from the Partnership Agreement and the
following Paragraph 6.4(g) is inserted in its place:
"(g) Nonrecourse Deductions for any fiscal year or other period
shall be allocated among the Partners holding OP Units in proportion
to their respective Percentage Interests calculated without taking
into account ownership of Preferred Units."
14. Paragraph 6.4(i) is hereby added to the Partnership Agreement:
8
"(i) Unless otherwise provided in an amendment to the Partnership
Agreement specifying the rights, preferences, exchange and other
rights, voting powers and restrictions, limitations as to
distributions, qualifications and terms and conditions of any class
or series of Preferred Units, all or a portion of the remaining
items of Partnership income (including but not limited to Gross
Income) or gain comprised of the same proportion of capital gain and
ordinary income for the Fiscal Year as accrued by the Partnership,
if any, shall be specially allocated to the Partners holding
Preferred Units in an amount equal to the excess, if any, of (i) the
lesser of (A) the cumulative Priority Return (as defined in
Schedule A attached hereto), whether or not declared, calculated
through the last day of the relevant Fiscal Years or (B) the excess,
if any of Net Profits over Net Losses for the current Fiscal Year
(solely for this purpose, Net Profits and Net Losses for all Fiscal
Years shall be computed as if this Paragraph 6.4 were not part of
this Agreement), over (ii) the aggregate items of income and gain
allocated to such Partner pursuant to this Paragraph 6.4(i) for all
prior Fiscal Years."
15. Paragraph 6.5(d) is hereby deleted from the Partnership Agreement and the
following Paragraph 6.5(d) is inserted in its place:
"(d) Solely for purposes of determining a Partner's proportionate
share of the "excess nonrecourse liabilities" of the Partnership
within the meaning of Regulations Section 1.752-3(a)(3), the
Partner's interests in Partnership profits are equal to their
respective Percentage Interests calculated without taking into
account ownership of Preferred Units."
16. Paragraph 8.1(c) is hereby deleted from the Partnership Agreement and the
following Paragraphs 8.1(c) and (d) are hereby added to the Partnership
Agreement:
"(c) Third to those Partners holding Preferred Units in
accordance with their respective Capital Accounts, after giving
effect to all contributions, distributions, and allocations for all
periods; provided, however, that such amounts shall not be in excess
of such Partner's Capital Contributions plus the cumulative Priority
Return (as defined in Schedule A attached hereto), whether or not
declared, to the redemption date to the extent not previously
distributed;
"(d) Then, to the Partners (other than the holders of
Preferred Units) in accordance with their respective Capital
Accounts, after giving effect to all contributions, distributions,
and allocations for all periods.
17. Paragraph 9.2(a) is hereby deleted from the Partnership Agreement and the
following Paragraph 9.2(a) is inserted in its place:
"9.2 LIMITED PARTNER:
(a) No Limited Partner or Substituted Limited Partner shall,
without the prior written consent of the General Partners (which consent
may be given or withheld in the sole discretion of the General Partners),
sell, assign, distribute or otherwise transfer (a "Transfer") all or any
part of such Partner's interest in the Partnership except by operation of
law, gift (outright or in trust) or by sale or distribution, in each case
to or for the benefit of his spouse or descendants, or to one or more
partner, shareholder, beneficiary or Affiliate of such Partner, except for
pledges or other collateral transfers effected by a Limited Partner to
9
secure the repayment of a loan, and except for the exchange of OP Units
for shares of Common Stock of the Company, pursuant to Paragraph 4.3(C)
hereof and the exchange of Preferred Units for Preferred Stock of the
Company as provided in an amendment to the Partnership Agreement
specifying the rights, preferences, exchange rights, voting powers and
restrictions, limitations as to distributions, qualifications and terms
and conditions of any class or series of such Preferred Units. A Limited
Partner shall notify the General Partners of any Transfer of beneficial
interest or other interest which occurs without a transfer of record
ownership, as well as any pledge or other collateral transfer. No part of
the interest of a Limited Partner shall be subject to the claims of any
creditor, any spouse for alimony or support, or to legal process, and may
not be voluntarily alienated or encumbered except as may be specifically
provided for in this Agreement."
18. Paragraph 9.2(c) is hereby deleted from the Partnership Agreement and the
following Paragraph 9.2(c) is inserted in its place:
"(c) Notwithstanding anything to the contrary contained in
this Paragraph 9.2, (i) in the event of a permitted transfer under
Paragraph 9.2(a) hereof or in the event an Affiliate distributes, in
dissolution and liquidation or otherwise, all or any portion of its
interest in the Partnership, the permitted transferee and/or
partners in such Affiliate receiving such interest shall become
Substituted Limited Partners, and shall succeed to the rights,
interests and obligations of their respective transferor in the
Partnership, in proportion to their respective interests so
received, and (ii) no Transfer shall be effective to the extent that
such Transfer would, by treating the interest in the Partnership so
transferred as if it had been exchanged for Common Stock or
Preferred Stock in accordance with Paragraph 4.3(C) or as provided
in an amendment to this Partnership Agreement specifying the rights,
preferences, exchange and other rights, voting powers and
restrictions, limitations as to distributions, qualifications and
terms and conditions of any class or series of such Preferred Units,
violate the limitations on ownership of Common Stock or Preferred
Stock contained in Article VI of the Articles of Incorporation of
the Company."
19. Paragraph 9.2(d) is hereby deleted from the Partnership Agreement and the
following Paragraph 9.2(d) is inserted in its place:
"(d) ADMISSION ADJUSTMENTS. The General Partners shall, when
necessary, cause this Agreement to be amended from time to time to reflect
the addition or withdrawal of Partners, including the corresponding
adjustments to Percentage Interests."
20. All other terms and conditions of the Partnership Agreement, except as
modified herein, shall remain unchanged in full force and effect.
21. This Amendment may be executed in one or more counterparts, each of which
shall be deemed an original and all of which shall constitute one instrument.
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IN WITNESS WHEREOF, the parties have executed this Amendment as of
the date first written above.
CP LIMITED PARTNERSHIP
XXXX X. XXXX, individually and on behalf By: Chateau Communities, Inc.,
of the Xxxx X. and Xxxxxxx X. Xxxx one of the general partners
Foundation and the Xxxx X. Xxxx
Irrevocable Trusts
By: /S/ XXXXXX X. XXXXXXX
-----------------------------
Name: Xxxxxx X. Xxxxxxx
By: /S/ XXXX X. XXXX Title: Chief Financial Officer
-------------------------------
XXXX X. XXXX
By: ROC Communities, Inc.,
the other general partner
J. XXXXX XXXXXXXXXXX, individually
and on behalf of the Xxx X. Xxxxxxxxxxx By: /S/ XXXXXX X. XXXXXXX
Revocable Trust and Ministrelli -----------------------------
Construction Corporation Name: Xxxxxx X. Xxxxxxx
Title: Secretary
By: /S/ J. XXXXX XXXXXXXXXXX
----------------------------- THE OTHER LIMITED PARTNERS
J. XXXXX XXXXXXXXXXX
By: Chateau Communities, Inc.
(one of the general
Xxxxxx X. Xxxxxxxx, Xx. partners), as attorney-in-
d/b/a Tamsberg Properties fact
By: /S/ XXXXXX X. XXXXXXX
--------------------------
Name: Xxxxxx X. Xxxxxxx,
By: /S/ XXXXXX X. XXXXXXXX, XX. Attorney-in-Fact
------------------------------ Title: Chief Financial
Xxxxxx X. Xxxxxxxx, Xx. Officer
By: ROC Communities, Inc.
By: /S/ XXXXXX XXXXXXX (the other general
------------------------------ partner), as attorney-in-
Xxxxxx Xxxxxxx fact
By: /S/ XXXXXX X. XXXXXXX
--------------------------
Name: Xxxxxx X. Xxxxxxx,
Attorney-in-Fact
Title: Secretary
BELAIR CAPITAL FUND LLC
By: Xxxxx Xxxxx Management, as its
Manager
By: /S/ XXXXXX XXXX
--------------------------
Name: Xxxxxx Xxxx
Title: Vice President
SCHEDULE A
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TERMS OF 8.125% SERIES A CUMULATIVE REDEEMABLE
PREFERRED UNITS
SECTION 1. DEFINITIONS. For purposes of this Amendment, the term "PARITY
PREFERRED UNITS" shall be used to refer to any class or series of Partnership
Interests of the Partnership now or hereafter authorized, issued or outstanding
expressly designated by the Partnership to rank on a parity with Series A
Preferred Units with respect to distributions or rights upon voluntary or
involuntary liquidation, winding-up or dissolution of the Partnership, or both,
as the context may require. The term "PRIORITY RETURN" shall mean, an amount
equal to 8.125% per annum, determined on the basis of a 360-day year of twelve
30-day months (or actual days for any month which is shorter than a full
monthly period), cumulative to the extent not distributed for any given
distribution period pursuant to Section 6.2 of the Partnership Agreement, of
the stated value of $50 per Series A Preferred Unit, commencing on the date of
issuance of such Series A Preferred Unit. The term "SUBSIDIARY" shall mean
with respect to any person, any corporation, partnership, limited liability
company, joint venture or other entity of which a majority of (i) voting power
of the voting equity securities or (ii) the outstanding equity interests, is
owned, directly or indirectly, by such person. The term "PTP" shall mean a
"publicly traded partnership" within the meaning of Section 7704 of the
Internal Revenue Code of 1986, as amended (the "CODE").
SECTION 2. DESIGNATION AND NUMBER. A series of Partnership Units in the
Partnership designated as the "8.125% Series A Cumulative Redeemable Preferred
Units" (the "SERIES A PREFERRED UNITS") is hereby established. The number of
Series A Preferred Units shall be 1,500,000.
SECTION 3. DISTRIBUTIONS. (a) PAYMENT OF DISTRIBUTIONS. Subject to the
rights of holders of Parity Preferred Units as to the payment of distributions,
pursuant to Section 6.2 of the Partnership Agreement, holders of Series A
Preferred Units shall be entitled to receive, when, as and if declared by the
Partnership, out of Operating Cash Flow, cumulative preferential cash
distributions at the rate per annum of 8.125% of the original Capital
Contribution per Series A Preferred Unit; provided, however, that in the event
Xxxxx'x shall upgrade Chateau Communities, Inc.'s preferred stock rating to not
lower than "baa3" within 90 days after the date hereof the rate per annum shall
be 7.80% of the original Capital Contribution per Series A Preferred Unit, in
which case the designation of the Series A Preferred Units will change
accordingly to reflect such new dividend rate. Such distributions shall be
cumulative, shall accrue from the original date of issuance and will be payable
(A) quarterly in arrears, on or before May 15, August 15, November 15 and
February 15, of each year commencing on May 15, 1998 and, (B), in the event of
(i) an exchange of Series A Preferred Units into Series A Preferred Stock, or
(ii) a redemption of Series A Preferred Units, on the exchange date or
redemption date, as applicable (each a "PREFERRED UNIT DISTRIBUTION PAYMENT
DATE"). The amount of the distribution payable for any period will be computed
on the basis of a 360-day year of twelve 30-day months and for any period
shorter than a full quarterly period for which distributions are computed, the
amount of the distribution payable will be computed on the basis of the actual
number of days elapsed in such 30-day month. If any date on which
distributions are to be made on the Series A Preferred Units is not a Business
Day (as defined herein), then payment of the distribution to be made on such
date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay) except
that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date. Distributions on the
Series A Preferred Units will be made to the holders of record of the Series A
Preferred Units on the relevant record dates to be fixed by the Partnership,
which record dates shall in no event exceed 15 Business Days prior to the
relevant Preferred Unit Distribution Payment Date (the "PREFERRED UNIT
PARTNERSHIP RECORD DATE").
The term "BUSINESS DAY" shall mean each day, other than a Saturday or
Sunday, which is not a day on which banking institutions in New York, New York
are authorized or required by law, regulation or executive order to close.
(b) DISTRIBUTIONS CUMULATIVE. Distributions on the Series A Preferred
Units will accrue whether or not the terms and provisions of any agreement of
the Partnership, including any agreement relating to its indebtedness at any
time prohibit the current payment of distributions, whether or not the
Partnership has earnings, whether or not there are funds legally available for
the payment of such distributions and whether or not such distributions are
authorized. Accrued but unpaid distributions on the Series A Preferred Units
will accumulate as of the Preferred Unit Distribution Payment Date on which
they first become payable. Distributions on accounts of arrears for any past
distribution periods may be declared and paid at any time, without reference to
a regular Preferred Unit Distribution Payment Date to holders of record of the
Series A Preferred Units on the record date fixed by the Partnership which date
shall not exceed 15 Business Days prior to the payment date. Accumulated and
unpaid distributions will not bear interest.
(c) PRIORITY AS TO DISTRIBUTIONS. (i) So long as any Series A
Preferred Units are outstanding, no distribution of cash or other property
shall be authorized, declared, paid or set apart for payment on or with respect
to any class or series of Partnership Interest of the Partnership ranking
junior as to the payment of distributions to the Series A Preferred Units
(collectively, "JUNIOR UNITS"), nor shall any cash or other property be set
aside for or applied to the purchase, redemption or other acquisition for
consideration of any Series A Preferred Units, any Parity Preferred Units with
respect to distributions or any Junior Units, unless, in each case, all
distributions accumulated on all Series A Preferred Units and all classes and
series of outstanding Parity Preferred Units as to payment of distributions
have been paid in full. The foregoing sentence will not prohibit (a)
distributions payable solely in Junior Units, (b) the conversion of Junior
Units or Parity Preferred Units into Partnership Interests of the Partnership
ranking junior to the Series A Preferred Units as to distributions, or (c) the
redemption of Partnership Interests corresponding to any Series A Preferred
Stock, Parity Preferred Stock with respect to distributions or Junior Stock to
be purchased by the General Partner pursuant to Article VI of the Articles of
Amendment and Restatement of the Company (the "CHARTER") to preserve the
Company's status as a real estate investment trust, provided that such
redemption shall be upon the same terms as the corresponding purchase pursuant
to Article VI of the Charter.
(ii) So long as distributions have not been paid in full (or a sum
sufficient for such full payment is not irrevocably deposited in trust for
payment) upon the Series A Preferred Units, all distributions authorized and
declared on the Series A Preferred Units and all classes or series of
outstanding Parity Preferred Units with respect to distributions shall be
authorized and such other classes or series of Parity Preferred Units shall in
all cases bear to each other the same ratio that accrued distributions per
Series A Preferred Unit and such other classes or series of Parity Preferred
Units (which shall not include any accumulation in respect of unpaid
distributions for prior distribution periods if such class or series of Parity
Preferred Units do not have cumulative distribution rights) bear to each other.
(d) NO FURTHER RIGHTS. Holders of Series A Preferred Units shall not be
entitled to any distributions, whether payable in cash, other property or
otherwise, in excess of the full cumulative distributions described herein.
SECTION 4. LIQUIDATION PROCEEDS. (a) Upon voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership, distributions on the
Series A Preferred Units shall be made in accordance with Section 8.1(c) of the
Partnership Agreement.
(b) NOTICE. Written notice of any such voluntary or involuntary
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 (i) fax and (ii) by
first class mail, postage pre-paid, not less than 15 and not more that 60 days
prior to the payment date stated therein, to each record holder of the Series A
Preferred Units at the respective addresses of such holders as the same shall
appear on the transfer records of the Partnership.
(c) NO FURTHER RIGHTS. After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of Series A
Preferred Units will have no right or claim to any of the remaining assets of
the Partnership.
(d) CONSOLIDATION, MERGER OR CERTAIN OTHER TRANSACTIONS. The voluntary
sale, conveyance, lease, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the property
or assets of the General Partner to or the consolidation or merger or other
business combination of the Partnership with or into, any corporation, trust or
other entity (or of any corporation, trust or other entity with or into the
Partnership) shall not be deemed to constitute a liquidation, dissolution or
winding-up of the Partnership.
SECTION 5. OPTIONAL REDEMPTION. (a) RIGHT OF OPTIONAL REDEMPTION. The
Series A Preferred Units may not be redeemed prior to the fifth anniversary of
the issuance date. On or after such date, the Partnership shall have the right
to redeem the Series A Preferred Units, in whole or in part, at any time or
from time to time, upon not less than 30 nor more than 60 days' written notice,
at a redemption price, payable in cash, equal to the original Capital
Contribution (as defined in the Partnership Agreement) of such holder plus the
cumulative Priority Return, whether or not declared, to the redemption date to
the extent not previously distributed (the "REDEMPTION PRICE"). If fewer than
all of the outstanding Series A Preferred Units are to be redeemed, the Series
A Preferred Units to be redeemed shall be selected PRO RATA among the holders
(as nearly as practicable without creating fractional units).
(b) LIMITATION ON REDEMPTION. (i) The Redemption Price of the Series A
Preferred Units (other than the portion thereof consisting of accumulated but
unpaid distributions) will be payable solely out of the sale proceeds of
capital stock of the General Partners, which will be contributed by the General
Partners to the Partnership as additional capital contribution, or out of the
sale of limited partner interests in the Partnership and from no other source.
For purposes of the preceding sentence, "capital stock" means any equity
securities (including Common Stock and Preferred Stock (as such terms are
defined in the respective articles of incorporation of the General Partners)),
shares, participation or other ownership interest (however designated) and any
rights (other than debt securities convertible into or exchangeable for equity
securities) or options to purchase any of the foregoing.
(ii) The Partnership may not redeem fewer than all of the
outstanding Series A Preferred Units unless all accumulated and unpaid
distributions have been paid on all Series A Preferred Units for all quarterly
distribution periods termination on or prior to the date of redemption.
(c) PROCEDURES FOR REDEMPTION. (i) Notice of redemption will be (i)
faxed, and (ii) mailed by the partnership, be certified mail, postage prepaid,
not less than 30 nor more than 60 days prior to the redemption date, addressed
to the respective holders of record of the Series A Preferred Units at their
respective addresses as they appear on the records of the Partnership. No
failure to give or defect in such noticed shall affect the validity of the
proceedings for the redemption of any Series A Preferred Units except as to the
holder to whom such notice was defective or not given. In addition to any
information required by law, each such notice shall state: (i) the redemption
date, (ii) the Redemption Price, (iii) the aggregate number of Series A
Preferred Units to be redeemed and if fewer than all of the outstanding Series
A Preferred Units are to be redeemed, the number of Series A Preferred Units to
be redeemed held by such holder, which number shall equal such holder's pro
rata share (based on the percentage of the aggregate number of outstanding
Series A Preferred Units the total number of Series A Preferred Units held by
such holder represents) of the aggregate number of Series A Preferred Units to
be redeemed, (iv) the place or places where such Series A Preferred Units are
to be surrendered for payment of the Redemption Price, (v) that distributions
on the Series A Preferred Units to be redeemed will cease to accumulate on such
redemption date and (vi) that payment of the Redemption Price will be made upon
presentation and surrender of such Series A Preferred Units.
(ii) If the Partnership gives a notice of redemption in respect of
Series A Preferred Units (which notice will be irrevocable) then, by 12:00
noon, New York City time, on the redemption date, the Partnership will deposit
irrevocably in trust for the benefit of the Series A Preferred Units being
redeemed funds sufficient to pay the applicable Redemption Price and will give
irrevocable instructions and authority to pay such Redemption Price to the
holders of the Series A Preferred Units upon surrender of the Series A
Preferred Units by such holders at the place designated in the notice of
redemption. If the Series A Preferred Units are evidenced by a certificate and
if fewer than all Series A Preferred Units evidenced by any certificate are
being redeemed, a new certificate shall be issued upon surrender of the
certificate evidencing all Series A Preferred Units, evidencing the unredeemed
Series A Preferred Units without cost to the holder thereof. On and after the
date of redemption, distributions will cease to accumulate on the Series A
Preferred Units or portions thereof called for redemption, unless the
Partnership defaults in the payment thereof. If any date fixed for redemption
of Series A Preferred Units is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay) except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date fixed for
redemption. If payment of the Redemption Price is improperly withheld or
refused and not paid by the Partnership, distributions on such Series A
Preferred Units will continue to accumulate from the original redemption date
to the date of payment, in which case the actual payment date will be
considered the date fixed for redemption for purposes of calculating the
applicable Redemption Price.
SECTION 6. VOTING RIGHTS. (a) GENERAL. Holders of the Series A Preferred
Units will not have any voting rights or right to consent to any matter
requiring the consent or approval of the Limited Partners, except as set forth
below:
(b) CERTAIN VOTING RIGHTS. So long as any Series A Preferred Units
remains outstanding, and notwithstanding anything to the contrary set forth in
Article Twelve of the Partnership Agreement, the Partnership shall not, without
the affirmative vote of the holders of at least two-thirds of the Series A
Preferred Units outstanding at the time (i) authorize or create, or increase
the authorized or issued amount of, any class or series of Partnership
Interests ranking prior to the Series A Preferred Units with respect to payment
of distributions or rights upon liquidation, dissolution or winding-up or
reclassify any Partnership Interests of the Partnership into any such
Partnership Interest, or create, authorize or issue any obligations or security
convertible into or evidencing the right to purchase any such Partnership
Interests, (ii) authorize or create, or increase the authorized or issued
amount of any Parity Preferred Units or reclassify any Partnership Interest of
the Partnership into any such Partnership Interest or create, authorize or
issue any obligations or security convertible into or evidencing the right to
purchase any such Partnership Interests but only to the extent such Parity
Preferred Units are issued to an affiliate of the Partnership, other than the
General Partners to the extent the issuance of such interests was to allow the
General Partners to issue corresponding preferred stock to persons who are not
affiliates of the Partnership, (iii) amend this SECTION 6, or (iv) either (A)
consolidate, merge into or with, or convey, transfer or lease its assets
substantially as an entirety to, any corporation or other entity or (B) amend,
alter or repeal the provisions of the Partnership Agreement, whether by merger,
consolidation or otherwise, that would materially and adversely affect the
powers, special rights, preferences, privileges or voting power of the Series A
Preferred Units or the holders thereof; provided, however, that with respect to
the occurrence of a merger, consolidation or a sale or lease of all of the
Partnership's assets as an entirety, so long as (a) the Partnership is the
surviving entity and the Series A Preferred Units remain outstanding with the
terms thereof unchanged, or (b) the resulting, surviving or transferee entity
is a partnership, limited liability company or other pass-through entity
organized under the laws of any state and substitutes the Series A Preferred
Units for other interests in such entity having substantially the same terms
and rights as the Series A Preferred Units, including with respect to
distributions, voting rights and rights upon liquidation, dissolution or
winding-up, then the occurrence of any such event shall not be deemed to
materially and adversely affect such rights, privileges or voting powers of the
holders of the Series A Preferred Units; and provided further that any increase
in the amount of Partnership Interests or the creation or issuance of any other
class or series of Partnership Interests, in each case ranking (a) junior to
the Series A Preferred Units with respect to payment of distributions or the
distribution of assets upon liquidation, dissolution or winding-up, or (b) on a
parity to the Series A Preferred Units with respect to payment of distributions
or the distribution of assets upon liquidation, dissolution or winding-up to
the extent such Partnership Interest are not issued to an affiliate of the
Partnership, other than the General Partners to the extent the issuance of such
interests was to allow the General Partners to issue corresponding preferred
stock to persons who are not affiliates of the Partnership, shall not be deemed
to materially and adversely affect such rights, preferences, privileges or
voting powers. Notwithstanding the provisions of this SECTION 3, Series A
Preferred Units will not be deemed outstanding for purposes of determining
whether a Majority in Interest of Limited Partners have acted in accordance
with the provisions of the Partnership Agreement.
SECTION 7. TRANSFER RESTRICTIONS. (a) The Series A Preferred Units shall
be subject to the provisions of Article Nine of the Partnership Agreement and
SECTION 8(A) hereof. Notwithstanding the provisions of Section 9.2(a) of the
Partnership Agreement, (i) Contributor shall be permitted to Transfer Series A
Preferred Units to (x) Belvedere Equity Fund LLC and Broadmoor I, L.P. (funds
managed by Xxxxx Xxxxx Management) and (y) pursuant to Section 8(a)(iii) hereof
but subject to the terms of said Section, in each case without the consent of
the General Partners, and (ii) with respect to all Transfers by Contributor
(other than those described in clause (i) above), the General Partners consent
thereto shall not be unreasonably withheld. The General Partners' consent
shall not be deemed to be unreasonably withheld in the case of Transfers,
without limitation, to any person or entity that is a competitor (as determined
by the General Partners) of the General Partners, the Partnership or their
Affiliates.
(b) Section 9.2(c)(ii) shall not apply to Transfers of Series A
Preferred Units.
SECTION 8. EXCHANGE RIGHTS. (a) RIGHT TO EXCHANGE. (i) Series A Preferred
Units will be exchangeable in whole or in part at anytime on or after the tenth
anniversary of the date of issuance, at the option of the holders thereof, for
authorized but previously unissued shares of 8.125% Series A Cumulative
Redeemable Preferred Stock of the Company (the "SERIES A PREFERRED STOCK") at
an exchange rate of one share of Series A Preferred Stock for one Series A
Preferred Unit, subject to adjustment as described
below (the "EXCHANGE PRICE"), provided that the Series A Preferred Units will
become exchangeable at any time, in whole or in part, at the option of the
holders of Series a Preferred Units for Series A Preferred Stock if (y) at
any time full distributions shall not have been timely made on any Series A
Preferred Unit with respect to six (6) prior quarterly distribution periods,
whether or not consecutive, provided, however, that a distribution in respect
of Series A Preferred Units shall be considered timely made if made within
two (2) Business Days after the applicable Preferred Unit Distribution Payment
Date if at the time of such late payment there shall not be any prior quarterly
distribution periods in respect of which full distribution were not timely made
or (z) upon receipt by a holder or holders of Series A Preferred Units
of (A) notice from a General Partner that a General Partner or a Subsidiary of
a General Partner has taken the position that the Partnership is, or upon
the occurrence of a defined event in the immediate future will be, a PTP and
(B) an opinion rendered by an outside nationally recognized independent
counsel familiar with such matters addressed to a holder or holders of
Series A Preferred Units, that the Partnership is or likely is, or upon the
occurrence of a defined event in the immediate future will be or likely will
be, a PTP; PROVIDED, that if such notice and opinion refers to a defined event,
the Series A Preferred Units will become exchangeable only after the
defined event occurs; PROVIDED FURTHER, that in the event any such exchange
would result from application of clause (z)(B) above, no exchange will be
available to the holders of Series A Preferred Units if, within 15 Business
Days of the date of delivery of the opinion referred to in clause (z)(B) above,
one of the General Partners delivers to such holders an opinion rendered
by an outside nationally recognized independent counsel familiar with such
matters addressed to such General Partner, that upon the occurrence of such
defined event the Partnership will not or likely will not become a PTP. In
addition, the Series A Preferred Units may be exchanged for Series A
Preferred Stock, in whole or in part, at the option of any holder prior to the
tenth anniversary of the issuance date and after the third anniversary thereof
if such holder of Series A Preferred Units shall deliver to one of the General
Partners either (i) a private ruling letter following any application by such
holder of Series A Preferred Units (with the consent of the General Partners)
addressed to such holder of Series A Preferred Units or (ii) an opinion of
independent counsel reasonably acceptable to the General Partner based on
the enactment of temporary of final Treasury Regulations or the publication of
a Revenue Ruling, in either case to the effect that an exchange of the
Series A Preferred Units at such earlier time would not cause the Series A
Preferred Units to be considered "stock and securities" within the meaning
of section 351(e) of the Internal Revenue Code of 1986, as amended (the
"CODE"), for purposes of determining whether the holder of such Series A
Preferred Units is an "investment company" under section 721(b) of the Code if
an exchange is permitted at such earlier date. Furthermore, the Series A
Preferred Units may be exchanged in whole or in part for Series A Preferred
Stock at any time, if both (1) based on results or projected results there
exists (in the reasonable judgment of the holder) an imminent and substantial
risk that such holder's interest in the Partnership interest represents or
will represent more than 19.5% of the total profits or capital interests in the
Partnership for the taxable year, and (2) the holder thereof delivers to the
Company an opinion of nationally recognized independent counsel, that there
is a substantial risk that its interest in the Partnership represents or will
represent more than 19.5% of the total profits or capital interests in the
Partnership (determined in accordance with Treasury Regulations Section 1.731-
2(e)(4)).
(ii) Notwithstanding anything to the contrary set forth in SECTION
8(A)(I), if an Exchange Notice (as defined herein) has been delivered to one of
the General Partners, then the General Partner may, at its option, elect to
redeem or cause the Partnership to redeem all or a portion of the outstanding
Series A Preferred Units for cash in an amount equal to the original Capital
Contribution per Series A Preferred Unit and all accrued and unpaid
distributions thereon to the date of redemption. A General Partner may
exercise its option to redeem the Series A Preferred Units for cash pursuant to
this SECTION 8(A)(II) by giving each holder of record of Series A Preferred
Units notice of its election to redeem for cash, within 15 Business Days after
receipt of the Exchange Notice, by (i) fax, and (ii) registered mail, postage
paid, at the address of each holder as it may appear on the records of the
Partnership stating (i) the redemption date, which shall be no later than 60
days following the receipt of the Exchange Notice, (ii) the redemption price,
(iii) the place or places where the Series A Preferred Units are to be
surrendered for payment of the redemption price, (iv) that distributions on the
Series A Preferred Units will cease to accrue on such redemption date; (v) that
payment of the redemption price will be made upon presentation and surrender of
the Series A Preferred Units and (vi) the aggregate number of Series A
Preferred Units to be redeemed, and if fewer than all of the outstanding Series
A Preferred Units are to be redeemed, the number of Series A Preferred Units
are to be redeemed, the number of Series A Preferred Units to be redeemed held
by such holder, which number shall equal such holder's pro-rata share (based on
the percentage of the aggregate number of outstanding Series A Preferred Units
the total number of Series A Preferred Units being redeemed.
(iii) In the event an exchange of, or the right to exchange, all or a
portion of Series A Preferred Units pursuant to SECTION 8(A)(I) would violate
the provisions on ownership limitation of the Company set forth in Article VI
of the Charter with respect to the Series A Preferred Stock, the Company shall
give written notice (an "EXCESS SHARE NOTICE") thereof to each holder of record
of Series A Preferred Units, within 15 Business Days following receipt of the
Exchange Notice, by (i) fax, and (ii) registered mail, postage prepaid, at the
address of each such holder set forth in the records of the Partnership. In
such event, the Company may, at its option, as a condition to allowing such
exchange, require that the holder designate in writing to the Company, in
conjunction with delivery of such Series A Preferred Units, a sufficient number
of proposed holders of Series A Preferred Stock such that upon completion of
the exchange none of the holders of the Series A Preferred Stock will
individually own in excess of 7% in number of shares or value of the preferred
stock of the Company (determined in accordance with Article VI of the Charter)
outstanding (the "EXCHANGE CONDITION"). If the Company has properly imposed
the Exchange Condition and if the holder designates a sufficient number of
proposed holders so as to comply with the Exchange Condition, the Company and
the holder shall effect the exchange in a manner so as to deliver the Series A
Preferred Stock to be issued in the exchange to the proposed holders. The
Company's right to impose the Exchange Condition (i) is conditioned on (A) the
Company notifying the holder of the Exchange Condition in the Excess Share
Notice, (B) the Company being able to deliver to the proposed holders shares of
Series A Preferred Stock that have been, prior to or in connection with such
issuance of shares of Series A Preferred Stock, registered under the Securities
Act of 1933, as amended and (C) the Company otherwise being in compliance with
the Registration Rights Agreement, dated the date hereof, between the Company
and Belair Capital Fund LLC, and (ii) shall not arise upon an exchange effected
by holders of Series A Preferred Units pursuant to clause (y) of SECTION
8(A)(I). The Excess Share Notice shall state (i) the number of Excess Units
held by such holder, (ii) the redemption price of the Excess Units, (iii) the
date on which such Excess Units shall be redeemed, which date shall be no later
than 60 days following the receipt of the Exchange Notice, (iv) the place or
places where such Excess Units are to be surrendered for payment of the
Redemption Price, (iv) that distributions on the Excess Units will cease to
accrue on such redemption date, and (v) that payment of the redemption price
will be made upon presentation and surrender of such Excess Units. In the
event an exchange would in the judgment of the Company result in Excess Units,
as a condition to such exchange, each holder of such units agrees to provide
representations and covenants reasonably requested by the Company (i)
sufficient to assure the Company that the holder's ownership of stock of the
Company would not violate the provisions on ownership limitation set forth in
Article VI of the Charter; and (ii) to the extent such holder can so represent
and covenant without obtaining information from its owners, relating to the
holder's ownership of Units of the Partnership and its affiliates.
(iv) The redemption of Series A Preferred Units described in
SECTIONS 8(A)(II) and (III) shall be subject to the provisions of SECTION
5(B)(I) and SECTION 5(C)(II); provided, however, that the term"Redemption
Price" in such Section shall be read to mean the original Capital Contribution
per Series A Preferred Unit being redeemed plus all accrued and unpaid
distributions to the redemption date.
If and to the extent that an exchange is effectuated pursuant to Section
8(a)(iii), the Company shall indemnify the holders of the Series A Preferred
Units and the prospective holder(s) of the Series A Preferred Stock
participating in said exchange against any claim that the exchange so
effectuated has resulted in a violation of Article VI of the Charter of the
Company.
(b) PROCEDURE FOR EXCHANGE. (i) Any exchange shall be exercised
pursuant to a notice of exchange (the "EXCHANGE NOTICE") delivered to the
Company by the holder who is exercising such exchange right, by (i) fax and
(ii) by certified mail postage prepaid. The exchange of Series A Preferred
Units, or a specified portion thereof, may be effected after the fifth
Business Day following receipt by the Company of the Exchange Notice by
delivering certificates, if any, representing such Series A Preferred Units
to be exchanged together with, if applicable, written notice of exchange and
a proper assignment of such Series A Preferred Units to the office of the
Company maintained for such purpose. Currently, such office is located at
0000 X. Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000. Each exchange will be
deemed to have been effected immediately prior to the close of business on the
date on which such Series A Preferred Units to be exchanged (together
with all required documentation) shall have been surrendered and notice shall
have been received by the Company as aforesaid and the Exchange Price shall
have been paid. Any Series A Preferred Stock issued pursuant to this SECTION 8
shall be delivered as shares which are duly authorized, validly issued,
fully paid and nonassessable, free of pledge, lien, encumbrance or restriction
other than those provided in the Charter, the Bylaws of the Company, the
Federal securities acts and relevant state securities or blue sky laws.
(ii) In the event of an exchange of Series A Preferred Units for
shares of Series A Preferred Stock, an amount equal to the accrued and unpaid
distributions, whether or not declared, to the date of exchange on any Series A
Preferred Units tendered for exchange shall (i) accrue on the shares of the
Series A Preferred Stock into which such Series A Preferred Units are
exchanged, and (ii) continue to accrue on such Series A Preferred Units, which
shall remain outstanding following such exchange, with one of the General
Partners as the holder of such Series A Preferred Units. Notwithstanding
anything to the contrary set forth herein, in no event shall a holder of a
Series A Preferred Unit that was validly exchanged into Series A Preferred
Stock pursuant to this SECTION 8 (other than the General Partner now holding
such Series A Preferred Unit), receive a distribution out of Operating Cash
Flow of the Partnership, if such holder, after exchange, is entitled to receive
a distribution out of Operating Cash Flow with respect to the share of Series A
Preferred Stock for which such Series A Preferred Unit was exchanged or
redeemed.
(iii) Fractional shares of Series A Preferred Stock are not to be
issued upon exchange but, in lieu thereof, the Company will pay a cash
adjustment based upon the fair market value of the Series A Preferred Stock on
the day prior to the exchange date as determined in good faith by the Board of
Directors of the Company.
(c) ADJUSTMENT OF EXCHANGE PRICE. (i) The Exchange Price is subject to
adjustment upon certain events, including, (i) subdivisions, combinations and
reclassification of the Series A Preferred Stock, and (ii) distributions to all
holders of Series A Preferred Stock of evidences of indebtedness of the Company
or assets (including securities, but excluding dividends and distributions paid
in cash out of equity applicable to Series A Preferred Stock).
(ii) In case the Company shall be a party to any transaction
(including, without limitation, a merger, consolidation, statutory share
exchange, tender offer for all or substantially all of the Company's capital
stock or sale of all or substantially all of the Company's assets), in each
case as a result of which the Series A Preferred Stock will be converted into
the right to receive shares of capital stock, other securities or other
property (including cash or any combination thereof), each Series A Preferred
Unit will thereafter be exchangeable into the kind and amount of shares of
capital stock and other securities and property receivable (including cash or
any combination thereof) upon the consummation of such transaction by a holder
of that number of shares of Series A Preferred Stock or fraction thereof into
which one Series A Preferred Unit was exchangeable immediately prior to such
transaction. The Company may not become a party to any such transaction unless
the terms thereof are consistent with the foregoing.
SECTION 9. NO CONVERSION RIGHTS. Except as set forth herein, the holders
of the Series A Preferred Units shall not have any rights to convert such units
into shares of any other class or series of stock or into any other securities
of, or interest in, the Partnership.
SECTION 11. NO SINKING FUND. No sinking fund shall be established for the
retirement of redemption of Series A Preferred units.
