AMENDMENT NO. 2
TO
AGREEMENT OF LIMITED PARTNERSHIP
OF
CEDAR SHOPPING CENTERS PARTNERSHIP, L.P.
This Amendment No. 2 to Agreement of Limited Partnership (the
"Partnership Agreement") of Cedar Shopping Centers Partnership, L.P. (this
"Amendment") is entered into as of July 26, 2004, by and among Cedar Shopping
Centers, Inc. (the "General Partner") and the limited partners signatory hereto.
All capitalized terms used herein shall have the meanings given to them in the
Partnership Agreement.
WHEREAS, Section 4.5 of the Partnership Agreement authorizes the General
Partner to cause the Partnership to issue additional Partnership Units in one or
more classes or series, with such designations, preferences and relative,
participating, optional or other special rights, powers and duties as shall be
determined by the General Partner, subject to the provisions of such Section;
and
WHEREAS, the General Partner desires to amend the Partnership Agreement
(i) to establish a new class of Partnership Units, designated the 8?% Series A
Cumulative Redeemable Preferred Partnership Units (the "Series A Preferred
Partnership Units") and (ii) to issue the Series A Preferred Partnership Units
to the General Partner.
NOW THEREFORE, in consideration of the mutual covenants herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
Section 1. Issuance of Series A Preferred Partnership Units.
In consideration of the contribution of the net proceeds from the issue
and sale by the General Partner of 2,350,000 shares of its 8?% Series A
Cumulative Redeemable Preferred Stock in an underwritten public offering, the
Partnership hereby issues to the General Partner 2,350,000 Series A Preferred
Partnership Units.
Section 2. Definitions.
A. In addition to those terms defined in the Partnership
Agreement, the following definitions shall be for all purposes, unless otherwise
clearly indicated to the contrary, applied to the terms used in the Partnership
Agreement and in this Amendment:
"Common Partnership Unit" means a Partnership Unit that is not a
Preferred Partnership Unit.
"Liquidation Preference Amount" means, with respect to any
Preferred Partnership Unit, the amount payable with respect to such Preferred
Partnership Unit (as established by the instrument designating such Preferred
Partnership Unit) upon the voluntary or involuntary dissolution, liquidation or
winding up of the Partnership, or upon the earlier redemption of such Preferred
Partnership Units, as the case may be.
"Preferred Partnership Unit" means any Partnership Unit issued
from time to time pursuant to Section 4.5 of the Partnership Agreement that is
designated by the General Partner at the time of its issuance as a Preferred
Partnership Unit. Each Preferred Partnership Unit shall have such preferences,
conversions and other rights, voting powers, restrictions, limitations as to
dividends and other distributions, qualifications and terms and conditions of
redemption as shall be determined by the General Partner subject to the
requirements of Section 4.5 of the Partnership Agreement.
"Partnership Interest" means, as to a Partner, with respect to
any class of Partnership Units held by such Partner, an ownership interest in
such class of Partnership Units (including any and all benefits to which the
holder of such a Partnership Interest may be entitled as provided in the
Partnership Agreement, together with all obligations of such Person to comply
with the terms and provisions of the Partnership Agreement) as determined by
dividing the number of Partnership Units in such class owned by such Partner by
the total number of Partnership Units in such class then outstanding. A
Partnership Interest may be expressed as a number of Partnership Units.
"Partnership Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1, 4.2 and
4.5 of the Partnership Agreement. The ownership of Partnership Units shall be
evidenced by such form, if any, of certificate for units as the General Partner
adopts from time to time on behalf of the Partnership. Without limitation on the
authority of the General Partner as set forth in Section 4.5 of the Partnership
Agreement, the General Partner may designate any Partnership Units, when issued,
as Common Partnership Units or as Preferred Partnership Units, may establish any
other class of Partnership Units, and may designate one or more series of any
class of Partnership Units.
Section 3. Requirement and Characterization of Distributions.
Section 5.1 of the Partnership Agreement is hereby deleted in its
entirety and the following new Section 5.1 is inserted in its place:
"Section 5.1 Requirement and Characterization of Distributions.
The General Partner shall cause the Partnership to make
quarterly distributions of all or such portion as the General Partner may in its
discretion determine, of Available Cash generated by the Partnership during such
quarter to the Holders of Partnership Units who are Holders on the Partnership
Record Date with respect to such quarter in the following order of priority:
(i) First, to the Holders of Partnership Units in
such amount as is required for the Partnership to pay all distributions with
respect to such Preferred Partnership Units due or payable in accordance with
the instruments designating such Preferred Partnership Units through the last
day of such quarter; such distributions shall be made to such Holders of
Partnership Units in such order of priority and with such preferences as have
been established with respect to such Preferred Partnership Units as of the last
day of such calendar quarter; and
(ii) Second, to the Holders of Partnership Units in
proportion to their respective Percentage Interests in Common Partnership Units
on such Partnership Record Date;
-2-
provided that in no event may a Holder of Partnership Units receive a
distribution of Available Cash with respect to a Partnership Unit if such Holder
of Partnership Units is entitled to receive a distribution out of such Available
Cash with respect to a REIT Share for which such Partnership Unit has been
redeemed or exchanged. The General Partner shall take such reasonable efforts,
as determined by it in its sole and absolute discretion and consistent with its
qualification as a REIT, to cause the Partnership to distribute sufficient
amounts to enable the General Partner to pay unit holder dividends that will (a)
satisfy the requirements for qualifying as a REIT under the Code and
Regulations, and (b) avoid any federal income or excise tax liability of the
General Partner.
Notwithstanding anything to the contrary contained herein, in no
event shall any Holder of Partnership Units receive a distribution of Available
Cash with respect to any Common Partnership Unit with respect to any quarter
until such time as the Partnership has distributed to the holders of the
Preferred Partnership Units an amount sufficient to pay all distributions
payable with respect to such Preferred Partnership Units through the last day of
such quarter, in accordance with the instruments designating such Preferred
Partnership Units."
Section 4. Tax Provisions.
Section 6.2 of the Partnership Agreement is hereby deleted in its
entirety and the following new Section 6.2 is inserted in its place:
"Section 6.2 Allocations of Net Income and Net Loss
For purposes of maintaining the Capital Accounts and in
determining the rights of the Holders of Partnership Units among themselves, the
Partnership's items of income, gain, loss and deduction shall be allocated among
the Holders of Partnership Units in each taxable year (or portion thereof) as
provided herein below.
A. Net Income. After giving effect to the special
allocations set forth in Section 6.3, Net Income shall be allocated in the
following manner and order of priority:
(1) First, to the General Partner until the
cumulative allocations of Net Income under this Section 6.2.A.(1) equal the
cumulative Net Losses allocated to the General Partner under Section 6.2.B.(4)
hereof;
(2) Second, to the General Partner until the
cumulative allocations of Net Income under this Section 6.2.A.(2) equal the
cumulative allocations of Net Loss to the General Partner under Section
6.2.B.(3) hereof;
(3) Third, to those Holders of Partnership Units who
have received allocations of Net Loss under Section 6.2.B.(2) hereof until the
cumulative allocations of Net Income under this Section 6.2.A.(3) equal such
cumulative allocations of Net Loss (such allocation of Net Income to be in
proportion to the cumulative allocations of Net Loss under such section to each
such Holder of Partnership Units);
(4) Fourth, to the Holders of Partnership Units
until the cumulative allocations of Net Income under this Section 6.2.A.(4)
equal the cumulative allocations of Net
-3-
Loss to such Holders of Partnership Units under Section 6.2.B.(1) hereof (such
allocation of Net Income to be in proportion to the cumulative allocations of
Net Loss under such section to each such Holder of Partnership Units); and
(5) Fifth any remaining Net Income shall be
allocated to the Holders of Partnership Units who hold Common Partnership Units
in proportion to their respective Percentage Interests as holders of Common
Partnership Units.
B. Net Losses. After giving effect to the special
allocations set forth in Section 6.3, Net Losses shall be allocated to the
Holders of Partnership Units as follows:
(1) To the Holders of Partnership Units who hold
Common Partnership Units in accordance with their respective Percentage
Interests as holders of Common Partnership Units, except as otherwise provided
in this Section 6.2.B.
(2) To the extent that an allocation of Net Loss
under Section 6.2.B.(1) would cause a Holder of Partnership Units to have an
Adjusted Capital Account Deficit at the end of such taxable year (or increase
any existing Adjusted Capital Account Deficit of such Holder of Partnership
Units), such Net Loss shall instead be allocated to those Holders of Partnership
Units, if any, for whom such allocation of Net Loss would not cause or increase
an Adjusted Capital Account Deficit. Solely for purposes of this Section
6.2.B.(2), the Adjusted Capital Account Deficit, in the case of the General
Partner, shall be determined without regard to the amount credited to the
General Partner's Capital Account for the aggregate Liquidation Preference
Amount attributable to the General Partner's Preferred Partnership Units. The
Net Loss allocated under this Section 6.2.B.(2) shall be allocated among the
Holders of Partnership Units who may receive such allocation in proportion to
and to the extent of the respective amounts of Net Loss that could be allocated
to such Holders of Partnership Units without causing such Holders of Partnership
Units to have an Adjusted Capital Account Deficit.
(3) Any remaining Net Loss shall be allocated to the
General Partner to the extent that such allocation of Net Loss would not cause
or increase an Adjusted Capital Account Deficit of the General Partner.
(4) Any remaining Net Loss shall be allocated to the
General Partner.
Section 5. Preferred Unit Allocation.
The Partnership Agreement is hereby amended by adding the following new
Section 6.3.C to the Partnership Agreement, immediately following Section 6.3.B:
"C. Priority Allocation With Respect To Preferred
Partnership Units. After taking into account the special allocation provisions
of Section 6.3.A, all or a portion of the remaining items of Partnership gross
income or gain for the Partnership Year, if any, shall be specially allocated to
the holders of Series A Preferred Partnership Units in an amount equal to the
excess, if any, of the cumulative distributions received by the holders of
Series A Preferred Partnership Units pursuant to Section 5.1(i) hereof for the
current Partnership Year and all prior Partnership Years (other than any
distributions that are treated as being in satisfaction of the Liquidation
Preference Amount for any Preferred Partnership Units) over the cumulative
-4-
allocations of Partnership gross income and gain to the holders of Series A
Preferred Partnership Units under this Section 6.3.C for all prior Partnership
Years."
Section 6. Redemption Right.
The Partnership Agreement is hereby amended by adding the following new
Sections 8.6.E and 8.6.F to the Partnership Agreement, immediately following
Section 8.6.D:
"E. Notwithstanding anything contained in Sections 8.6.A,
8.6.B, 8.6.C and 8.6.D, except as set forth in Section 8.6.F, no Partner shall
be entitled to exercise the Redemption Right pursuant to Section 8.6.A with
respect to any Preferred Partnership Unit unless (i) such Preferred Partnership
Unit has been issued to and is held by a Partner other than the General Partner,
and (ii) the General Partner has expressly granted to such Partner the right to
redeem such Preferred Partnership Units pursuant to Section 8.6.A.
F. Preferred Partnership Units shall be redeemed, if at
all, only in accordance with such redemption rights or options as are set forth
with respect to such Preferred Partnership Units (or class or series thereof) in
the instruments designating such Preferred Partnership Units (or class or series
thereof)."
Section 7. General Amendments to Partnership Agreement.
Notwithstanding anything contained herein, all references to Partnership
Units in the definition of Cash Amount and in Section 7.5.B of the Partnership
Agreement shall be deemed to refer solely to Common Partnership Units, and not
to Preferred Partnership Units. In addition, references in Section 14.2 of the
Partnership Agreement to Percentage Interests of the Limited Partners shall be
deemed to refer solely to Percentage Interests of Limited Partners with respect
to Common Partnership Units. Further, the reference to Partnership Interests
appearing in Section 14.2.A shall be deemed to refer only to Partnership
Interests held with respect to Common Partnership Units.
Section 8. Exhibits to Partnership Agreement.
The General Partner shall maintain the information set forth in Exhibit
A to the Partnership Agreement, as such information shall change from time to
time, in such form as the General Partner deems appropriate for the conduct of
the Partnership affairs, and Exhibit A shall be deemed amended from time to time
to reflect the information so maintained by the General Partner, whether or not
a formal amendment to the Partnership Agreement has been executed amending such
Exhibit A. In addition to the issuance of Series A Preferred Partnership Units
to the Investor pursuant to this Amendment, such information shall reflect (and
Exhibit A shall be deemed amended from time to time to reflect) the issuance of
any additional Partnership Units to the General Partner or any other Person, the
transfer of Partnership Units and the redemption of any Partnership Units, all
as contemplated herein.
In addition, the Partnership Agreement is hereby amended by attaching
thereto as Exhibits 1 the Exhibit 1 attached hereto.
-5-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2
to the Partnership Agreement to be executed as of the day and year first above
written.
CEDAR SHOPPING CENTERS PARTNERSHIP, L.P.
By: Cedar Shopping Centers, Inc.
General Partner
By:
---------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
LIMITED PARTNERS
By:
---------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇
By:
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-6-
EXHIBIT 1
CEDAR SHOPPING CENTERS PARTNERSHIP, L.P.
DESIGNATION OF THE VOTING POWERS, DESIGNATIONS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS AND
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS
OF THE
SERIES A PREFERRED PARTNERSHIP UNITS
All capitalized terms in this legend have the meanings defined
in the Limited Partnership Agreement of Cedar Shopping Centers Partnership, L.P.
(1) Designation and Number. A series of Preferred
Partnership Units, designated as the "8?% Series A Cumulative Redeemable
Preferred Partnership Units" (the "Series A Preferred Partnership Units"), is
hereby established. The number of Series A Preferred Partnership Units shall be
2,350,000. The par value of the Series A Preferred Partnership Units shall be
$.01 per unit.
(2) Rank. The Series A Preferred Partnership Units will,
with respect to distribution rights and rights upon liquidation, dissolution or
winding up of the Partnership, rank (a) senior to all classes or series of
Partnership Units, and to all equity securities, the terms of which provide that
such equity securities shall rank junior to the Series A Partnership Units; (b)
on parity with all equity securities issued by the Partnership the terms of
which specifically provide that such equity securities rank on parity with the
Series A Partnership Units; and (c) junior to all Partnership Units issued by
the Partnership the terms of which specifically provide that such Partnership
Units rank senior to the Series A Preferred Partnership Units. The term "equity
securities" shall not include convertible debt securities.
(3) Distributions.
(a) Holders of Series A Preferred Partnership Units shall be
entitled to receive, when and if declared by the General Partner, out of funds
legally available for payment of distributions, cumulative preferential cash
distributions at the rate of 8?% of the liquidation preference per annum (which
is equivalent to a fixed annual amount of $2.21875 per Series A Preferred
Partnership Unit). Such distributions shall accrue and cumulate from the date of
original issuance (July 28, 2004) and shall be payable quarterly in arrears on
the 20th day of February, May, August and November of each year or, if not a
business day, the next succeeding business day (each a "Distribution Payment
Date"). The first distribution on the Series A Preferred Partnership Units shall
be paid on November 20, 2004, will be for more than a full quarter and will
reflect distributions accumulated from the date of original issuance through
November 20, 2004. Any distribution payable on the Series A Preferred
Partnership Units for any partial distribution period shall be prorated and
computed on the basis of a 360-day year consisting of twelve 30-day months.
Distributions shall be payable to holders of record as they appear in the
records of the Partnership at the close of business on the applicable
distribution record date, which shall be a date designated by the General
Partner for the payment of
distributions that is not more than 60 nor less than 10 calendar days
immediately preceding such Distribution Payment Date (each, a "Distribution
Record Date").
(b) No distribution on the Series A Preferred Partnership
Units shall be authorized or declared 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 or any other
of the Partnership's Preferred Partnership Units, prohibits such authorization,
declaration, payment or setting apart for payment or provides that such
authorization, declaration, payment or setting apart for payment would
constitute a breach or default thereunder, or if such authorization,
declaration, payment or setting apart for payment shall be restricted or
prohibited by law.
Notwithstanding anything to the contrary contained herein, distributions on the
Series A Preferred Partnership Units shall accrue and cumulate 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
declared by the General Partner. Accrued but unpaid distributions on the Series
A Preferred Partnership Units shall cumulate as of the Distribution Payment Date
on which they first become payable or on the date of redemption, as the case may
be. No interest shall be payable in respect of any distribution on the Series A
Preferred Partnership Units that may be in arrears.
(c) Except as provided in the following sentence, if any
Series A Preferred Partnership Units are outstanding, no distributions, other
than distributions in kind of the Common Partnership Units or other Partnership
Units ranking junior to the Series A Preferred Partnership Units as to
distributions and upon liquidation, may be declared or paid or set apart for
payment, and no other distribution may be declared or made upon, the Common
Partnership Units or any other Partnership Units ranking, as to distributions
and upon liquidation, on parity with or junior to the Series A Preferred
Partnership Units unless full cumulative distributions have been or
contemporaneously are declared and paid or declared and a sum sufficient is set
apart for such payment on the Series A Preferred Partnership Units for all past
distribution periods and the then current distribution period. When
distributions are not paid in full (or a sum sufficient for such full payment is
not so set apart) upon the Series A Preferred Partnership Units and all other
Partnership Units ranking on parity, as to distributions, with the Series A
Preferred Partnership Units, all distributions declared upon the Series A
Preferred Partnership Units and any other Partnership Units ranking on parity,
as to distributions, with the Series A Preferred Partnership Units shall be
authorized pro rata so that the amount of distributions authorized per Series A
Preferred Partnership Unit and each such Partnership Units shall in all cases
bear to each other the same ratio that accrued distributions per Series A
Preferred Partnership Unit and such other Partnership Units (which shall not
include any accumulation in respect of unpaid distributions for prior
distribution periods if such other Partnership Units do not have a cumulative
distribution) bear to each other. No interest, or sum of money in lieu of
interest, shall be payable in respect of any distribution payment or payments on
Series A Preferred Partnership Unit which may be in arrears.
(d) Except as provided in clause (c), unless full cumulative
distributions on the Series A Preferred Partnership Units have been or
contemporaneously are declared and paid or declared and a sum sufficient is set
apart for payment for all past distribution periods and the
-2-
then current distribution period, no Common Partnership Units or any other
Partnership Units ranking junior to or on parity with the Series A Preferred
Partnership Units as to distributions or upon liquidation shall be redeemed,
purchased or otherwise acquired for any consideration (or any monies be paid to
or made available for a sinking fund for the redemption of any such Partnership
Units) by the Partnership (except by conversion into or exchange for Common
Partnership Units or other Partnership Units ranking junior to the Series A
Preferred Partnership Units as to distributions and amounts upon liquidation).
(e) Holders of Series A Preferred Partnership Units shall
not be entitled to any distribution, whether payable in cash, property or units,
in excess of full cumulative distributions on the Series A Preferred Partnership
Units as described above. Any distribution payment made on the Series A
Preferred Partnership Units, including any capital gain distributions, shall
first be credited against the earliest accrued but unpaid distribution due with
respect to the Series A Preferred Partnership Units which remains payable.
(f) If, for any taxable year, the Partnership elects to
designate as a "capital gain dividend" (as defined in Section 857 of the Code)
any portion (the "Capital Gains Amount") of the dividends (as determined for
federal income tax purposes) paid or made available for the year to holders of
all series or classes of Partnership Units (the "Total Dividends"), then, except
as otherwise required by applicable law, that portion of the Capital Gains
Amount that shall be allocable to the holders of Series A Preferred Partnership
Units shall be in proportion to the amount that the total dividends (as
determined for federal income tax purposes) paid or made available to the
holders of the Series A Preferred Partnership Units for the year bears to the
Total Dividends. Except as otherwise required by applicable law, the Partnership
will make a similar allocation with respect to any undistributed long-term
capital gains of the Partnership which are to be included in its unit holders'
long-term capital gains, based on the allocation of the Capital Gains Amount
which would have resulted if such undistributed long-term capital gains has been
distributed as "capital gains dividends" by the Partnership to its unit holders.
(4) Liquidation Preference.
(a) In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Partnership (referred to herein
sometimes as a "liquidation"), the holders of Series A Preferred Partnership
Units then outstanding shall be entitled to receive out of the assets of the
Partnership legally available for distribution to unit holders (after payment or
provision for payment of all debts and other liabilities of the Partnership) a
liquidation preference of $25.00 per unit, (ii) the applicable premium per unit
(expressed as a percentage of the liquidation preference of $25.00 per Series A
Preferred Partnership Unit) as set forth in the table below during the
twelve-month period beginning on July 28 of each year and (c) an amount equal to
any accrued and unpaid distributions (whether or not declared) to the date of
payment, before any distribution of assets is made to holders of Common
Partnership Units or any equity securities that the Partnership may issue that
rank junior to the Series A Preferred Partnership Units as to liquidation
rights.
-3-
12-month period Applicable Premium
------------------------------ ----------------------------
July 28, 2004 to July 27, 2005 5%
July 28, 2005 to July 27, 2006 4%
July 28, 2006 to July 27, 2007 3%
July 28, 2007 to July 27, 2008 2%
July 28, 2008 to July 27, 2009 1%
July 28, 2009 and thereafter 0
(b) If, upon any such voluntary or involuntary liquidation,
dissolution or winding up of the Partnership, the assets of the Partnership are
insufficient to make full payment to holders of the Series A Preferred
Partnership Units and any Partnership Units ranking on parity with the Series A
Preferred Partnership Units as to liquidation rights, then the holders of the
Series A Preferred Partnership Units and all other such Partnership Units
ranking on parity with the Series A Preferred Partnership Units as to
liquidation rights shall share ratably in any distribution of assets in
proportion to the full liquidating distributions to which they would otherwise
be respectively entitled.
(c) 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 calendar days immediately preceding the payment date stated
therein, to each record holder of the Series A Preferred Partnership Units at
the respective addresses of such holders as the same shall appear on the unit
transfer records of the Partnership.
(d) After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Series A Preferred
Partnership Units shall have no right or claim to any of the remaining assets of
the Partnership.
(e) None of a consolidation or merger of the Partnership
with or into another entity, the merger of another entity with or into the
Partnership, a statutory share exchange by the Partnership or a sale, lease,
transfer or conveyance of all or substantially all of the Partnership's assets
or business shall be considered a liquidation, dissolution or winding up of the
Partnership.
(f) In determining whether a distribution (other than upon
voluntary or involuntary dissolution) by dividend, redemption or other
acquisition of Partnership Units of the Partnership or otherwise is permitted
under Delaware law, amounts that would be needed, if the Partnership were to be
dissolved at the time of the distribution, to satisfy the preferential rights
upon dissolution of the holders of Series A Preferred Partnership Units will not
be added to the Partnership's total liabilities.
(5) Redemption.
(a) Except as otherwise set forth in this Section 5, the
Series A Preferred Partnership Units are not redeemable prior to July 28, 2009,
except that the Partnership will be entitled to redeem, purchase or acquire
Series A Preferred Partnership Units for federal income tax purposes to maintain
the General Partnership's status as a REIT.
-4-
(b) On or after July 28, 2009 the Partnership, at its
option, upon giving notice as provided below, may redeem the Series A Preferred
Partnership Units, in whole or from time to time in part, for cash, at a
redemption price of $25.00 per Series A Preferred Partnership Unit, plus all
accrued and unpaid distributions on such Series A Preferred Partnership Units to
the date of redemption, whether or not declared (the "Redemption Right").
(c) If fewer than all of the outstanding Series A Preferred
Partnership Units are to be redeemed pursuant to the Redemption Right, the
Series A Preferred Partnership Units to be redeemed shall be selected pro rata
(as nearly as practicable without creating fractional Series A Preferred
Partnership Units) or by lot or in such other equitable method prescribed by the
General Partner.
(d) Notwithstanding anything to the contrary contained
herein, unless full cumulative distributions on all Series A Preferred
Partnership Units have been or contemporaneously are declared and paid or
declared and a sum sufficient is set apart for payment for all past distribution
periods and the then current distribution period, no Series A Preferred
Partnership Units shall be redeemed unless all outstanding Series A Preferred
Partnership Units are simultaneously redeemed. In addition, unless full
cumulative distributions on all Series A Preferred Partnership Units have been
or contemporaneously are declared and paid or declared and a sum sufficient is
set apart for payment for all past distribution periods and the then current
distribution period, the Partnership shall not purchase or otherwise acquire
directly or indirectly any Series A Preferred Partnership Units or any other
Partnership Units ranking junior to or on parity with the Series A Preferred
Partnership Units as to distributions or upon liquidation (except by conversion
into or exchange for Partnership Units ranking junior to the Series A Preferred
Partnership Units as to distributions and upon liquidation). The restrictions in
this Section 5 on redemptions, purchases and other acquisitions shall not
prevent the redemption, purchase or acquisition by the Partnership of Preferred
Units of any series pursuant to the Partnership Agreement or the purchase or
acquisition of Series A Preferred Partnership Units pursuant to a purchase or
exchange offer made on the same terms to all holders of the Series A Preferred
Partnership Units.
(e) Immediately prior to any redemption of Series A
Preferred Partnership Units, the Partnership shall pay, in cash, any accrued and
unpaid distributions to the redemption date, whether or not declared, unless a
redemption date falls after a Distribution Record Date and prior to the
corresponding Distribution Payment Date, in which case each holder of Series A
Preferred Partnership Units at the close of business on such Distribution Record
Date shall be entitled to the distribution payable on such Series A Preferred
Partnership Units on the corresponding Distribution Payment Date notwithstanding
the redemption of such Series A Preferred Partnership Units before the
Distribution Payment Date. Except as provided in the previous sentence, the
Partnership shall make no payment or allowance for unpaid distributions, whether
or not in arrears, on Series A Preferred Partnership Units for which a notice of
redemption has been given.
(f) The following provisions set forth the procedures for
redemption.
(i) Notice of redemption will be mailed by the
Partnership, postage prepaid, no less than 30 nor more than 60 calendar days
immediately preceding the redemption
-5-
date, addressed to the respective holders of record of the Series A Preferred
Partnership Units to be redeemed at their respective addresses as they appear on
the unit transfer records of the Partnership. No failure to give such notice or
any defect thereto or in the mailing thereof shall affect the validity of the
proceedings for the redemption of any Series A Preferred Partnership Unit except
as to the holder to whom notice was defective or not given.
(ii) In addition to any information required by law
or by the applicable rules of any exchange upon which the Series A Preferred
Partnership Units may be listed or admitted to trading, each notice shall state:
(A) the redemption date; (B) the redemption price; (C) the number of Series A
Preferred Partnership Units to be redeemed; (D) the place or places where the
holders of Series A Preferred Partnership Units may surrender certificates for
payment of the redemption price; and (E) that distributions on the Series A
Preferred Partnership Units to be redeemed will cease to accrue on the
redemption date. If less than all of the Series A Preferred Partnership Units
held by any holder are to be redeemed, the notice mailed to each holder shall
also specify the number of Series A Preferred Partnership Units held by such
holder to be redeemed.
(iii) On or after the redemption date, each holder of
Series A Preferred Partnership Units to be redeemed shall present and surrender
the certificates representing his Series A Preferred Partnership Units to the
Partnership at the place designated in the notice of redemption and thereupon
the redemption price of such Series A Preferred Partnership Units (including all
accrued and unpaid distributions up to the redemption date) shall be paid to or
on the order of the person whose name appears on such certificate representing
Series A Preferred Partnership Units as the owner thereof and each surrendered
certificate shall be canceled. If fewer than all the units represented by any
such certificate representing Series A Preferred Partnership Units are to be
redeemed, a new certificate shall be issued representing the unredeemed units.
(iv) From and after the redemption date (unless the
Partnership defaults in payment of the redemption price), all distributions on
the Series A Preferred Partnership Units designated for redemption and all
rights of the holders thereof, except the right to receive the redemption price
thereof and all accrued and unpaid distributions up to the redemption date,
shall terminate with respect to such units and such units shall not thereafter
be transferred (except with the consent of the Partnership) on the Partnership's
transfer records, and such units shall not be deemed to be outstanding for any
purpose whatsoever. At its election, the Partnership, prior to a redemption
date, may irrevocably deposit the redemption price (including accrued and unpaid
distributions to the redemption date) of the Series A Preferred Partnership
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 A
Preferred Partnership Units to be redeemed shall (A) state the date of such
deposit, (B) specify the office of such bank or trust company as the place of
payment of the redemption price and (C) require such holders to surrender the
certificates representing such 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 accrued and unpaid distributions
to the redemption date). Any monies so deposited which remain unclaimed by the
holders of the Series A Preferred Partnership Units at the end of two years
after the redemption date shall be returned by such bank or trust company to the
Partnership.
-6-
(g) Any Series A Preferred Partnership Units that shall at
any time have been redeemed shall, after such redemption, have the status of
authorized but unissued Preferred Partnership Units, without designation as to
series until such Preferred Partnership Units are once more designated as part
of a particular series by the General Partner.
(6) Voting Rights.
(a) Except as required by law, the holder of the Series A
Preferred Partnership Units shall not be entitled to vote at any meeting of the
Partners or for any other purpose or otherwise to participate in any action
taken by the Partnership or the Partners, or to receive notice of any meeting of
Partners.
(b) So long as any Series A Preferred Partnership Units
remain outstanding, the Partnership shall not, without the affirmative vote or
consent of the holders of at least two-thirds of the Series A Preferred
Partnership Units outstanding at the time, given in person or by proxy, either
in writing or at a meeting (such series voting separately as a class), (i)
authorize, create or increase the authorized or issued amount of any class or
series of equity securities ranking senior to the outstanding Series A Preferred
Partnership 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 authorized equity securities of
the Partnership into any such senior equity securities, or create, authorize or
issue any obligation or security convertible into or evidencing the right to
purchase any such senior equity securities; or (ii) amend, alter or repeal the
provisions of the Partnership Agreement, as amended, whether by merger or
consolidation (in either case, an "Event") or otherwise, so as to materially and
adversely affect any right, preference, privilege or voting power of the Series
A Preferred Partnership Units; provided, however, that with respect to any such
amendment, alteration or repeal of the provisions of the Partnership Agreement,
as amended, upon the occurrence of an Event, so long as the Series A Preferred
Partnership Units remain outstanding with the terms thereof materially unchanged
in any adverse respect, taking into account that, upon the occurrence of an
Event, the Partnership may not be the surviving entity and such surviving entity
may thereafter be the issuer of the Series A Preferred Partnership Units, the
occurrence of any such Event shall not be deemed to materially and adversely
affect the rights, preferences or voting powers of the Series A Preferred
Partnership Units; and provided further that any increase in the amount of
authorized Series A Preferred Partnership Units or the creation of or increase
in the amount of any other class or series of the Partnership's equity
securities, in each case ranking on parity with or junior to the Series A
Preferred Partnership Units with respect to the 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 the rights, preferences, privileges or voting powers of the Series A
Preferred Partnership Units.
(c) The foregoing voting provisions shall not apply if, at
or prior to the time when the action with respect to which such vote or consent
would otherwise be required shall be effected, all outstanding Series A
Preferred Partnership Units shall have been redeemed or called for redemption
upon proper notice and sufficient funds shall have been deposited in trust to
effect such redemption.
-7-
(7) Conversion. The Series A Preferred Partnership Units are
not convertible into or exchangeable for any other property or securities of the
Partnership.
(8) Legend. Each certificate for Series A Preferred
Partnership Units shall bear legends substantially to the effect of the
following:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), or the
securities laws of any state. The securities may not be offered, sold,
transferred, pledged or otherwise disposed of without an effective
registration statement under the Act and under any applicable state
securities laws, receipt of a no-action letter issued by the Securities
and Exchange Commission (together with either registration or an
exemption under applicable state securities laws) or an opinion of
counsel acceptable to the Partnership and the REIT that the proposed
transaction will be exempt from registration under the Act and
applicable state securities laws."
(9) Status. Upon any redemption of Series A Preferred
Partnership Units, the Series A Preferred Partnership Units which are redeemed
will be reclassified as authorized and unissued Preferred Partnership Units, and
the number of Series A Preferred Partnership Units which the Partnership has the
authority to issue will be decreased by the redemption of Series A Preferred
Partnership Units, so that the Series A Preferred Partnership Units which were
redeemed may not be reissued.
(10) Exclusion of Other Rights. The Series A Preferred
Partnership Units shall not have any preferences, conversion or other rights,
voting powers, restrictions, limitations as to dividends or other distributions,
qualifications or terms or conditions of redemption other than those
specifically set forth herein. The Series A Preferred Partnership Units shall
have no preemptive or subscription rights.
(11) Headings of Subdivisions. The headings of the various
subdivisions hereof are for convenience of reference only and shall not affect
the interpretation of any of the provisions hereof.
(12) Severability of Provisions. If any preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends or other distributions, qualifications or terms or conditions of
redemption of the Series A Preferred Partnership Units set forth in the
Partnership Agreement is invalid, unlawful or incapable of being enforced by
reason of any rule of law or public policy, all other preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends or other
distributions, qualifications or terms or conditions of redemption of Series A
Preferred Partnership Units set forth in the Partnership Agreement which can be
given effect without the invalid, unlawful or unenforceable provision thereof
shall, nevertheless, remain in full force and effect, and no preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends or other distributions, qualifications or terms or conditions of
redemption of Series A Preferred Partnership Units herein set forth shall be
deemed dependent upon any other provision thereof unless so expressed therein.
-8-
