Exhibit 10.1
SUPPLEMENT TO THE AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
RECKSON OPERATING PARTNERSHIP, L.P.
ESTABLISHING
SERIES A PREFERRED UNITS
OF
LIMITED PARTNERSHIP INTEREST
In accordance with Sections 4.2 and 14.1 B(3) of the Amended and Restated
Agreement of Limited Partnership, dated as of June 2, 1995, as amended on
December 6, 1995 (the "Partnership Agreement"), the Partnership Agreement is
hereby supplemented to establish a series of 9,200,000 preferred units of
limited partnership interest of Reckson Operating Partnership, L.P. (the
"Partnership") (including up to 1,200,000 preferred units which may be issued
in connection with an underwriters' over-allotment option in respect of an
identical number of shares of Series A Preferred Stock (as defined below))
which shall be designated "Series A Preferred Units" having the rights,
preferences, powers, privileges and restrictions, qualifications and
limitations granted to or imposed upon the 7-5/8% Series A Convertible
Cumulative Preferred Stock issued by Reckson Associates Realty Corp. (the
"Company") (the "Series A Preferred Stock") (referred to hereinafter sometimes
as the "Designations") as set forth below and which shall be issued to the
Company. Capitalized terms used and not otherwise defined herein shall have
the meanings set forth in the Partnership Agreement.
WHEREAS, the Company has issued 8 million shares of Series A Preferred
Stock and may issue an additional 1.2 million shares of Series A Preferred
Stock in connection with an underwriters' over-allotment option;
WHEREAS, the Company made a Capital Contribution to the Partnership in an
amount equal to the proceeds raised in connection with the issuance of the
Series A Preferred Stock; and
WHEREAS, pursuant to Section 4.2 of the Partnership Agreement, the
Partnership desires to issue additional Partnership Units to the Company with
substantially similar designations, preferences and other rights to the Series
A Preferred Stock.
NOW THEREFORE, in consideration of the mutual covenants contained herein,
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 Units
Pursuant to Section 4.2 of the Partnership Agreement, the Partnership
hereby issues 9,200,000 additional Partnership Interests (the "Series A
Preferred Units") to the Company. The Series A Preferred Units will have
substantially the same designations, preferences and other rights of the
Series A Preferred Stock, as specified in this amendment and in Exhibit I. In
consideration for the issuance of the Series A Preferred Units, the Company
has made a Capital Contribution to the Partnership in an amount equal to the
proceeds raised in connection with the issuance of the Series A Preferred
Stock.
Section 2. Amendment to Partnership Agreement
Pursuant to Section 14.1.B(3) of the Partnership Agreement, the General
Partner, as general partner of the Partnership and as attorney-in-fact for its
Limited Partners, hereby amends the Partnership Agreement as follows:
(a) Article 1 of the Partnership Agreement is hereby amended by adding
the following definition of "Series A Preferred Units":
"Series A Preferred Units" means the units of limited partnership
interest issued to the Company on April 13, 1998, and any subsequent date, if
any, upon which the underwriters' over-allotment option is exercised, in
connection with the issuance of the Series A Preferred Stock by the Company
and the contribution of the net proceeds therefrom to the Partnership.
(b) Section 5.1 of the Partnership Agreement is deleted and replaced in
its entirety with the following:
Section 5.1 Requirement and Characterization of Distributions
(a) The General Partner shall distribute at least quarterly an amount
equal to 100% of Available Cash generated by the Partnership during such
quarter or shorter period to the Partners who are Partners on the Partnership
Record Date with respect to such quarter or shorter period (i) first, to the
holders of Series A Preferred Units and to all holders of other Preferred
Units that are pari passu with Series A Preferred Units (in proportion to the
amount of distributions authorized and payable with respect to the Series A
Preferred Units or other pari passu Preferred Units owned by them), an amount
that in the aggregate equals the aggregate amount of the distributions
authorized and payable with respect to the Series A Preferred Units and such
other Preferred Units, as the case maybe, for such quarter or shorter period;
and (ii) second, to the Partners in accordance with their respective
Percentage Interests on such Partnership Record Date; provided that in no
event may a Partner receive a distribution of Available Cash with respect to a
Partnership Unit if such Partner is entitled to receive a distribution out of
such Available Cash with respect to a REIT Share for which such Partnership
Unit has been exchanged; and further provided that no distributions shall be
made pursuant to clause (ii) above unless all cumulative distributions with
respect to the Series A Preferred Units and other pari passu Preferred Units
for all past periods and the then current period have been or
contemporaneously are (x) authorized and paid in full or (y) authorized and a
sum sufficient for the full payment thereof is set apart for such payment. The
General Partner shall take such reasonable efforts, as determined by it in its
sole and absolute discretion and consistent with the Company's qualification
as a REIT, to distribute Available Cash to the Limited Partners so as to
preclude any such distribution or portion thereof from being treated as part
of a sale of property to the Partnership by a Limited Partner under Section
707 of the Code or the Regulations thereunder; provided that the General
Partner and the Partnership shall not have liability to a Limited Partner
under any circumstances as a result of any distribution to a Limited Partner
being so treated.
(b) Notwithstanding anything to the contrary above, the Partnership shall
cause to be distributed to the Company an amount equal to the aggregate amount
necessary to redeem any Series A Preferred Stock or other series of redeemable
Preferred Stock issued by the Company which has been called for redemption by
the Company, at such time as is necessary to facilitate any such redemption.
Such distribution will cause a redemption of a like number of Series A
Preferred Units or other series of Preferred Units, as the case may be.
(c) Section 6.1.A of the Partnership Agreement is deleted and replaced in
its entirety with the following:
A. After giving effect to the special allocations set forth in
Section 1 of Exhibit C attached hereto, Net Income shall be allocated (i)
first, to the General Partner to the extent that Net Losses previously
allocated to the General Partner pursuant to clause (iii) of Section 6.1.B
exceed Net Income previously allocated to the General Partner pursuant to this
clause (i) of Section 6.1.A; (ii) second, to the holders of Series A Preferred
Units and to all holders of other Preferred Units that are pari passu with
Series A Preferred Units, to the extent that Net Losses previously allocated
to such holders pursuant to clause (ii) of Section 6.1B exceed Net Income
previously allocated to them pursuant to this clause (ii) of Section 6.1A, pro
rata in accordance with the amounts necessary to reverse such previous
allocations of Net Losses; (iii) third, to the holders of Series A Preferred
Units and to all holders of other Preferred Units that are pari passu with
Series A Preferred Units, until the aggregate amount of Net Income allocated
pursuant to this clause (iii) of Section 6.1A from the inception of the term
of the Partnership equals the aggregate amount distributed to all such holders
pursuant to clause (i) of Section 5.1(a) or the corresponding provisions of
the supplement or amendment to the Partnership Agreement governing such other
Preferred Units, from the inception of the term of the Partnership, pro rata
in accordance with the amounts necessary to fully allocate to each such holder
the maximum amount allocable to such holder for such year (or other period)
under this clause (iii), and (iv) thereafter, to the Partners in accordance
with their respective Percentage Interests.
(d) Section 6.1B of the Partnership Agreement is deleted and replaced in
its entirety with the following:
B. After giving effect to the special allocations set forth in
Section 1 of Exhibit C attached hereto, Net Losses shall be allocated (i)
first, to the Partners in accordance with their respective Percentage
Interests, until each Partner's Adjusted Capital Account balance has been
reduced to zero, excluding, for this purpose, the portion of any such Adjusted
Capital Account balance attributable to Capital Contributions made with
respect to Preferred Units (or attributable to allocations of income under
clause (ii) of Section 6.1A); (ii) second, to Partners holding Series A
Preferred Units and to all holders of other Preferred Units that are pari
passu with Series A Preferred Units, pro rata in accordance with their
Adjusted Capital Account balances, until their Adjusted Capital Account
balances have been reduced to zero; and (iii) thereafter, 100% to the General
Partner.
(e) Section 8.5 of the Partnership Agreement is amended by adding
subsection D thereto as follows:
D. In connection with a redemption by the Company of any or all of
the Series A Preferred Stock or any other series of redeemable Preferred Stock
issued by the Company, the General Partner shall have the right to cause the
Partnership to redeem all or a portion of the Series A Preferred Units or
other series of Preferred Units, as the case may be, that the Company holds,
and such redemption proceeds shall be distributed to the Company pursuant to
the provisions of Section 5.1(b).
(f) Section 13.2.A of the Partnership Agreement is amended by
redesignating subparagraph (4) as subparagraph (5) and inserting new
subparagraph (4) as follows:
(4) To the Partners holding Series A Preferred Units or other
Preferred Units that are pari passu with the Series A Preferred
Units, an amount equal to the aggregate liquidation preference
with respect to such Series A Preferred Units and other
Preferred Units, plus any accrued but unpaid distributions with
respect to such Series A Preferred Units or other Preferred
Units (such amounts paid with respect to accrued distributions
to be treated, for purposes of Section 6.1A, as if they were
distributions made pursuant to clause (i) of Section 5.1(a)),
pro rata in accordance with the aggregate liquidation
preference plus accrued distributions of such Preferred Units
held by each such Partner; and
Section 3. Continuation of Partnership Agreement
The Partnership Agreement and this Amendment shall be read together and
shall have the same force and effect as if the provisions of the Partnership
Agreement and this Amendment were contained in one document. Any provisions of
the Partnership Agreement not amended by this Amendment shall remain in full
force and effect as provided in the Partnership Agreement immediately prior to
the date hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Supplement to
the Partnership Agreement as of the 13th day of April, 1998.
GENERAL PARTNER:
RECKSON ASSOCIATES REALTY CORP.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------
Name:
Title:
EXISTING LIMITED PARTNERS:
By: Reckson Associates Realty Corp.,
as Attorney-in-Fact for the Limited Partners
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
Name:
Title:
Series A Preferred Unit Holder
RECKSON ASSOCIATES REALTY CORP.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------------
Name:
Title:
EXHIBIT I
RECKSON OPERATING 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
The following are the terms of the Series A Preferred Partnership Units
established pursuant to this Amendment:
(a) Number. The maximum number of authorized Series A Preferred
Partnership Units (the "Series A Preferred Units") shall be 9,200,000.
Rank. The Series A Preferred Units will, with respect to
distribution rights and rights upon liquidation, dissolution or
winding up of the Operating Partnership, rank: (a) senior to all
classes or series of common units of the Operating Partnership
("Common Units") and to all equity securities issued by the
Operating Partnership the terms of which provide that such equity
securities shall rank junior to such Series A Preferred Units;
(b) on a parity with all equity securities issued by the
Operating Partnership other than those referred to in clauses (a)
and (c); and (c) junior to all equity securities issued by the
Operating Partnership that rank senior to the Series A Preferred
Units in accordance with Section 6(d). The term "equity
securities" shall not include convertible debt securities.
Distributions.
(i) Holders of the shares of Series A Preferred Units shall be
entitled to receive, when and as authorized by the General Partner, out
of funds legally available for the payment of distributions, cumulative
cash distributions at the rate of 7-5/8% per annum of the liquidation
preference per unit (equivalent to $1.90625 per annum per Series A
Preferred Unit). Distributions on the Series A Preferred Units shall be
cumulative from the date of original issue and shall be payable quarterly
in arrears on January 31, April 30, July 31 and October 31 of each year
or, if not a business day, the next succeeding business day, commencing
July 31, 1998 (each, a "Distribution Payment Date"). Any distribution
payable on the Series A Preferred Units for a partial distribution period
will be computed on the basis of a 360-day year consisting of twelve
30-day months. Distributions will be payable to holders of record as they
appear in the records of the Operating Partnership at the close of
business on the applicable record date, which shall be such date
designated by the General Partner of the Operating Partnership for the
payment of distributions that is not more than 30 nor less than 10 days
prior to such Distribution Payment Date (each, a "Distribution Payment
Record Date").
(ii) No distributions on the Series A Preferred Units shall be
authorized by the General Partner of the Operating Partnership or be paid
or set apart for payment by the Operating Partnership at such time as the
terms and provisions of any agreement of the Operating Partnership,
including any agreement relating to its indebtedness, prohibits such
authorization, payment or setting apart for payment or provides that such
authorization, payment or setting apart for payment would constitute a
breach thereof or a default thereunder, or if such authorization or
payment shall be restricted or prohibited by law.
(iii) Distributions on the Series A Preferred Units will accumulate
whether or not the Operating 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. Accumulated but
unpaid distributions on the Series A Preferred Units will not bear
interest and holders of the Series A Preferred Units will not be entitled
to any distributions in excess of full cumulative distributions as
described above.
(iv) No full distributions will be authorized or paid or set apart
for payment on any equity securities of the Operating Partnership
ranking, as to distributions, on a parity with or junior to the Series A
Preferred Units for any period unless full distributions have been or
contemporaneously are authorized and paid or authorized and a sum
sufficient for the payment thereof is set apart for such payment on the
Series A Preferred 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 Units and the other equity securities of the Operating
Partnership ranking on a parity as to distributions with the Series A
Preferred Units, all distributions authorized upon the Series A Preferred
Units and any other equity securities of the Operating Partnership
ranking on a parity as to distributions with the Series A Preferred Units
shall be authorized pro rata so that the amount of distributions
authorized per Series A Preferred Unit and such other equity securities
shall in all cases bear to each other the same ratio that accumulated
distributions per Series A Preferred Unit and such other equity
securities (which shall not include any accumulation in respect of unpaid
distributions for prior distribution periods if such equity securities do
not have cumulative distributions) 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 Units which may be
in arrears.
(v) Except as provided in Section 3(d), unless full distributions on
the Series A Preferred Units have been or contemporaneously are
authorized and paid or authorized and a sum sufficient for the payment
thereof is set apart for payment for all past distribution periods and
the then current distribution period, no distributions (other than in
common units or other equity securities of the Operating Partnership
ranking junior to the Series A Preferred Units as to distributions and
upon liquidation) shall be authorized or paid or set aside for payment or
other distribution shall be authorized or made upon the Common Units or
any other equity securities of the Operating Partnership ranking junior
to or on a parity with the Series A Preferred Units as to distributions
or upon liquidation, nor shall any common units or any other equity
securities of the Operating Partnership ranking junior to or on a parity
with the Series A Preferred Units as to distributions or upon liquidation
be redeemed, purchased or otherwise acquired for any consideration (or
any moneys be paid to or made available for a sinking fund for the
redemption of any such units) by the Operating Partnership (except by
conversion into or exchange for other units of the Operating Partnership
ranking junior to the Series A Preferred Units as to distributions and
upon liquidation).
(vi) Any distribution payment made on Series A Preferred Units shall
first be credited against the earliest accumulated but unpaid
distribution due with respect to such units which remains payable.
(b) Liquidation Preference.
(i) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Operating Partnership (referred to
herein as a "liquidation"), the holders of the Series A Preferred Units
will be entitled to be paid out of the assets of the Operating
Partnership legally available for distribution to its unitholders
liquidating distributions, in cash or property at its fair market value
as determined by the Operating Partnership's General Partner, in the
amount of a liquidation preference of $25.00 per Unit, plus an amount
equal to any accumulated and unpaid distributions to the date of such
liquidation, before any distribution or payment is made to holders of
Common Units or any other equity securities of the Operating Partnership
ranking junior to the Series A Preferred Units as to the distribution of
assets upon a liquidation. 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 Operating Partnership.
(ii) In the event that, upon any liquidation of the Operating
Partnership, the available assets of the Operating Partnership are
insufficient to pay the amount of the liquidating distributions on all
outstanding Series A Preferred Units and the corresponding amounts
payable on all other equity securities of the Operating Partnership
ranking on a parity with Series A Preferred Units in the distribution of
assets upon a liquidation, then the holders of Series A Preferred Units
and all other such equity securities shall share ratably in any such
distribution of assets in proportion to the full liquidating
distributions to which they would otherwise be respectively entitled.
(iii) The consolidation or merger of the Operating Partnership with
or into any other entity, or the merger of another entity with or into
the Operating Partnership, or a statutory unit exchange by the Operating
Partnership, or the sale, lease or conveyance of all or substantially all
of the property or business of the Operating Partnership, shall not be
deemed to constitute a liquidation of the Operating Partnership.
(iv) The liquidation preference of the outstanding Series A
Preferred Units will not be added to the liabilities of the Operating
Partnership for the purpose of determining whether under the Delaware
Revised Uniform Limited Partnership Act a distribution may be made to
unitholders of the Operating Partnership whose preferential rights upon
dissolution of the Operating Partnership are junior to those of holders
of Series A Preferred Units.
(c) Redemption.
(i) The Operating Partnership shall redeem the Series A Preferred
Units, in such a number and at such time as Series A Preferred Stock is
redeemed by the Company, at the following redemption prices per unit if
redeemed during the twelve-month period beginning April 13 of the
applicable year, plus all accumulated and unpaid distributions thereon to
the date fixed for redemption of the Series A Preferred Stock.
Year Redemption Price Per Unit
---- -------------------------
2003................................... $25.95313
2004................................... 25.76250
2005................................... 25.57187
2006................................... 25.38124
2007................................... 25.19061
2008 and thereafter.................... 25.00
(ii) The Operating Partnership may not exercise its option to redeem
Series A Preferred Units unless the redemption price (other than the
portion thereof consisting of accumulated and unpaid distributions) is
paid solely out of the sale proceeds of equity securities of the
Operating Partnership, and from no other source. For purposes of the
preceding sentence, "equity securities" means limited partner interests
or other equity securities of the Operating Partnership, or any shares,
interest, participation or other ownership interests (however
designated), or any rights or options to purchase any of the foregoing
(other than debt securities convertible into or exchangeable for equity
securities).
(iii) At its election, the Operating Partnership, prior to the
Series A Preferred Unit Redemption Date, may irrevocably deposit the
redemption price (including accumulated and unpaid distributions) of the
Series A Preferred Units so called for redemption in trust for the
holders thereof with a bank or trust company, in which case the notice of
redemption to holders of the Series A Preferred Units to be redeemed will
(i) state the date of such deposit, (ii) specify the office of such bank
or trust company as the place of payment of the redemption price and
(iii) require such holders to surrender the certificates representing
such Series A Preferred Units at such place on or about the date fixed in
such redemption notice (which may not be later than the Series A
Preferred Unit Redemption Date) against payment of the redemption price
(including all accumulated and unpaid distributions to the Series A
Preferred Unit Redemption Date). Any moneys so deposited which remain
unclaimed by the holders of the Series A Preferred Units at the end of
two years after the Series A Preferred Unit Redemption Date will be
returned by such bank or trust company to the Operating Partnership.
(iv) From and after the Series A Preferred Unit Redemption Date
(unless the Operating Partnership defaults in payment of the redemption
price), all distributions on the Series A Preferred Units called for
redemption will cease to accumulate and all rights of the holders
thereof, except the right to receive the redemption price thereof
(including all accumulated and unpaid distributions to the Series A
Preferred Unit Redemption Date), will cease and terminate and such units
will not thereafter be transferred (except with the consent of the
Operating Partnership) on the Operating Partnership's records, and such
units shall not be deemed to be outstanding for any purpose whatsoever.
(v) Unless full distributions on all Series A Preferred Units shall
have been or contemporaneously are authorized and paid or authorized and
a sum sufficient for the payment thereof is set apart for payment for all
past distribution periods and the then current distribution period, no
Series A Preferred Units shall be redeemed unless all outstanding Series
A Preferred Units are simultaneously redeemed.
(vi) Unless full distributions on all Series A Preferred Units have
been or contemporaneously are authorized and paid or authorized and a sum
sufficient for the payment thereof is set apart for payment for all past
distribution periods and the then current distribution period, the
Operating Partnership shall not purchase or otherwise acquire, directly
or indirectly, any Series A Preferred Units (except by conversion into or
exchange for equity securities of the Operating Partnership ranking
junior to the Series A Preferred Units as to distributions and upon
liquidation).
(vii) Immediately prior to any redemption of Series A Preferred
Units, the Operating Partnership shall pay, in cash, any accumulated and
unpaid distributions to the Series A Preferred Unit Redemption Date,
unless such Series A Preferred Unit Redemption Date falls after a
Distribution Payment Record Date and prior to the corresponding
Distribution Payment Date, in which case each holder of Series A
Preferred Units at the close of business on such Distribution Payment
Record Date shall be entitled to the distribution payable on such units
on the corresponding Distribution Payment Date notwithstanding the
redemption of such units on or prior to such Distribution Payment Date.
Except as provided above, the Operating Partnership will make no payment
or allowance for unpaid distributions, whether or not in arrears, on
Series A Preferred Units for which a notice of redemption has been given.
(viii) Any Series A Preferred Units that have been redeemed shall,
after such redemption, have the status of authorized but unissued
Preferred Units, without designation as to series, until such units are
once more designated as part of a particular series by the General
Partner of the Operating Partnership.
(ix) The Series A Preferred Units will not have a stated maturity
date and will not be subject to any sinking fund or mandatory redemption
provisions.
(d) Voting Rights.
(i) Holders of the Series A Preferred Units will not have any voting
rights, except as set forth below. In any matter in which the Series A
Preferred Units are entitled to vote, including any action by written
consent, each Series A Preferred Unit shall be entitled to one vote.
(ii) So long as any Series A Preferred Units remain outstanding, the
Operating Partnership shall not, without the affirmative vote or consent
of the holders of record of at least two-thirds of the outstanding Series
A Preferred Units given in person or by proxy, either in writing or at a
meeting (such series voting separately as a class), (i) authorize or
create, or increase the authorized or issued amount of, any equity
securities ranking senior to the Series A Preferred Units with respect to
payment of distributions or the distribution of assets upon a liquidation
of the Operating Partnership or reclassify any authorized units of the
Operating Partnership into any such equity securities, or create,
authorize or issue any obligation or security convertible into or
evidencing the right to purchase any such unit or (ii) amend, alter or
repeal the provisions of the Operating Partnership Agreement, whether by
merger, consolidation or otherwise (an "Event"), so as to materially and
adversely affect any right, preference, privilege or voting power of the
Series A Preferred Units or the holders thereof; provided, however, that
the holders of the Series A Preferred Units shall not be entitled to any
voting rights in connection with an Event if as a result of such Event
(a) Series A Preferred Units remain outstanding with the terms thereof
materially unchanged or (b) the Operating Partnership is not the
surviving entity but the surviving entity issues to the holders of the
Series A Preferred Units the same number of units of a separate class of
preferred units with rights, preferences, privileges and voting powers
that are materially unchanged from the preferences, rights, privileges
and other terms of the Series A Preferred Units; and provided, further,
that (x) any increase in the amount of the authorized Series A Preferred
Units or the creation or issuance of any other series of Preferred Units
or (y) any increase in the amount of authorized units of such series, in
each case ranking on a parity with or junior to the Series A Preferred
Units with respect to payment of distributions or the distribution of
assets upon a liquidation of the Operating Partnership, shall not be
deemed to materially and adversely affect such rights, preferences,
privileges or voting powers.
(iii) The foregoing voting provisions will not apply if, at or prior
to the time when the act with respect to which such vote would otherwise
be required shall be effected, all outstanding Series A Preferred Units
shall have been converted, redeemed or called for redemption upon proper
notice and sufficient funds shall have been deposited in trust to effect
such redemption.
(e) Conversion.
(i) Subject to Section 8, Series A Preferred Units will be
convertible at any time, at the option of the holders thereof, into
Common Units at a conversion price of $28.61 per Common Unit (equivalent
to a conversion rate of .8738 Common Units for each Series A Preferred
Unit), subject to adjustment as described below (the "Conversion Price");
provided, however, that the right to convert Series A Preferred Units
called for redemption will terminate at the close of business on the
fifth business day prior to the Series A Preferred Unit Redemption Date.
(ii) To exercise the conversion right, the holder of each Series A
Preferred Unit to be converted shall surrender the certificate
representing such Series A Preferred Unit, duly endorsed or assigned to
the Operating Partnership or in blank, at the principal office of the
Operating Partnership accompanied by written notice to the Operating
Partnership that such holder elects to convert such Series A Preferred
Unit. Unless the units issuable on conversion are to be issued in the
same name as the name in which such Series A Preferred Units are
registered, in which case the Operating Partnership shall bear the
related taxes, each share surrendered for conversion shall be accompanied
by instruments of transfer, in form satisfactory to the Operating
Partnership, duly executed by the holder or such holder's duly authorized
attorney and an amount sufficient to pay any transfer or similar tax (or
evidence reasonably satisfactory to the Operating Partnership
demonstrating that such taxes have been paid).
(iii) Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date on which the
certificates representing shares of Series A Preferred Units shall have
been surrendered and such notice (and if applicable, payment of an amount
equal to the distribution payable on such shares) received by the
Operating Partnership as aforesaid, and the person or persons in whose
name or names any certificate or certificates representing Common Units
shall be issuable upon such conversion shall be deemed to have become the
holder or holders of record of the units represented thereby at such time
on such date, and such conversion shall be at the Conversion Price in
effect at such time and on such date unless the records of the Operating
Partnership shall be closed on that date, in which event such person or
persons shall be deemed to have become such holder or holders of record
at the close of business on the next succeeding day on which such records
are open, but such conversion shall be at the Conversion Price in effect
on the date on which such units have been surrendered and such notice
received by the Operating Partnership.
(iv) Holders of Series A Preferred Units at the close of business on
a Distribution Payment Record Date shall be entitled to receive the
distribution payable on such units on the corresponding Distribution
Payment Date notwithstanding the conversion of such units following such
Distribution Payment Record Date and prior to such Distribution Payment
Date. However, certificates representing Series A Preferred Units
surrendered for conversion during the period between the close of
business on any Distribution Payment Record Date and the opening of
business on the corresponding Distribution Payment Date (except units
converted after the issuance of a notice of redemption with respect to
the Series A Preferred Unit Redemption Date during such period or
coinciding with such Distribution Payment Date) must be accompanied by
payment of an amount equal to the distribution payable on the related
shares of Series A Preferred Units on such Distribution Payment Date. A
holder of Series A Preferred Units on a Distribution Payment Record Date
who (or whose transferee) tenders any such units for conversion into
Common Units on such Distribution Payment Date shall receive the
distribution payable by the Operating Partnership on such Series A
Preferred Units on such date, and the converting holder need not include
payment of the amount of such distribution upon surrender of certificates
representing such Series A Preferred Units for conversion. Except as
provided above, the Operating Partnership shall make no payment or
allowance for unpaid distributions, whether or not in arrears, on
converted units or for distribution on the Common Units that is issued
upon such conversion.
As promptly as practicable after the surrender of certificates for
Series A Preferred Units as aforesaid, the Operating Partnership shall issue
and shall deliver at such office to such holder,or on his written order, a
certificate or certificates for the number of full Common Units issuable upon
the conversion of such units in accordance with the provisions of this Section
7, and any fractional interest in respect of a Common Unit arising upon such
conversion shall be settled as provided in Section 7(e).
(v) No fractional Common Units shall be issued upon conversion of
Series A Preferred Units. Instead of any fractional Common Unit that
would otherwise be deliverable upon the conversion of a Series A
Preferred Unit, the Operating Partnership shall pay to the holder of such
unit an amount in cash in respect of such fractional interest based upon
the Current Market Price of a Common Unit on the Trading Day immediately
preceding the date of conversion. If more than one Series A Preferred
Unit shall be surrendered for conversion at one time by the same holder,
the number of full Common Units issuable upon conversion thereof shall be
computed on the basis of the aggregate number of Series A Preferred Units
so surrendered.
(vi) The Conversion Price shall be adjusted from time to time as
follows:
(1) If the Operating Partnership shall after the date on which
Series A Preferred Units are first issued (the "Issue Date") (A) pay
or make a distribution to holders of its equity securities in Common
Units, (B) subdivide its outstanding Common Units into a greater
number of units, (C) combine its outstanding Common Units into a
smaller number of units or (D) issue any equity securities by
reclassification of its Common Units, then the Conversion Price in
effect at the opening of business on the day following the record
date for the determination of unitholders entitled to receive such
distribution or at the opening of business on the day following the
day on which such subdivision, combination or reclassification
becomes effective, as the case may be, shall be adjusted so that the
holder of any Series A Preferred Unit thereafter surrendered for
conversion shall be entitled to receive the number of Common Units
that such holder would have owned or have been entitled to receive
after the happening of any of the events described above had such
units been converted immediately prior to the record date in the
case of a distribution or the effective date in the case of a
subdivision, combination or reclassification. An adjustment made
pursuant to this subsection (i) shall become effective immediately
after the opening of business on the day following such record date
(except as provided in Section 7(i) in the case of a distribution
and shall become effective immediately after the opening of business
on the day next following the effective date in the case of a
subdivision, combination or reclassification.
(2) If the Operating Partnership shall issue after the Issue
Date rights, options or warrants to all holders of Common Units
entitling them to subscribe for or purchase Common Units (or
securities convertible into or exchangeable for Common Units) at a
price per unit less than the Fair Market Value per Common Unit on
the record date for the determination of unitholders entitled to
receive such rights, options or warrants, then the Conversion Price
in effect at the opening of business on the day following such
record date shall be adjusted to equal the price determined by
multiplying (I) the Conversion Price in effect immediately prior to
the opening of business on the day following the record date for
such determination by (II) a fraction, the numerator of which shall
be the sum of (A) the number of Common Units outstanding on the
close of business on the record date for such determination and (B)
the number of units that the aggregate proceeds to the Operating
Partnership from the exercise of such rights, options or warrants
for Common Units would purchase at such Fair Market Value, and the
denominator of which shall be the sum of (A) the number of Common
Units outstanding on the close of business on the record date for
such determination and (B) the number of additional Common Units
offered for subscription or purchase pursuant to such rights,
options or warrants. Such adjustment shall become effective
immediately after the opening of business on the day following such
record date (except as provided in Section 7(i)). In determining
whether any rights, options or warrants entitle the holders of
Common Units to subscribe for or purchase Common Units at less than
the Fair Market Value, there shall be taken into account any
consideration received by the Operating Partnership upon issuance
and upon exercise of such rights, options or warrants, the value of
such consideration, if other than cash, to be determined by the
Operating Partnership's Chief Executive Officer or the General
Partner of the Operating Partnership.
(3) If the Operating Partnership shall distribute to all
holders of its Common Units any equity securities of the Operating
Partnership (other than Common Units) or evidences of its
indebtedness or assets (excluding Permitted Common Unit Cash
Distributions and those rights, options and warrants referred to in
and treated under subsection (ii) above), then the Conversion Price
shall be adjusted so that it shall equal the price determined by
multiplying (I) the Conversion Price in effect immediately prior to
the close of business on the record date for the determination of
unitholders entitled to receive such distribution by (II) a
fraction, the numerator of which shall be the Fair Market Value per
Common Unit on the record date for such determination less the then
fair market value (as determined by the Operating Partnership's
Chief Executive Officer or the General Partner of the Operating
Partnership, whose determination shall be conclusive) of the portion
of the equity securities, evidences of indebtedness or assets so
distributed applicable to one Common Unit, and the denominator of
which shall be the Fair Market Value per Common Unit on the record
date for such determination. Such adjustment shall become effective
immediately at the opening of business on the day following such
record date (except as provided in Section 7(i)). For the purposes
of this subsection (iii), the distribution of equity securities,
evidences of indebtedness or assets which are distributed not only
to the holders of Common Units on the record date for the
determination of unitholders entitled to such distribution, but also
are distributed with each Common Unit delivered to a person
converting a Series A Preferred Unit after such record date, shall
not require an adjustment of the Conversion Price pursuant to this
subsection (iii), provided that on the date, if any, on which a
person converting a Series A Preferred Unit would -------- no longer
be entitled to receive such equity securities, evidences of
indebtedness or assets with a Common Unit (other than as a result of
the termination of all such equity securities, evidences of
indebtedness or assets), a distribution of such equity securities,
evidences of indebtedness or assets shall be deemed to have occurred
and the Conversion Price shall be adjusted as provided in this
subsection (iii) (and such day shall be deemed to be "the record
date for the determination of the unitholders entitled to receive
such distribution" within the meaning of the two preceding
sentences).
(4) Except with respect to any distribution of shares of common
stock of Reckson Service Industries, Inc. as contemplated by the
Operating Partnership on the Issue Date, no adjustment in the
Conversion Price shall be required unless such adjustment would
require a cumulative increase or decrease of at least 1% in the
Conversion Price; provided, however, that any adjustments that by
reason of this subsection (iv) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment
until made; and provided, further, that any adjustment shall be
required and made in accordance with the provisions of this Section
7 (other than this subsection (iv)) not later than such time as may
be required in order to preserve the tax-free nature of a
distribution to the holders of Common Units. Notwithstanding any
other provisions of this Section 7, the Operating Partnership shall
not be required to make any adjustment of the Conversion Price for
the issuance of any Common Units pursuant to any plan providing for
the reinvestment of distributions or interest payable on securities
of the Operating Partnership and the investment of additional
optional amounts in Common Units under such plan. All calculations
under this Section 7 shall be made to the nearest cent with ($.005
being rounded upward) or to the nearest one-tenth of a share (with
.05 of a share being rounded upward), as the case may be. Anything
in this subsection (f) to the contrary notwithstanding, the
Operating Partnership shall be entitled, to the extent permitted by
law, to make such reductions in the Conversion Price, in addition to
those required by this subsection (f), as it in its discretion shall
determine to be advisable in order that any unit distributions,
subdivision, reclassification or combination of units, distribution
of rights, options or warrants to purchase units or securities, or a
distribution of other assets (other than cash distributions)
hereafter made by the Operating Partnership to its unitholders shall
not be taxable.
(vii) Except as otherwise provided for in Section7(f), if the
Operating Partnership shall be a party to any transaction (including,
without limitation, a merger, consolidation, statutory unit exchange,
tender offer for all or substantially all of the Common Units or sale of
all or substantially all of the Operating Partnership's assets) (each of
the foregoing being referred to herein as a "Transaction"), in each case
as a result of which Common Units shall be converted into the right to
receive units, stock, securities or other property (including cash or any
combination thereof), each Series A Preferred Unit, if convertible after
the consummation of the Transaction, which is not converted into the
right to receive units, stock, securities or other property in connection
with such Transaction shall thereafter be convertible into the kind and
amount of units, stock, securities and other property (including cash or
any combination thereof) receivable upon the consummation of such
Transaction by a holder of that number of Common Units into which one
Series A Preferred Unit was convertible immediately prior to such
Transaction, assuming such holder of Common Units (i) is not a Person
with which the Operating Partnership consolidated or into which the
Operating Partnership merged or which merged into the Operating
Partnership or to which such sale or transfer was made, as the case may
be (a "Constituent Person"), or an affiliate of a Constituent Person and
(ii) failed to exercise his rights of the election, if any, as to the
kind or amount of units, stock, securities and other property (including
cash or any combination thereof) receivable upon such Transaction (each,
a "Non-Electing Unit") (provided that if the kind and amount of units,
stock, securities and other property (including cash or any combination
thereof) receivable upon consummation of such Transaction is not the same
for each Non-Electing Unit, the kind and amount receivable by each
Non-Electing Unit shall be deemed to be the kind and amount receivable
per unit by a plurality of the Non-Electing Units). The Operating
Partnership shall not be a party to any Transaction unless the terms of
such Transaction are consistent with the provisions of this subsection
(g), and it shall not consent or agree to the occurrence of any
Transaction until the Operating Partnership has entered into an agreement
with the successor or purchasing entity, as the case may be, for the
benefit of the holders of the Series A Preferred Units that will contain
provisions enabling holders of Series A Preferred Units that remains
outstanding after such Transaction to convert into the consideration
received by holders of Common Units at the Conversion Price in effect
immediately prior to such Transaction. The provisions of this subsection
(g) shall similarly apply to successive Transactions.
(viii) If:
(1) the Operating Partnership shall declare a distribution on
the Common Units (other than Permitted Common Unit Cash
Distributions) or there shall be a reclassification, subdivision or
combination of the Common Units; or
(2) the Operating Partnership shall grant to the holders of
the Common Units of rights, options or warrants to subscribe for or
purchase Common Units at less than Fair Market Value; or
(3) the Operating Partnership shall enter into a Transaction;
or
(4) there shall occur the voluntary or involuntary
liquidation, dissolution or winding up of the Operating Partnership,
then the Operating Partnership shall notify the Company and shall cause
to be mailed to the holders of the Series A Preferred Units at their
addresses as shown on the records of the Operating Partnership, as
promptly as possible, but at least 15 days prior to the applicable date
hereinafter specified, a notice stating (A) the date on which a record is
to be taken for the purpose of such distribution or rights, options or
warrants, or, if a record is not to be taken, the date as of which the
holders of Common Units of record to be entitled to such distribution or
rights, options or warrants are to be determined or (B) the date on which
such reclassification, subdivision, combination, Transaction or
liquidation, dissolution or winding up is expected to become effective,
and the date as of which it is expected that holders of Common Units of
record shall be entitled to exchange their Common Units for securities or
other property, if any, deliverable upon such reclassification,
subdivision, combination, Transaction or liquidation, dissolution or
winding up. Failure to give or receive such notice or any defect therein
shall not affect the legality or validity of the proceedings described in
this Section 7.
(ix) In any case in which Section 7(f) provides that an adjustment
shall become effective on the day following the record date for an event,
the Operating Partnership may defer until the occurrence of such event
(A) issuing to the holder of any Series A Preferred Unit converted after
such record date and before the occurrence of such event the additional
Common Units issuable upon such conversion by reason of the adjustment
required by such event over and above the Common Units issuable upon such
conversion before giving effect to such adjustment and (B)
fractionalizing any Series A Preferred Unit and/or paying to such holder
any amount of cash in lieu of any fraction pursuant to Section 7(e).
(x) There shall be no adjustment of the Conversion Price in case of
the issuance of any equity securities of the Operating Partnership in a
reorganization, acquisition or other similar transaction except as
specifically set forth in this Section 7. If any action or transaction
would require adjustment of the Conversion Price pursuant to more than
one subsection of Section 7(f), only one adjustment shall be made, and
such adjustment shall be the amount of adjustment that has the highest
absolute value.
(xi) If the Operating Partnership shall take any action affecting
the Common Units, other than action described in this Section 7, that in
the opinion of the General Partner of the Operating Partnership would
materially adversely affect the conversion rights of the holders of the
Series A Preferred Units, the Conversion Price for the Series A Preferred
Units may be adjusted, to the extent permitted by law, in such manner, if
any, and at such time, as the Officers of the Operating Partnership, in
their sole discretion, may determine to be equitable in the
circumstances.
(xii) The Operating Partnership shall at all times reserve and keep
available, free from preemptive rights, for the purpose of effecting
conversion of the Series A Preferred Units, the full number of Common
Units deliverable upon the conversion of all outstanding Series A
Preferred Units not theretofore converted.
(xiii) The Operating Partnership will pay any and all documentary
stamp or similar issue or transfer taxes payable in respect of the issue
or delivery of Common Units or other securities or property on conversion
of the Series A Preferred Units pursuant hereto; provided, however, that
the Operating Partnership shall not be required to pay any tax that may
be payable in respect of any transfer involved in the issue or delivery
of Common Units or other securities or property in a name other than that
of the record holder of the Series A Preferred Units to be converted, and
no such issue or delivery shall be made unless and until the person
requesting such issue or delivery has paid to the Operating Partnership
the amount of any such tax or established, to the reasonable satisfaction
of the Operating Partnership, that such tax has been paid.
(8) Ownership Limitations. The Series A Preferred Units shall be owned and
held solely by the General Partner.
(9) General. The rights of the General Partner, in its capacity as holder of
the Series A Preferred Units, are in addition to and not in limitation on any
other rights or authority of the General Partner, in any other capacity, under
the Partnership Agreement. In addition, nothing contained herein shall be
deemed to limit or otherwise restrict any rights or authority of the General
Partner under the Partnership Agreement, other than in its capacity as the
holder of the Series A Preferred Units.
(10) Definitions.
"Business Day". The term "Business Day" shall mean any day, other than a
Saturday or Sunday, that is neither a legal holiday nor a day on which banking
institutions in The City of New York are authorized or required by law,
regulation or executive order to close.
"Current Market Price" of the common units shall be equal to the current
market value of the Company's Common Stock, par value $0.01 per share,
multiplied by the applicable Conversion Factor or any other equity security of
the Company or the Operating Partnership or any other issuer for any day shall
mean the last reported sales price, regular way, on such day, or, if no sale
takes place on such day, the average of the reported closing bid and asked
prices on such day, regular way, in either case as reported on the NYSE or, if
such security is not listed or admitted for trading on the NYSE, on the
principal national securities exchange on which such security is listed or
admitted for trading or, if not listed or admitted for trading on any national
securities exchange, on the Nasdaq National Market or, if such security is not
quoted on the Nasdaq National Market, the average of the closing bid and asked
prices on such day in the over-the-counter market as reported by Nasdaq or, if
bid and asked prices for such security on such day shall not have been
reported through Nasdaq the average of the bid and asked prices on such day as
furnished by any NYSE member firm regularly making a market in such security
selected for such purpose by the Operating Partnership's Chief Executive
Officer or the General Partner of the Operating Partnership.
"Fair Market Value" shall mean the average of the daily Current Market
Prices multiplied by the applicable Conversion Factor during the five
consecutive Trading Days selected by the Operating Partnership commencing not
more than 20 Trading Days before, and ending not later than, the earlier of
the day in question and the day before the "ex" date with respect to the
issuance or distribution requiring such computation. The term "ex-date", when
used with respect to any issuance or distribution, means the first day on
which the share of Common Stock trade regular way, without the right to
receive such issuance or distribution, on the exchange or in the market, as
the case may be, for purposes of determining that day's Current Market Price.
"Market Price". The term "Market Price" as to any date shall mean the
average of the last sales price reported on the NYSE of Common Stock,
multiplied by the applicable Conversion Factor, on the ten trading days
immediately preceding the relevant date, or if not then traded on the NYSE,
the average of the last reported sales price of the Common Stock multiplied by
the applicable Conversion Factor on the ten trading days immediately preceding
the relevant date as reported on any exchange or quotation system over which
the Common Stock may be traded, of it not then traded over any exchange or
quotation system, then the market price of the Common Stock multiplied by the
applicable Conversion Factor on the relevant date as determined in good faith
by the General Partner.
"Permitted Common Unit Cash Distributions" shall mean those cumulative
cash distributions paid with respect to the Common Units after March 31, 1998,
which are not in excess of the following: the sum of (i) the Operating
Partnership's cumulative undistributable funds from operations ("FFO"), as
determined by the General Partner of the Operating Partnership, at March 31,
1998 plus (ii) the cumulative amount of FFO, as determined by the General
Partner of the Operating Partnership, after March 31, 1998 minus (iii) the
cumulative amount of distributions accumulated or paid on any other Preferred
Units after the Issue Date.
"Person". The term "Person" shall mean an individual, Operating
Partnership, partnership, estate, trust (including a trust qualified under
Section 401(a) or 501(c)(17) of the Code), a portion of a trust permanently
set aside for or to be used exclusively for the purposes described in Section
642(c) of the Code, association, private foundation within the meaning of
Section 509(a) of the Code, joint stock company or other entity, and also
includes a group as that term is used for purposes of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended; but does not include an
underwriter which participates in a public offering of the Series A Preferred
Units or any interest therein, provided that such ownership by such
underwriter would not result in the Operating Partnership being "closely held"
within the meaning of Section 856(h) of the Code.,
"Trading Day" shall mean any day on which the securities in question are
traded on the NYSE or, if such securities are not listed or admitted for
trading on the NYSE, on the principal national securities exchange on which
such securities are listed or admitted or, if not listed or admitted for
trading on any national securities exchange, on the Nasdaq National Market or,
if such securities are not quoted on the Nasdaq National Market, in the
applicable securities market in which the securities are traded.