EXHIBIT 99.24
BOSTON PROPERTIES LIMITED PARTNERSHIP
CERTIFICATE OF DESIGNATIONS
ESTABLISHING AND FIXING THE RIGHTS, LIMITATIONS AND
PREFERENCES OF A SERIES OF PREFERRED UNITS
Reference is made to the Second Amended and Restated Agreement of Limited
Partnership (the "Partnership Agreement") of Boston Properties Limited
Partnership, a Delaware limited partnership (the "Partnership"), of which this
Certificate of Designations (this "Certificate") shall become a part.
Capitalized terms used herein and not defined herein have the meanings ascribed
thereto in the main part of the Partnership Agreement. Section references are
(unless otherwise specified) references to sections in this Certificate.
WHEREAS, Section 14.1.B(3) of the main part of the Partnership Agreement
permits the General Partner, without the consent of the Limited Partners, to
amend the Partnership Agreement for the purpose of setting forth and reflecting
in the Partnership Agreement the designations, rights, powers, duties, and
preferences of holders of any additional Partnership Interests issued pursuant
to Section 4.2.A of the main part of the Partnership Agreement; and
WHEREAS, the General Partner desires by this Certificate to so amend the
Partnership Agreement as of this 12th day of November, 1998 (the "Closing
Date").
NOW, THEREFORE, the General Partner has set forth in this Certificate the
following description of the preferences and other rights, voting powers,
restrictions, limitations as to distributions, qualifications and terms and
conditions of conversion and redemption of a class and series of Partnership
Interest to be represented by Partnership Units which shall be referred to as
"Series Two Preferred Units":
(1) Designation and Number. A series of Preferred Units, designated the
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"Series Two Preferred Units," is hereby established.
(2) Definitions. For purposes of this Certificate of Designations, the
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following terms shall have the meanings indicated:
"Cash Business Combination" means a Transaction in which the fair market
value of the aggregate consideration into which
the outstanding Common Units are or will be exchanged or converted, or
which the holders of such Units will be entitled to receive, consists of
60% or more cash. In determining whether a Transaction is a Cash Business
Combination, the following will apply: (a) if elections for the type of
consideration may be made by the holders of Common Units and cash is one of
the types of elections that may be made, it will be assumed that all
holders of Common Units elect or will elect cash, (b) the determination
shall be made in good faith by the General Partner, based on the fair
market values of the consideration to be issued in the Transaction as of
the date the definitive merger or other agreement relating thereto is
entered into, and (c) if any of the consideration to be issued in the
Transaction is a publicly traded security, the fair market value of that
security shall be the Current Market Price of such security as of the date
the definitive merger or other agreement relating thereto is entered into.
"Closing Date" shall have the meaning set forth in the recitals above.
"Conversion Price" shall mean the conversion price per Common Unit for
which the Series Two Preferred Units are convertible, as such Conversion
Price may be adjusted pursuant to Section 7 hereof. The initial Conversion
Price shall be $38.10 per REIT Share.
"Conversion Date" shall have the meaning set forth in paragraph (d) of
Section 7 hereof.
"Conversion Period" shall have the meaning set forth in paragraph (a) of
Section 7 hereof.
"Conversion Right" shall have the meaning set forth in paragraph (a) of
Section 7 hereof.
"Current Market Price" of a REIT Share or of a publicly traded security
of any other issuer for any day shall mean the last reported sales price,
regular way, on such day, or, if no sale takes place on such day, the
average of the reported closing bid and asked prices on such day, regular
way, in either case as reported on the New York Stock Exchange ("NYSE") or,
if such security is not listed or admitted for trading on the NYSE, on the
principal national securities exchange on which such security is listed or
admitted for trading or, if not listed or admitted for trading on any
national securities exchange, on the Nasdaq National Market or, if such
security is not quoted on such Nasdaq National Market, the average of the
closing bid and asked prices on such day in the over-the-counter market as
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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 Chief
Executive Officer of the Partnership or the General Partner. "Current
Market Price" of a Common Unit as of any day means the Current Market Price
of a REIT Share multiplied by the Conversion Factor, as such term is
defined in the main part of the Partnership Agreement.
"Distribution Payment Date" shall mean the fifteenth day of February, May,
August and November, in each year, commencing on November 16, 1998;
provided, however, that if any Distribution Payment Date falls on any day
other than a Business Day, the distribution payment due on such
Distribution Payment Date shall be paid on the first Business Day
immediately following such Distribution Payment Date.
"Distribution Periods" shall mean quarterly distribution periods from and
after a Distribution Payment Date and to and excluding the next succeeding
Distribution Payment Date (other than the initial Distribution Period,
which shall commence on the day after the Closing Date and end on and
exclude November 16, 1998).
"Fair Market Value" shall mean the average of the daily Current Market
Prices per REIT Share during the ten (10) consecutive Trading Days selected
by the 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 REIT Shares trade
regular way, without the right to receive such issuance or distribution, on
the exchange or in the market, as the case may be, used to determine that
day's Current Market Price.
"Forced Conversion" has the meaning set forth in Section 7(b) hereof.
"Forced Conversion Amount" shall mean the number of Series Two Preferred
Units which the General Partner may require to be converted as provided in
paragraph 7(b);
"Forced Conversion Option" shall have the meaning set forth in paragraph
(b) of Section 7 hereof.
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"Issue Date" shall mean, with respect to a Series Two Preferred Unit, the
day after the Closing Date.
"Junior Preferred Units" shall mean any class or series of Partnership
Units the holders of which are entitled to the receipt of distributions or
of amounts distributable upon liquidation, dissolution or winding up, as
the case may be, junior in priority to the holders of the Series Two
Preferred Units, but senior in priority to the holders of Common Units.
"Junior Units" shall mean the Common Units and any other class or series of
Partnership Units constituting junior units within the meaning set forth in
paragraph (a) of Section 9 hereof.
"Liquidation Preference" shall have the meaning set forth in paragraph (a)
of Section 4 hereof.
"Option Strike Date" shall have the meaning set forth in paragraph (a) of
Section 5 hereof.
"Parity Units" shall have the meaning set forth in paragraph (b) of Section
9 hereof.
"Preferred Rate" shall mean, at any given time, the rate per annum as to
which distributions accrue on each Series Two Preferred Unit, based on the
Liquidation Preference, for purposes of determining the Stated Quarterly
Distribution in effect at such time, as set forth in the following
schedule:
Time Period Preferred Rate
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November 12, 1998 to March 31, 1999 5.0%
April 1, 1999 to December 31, 1999 5.5%
January 1, 2000 to December 31, 2000 5.625%
January 1, 2001 to December 31, 2001 6.0%
January 1, 2002 to December 31, 2002 6.5%
January 1, 2003 to May 12, 2009 7.0%
May 13, 2009 and thereafter 6.0%
"Ratchet Distribution" shall mean for each Distribution Payment Date a
distribution payable, if applicable, per Series Two Preferred Unit in
respect of the Distribution Period ending on such Distribution Payment
Date. The Ratchet Distribution for each Distribution Period shall be equal
to the distribution which would have been paid in respect of such Series
Two Preferred Unit had (i) such Series Two Preferred Unit been converted
into (x) a number of Common Units determined by dividing the Liquidation
Preference by the Conversion Price in effect on such Distribution Payment
Date and any (y) Other Securities (as defined below) issuable upon such
conversion and (ii) there
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had been paid in respect of each such Common Unit and Other Securities
(including any fractional portion thereof to the fourth decimal) a
distribution (the "Regular Distribution") equal to the regular, quarterly
cash distribution paid to holders of record of Common Units and Other
Securities on that record date (the "Reference Record Date") which is
closest to the end of the calendar quarter preceding such Distribution
Payment Date. For purposes of determining the Ratchet Distribution, in the
event that a special cash distribution was paid to holders of Common Units
and Other Securities on the Reference Record Date or at any time prior to
the Reference Record Date and after the last record date for regular,
quarterly cash distributions, then in such event the Ratchet Distribution
shall include, in addition to the Regular Distribution paid in respect of
the Reference Record Date, the amount of such special cash distribution
paid in respect of each Common Unit or Other Security (for clarity, it is
noted that the effect of this sentence is to assure that in calculating the
Ratchet Distribution the holders of Series Two Preferred Units will benefit
from any cash distributions paid in respect of Common Units and Other
Securities even if such cash distributions might not be characterized as
"regular, quarterly cash distributions"). In the event that a Series Two
Preferred Unit is outstanding for only a portion of a Distribution Period,
then the Ratchet Distribution with respect to such Series Two Preferred
Unit and such Distribution Period shall be determined as provided in the
preceding sentence but shall then be adjusted by multiplying such amount by
a fraction, the numerator of which equals the number of days such Series
Two Preferred Unit had been outstanding during such period and the
denominator of which shall equal the total number of days during such
Distribution Period. As used herein, the term "Other Security" means any
security in addition to Common Units (including Junior Preferred Units)
which may be issuable to a holder of Series Two Preferred Units upon
conversion of a Series Two Preferred Unit.
"Redemption Notice" shall have the meaning set forth in paragraph (b) of
Section 5 hereof.
"Redemption Right" shall have the meaning set forth in paragraph (a) of
Section 5 hereof.
"Securities" shall have the meaning set forth in paragraph (g)(iii) of
Section 7 hereof.
"Source Agreements" shall mean that certain Master Transaction Agreement
dated September 28, 1998 by and among the General Partner, the Partnership
and, among others, the
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holders of the Series Two Preferred Units designated hereby, and each of
the other agreements contemplated therein.
"Stated Quarterly Distribution" shall mean for each Distribution Payment
Date a distribution payable, if applicable, per each Series Two Preferred
Unit in respect of the Distribution Period ending on such Distribution
Payment Date. The Stated Quarterly Distribution for each Distribution
Period shall equal the sum of the following products for each day in such
Distribution Period on which the Series Two Preferred Unit is outstanding:
(i) the Preferred Rate in effect on such day divided by 365, multiplied by
(ii) the Liquidation Preference.
"Target Amount" shall mean that number of Series Two Preferred Units having
a Liquidation Preference equal to one-sixth of the aggregate Liquidation
Preference of the Series Two Preferred Units issued under the Source
Agreements.
"Trading Day" shall mean any day on which the securities in question are
traded on the New York Stock Exchange ("NYSE"), or if such securities are
not listed or admitted for trading on the NYSE, on the principal national
securities exchange on which such securities are listed or admitted, or if
not listed or admitted for trading on any national securities exchange, on
the Nasdaq National Market, or if such securities are not quoted on such
Nasdaq National Market, in the applicable securities market in which the
securities are traded.
"Transaction" shall have the meaning set forth in paragraph (h) of Section
7 hereof.
(3) Distributions.
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(a) The holders of Series Two Preferred Units shall be entitled to
receive, in respect of each Distribution Payment Date, when, as and
if authorized and declared by the General Partner out of assets
legally available for that purpose, cumulative preferential
distributions payable in cash in an amount per Series Two Preferred
Unit equal to the greater of (i) the Stated Quarterly Distribution for
such Distribution Payment Date or (ii) the Ratchet Distribution for
such Distribution Payment Date. Such distributions shall, with respect
to each Series Two Preferred Unit, be cumulative from and including
its Issue Date, whether or not in, or with respect to, any
Distribution Period or Periods (i) such distributions are declared,
(ii) the Partnership is contractually prohibited from paying such
distributions
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or (iii) there shall be assets of the Partnership legally available
for the payment of such distributions, and shall be payable quarterly,
when, as and if authorized and declared by the General Partner, in
arrears on Distribution Payment Dates, commencing on the first
Distribution Payment Date after the Issue Date of such Series Two
Preferred Units. Distributions are cumulative from the most recent
Distribution Payment Date to which distributions have been paid,
whether or not, or with respect to, in any Distribution Period or
Periods (i) such distributions are declared, (ii) the Partnership is
contractually prohibited from paying such distributions or (iii) there
shall be assets legally available therefor. Each such distribution
shall be payable in arrears to the holders of record of the Series Two
Preferred Units, as they appear on the records of the Partnership at
the close of business on such record dates, not more than 30 days
preceding the applicable Distribution Payment Date (the "Distribution
Payment Record Date") (or, in the case of a Distribution Payment
Record Date that coincides with a record date for payment of
distributions on Common Units, not more than 60 days preceding the
applicable Distribution Payment Date), as shall be fixed by the
General Partner; provided, however, that with respect to the first
Distribution Period, the Distribution Payment Record Date for such
period will be on or after the Issue Date. Accrued and unpaid
distributions for any past Distribution Periods and any additional
amounts as provided in subsection (f) may be authorized and declared
and paid at any time, without reference to any regular Distribution
Payment Date, to holders of record on such date, not exceeding 45 days
preceding the payment date thereof (or, in the case of a record date
that coincides with a record date for payment of distributions on
Common Units, not more than 60 days preceding the applicable payment
date thereof), as may be fixed by the General Partner.
(b) The first Distribution Period with respect to the first Series Two
Preferred Units issued shall be for the period from on and after the
Closing Date to the first Distribution Payment Date of (and excluding)
November 16, 1998.
(c) So long as any Series Two Preferred Units are outstanding, no
distributions (whether in cash or in kind or upon liquidation of the
Partnership), except as described in the immediately following
sentence, shall be authorized and declared or paid on any series or
class or classes of Parity Units for any period nor
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shall any Parity Units be redeemed, purchased or otherwise acquired
for any consideration or any moneys to be paid to or made available
for a sinking fund for the redemption of any Parity Units, directly or
indirectly (except by conversion into or exchange for Parity Units or
Junior Units), unless full cumulative distributions, including, if
applicable, the further preferential distribution provided in
subsection (f), have been or contemporaneously are authorized and
declared and paid on the Series Two Preferred Units for all
Distribution Periods terminating on or prior to the distribution
payment date on (or date of purchase, redemption or other acquisition
of) such class or series of Parity Units. When distributions are not
paid in full upon the Series Two Preferred Units and any other class
or classes of Parity Units, all distributions authorized upon the
Series Two Preferred Units and any other class or classes of Parity
Units shall be authorized and declared ratably in proportion to the
respective amounts of distributions accumulated and unpaid on the
Series Two Preferred Units and such Parity Units (which shall not
include any accrual in respect of unpaid distributions for prior
distribution periods if such Parity Units do not have a cumulative
distribution).
(d) So long as any Series Two Preferred Units are outstanding, no
distributions (other than distributions paid solely in Junior Units,
or options, warrants or rights to subscribe for or purchase Junior
Units) shall be authorized and declared or paid or other distribution
authorized and declared or made upon Junior Units for any period, nor
shall any Junior Units be redeemed, purchased or otherwise acquired
(other than a redemption, purchase or other acquisition of Common
Units made for purposes of and in compliance with requirements of
employee incentive or employee benefit plans of the Partnership or the
General Partner or any of their subsidiaries), for any consideration
(or any moneys to be paid to or made available for a sinking fund for
the redemption of any Junior Units) by the Partnership, directly or
indirectly (except by conversion into or exchange for Junior Units),
unless in each case (i) the full cumulative distributions on all
outstanding Series Two Preferred Units, including, if applicable, the
further preferential distribution provided in subsection (f), and any
other Parity Units of the Partnership shall have been paid for all
past Distribution Periods with respect to the Series Two Preferred
Units and all past distribution periods with respect to such Parity
Units and (ii) sufficient funds
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shall have been paid for or irrevocably set aside and designated for
payment of the distribution due for the current Distribution Period
with respect to the Series Two Preferred Units.
(e) Without limiting the other provisions hereof, no distributions on
Series Two Preferred Units (other than liquidating distributions made
in accordance with Section 13.2 of the main part of the Partnership
Agreement and Section 4 hereof) shall be paid by the Partnership at
such time as the terms and provisions of any agreement of the
Partnership or its affiliates or subsidiaries, relating to bona fide
indebtedness for borrowed money, prohibits such declaration or payment
or provides that such declaration or payment would constitute a breach
thereof or a default thereunder, or if such declaration or payment
shall be restricted or prohibited by law (and such failure to pay
distributions on the Series Two Preferred Units shall prohibit other
distributions by the Partnership as described in Sections 3(c) and
(d)).
(f) Notwithstanding the foregoing, distributions on the Series Two
Preferred Units shall accrue whether or not the terms and provisions
set forth in Section 3(e) hereof at any time prohibit the current
payment of distributions, whether or not the Partnership has earnings,
whether or not there are funds legally available for the payment of
such distributions and whether or not such distributions are declared.
Accrued but unpaid distributions on the Series Two Preferred Units
will accumulate as of the Distribution Payment Date on which they
first become payable and a further preferential distribution at the
per annum rate then applicable for the period or periods specified in
subsection (a) above shall accrue during the period of accumulation
and be distributed in respect of such unpaid distributions until the
amount thereof and the further preferential amount thereon shall have
been distributed in full.
(g) Upon liquidation, dissolution or winding up of the Partnership, no
distributions shall be made to any series or class or classes of
Junior Units until after payment shall have been made in full to the
holders of the Series Two Preferred Units, as provided in Section
4(a).
(h) Any distribution made on the Series Two Preferred Units shall first be
credited against the further preferential distribution provided in
subsection (f)
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above and then against the earliest accrued but unpaid distribution
due with respect to such Series Two Preferred Units which remains
payable. Other than liquidating distributions described in Section 4,
the Series Two Preferred Units shall be entitled only to the
distributions on the Series Two Preferred Units as described in this
Section 3.
(4) Liquidation Preference.
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(a) In the event of any liquidation, dissolution or winding up of the
Partnership, whether voluntary or involuntary, before any payment or
distribution of the assets of the Partnership (whether capital or
surplus) shall be made to the holders of Junior Units, the holders of
the Series Two Preferred Units shall be entitled to receive Fifty
Dollars ($50.00) per Series Two Preferred Unit (the "Liquidation
Preference") or, if greater, the amount which each holder would
receive in respect of the Common Units and Other Securities and
property it would receive upon conversion of its Series Two Preferred
Units if all Series Two Preferred Units were converted pursuant to
Section 7 immediately prior to the distribution of liquidation
proceeds under the Partnership Agreement, plus an amount equal to all
distributions (whether or not earned or declared) accrued and unpaid
thereon pursuant to Section 3 to the date of final distribution to
such holder; but such holders of Series Two Preferred Units shall not
be entitled to any further payment. If, upon any such liquidation,
dissolution or winding up of the Partnership, the assets of the
Partnership, or proceeds thereof, distributable among the holders of
Series Two Preferred Units shall be insufficient to pay in full the
preferential amount aforesaid and liquidating payments on any other
Parity Units, then such assets, or the proceeds thereof, shall be
distributed among the holders of such Series Two Preferred Units and
any such other Parity Units ratably in accordance with the respective
amounts that would be payable on such Series Two Preferred Units and
any such other Parity Units if all amounts payable thereon were paid
in full.
(b) Upon any liquidation, dissolution or winding up of the Partnership,
after payment shall have been made in full to the holders of the
Series Two Preferred Units and Parity Units, as provided in this
Section 4, any series or class or classes of Junior Units shall,
subject to any respective terms and provisions applying thereto, be
entitled to receive any and all assets remaining to be paid or
distributed.
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(c) After payment of the full amount of the liquidating distributions to
which they are entitled pursuant to Sections 4(a) and (b), the holders
of Series Two Preferred Units will have no right or claim to any of
the remaining assets of the Partnership.
(d) The consolidation or merger of the Partnership with or into any other
corporation, partnership, trust or entity or of any other corporation,
partnership, trust or entity with or into the Partnership, or an
exchange of Units or partnership interests, or the sale, lease or
conveyance of all or substantially all of the property or business of
the Partnership (unless the net proceeds of any of the foregoing
transactions shall be distributed to the holders of Units rather than
reinvested), shall not be deemed to constitute a liquidation,
dissolution or winding up of the Partnership.
(5) Redemption.
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(a) Subject to adjustment as provided in this Section 5, on each of May
12, 2009; May 12, 2010; May 12, 2011; May 14, 2012; May 14, 2013; and
May 12, 2014 (each an "Option Strike Date") (i) each of the Series Two
Preferred Unit holders, upon giving prior written notice as provided
below, shall have the right (the "Redemption Right") to require that
the Partnership redeem for cash, at a redemption price of $50 per
Series Two Preferred Unit, Series Two Preferred Units held by such
holder; provided that the maximum number of Series Two Preferred Units
that may be required to be redeemed from all such holders is equal to
the Target Amount; provided, further, that a holder may not exercise
the Redemption Right for less than one thousand (1,000) Series Two
Preferred Units or, if such holder holds less than one thousand Series
Two Preferred Units, all of the Series Two Preferred Units held by
such holder; and (ii) the General Partner, upon giving prior written
notice as provided below, shall have the Redemption Right to require
the redemption for cash, at a redemption price of $50 per Series Two
Preferred Unit, of a number of Series Two Preferred Units equal to,
but not in excess of, the Target Amount (in the aggregate from all
holders); provided, however, that the General Partner may not require
the redemption by the Partnership on any Option Strike Date of more
than the lesser of (A) the Target Amount in respect of such Option
Strike Date or (B) such number of Series Two Preferred Units as shall
have an aggregate
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Liquidation Preference equal to the excess of (i) the aggregate
Liquidation Preference of the sum of the Target Amounts for all prior
Option Strike Dates and the currently applicable Option Strike Date
over (ii) the aggregate Liquidation Preference of all Series Two
Preferred Units previously converted (including Forced Conversions),
noticed for conversion on such Option Strike Date, previously
redeemed, and noticed for redemption on such Option Strike Date.
The exercise of a Redemption Right on any Option Strike Date shall not
be cumulative (i.e., the Target Amount with respect to any Option
Strike Date is the maximum number of Series Two Preferred Units
subject to mandatory redemption by either the Partnership or the
holders of Series Two Preferred Units on each Option Strike Date); any
Series Two Preferred Units that are not converted pursuant to Section
7 or redeemed pursuant to this Section 5 on or before May 12, 2014
shall remain outstanding and shall have all of the rights and
preferences set forth in this Certificate except that the provisions
of this Section 5 shall not apply to any Series Two Preferred Units
outstanding after such date.
(b) In order to exercise its Redemption Right, a holder of Series Two
Preferred Units shall deliver a notice (a "Redemption Notice," such
term to also include the notice required to be delivered by the
General Partner upon exercise of its Redemption Right) in the form
attached hereto as Exhibit B to the Partnership (with a copy to the
General Partner) not less than 40 nor more than 70 days prior to an
Option Strike Date. If a holder of Series Two Preferred Units who has
delivered a Redemption Notice pursuant to this Section 5 converts the
Units tendered for redemption prior to the redemption date, the
Redemption Notice shall be deemed revoked. The General Partner may
exercise its Redemption Right by delivering in writing a Redemption
Notice, containing the information provided in subsection (e), to each
holder of record of Series Two Preferred Units, not less than 30 nor
more than 70 days prior to an Option Strike Date.
If, pursuant to the exercise of a Redemption Right by holders of the
Series Two Preferred Units, with such redemption to be effective on an
Option Strike Date, holders tender for redemption a number of Series
Two Preferred Units having an aggregate Liquidation Preference greater
than the Target Amount, the Partnership may redeem all such Units
tendered for
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redemption or a lesser number of Units, as the General Partner
determines in its sole discretion, but not less than the Target
Amount; provided, however, that if the Partnership does not redeem all
Series Two Preferred Units so tendered for redemption, the Partnership
shall redeem Units ratably from each tendering holder in proportion to
the respective number of Units tendered. If the holders have tendered
for redemption a number of Series Two Preferred Units of less than the
Target Amount and the General Partner delivers a Redemption Notice to
redeem a number of Series Two Preferred Units greater than the number
of Units tendered for redemption by the holders, the Partnership shall
first redeem the Series Two Preferred Units of those holders
exercising their Redemption Right pursuant to this Section 5 and shall
then redeem, on a pro rata basis, Series Two Preferred Units from all
holders who hold Units after giving effect to such redemption;
provided, however, that in such case, (i) the General Partner shall
deliver a separate notice at least 30 days prior to the Option Strike
Date, containing the information provided in subsection (e), to all
holders of the Series Two Preferred Units to be so redeemed indicating
the number of Units to be so redeemed, and (ii) the total number of
Units to be redeemed (upon notice by the General Partner and the
holders, collectively) shall not exceed the Target Amount.
If the General Partner delivers a Redemption Notice to the holders of
the Series Two Preferred Units, the holders shall have the right,
subject to Section 7(a), to convert their Series Two Preferred Units
into Common Units, pursuant to Section 7, on or before the Option
Strike Date. To the extent that such Series Two Preferred Units are so
converted, the right of the General Partner to require the redemption
of Series Two Preferred Units shall be reduced by the aggregate
Liquidation Preference of the Series Two Preferred Units so converted
(and the reduction in the number of Series Two Preferred Units to be
redeemed from each holder shall be allocated first to the holders who
so elected to convert their Units and second pro rata among all other
holders).
Within two Business Days of a redemption of Series Two Preferred
Units, the Partnership shall pay the redemption price by certified
check to or on the order of those holders whose Series Two Preferred
Units have been redeemed.
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(c) Immediately prior to any redemption of Series Two Preferred Units and
as a condition to such redemption, the Partnership shall pay, in cash,
all accumulated and unpaid distributions, including the further
preferential distribution provided in Section 3(f), through the Option
Strike Date in respect of all Series Two Preferred Units, including
those Series Two Preferred Units to be redeemed. Unless full
cumulative distributions on all Series Two Preferred Units have been
paid, the Partnership may not require the Series Two Preferred Units
to be redeemed.
(d) The Assignee of any Limited Partner pursuant to Section 11 of the
main part of the Partnership Agreement may exercise the rights of such
Limited Partner pursuant to this Section 5, and such Limited Partner
shall be deemed to have assigned such rights to such Assignee and
shall be bound by the exercise of such rights by the Assignee. In
connection with any exercise of such rights by an Assignee of a
Limited Partner, the cash amount shall be paid by the Partnership
directly to such Assignee and not to such Limited Partner.
(e) A Redemption Notice shall be provided in the manner provided in
Section 12. Any defect in a Redemption Notice or in the mailing
thereof, to any particular holder, the Partnership or the General
Partner shall not affect the sufficiency of the notice or the validity
of the proceedings for redemption with respect to the other holders.
Any notice that was mailed in the manner herein provided shall be
conclusively presumed to have been duly given on the date of deemed
delivery provided in Section 12, whether or not the holder receives
the notice. Each of the General Partner's Redemption Notices shall
state, as appropriate: (1) the Option Strike Date; (2) the number of
Series Two Preferred Units to be redeemed in the aggregate from all
holders and, if fewer than all the Series Two Preferred Units held by
such holder are to be redeemed, the number of such Series Two
Preferred Units to be redeemed from such holder; and (3) that
distributions on the Series Two Preferred Units to be redeemed shall
cease to accrue on such Option Strike Date except as otherwise
provided herein. Notice having been delivered as aforesaid, from and
after the Option Strike Date (unless the Partnership shall fail to pay
the redemption price on the date required), (i) except as otherwise
provided herein, distributions on the Series Two Preferred Units so
called for redemption shall cease to accrue, (ii) said Units shall no
longer be deemed to be outstanding, and all rights of the
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holders thereof as holders of Series Two Preferred Units of the
Partnership shall cease (except the right to receive the redemption
price and the amounts required to be paid under subsection (c)).
After the redemption of Series Two Preferred Units as aforesaid, the
Partnership shall deliver to such holder, upon his written request, a
certificate of the General Partner certifying the number of Common
Units and Series Two Preferred Units held by such person immediately
after such redemption. The Partnership shall also advise each holder
as to the number of Series Two Preferred Units redeemed and the number
of Series Two Preferred Units which remain outstanding.
(f) Each Series Two Preferred Unit holder covenants and agrees with the
Partnership that all Series Two Preferred Units delivered for
redemption pursuant to this Section 5 shall be delivered to the
Partnership free and clear of all liens, and, notwithstanding anything
contained herein to the contrary, the Partnership shall not be under
any obligation to acquire Series Two Preferred Units which are or may
be subject to any liens.
(6) The rights of each Series Two Preferred Unit holder pursuant to this
Certificate arise solely from its ownership as a Limited Partner of
Partnership Interests in the Partnership and not from it being a creditor
of the Partnership and none of such rights with respect to any required
redemption shall constitute a "claim" as such term is defined in Section
101 of the United States Bankruptcy Code as in effect as of the date of
this Certificate; provided, however, that any rights in respect of such
Series Two Preferred Units shall constitute equity interests of each
Partner hereunder, it being agreed and understood that no Partner is
waiving any equity interest it has in the Partnership or any rights to
assert any such interests in any bankruptcy proceeding or otherwise.
(7) Conversion. Holders of the Series Two Preferred Units shall have the right
----------
(the "Conversion Right") to convert all or a portion of such Units into
Common Units (provided, however, that a holder may not exercise the
Conversion Right for less than one thousand (1,000) Series Two Preferred
Units or, if such holder holds less than one thousand Series Two Preferred
Units, all of the Series Two Preferred Units held by such holder), and the
General Partner shall have the right on each Option Strike Date to cause a
conversion of Series Two Preferred Units into Common Units, subject, in
each case, to the following conditions and procedures:
-15-
(a) Subject to and upon compliance with the provisions of this Section 7,
a holder of Series Two Preferred Units shall have the right, at his or
her option, at any time and from time to time during the period on or
after the earlier of (i) December 31, 2002, and (ii) the effective
time of a Cash Business Combination (the period beginning on and after
the earlier of such dates, the "Conversion Period"), to convert such
Units into the number of fully paid and non-assessable Common Units
obtained by dividing the aggregate Liquidation Preference of such
Series Two Preferred Units by the Conversion Price as in effect as of
such time (i.e. after adjustment as described in subsection (g)) by
delivering a Conversion Notice in the form attached hereto as Exhibit
A within the time period specified in paragraph (d) below and in the
manner provided in Section 12; provided, however, that the right to
deliver a conversion notice with respect to Series Two Preferred Units
called or tendered for redemption pursuant to Section 5 hereof shall
terminate on that day which is the fifth business day prior to the
applicable Option Strike Date on which such Units are to be redeemed,
unless the Partnership shall default in making any cash payment
required upon a redemption on such date as provided in Section 5
hereof. A conversion of Series Two Preferred Units specified in the
Conversion Notice shall occur automatically at the close of business
on the applicable Conversion Date without any action on the part of
the holders of Series Two Preferred Units, and immediately after the
close of business on the Conversion Date the holders of Series Two
Preferred Units who had all or a portion of their Series Two Preferred
Units converted shall be credited on the books and records of the
Partnership with the issuance as of the opening of business on the
next day of the Common Units issuable upon such conversion.
(b) If, as of an applicable Option Strike Date, the Target Amount for such
Option Strike Date has not been redeemed and/or converted (or noticed
for conversion and/or redemption on such Option Strike Date) as a
result of Series Two Preferred Unit holders and/or the General Partner
exercising Redemption Rights pursuant to Section 5 and/or such holders
exercising their conversion rights pursuant to this Section 7, the
Partnership, at the election of the General Partner and subject to and
upon compliance with the provisions of this Section 7, may convert (a
"Forced Conversion") not more than the lesser of (A) the Target Amount
in
-16-
respect of such Option Strike Date or (B) such number of Series Two
Preferred Units as shall have an aggregate Liquidation Preference
equal to the excess of (i) the aggregate Liquidation Preference of the
sum of the Target Amounts for all prior Option Strike Dates and the
currently applicable Option Strike Date over (ii) the aggregate
Liquidation Preference of all Series Two Preferred Units previously
converted, noticed for conversion by the holders on such Option Strike
Date, previously redeemed, and noticed for redemption on such Option
Strike Date (the "Forced Conversion Amount") of Series Two Preferred
Units into a number of Common Units determined in accordance with the
Conversion Price in effect on such date as determined in accordance
with subsection (a) by transmitting for delivery a Conversion Notice,
in the manner prescribed in Section 12 within one business day after
the applicable Option Strike Date, to the holders of the Series Two
Preferred Units which are to be so converted (the "Forced Conversion
Option") ratably in proportion to the Series Two Preferred Units then
outstanding from the holders thereof (after giving effect to the
redemptions and conversions otherwise noticed to occur on such Option
Strike Date); provided, further, however, that such Forced Conversion
Option may only be exercised by the Partnership if the value of the
REIT Shares, calculated on their weighted average closing price during
the 10 Trading Days prior to the second Trading Day preceding the
exercise of the Forced Conversion Option, is equal to or greater than
110% of the Conversion Price.
(c) Immediately prior to any conversion of Series Two Preferred Units, the
Partnership shall pay, in cash, all accumulated and unpaid
distributions including the further preferential distributions
provided in Section 3(f) through the Conversion Date on all Series Two
Preferred Units. A holder of Series Two Preferred Units shall have no
right with respect to any Series Two Preferred Units so converted to
receive any distributions paid after the Conversion Date with respect
to such Series Two Preferred Units and his interest in the Partnership
as to such converted Units shall be terminated; provided, however,
that in the event the Partnership is legally or contractually
prohibited from paying, or fails for any other reason to pay, such
accumulated and unpaid distributions prior to any conversion and such
holder elects to continue with and permit such conversion after notice
from the Partnership of such inability or failure, such holder shall
still be entitled to receive all such accumulated
-17-
and unpaid distributions, if any, that remain unpaid after such
conversion, as well as a further preferential distribution on such
unpaid distributions as provided in Section 3(f), which distributions
shall be paid by the Partnership as soon as it is legally and
contractually permitted to do so.
(d) After the conversion of Series Two Preferred Units as aforesaid, the
Partnership shall deliver to such holder, upon his written request, a
certificate of the General Partner certifying the number of Common
Units and Preferred Units held by such person immediately after such
conversion.
Each conversion shall be deemed to have been effected immediately
prior to the close of business on the date (the "Conversion Date")
specified in the Conversion Notice (which shall not be earlier than 5
days after mailing of the Conversion Notice nor later than sixty (60)
days after such date) or upon the Option Strike Date in the case of a
Forced Conversion pursuant to Section 7(b) and the Series Two
Preferred Units so presented for conversion shall be deemed converted
into Common Units at the close of business on such date, and such
conversion shall be in accordance with the Conversion Price in effect
on such date (unless such day is not a Business Day, in which event
such conversion shall be deemed to have become effective at the close
of business on the next succeeding Business Day) as determined in
accordance with subsection (a).
(e) No fractions of Common Units shall be issued upon conversion of the
Series Two Preferred Units. Instead of any fractional interest in a
Common Unit that would otherwise be deliverable upon the conversion of
a Series Two Preferred Unit, the Partnership shall pay to the holder
of such Series Two Preferred Unit an amount in cash based upon the
Current Market Price of Common Units on the Trading Day immediately
preceding the date of conversion. If more than one Series Two
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 Two Preferred Units so surrendered.
(f) The Assignee of any Limited Partner pursuant to Section 11 of the
main part of the Partnership Agreement may exercise the rights of such
Limited Partner pursuant to this Section 7, and such Limited Partner
shall be deemed to have assigned such rights to such Assignee and
shall be bound by the exercise of such rights by the Assignee.
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(g) The Conversion Price shall be adjusted from time to time as follows:
(i) If the Partnership shall after the Issue Date (A) pay or make a
distribution to holders of its Common Units in Common Units, (B)
subdivide its outstanding Common Units into a greater number of
Common Units, (C) combine its outstanding Common Units into a
smaller number of Common Units or (D) issue any Common Units by
reclassification of its Common Units, the Conversion Price in
effect at the opening of business on the day following the date
fixed for the determination of Common Unit holders 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 Two 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 Series Two Preferred Units
been converted immediately prior to the record date in the case
of a distribution or the effective date in the case of a
subdivision, combination, or reclassification. An adjustment made
pursuant to this subsection (g)(i) shall become effective
immediately after the opening of business on the day next
following the record date 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 and automatically
without any further required action of the Partnership or the
Series Two Preferred Unit holders.
(ii) If the Partnership shall issue after the Issue Date rights,
options or warrants to all holders of Common Units entitling them
to subscribe for or purchase Common Units (or securities
convertible into or exchangeable for Common Units) at a price per
Common Unit less than the Fair Market Value per Common Unit on
the record date for the determination of Common Unit holders
entitled to receive such rights, options or warrants, then the
-19-
Conversion Price in effect at the opening of business on the day
next following such record date shall be adjusted to equal the
price determined by multiplying (I) the Conversion Price in
effect immediately prior to the opening of business on the day
following the record date fixed for such determination by (II) a
fraction, the numerator of which shall be the sum of (A) the
number of Common Units outstanding on the close of business on
the record date fixed for such determination and (B) the number
of Common Units that the aggregate proceeds to the Partnership
from the exercise of such rights, options or warrants for Common
Units would purchase at such Fair Market Value, and the
denominator of which shall be the sum of (A) the number of Common
Units outstanding on the close of business on the date fixed for
such determination and (B) the number of additional Common Units
offered for subscription or purchase pursuant to such rights,
options or warrants. Such adjustment shall become effective
immediately upon the opening of business on the day next
following such record date (subject to paragraph (l) below). In
determining whether any rights, options or warrants entitle the
holders of Common Units to subscribe for or purchase Common Units
at less than such Fair Market Value, there shall be taken into
account any consideration received by the Partnership upon
issuance and upon exercise of such rights, options or warrants,
the value of such consideration, if other than cash, to be
determined in good faith by the General Partner.
(iii) If the Partnership shall distribute to all holders of its
Common Units any Partnership Units (other than Common Units) or
evidence of its indebtedness or assets (excluding (x) cash
distributions that were taken into account in calculating the
distribution payable under Section 3(a), and (y) cash
distributions to the extent that after giving effect to such
distributions the fair market value of the assets of the
Partnership exceed the sum of the liabilities of the Partnership,
as determined in good faith by the General Partner) or rights or
warrants to subscribe for or purchase any of its securities
(excluding those rights and warrants issued to all holders of
Common Units entitling them to subscribe for or purchase Common
Units or securities convertible into or exchangeable for Common
Units, which rights and warrants and
-20-
convertible or exchangeable securities are referred to in and
treated under subparagraph (ii) above) (any of the foregoing
being hereinafter in this subparagraph (iii) called the
"Securities"), then in each case the Conversion Price shall be
adjusted so that it shall equal the price determined by
multiplying (I) the Conversion Price in effect immediately prior
to the close of business on the date fixed for the determination
of Unit holders entitled to receive such distribution by (II) a
fraction, the numerator of which shall be the Fair Market Value
per Unit of the Common Units on the record date mentioned below
less the then fair market value (as determined by the General
Partner in good faith) of the portion of the Units or assets or
evidences of indebtedness so distributed or of such rights or
warrants applicable to one Common Unit, and the denominator of
which shall be the Fair Market Value per Unit of the Common Units
on the record date mentioned below. Such adjustment shall become
effective immediately upon the opening of business on the day
next following the record date for the determination of Unit
holders entitled to receive such distribution (subject to
paragraph (l) below). For the purposes of this subparagraph
(iii), the distribution of a Security, which is distributed not
only to the holders of the Common Units on the date fixed for the
determination of Unit holders entitled to such distribution of
such Security, but also is required to be distributed with each
Common Unit delivered to a person converting a Series Two
Preferred Unit after such determination date, shall not require
an adjustment of the Conversion Price pursuant to this
subparagraph (iii); provided that on the date, if any, on which a
person converting a Series Two Preferred Unit would no longer be
entitled to receive such Security with a Common Unit (other than
as a result of the termination of all such Securities), a
distribution of such Securities shall be deemed to have occurred,
and the Conversion Price shall be adjusted as provided in this
subparagraph (iii) (and such day shall be deemed to be "the date
fixed for the determination of the Unit holders entitled to
receive such distribution" and "the record date" within the
meaning of the two preceding sentences).
(iv) Notwithstanding the foregoing, no adjustment shall be made
pursuant to the preceding clauses (ii) and
-21-
(iii) that would result in any increase in the Conversion Price.
No adjustment in the Conversion Price shall be required unless
such adjustment would require a cumulative increase or decrease
of at least 1% in such price; provided, however, that any
adjustments that by reason of this subsection (g)(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 (g)(iv)) not later than such time as may be required
in order to preserve the tax-free nature of a distribution to the
holders of Common Units. Notwithstanding any other provisions of
this Section 7, the Partnership shall not be required to make any
adjustment of the Conversion Price for the issuance of any Common
Units pursuant to any employee benefit or compensation plan or
other plan providing for the reinvestment of distributions or
interest payable on securities of the Partnership and the
investment of additional optional amounts in Common Units under
such plan (or the issuance of any Common Units to the General
Partner in respect of a capital contribution by it resulting from
an analogous sale of its securities). All calculations under this
Section 7 shall be made to the nearest cent (with $.005 being
rounded upward) or to the nearest one-tenth of a Unit (with .05
of a Unit being rounded upward), as the case may be. Anything in
this paragraph (g) to the contrary notwithstanding, the
Partnership shall be entitled, to the extent permitted by law, to
make such adjustments in the Conversion Price (but without
adversely affecting the economic value of a Series Two Preferred
Unit), in addition to those required by this paragraph (g), as it
in its discretion shall determine to be advisable in order that
any Series Two Preferred Unit distributions, subdivision of
Series Two Preferred Units, reclassification or combination of
Series Two Preferred Units, distribution of rights, options or
warrants to purchase stock or securities, or a distribution of
other assets (other than cash distributions) hereafter made by
the Partnership to the holders of the Series Two Preferred Units
shall not be taxable.
-22-
(h) If the Partnership or the General Partner shall be a party to any
transaction (including without limitation a merger,
consolidation, unit exchange, self tender offer for all or
substantially all Common Units, sale of all or substantially all
of the Partnership's assets or recapitalization of the Common
Units and excluding any transaction as to which subparagraph
(g)(i) of this Section 7 applies) (each of the foregoing being
referred to herein as a "Transaction"), in each case as a result
of which Common Units shall be exchanged for or converted into
the right, or the holders of such Units shall otherwise be
entitled, to receive securities or other property (including cash
or any combination thereof), each Series Two Preferred Unit shall
upon the commencement of the Conversion Period be convertible
into the kind and amount of Units or securities and other
property (including cash or any combination thereof)(the "Per
Series Two Preferred Unit Merger Consideration") receivable upon
the consummation of such Transaction by a holder of that number
of Common Units into which one Series Two Preferred Unit was
convertible immediately prior to such Transaction (unless, in
connection with such Transaction, the Series Two Preferred Units
had been converted into the right to receive such consideration
(and thus, are no longer outstanding)), assuming such holder of
Common Units is not a Person with which the Partnership
consolidated or into which the Partnership merged or which merged
into the Partnership or to which such sale or transfer was made,
as the case may be (a "Constituent Person"), or an affiliate of a
Constituent Person. In the event that holders of Common Units
have the opportunity to elect the form or type of consideration
to be received upon consummation of the Transaction, prior to
such transaction the General Partner shall give prompt written
notice to each Series Two Preferred Unit holder of such election,
and each Series Two Preferred Unit holder shall also have the
right to elect, by written notice to the General Partner, the
form or type of consideration to be received upon conversion of
each Series Two Preferred Unit held by such holder following
consummation of such Transaction, and after such election the
consideration thereby elected shall be the "Per Series Two
Preferred Unit Merger Consideration" for each Series Two
Preferred Unit held by such holder or any transferee thereof. If
a holder of Series Two Preferred Units fails to make such an
election, such holder (and any of its transferees) shall receive
upon conversion of each Series Two Preferred Unit held by such
holder (or by
-23-
any of its transferees) the same Per Series Two Preferred Unit
Merger Consideration that a holder of that number of Common Units
into which one Series Two Preferred Unit was convertible
immediately prior to such Transaction would receive if such
Common Unit holder failed to make such an election. The
Partnership shall not be a party to any Transaction unless the
terms of such Transaction are consistent with the provisions of
this paragraph (h), and it shall not consent or agree to the
occurrence of any Transaction until the Partnership has entered
into an agreement with the successor or purchasing entity, as the
case may be, for the benefit of the holders of the Series Two
Preferred Units that will contain provisions enabling the holders
of the Series Two Preferred Units that remain outstanding after
such Transaction to convert their Series Two Preferred Units into
the consideration provided for herein and that shall preserve the
distribution preference, conversion, redemption, and other rights
set forth in this Certificate.
(i) If:
(i) the Partnership shall declare a distribution on the Common
Units (excluding cash distributions to the extent that after
giving effect to such distributions the fair market value of
the assets of the Partnership exceed the sum of the
liabilities of the Partnership, as determined in good faith
by the General Partner); or
(ii) the Partnership shall authorize the granting to the holders
of the Commo n Units of rights or warrants to subscribe for
or purchase any Units of any class or any other rights or
warrants; or
(iii) there shall be any reclassification of the Common Units
(other than an event to which subparagraph (g)(i) of this
Section 7 applies) or any consolidation or merger to which
the Partnership is a party and for which approval of any
Unit holders of the Partnership is required, or a unit
exchange involving the conversion or exchange of Common
Units into securities or other property, or a self tender
offer by the Partnership for all or substantially all of its
outstanding Common Units, or the sale or transfer of all or
substantially all of the assets of the Partnership as an
entirety and for which approval of any Unit holders of the
Partnership is required; or
-24-
(iv) if there shall occur the voluntary or involuntary
liquidation, dissolution or winding up of the Partnership;
then the Partnership shall cause to be mailed to the holders of
the Series Two Preferred Units at their addresses as shown on the
records of the 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 granting of rights 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 granting of rights or warrants are to be
determined or (B) the date on which such reclassification,
consolidation, merger, unit exchange, sale, transfer,
liquidation, dissolution or winding up is expected to become
effective, and the date as of which it is expected that holders
of Common Units of record shall be entitled to exchange their
Common Units for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger,
unit exchange, sale, transfer, liquidation, dissolution or
winding up. Failure to give or receive such notice or any defect
therein shall not affect the legality or validity of the
proceedings described in this Section 7.
(j) In the event that a Cash Business Combination is to be
consummated or proposed to the holders of Common Units, the
notice referred to in subparagraph (i)(iii) above shall specify
such fact and such notice shall be mailed to the holders of the
Series Two Preferred Units simultaneously with the mailing of
notice to holders of Common Units of the holding of a meeting or
written consent or making of elections with respect to the Cash
Business Combination. In such event, the holders of Series Two
Preferred Units shall be permitted to tender their Series Two
Preferred Units for conversion, in accordance with Section 7
hereof, and may condition such tender upon the consummation of
such Cash Business Combination. Any such conversion of Series Two
Preferred Units shall happen simultaneously with the consummation
of the Cash Business Combination such that holders of Series Two
Preferred Units receive, at the consummation of the Cash Business
Combination, the consideration described in Section 7(h).
(k) Whenever the Conversion Price is adjusted as herein provided, the
Partnership shall promptly file in the books and records of the
Partnership and provide to
-25-
each holder an officer's certificate setting forth the Conversion
Price after such adjustment as required by the terms hereof and
setting forth a brief statement of the facts requiring such
adjustment, which certificate shall be conclusive evidence of the
correctness of such adjustment absent manifest error. Promptly
after filing of such certificate, the Partnership shall prepare a
notice of such adjustment of the Conversion Price setting forth
the adjusted Conversion Price and the effective date such
adjustment becomes effective and shall mail such notice of such
adjustment of the Conversion Price to the holders of each Series
Two Preferred Unit at such holder's last address as shown on the
records of the Partnership.
(l) In any case in which paragraph (g) of this Section 7 provides
that an adjustment shall become effective on the day next
following the record date for an event, the Partnership may defer
until the occurrence of such event (A) issuing to the holder of
any Series Two 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) paying to such holder any amount of cash in lieu of any
fractional Common Unit.
(m) There shall be no adjustment of the Conversion Price in case of
the issuance of any Units in a reorganization, acquisition or
other similar transaction except as specifically set forth in
this Section 7. If any action would require adjustment of the
Conversion Price pursuant to more than one paragraph of this
Section 7, only one adjustment shall be made, and such adjustment
shall be the amount of adjustment that has the highest absolute
value; provided, however, that multiple actions taken at or about
the same time shall be subject to separate adjustments.
(n) If the 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 would materially adversely affect
the conversion rights of the holders of the Series Two Preferred
Units, the Conversion Price for the Series Two Preferred Units
may be adjusted, to the extent permitted by law, in such manner,
if any, and at such time, as the General Partner, in its sole
discretion, may determine to be equitable in the circumstances.
-26-
(8) Voting Rights.
-------------
(a) Holders of the Series Two Preferred Units will not have any voting
rights, except as set forth below or as otherwise from time to time
required by law.
(b) So long as any Series Two Preferred Units remain outstanding, the
Partnership shall not, without the affirmative vote of the holders of
at least a majority of the Series Two Preferred Units outstanding at
the time, given in person or by proxy, either in writing or at a
meeting (voting separately as a class), amend, alter or repeal the
provisions of the Partnership Agreement, increase the number of
authorized Series Two Preferred Units or create any additional class
or series of Preferred Units, whether by merger, consolidation or
otherwise, so as to materially and adversely affect any right,
preference, privilege or voting power of the Series Two Preferred
Units or the holders thereof in their capacity as holders of Series
Two Preferred Units; but subject, in any event, to the following
provisions:
(i) With respect to the occurrence of any merger, consolidation or
other business combination or reorganization, so long as the
Series Two Preferred Units remain outstanding with the terms
thereof materially unchanged or, if the Partnership is not the
surviving entity in such transaction, are exchanged for a
security of the surviving entity with terms that are materially
the same with respect to rights to distributions, voting,
redemption and conversion as the Series Two Preferred Units and
without any income, gain or loss expected to be recognized by the
holder upon the exchange for federal income tax purposes (and
with the terms of the Common Units or such other securities for
which the Series Two Preferred Units (or the substitute security
therefor) are convertible materially the same with respect to
rights to distributions, voting, redemption and conversion), the
occurrence of any such event shall not be deemed to materially
and adversely affect such rights, preferences, privileges or
voting powers of the holders of the Series Two Preferred Units.
(ii) Any creation or issuance of any Common Units or of any class or
series of Preferred Units, in each case ranking junior to the
Series Two Preferred Units with respect to payment of
distributions,
-27-
redemption rights and the distribution of assets upon
liquidation, dissolution or winding up, shall not be deemed to
materially and adversely affect such rights, preferences,
privileges or voting powers of the holders of the Series Two
Preferred Units.
(iii) Any creation or issuance of any series of Preferred Units (other
than an issuance of additional Series Two Preferred Units, as to
which a class vote shall be required; provided that no class vote
shall be required for any issuance of Series Two Preferred Units
in connection with or as contemplated by any of the Source
Agreements), or any increase in the amount of authorized Units of
such series, in each case ranking on a parity with the Series Two
Preferred Units with respect to payment of distributions, voting,
redemption and the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to materially and
adversely affect such rights, preferences, privileges or voting
powers of the holders of the Series Two Preferred Units if such
issuance is done (x) in connection with an issuance of
Partnership Units in exchange for non-cash assets (including,
without limitation, (i) securities, partnership interests,
membership interests or other interests in an entity and (ii)
real estate, personal property and intangibles), or to the
Company following the issuance of securities by it for such non-
cash assets and the contribution of such non-cash assets to the
Partnership or (y) in connection with a bona fide capital raising
transaction or to the Company in consideration of a cash
contribution to the Partnership following a sale of preferred
stock by the General Partner in a bona fide capital raising
transaction.
(iv) Any creation or issuance of any class or series of Preferred
Units ranking senior to the Series Two Preferred Units with
respect to the payment of distributions, redemption rights and
the distribution of assets upon liquidation, dissolution or
winding up, to the extent the issuance of such Units was in
compliance with the standard set forth in Section 9(c) hereof,
shall not be deemed to materially and adversely affect such
rights, preferences, privileges or voting powers of the holders
of the Series Two Preferred Units.
-28-
(c) In addition to the voting rights granted in paragraph (b) above, the
holders of Series Two Preferred Units shall be entitled to vote at any
time that the Limited Partners are entitled to vote according to the
Partnership Agreement. The Series Two Preferred Units shall be
entitled to vote the same number of votes as the Common Units into
which they may be converted and shall vote with the Holders of Common
Units as a single class with the Common Units.
(d) 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, will be effected, all outstanding Series Two Preferred
Units shall have been converted and/or redeemed.
(9) Ranking. The Series Two Preferred Units shall be deemed to rank:
-------
(a) Senior to any class or series of Units of the Partnership, if such
class or series shall be Common Units or if the holders of Series Two
Preferred Units shall be entitled to receipt of distributions or of
amounts distributable upon liquidation, dissolution or winding up, as
the case may be, in preference or priority to the holders of Units of
such class or series, including Junior Preferred Units ("Junior
Units");
(b) On a parity with the Series One Preferred Units, the Series Three
Preferred Units and with any other class or series of Units of the
Partnership, if the holders of such other class or series of Unit and
the Series Two Preferred Units shall be entitled to the receipt of
distributions and of amounts distributable upon liquidation,
dissolution or winding up in proportion to their respective amounts of
accrued and unpaid distributions per Unit or liquidation preferences,
without preference or priority one over the other ("Parity Units");
and
(c) Junior only to (I) any indebtedness issued by the Partnership and (II)
senior preferred units issued only to the General Partner having the
same distribution rate, term, preferences and other material terms
(including conversion rights) as preferred shares of stock (A) issued
only for cash by the General Partner in a public offering, or (B)
issued only for cash or property in an arm's length transaction (x) to
one or more institutional investors who are (but for the preferred
shares so issued) not affiliated with the
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Partnership, the General Partner or any Affiliate (as defined in
Section 10) thereof and (y) not in connection with any other
transaction or transactions with any of such Affiliates and (z) which
would be permitted by Section 10 if such preferred shares were Junior
Preferred Units, and (C) in either case, the entire cash proceeds (net
of any arm's length commissions paid to third parties who are not
Affiliates) of which are contributed by the General Partner to the
Partnership and used by the Partnership solely for (i) the acquisition
of assets to be held in the Partnership's business, (ii) capital
expenditures or maintenance expenses in respect of assets held by the
Partnership, (iii) other ordinary course expenses of the Partnership,
or (iv) repayment of indebtedness of the Partnership (including
indebtedness convertible into Junior Preferred Units or Common Units),
and (v) none of which proceeds are used (AA) to purchase, redeem,
retire or otherwise acquire directly or indirectly any Junior
Preferred Units, Common Units, or shares of preferred stock junior to
the Series A Preferred Stock of the General Partner or common stock
issued by the General Partner, or options, warrants, rights to
purchase or any other securities convertible into the foregoing (other
than debt repayable pursuant to subclause (iv)) or (BB) to make
distributions or to pay dividends in respect of any securities
described in subclause (AA). Any references to the term "Affiliate" in
this Section 9(c) (including by way of the cross-reference and
incorporation in clause (z) of the preceding sentence) shall have the
meaning given thereto in the Amended and Restated By-laws of the
General Partner as of the date hereof (except that the 5% threshold
referred to therein shall be deemed for these purposes to be a 10%
threshold).
(10) Junior Preferred Units. The Partnership may, at its option, issue Junior
----------------------
Preferred Units in exchange for arm's length consideration, the adequacy of
such consideration to be determined in good faith by the Board of Directors
of the General Partner; provided, however, that the Partnership may not,
without the consent of holders of a majority of the Series Two Preferred
Units, (i) issue Junior Preferred Units to any Affiliate (as such term is
defined in the Amended and Restated By-Laws of the General Partner as of
the date hereof) of the General Partner or the Partnership, (ii) distribute
Junior Preferred Units to any holder of Common Units, (iii) issue Junior
Preferred Units ratably to holders of Common Units for cash or any other
consideration, or (iv) issue Junior Preferred Units in exchange for Common
Units. Notwithstanding the foregoing, in connection with
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the General Partner's issuance of preferred shares of stock, the
Partnership may issue Junior Preferred Units to the General Partner having
the same distribution rate, term, preferences and other material terms as
such preferred shares, provided the issuance of such preferred shares would
not violate this Section 10 if such shares were Junior Preferred Units and
such issuance would comply with the requirements of Section 9 (c) (II) if
they were senior preferred shares (but without giving effect to the word
"institutional" in clause (B)(x) of Section 9(c)(II)).
(11) Allocation of Nonrecourse Debt. The provisions of that certain Tax
------------------------------
Reporting Agreement (including but not limited to paragraphs 3 and 4
thereof) dated the date hereof among the Partnership and such holders are
hereby incorporated herein by reference.
(12) Notices. All notices, demand, requests or other communications which may
-------
be or are required to be given, served or sent hereunder will be in writing
and delivered by certified U.S. mail, return receipt required, with postage
prepaid, or by nationally recognized overnight courier service that
provides tracking and proof of receipt. Notices shall be deemed delivered
upon the earlier of (i) delivery, (ii) refusal of delivery by addressee,
(iii) two Business Days after deposit in the U.S. Mails in the case of
certified U.S. mail, or (iv) one Business Day after deposit with a
nationally recognized overnight courier. Notices to Series Two Preferred
Unit holders shall be sent to their address of record with the Partnership.
Any Series Two Preferred Unit holder may change its address of record by
written notice as given as aforesaid. Notices delivered to the Partnership
shall be addressed to Boston Properties Limited Partnership, Attn.: Chief
Financial Officer, ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ or to such other
address as the Partnership may have notified holders in the manner provided
in this Section 12. Notices to be delivered to the General Partner shall
be addressed to Boston Properties, Inc., Attn: Chief Financial Officer,
▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or to such other address as the
General Partner may have notified holders in the manner provided in this
Section 12.
(13) Section 8.6.C of Partnership Agreement. The provisions of Section 8.6.C of
--------------------------------------
the main part of the Partnership Agreement shall not apply to Series Two
Preferred Units tendered or required to be tendered pursuant to Section 5,
which shall control over any other provision of the Partnership Agreement.
The provisions of Section 8.6.C of the Partnership Agreement also shall not
apply to any Common Units that may be issued upon a conversion of Series
Two
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Preferred Units ("Conversion Units"). For clarity, it is noted that the
effect of this provision is that the restriction on the Redemption Right
set forth in Section 8.6.C of the main part of the Partnership Agreement
shall not apply to Conversion Units such that if a holder of a Conversion
Unit presents a Conversion Unit for redemption and the delivery of REIT
Shares to such holder is prohibited under the Certificate of Incorporation
of the Company because such delivery would cause such holder to violate the
Ownership Limit, then (i) the Company may not exercise its rights under
Section 8.6.B to acquire such Conversion Unit for the REIT Shares Amount
unless the Company waives or modifies the Ownership Limit applicable to
such holder and (ii) if the Company does not so waive or modify the
Ownership Limit then the Partnership must pay such holder the applicable
Cash Amount to redeem such holder's Conversion Unit.
(14) In the event this Certificate of Designation is amended or modified by the
parties hereto, the holders of the Series Three Preferred Units issued by
the Partnership and the Series A Convertible Redeemable Preferred Stock
issued by the General Partner in accordance with the Source Agreements
shall each have the right to elect, by vote of a majority in interest of
such securities, to adopt amendments or modifications of their respective
securities comparable to the amendments or modifications of this
Certificate, and in the event of any modification or amendment of such
securities, the holders of Series Two Preferred Units shall have the right
to elect, by vote of a majority in interests of the Series Two Preferred
Units, to adopt amendments or modifications of this Certificate of
Designation comparable to amendments and modifications of such securities.
The Partnership and the General Partner agree for the benefit of the
holders of Series Two Preferred Units that neither of them shall permit the
amendment or modification of such other securities without causing this
Section 14 to be given full effect, and the Partnership and the General
Partner shall take such action as reasonably appropriate or necessary to
give full effect to this Section 14.
IN WITNESS WHEREOF, Boston Properties, Inc., as General Partner of the
Partnership, has caused this Certificate of Designations to become effective,
and the Partnership Agreement is hereby amended by giving effect to the terms
set forth herein.
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BOSTON PROPERTIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President
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Exhibit A to the Certificate of Designations for the Series Two Preferred Units
NOTICE OF ELECTION BY PARTNER TO CONVERT
SERIES TWO PREFERRED UNITS INTO COMMON UNITS
The undersigned Series Two Preferred Unit holder hereby (i) elects to
convert the number of Series Two Preferred Units in Boston Properties Limited
Partnership (the "Partnership") set forth below into Common Units in accordance
with the terms of the Second Amended and Restated Agreement of Limited
Partnership of the Partnership and the Certificate of Designations relating to
the Series Two Preferred Units that is a part thereof; and (ii) directs that any
cash in lieu of fractional Common Units that may be deliverable upon such
conversion be delivered to the address specified below. The undersigned hereby
represents, warrants, and certifies that the undersigned (a) has title to such
Series Two Preferred Units, free and clear of the rights or interests of any
other person or entity other than the Partnership; (b) has the full right,
power, and authority to cause the conversion of such Series Two Preferred Units
as provided herein; and (c) has obtained the consent or approval of all persons
or entities, if any, having the right to consent or approve such conversion.
Name of Series Two Preferred Unit holder: ___________________________________
(Please Print: Exact Name as
Registered with Partnership)
Date of this Notice:_________________________
Date the Series Two Preferred Units are to be converted:________________/1/
Number of Series Two Preferred Units to be converted:_________________
_____________________________________________
(Signature of Limited Partner: Sign Exact
Name as Registered with Partnership)
_____________________________________________
(Street Address)
_____________________________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
_____________________________________________
________________________
/1/ Not earlier than 15 days nor later than 60 days after the date this
Notice is deposited in the U.S. mails (certified mail, postage prepaid, return
receipt requested) or deposited with a nationally recognized overnight courier
guaranteeing next business day delivery.
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Exhibit B to the Certificate of Designations for the Series Two Preferred Units
NOTICE OF ELECTION BY PARTNER TO REDEEM
SERIES TWO PREFERRED UNITS FOR CASH
The undersigned Series Two Preferred Unit holder hereby (i) elects to redeem
the number of Series Two Preferred Units in Boston Properties Limited
Partnership (the "Partnership") set forth below for the redemption price
determined in accordance with the terms of the Second Amended and Restated
Agreement of Limited Partnership of the Partnership and the Certificate of
Designations (the "Certificate") relating to the Series Two Preferred Units that
is a part thereof; and (ii) directs that such redemption price be delivered by
certified check to the address specified below. The undersigned hereby
represents, warrants, and certifies that the undersigned (a) has title to such
Series Two Preferred Units, free and clear of the rights or interests of any
other person or entity other than the Partnership; (b) has the full right,
power, and authority to cause the redemption of such Series Two Preferred Units
as provided herein; and (c) has obtained the consent or approval of all persons
or entities, if any, having the right to consent or approve such redemption.
The undersigned hereby acknowledges that, except as provided in the Certificate,
distributions on the Series Two Preferred Units to be redeemed shall cease to
accrue on the redemption date indicated below.
Name of Series Two Preferred Unit holder: ___________________________________
(Please Print: Exact Name as
Registered with Partnership)
Date of this Notice:_________________________
Option Strike Date on which the Series Two Preferred Units are to be
redeemed:________________
Number of Series Two Preferred Units to be redeemed:_________________
_____________________________________________
(Signature of Limited Partner: Sign Exact
Name as Registered with Partnership)
_____________________________________________
(Street Address)
_____________________________________________
(City) (State) (Zip Code)
Signature Guaranteed by:
_____________________________________________
Note: Redemptions are subject to reduction and proration as provided in the
Certificate of Designations and the Partnership Agreement in respect of
the Series Two Preferred Units.
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