1
EXHIBIT 3.1
SECOND AMENDMENT TO SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
▇▇▇▇▇▇▇ PROPERTIES, L.P.
This Second Amendment ("Second Amendment") to the Second Amended and
Restated Agreement of Limited Partnership of ▇▇▇▇▇▇▇ Properties, L.P., a
California limited partnership, dated as of October 13, 1997 (the "Partnership
Agreement"), as amended by the First Amendment, dated as of October 13, 1997, is
executed and made effective for all purposes as of this 20th day of April, 1998
(the "Effective Date"), by and between ▇▇▇▇▇▇▇ Properties, Inc., a Maryland
corporation, the General Partner of the Partnership, and Belair Capital Fund LLC
(the "Initial Series D Limited Partner").
WHEREAS, Section 4.3 of the Partnership Agreement provides that the General
Partner may, without the consent of any Limited Partner, from time to time,
cause the Partnership to issue Additional Units to a Person in one or more
classes, or one or more series of any of such classes, with such designations,
preferences and relative, participating, optional or other special rights,
powers and duties, including, without limitation, rights, powers and duties
senior to the Limited Partners' Partnership Interests, and, if necessary, admit
such Person as an Additional Limited Partner, in exchange for the Capital
Contribution by such Person of cash and/or property;
WHEREAS, pursuant to the terms of that certain Contribution Agreement dated
as of April 20, 1998 among the Partnership, the General Partner of the
Partnership and the Initial Series D Limited Partner (as amended from time to
time, the "Belair Contribution Agreement"), the Initial Series D Limited Partner
is concurrently herewith making a Capital Contribution to the Partnership of
$75,000,000 in cash (the "Series D Capital Contribution");
WHEREAS, the General Partner and the Initial Series D Limited Partner
desire to enter into this Second Amendment to set forth the terms and conditions
on which the Initial Series D Limited Partner shall make the Series D Capital
Contribution and to amend certain other provisions of the Partnership Agreement
as set forth herein;
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto hereby agree as follows:
-1-
2
1. Definitions.
(a) Capitalized terms used herein, unless otherwise defined herein,
shall have the same meanings as set forth in the Partnership Agreement.
(b) Section 1.1 of the Partnership Agreement is hereby amended to add
the following defined terms and phrases:
"Business Day" shall mean each day, other than a Saturday or a Sunday,
which is not a day on which banking institutions in New York, New York are
authorized or required by law, regulation or executive order to close.
"Charter" shall have the meaning set forth in Section 6.2(g) hereof.
"Excess Stock Purchase Distribution" shall have the meaning set forth in
Section 6.2(h) hereof.
"Initial Series D Limited Partner" shall have the meaning provided in the
introductory paragraph of this Second Amendment.
"PTP" shall mean a "publicly traded partnership" within the meaning of Code
Section 7704.
"Series D Distribution Payment Date" shall mean the last day of March,
June, September and December of each year.
"Series D Excess Units" shall have the meaning set forth in Section 11.4
hereof.
"Series D Exchange Price" shall have the meaning set forth in Section 11.4
hereof.
"Series D Exercise Notice" shall mean a notice in the form attached hereto
as Schedule 1.
"Series D Junior Units" shall have the meaning set forth in Section 6.2(g)
hereof.
"Series D Limited Partner" shall mean the Initial Series D Limited Partner
and any Substituted Limited Partner that owns a Series D Preferred Unit.
-2-
3
"Series D Parity Preferred Units" shall be used to refer to any class or
series of Partnership Interests of the Partnership now or hereafter authorized,
issued or outstanding expressly designated by the Partnership to rank on a
parity with the Series D Preferred Units with respect to distributions or rights
upon liquidation, dissolution or winding-up of the Partnership, or both, as the
context may require, including the Series A Preferred Interest, the Series B
Preferred Interest, the Series C Preferred Interest, the Series D Preferred
Interest and the WCB Partnership Units.
"Series D Preferred Interest" shall mean the interest in the Partnership
received by the General Partner in connection with the issuance of shares of
Series D Preferred Stock, as and when issued, which Series D Preferred Interest
shall replace the exchanged Series D Preferred Units exchanged for Series D
Preferred Stock and include the right to receive preferential distributions and
certain other rights as set forth in this Agreement.
"Series D Preferred Return" shall mean with respect to a Series D Preferred
Unit an amount equal to 7.6875% per annum, determined on the basis of a 360 day
year of twelve 30 day months (or actual days for any month which is shorter than
a full monthly period), cumulative to the extent not distributed for any
quarterly distribution period pursuant to Section 6.2 of the Partnership
Agreement, of the Series D Preferred Unit Issue Price for the outstanding Series
D Preferred Units, commencing on the date of issuance of such Series D Preferred
Units.
"Series D Preferred Stock" shall have the meaning set forth in Section 11.4
hereof.
"Series D Preferred Unit Issue Price" shall mean $50.00.
"Series D Preferred Units" shall mean the Additional Units to be received
by the Series D Limited Partner in exchange for the Series D Capital
Contribution, which Series D Preferred Units shall include the right to receive
certain preferential distributions and additional rights as set forth in this
Second Amendment.
"Series D Redemption Price" shall have the meaning set forth in Section
4.14(a) hereof.
"Series D Rights" shall have the meaning set forth in Section 11.4 hereof.
2. The definition of "Percentage Interest" shall be modified to mean,
with respect to any Partner, "the undivided percentage ownership interest of
such Partner in the Partnership, as determined by dividing the number of
Partnership Units (other than
-3-
4
Series D Preferred Units) owned by such Partner by the total number of
Partnership Units (other than Series D Preferred Units) then outstanding."
3. The definition of "Standard Partnership Units" shall be modified to
mean "all Partnership Units other than WCB Partnership Units and Series D
Partnership Units."
4. Pursuant to Section 4.7 of the Partnership Agreement, the Initial
Series D Limited Partner is hereby admitted to the Partnership as a Limited
Partner, and the name of the Initial Series D Limited Partner is hereby recorded
in the books and records of the Partnership, effective as of the date first
written above. By executing this Second Amendment, the General Partner hereby
consents to the admission of the Initial Series D Limited Partner as a Limited
Partner in the Partnership.
5. The Partnership hereby issues to the Initial Series D Limited Partner
1,500,000 Series D Preferred Units.
6. The Initial Series D Limited Partner hereby agrees to be subject and
bound at all times to all of the terms and conditions of the Partnership
Agreement, as now in effect, as amended hereby or as hereafter amended. Without
limitation of the foregoing, the Initial Series D Limited Partner acknowledges
and agrees that it is bound by Article XII of the Partnership Agreement which
provides for the arbitration of disputes arising under the Partnership Agreement
and is deemed to have made all of the representations, warranties,
acknowledgments, waivers and agreements set forth in Sections 13.12, 13.13 and
13.14 of the Partnership Agreement; provided, however, that nothing set forth in
Section 13.12 of the Partnership Agreement and this Section 6 shall limit any of
the representations, warranties and agreements made by the General Partner and
the Partnership in the Belair Contribution Agreement and the General Partner and
the Partnership acknowledge and agree to such reliance upon such
representations, warranties and agreements. Each of the Company and the Initial
Series D Limited Partner represent to the other that it is not aware of any
facts or circumstances that would cause the restrictions on transfer set forth
in Section 9.3 of the Partnership Agreement not to be satisfied.
7. Section 4.3(c) of the Partnership Agreement is hereby modified by
adding the phrase "or Preferred Stock" after the phrase "of Common Stock" the
first time it appears in the second line and the only time it appears in the
fourth and fifth lines.
8. Section 4.4 of the Partnership Agreement is hereby modified by adding
the phrase "or Preferred Stock" after the phrase "Common Stock" each of the
three times it appears.
-4-
5
9. Section 4.10 of the Partnership Agreement is hereby modified by adding
to the end of the first sentence the phrase "and the Series A Percentage
Interest had been cancelled in proportion to the shares of Series A Preferred
Stock so converted."
10. A new Section 4.14 is hereby added to the Partnership Agreement as
follows:
4.14 Redemption of Series D Preferred Units. (a) Right of Optional
Redemption. The Series D Preferred Units may not be redeemed prior to April
20, 2003. On or after such date, the Partnership shall have the right to
redeem the Series D Preferred Units, in whole or in part, at any time or
from time to time, upon not less than 30 nor more than 60 days' written
notice, at a redemption price, payable in cash, equal to the Capital
Account balance of the holders of Series D Preferred Units (the "Series D
Redemption Price"); provided, however, that no redemption pursuant to this
Section 4.14 will be permitted if the Series D Redemption Price does not
equal or exceed the original Capital Contribution of such holders plus the
cumulative Series D Preferred Return, whether or not declared, to the
redemption date to the extent not previously distributed. If fewer than all
of the outstanding Series D Preferred Units are to be redeemed, the Series
D Preferred Units to be redeemed shall be selected pro rata (based on the
percentage of the aggregate number of Series D Preferred Units that the
total number of Series D Preferred Units held by a holder represents) (as
nearly as practicable without creating fractional units).
(b) Limitation on Redemption. (i) The Series D Redemption Price
of the Series D Preferred Units (other than the portion thereof consisting
of accumulated but unpaid distributions) will be payable solely out of the
sale proceeds (without giving effect to any temporary use of such proceeds)
of capital stock of the General Partner, which will be contributed by the
General Partner to the Partnership as an additional Capital Contribution,
or out of the sale of Limited Partnership Interests and from no other
source. For purposes of the preceding sentence, "capital stock" means any
equity securities (including Common Stock and Preferred Stock (as such
terms are defined in the Charter)), depositary shares, participations or
other ownership interests (however designated) and any rights (other than
debt securities convertible into or exchangeable for equity securities),
warrants or options to purchase any of the foregoing.
(ii) The Partnership may not redeem fewer than all of the
outstanding Series D Preferred Units unless all accumulated and unpaid
distributions have been
-5-
6
paid on all Series D Preferred Units for all quarterly distribution periods
terminating on or prior to the date of redemption.
(c) Procedures for Redemption. (i) Notice of redemption will be
given by mail and telecopier (if possible) in accordance with Section 13.1
of the Partnership Agreement, not less than 30 nor more than 60 days prior
to the redemption date, addressed to the respective holders of record of
the Series D Preferred Units at their respective addresses as they appear
in the records of the Partnership. No failure to give or defect in such
notice shall affect the validity of the proceedings for the redemption of
any Series D Preferred Units except as to the holder to whom such notice
was not given. In addition to any information required by law, each such
notice shall state: (i) the redemption date, (ii) the Series D Redemption
Price, (iii) the aggregate number of Series D Preferred Units to be
redeemed and if fewer than all of the outstanding Series D Preferred Units
are to be redeemed, the number of Series D Preferred Units to be redeemed
held by such holder, which number shall equal such holder's pro rata share
(based on the percentage of the aggregate number of outstanding Series D
Preferred Units that the total number of Series D Preferred Units held by
such holder represents) of the aggregate number of Series D Preferred Units
to be redeemed, (iv) the place or places where such Series D Preferred
Units are to be surrendered for payment of the Series D Redemption Price,
(v) that distributions on the Series D Preferred Units to be redeemed will
cease to accumulate on such redemption date and (vi) that payment of the
Series D Redemption Price will be made upon presentation and surrender of
such Series D Preferred Units and a duly executed certificate in the form
attached hereto as Exhibit J-1.
(ii) The redemption price shall be payable to the holders of the
Series D Preferred Units upon presentation and surrender of the Series D
Preferred Units by such holders and delivery of a duly executed certificate
in the form attached hereto as Exhibit J-1 at the place designated in the
notice of redemption. If the Series D Preferred Units are evidenced by a
certificate and if fewer than all Series D Preferred Units evidenced by any
certificate are being redeemed, a new certificate shall be issued upon
surrender of the certificate evidencing all Series D Preferred Units,
evidencing the unredeemed Series D Preferred Units without cost to the
holder thereof. On and after the date of redemption, distributions will
cease to accumulate on the Series D Preferred Units or portions thereof
called for redemption, unless the Partnership defaults in the payment
thereof. If any date fixed for redemption of Series D Preferred Units is
not a Business Day, then payment of the Series D Redemption Price payable
on such date will be made on the next succeeding day that is a Business Bay
(and without any interest or other payment in respect of any such delay)
except that, if such Business Day falls in the next calendar year, such
payment will be made on the immediately preceding
-6-
7
Business Day, in each case with the same force and effect as if made on
such date fixed for redemption. If payment of the Series D Redemption Price
is improperly withheld or refused and not paid by the Partnership,
distributions on such Series D Preferred Units will continue to accumulate
from the original redemption date to the date of payment, in which case the
actual payment date will be considered the date fixed for redemption for
purposes of calculating the applicable Series D Redemption Price.
11. Section 6.2(a)(i) of the Partnership Agreement is hereby deleted in
its entirety, and the following is hereby substituted in the place thereof:
(i) First, pro rata (in the proportion that amounts due and
unpaid pursuant to each of clause (x), clause (y) and clause (z) bear to
the total amounts due and unpaid pursuant to clause (x), clause (y) and
clause (z) in the aggregate) (x) to the General Partner, on account of the
Series A Preferred Interest, the Series B Cumulative Redeemable Preferred
Interest, the Series C Cumulative Redeemable Preferred Interest and the
Series D Preferred Interest on a pro rata basis, until the total amount of
distributions made to the General Partner pursuant to this subparagraph (i)
equals the total amount of accrued but unpaid dividends (if any) on the
Series A Preferred Stock, the Series B Cumulative Redeemable Preferred
Stock, the Series C Cumulative Redeemable Preferred Stock and the Series D
Preferred Stock as of the date of such distribution, (y) to the WCB Limited
Partners, on account of the WCB Partnership Units, an amount equal to the
sum of [1] the WCB Preferred Return as to such period plus [2] the accrued
but unpaid WCB Preferred Return in respect of any prior period and (z) to
the Series D Limited Partners, on account of the Series D Preferred Units
held by such Series D Limited Partners, an amount equal to the sum of [1]
the Series D Preferred Return as to such period plus [2] the accrued but
unpaid Series D Preferred Return in respect of any prior period;
12. New Sections 6.2(f), (g) and (h) are hereby added to the Partnership
Agreement as follows:
(f) Distributions on the Series D Preferred Units will accumulate
whether or not the terms and provisions of any agreement of the
Partnership, including any agreement relating to its indebtedness, at any
time prohibit the current payment of distributions, whether or not the
Partnership has earnings, whether or not there are funds legally available
for the payment of such distributions and whether or not such distributions
are authorized. Distributions on the Series D Preferred Units are payable
on the Series D Distribution Payment
-7-
8
Date. If any date on which distributions are to be made on the Series D
Preferred Units is not a Business Day, then payment of the distribution to
be made on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any
such delay) except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on
such date. Distributions on the Series D Preferred Units on account of
arrears for any past distribution periods may be declared and paid at any
time. Accumulated and unpaid distributions on the Series D Preferred Units
will not bear interest.
(g) So long as any Series D Preferred Units are outstanding,
notwithstanding anything to the contrary set forth in clauses (c), (d) and
(e) above, no distribution of cash or other property shall be authorized,
declared, paid or set apart for payment on or with respect to any class or
series of Partnership Interest of the Partnership ranking junior as to the
payment of distributions to the Series D Preferred Units (collectively,
"Series D Junior Units"), nor shall cash or other property be set aside for
or applied to the purchase, redemption or other acquisition for
consideration of any Series D Preferred Units, any Series D Parity
Preferred Units or any Series D Junior Units, unless, in each case, all
distributions accumulated for prior quarterly distribution periods on all
Series D Preferred Units and all classes and series of outstanding Series D
Parity Preferred Units have been paid in full. The foregoing sentence will
not prohibit (i) distributions payable solely in Series D Junior Units,
(ii) the conversion of Series D Junior Units or Series D Parity Preferred
Units into Partnership Interests of the Partnership ranking junior to the
Series D Preferred Units as to distributions, (iii) the exchange of Series
D Junior Units or Series D Parity Preferred Units of the Partnership into
capital stock of the General Partner and the corresponding issuance of
Series D Junior Units or Series D Parity Preferred Units, as applicable, to
the General Partner or (iv) the redemption of Partnership Interests
corresponding to any Series D Preferred Stock, Parity Stock (as defined in
the Articles Supplementary with respect to the Series D Preferred Stock) or
Junior Stock (as defined in the Articles Supplementary with respect to the
Series D Preferred Stock) to be purchased by the General Partner pursuant
to Article NINTH of the Articles of Incorporation of the General Partner
(the "Charter"), provided that such redemption shall be upon the same terms
as the corresponding purchase pursuant to Article NINTH of the Charter.
(h) Notwithstanding the foregoing, the General Partner may, in its
sole discretion, make one or more special distributions to itself, alone,
for the sole purpose of, and in an amount no greater than such amount as
will be used by the General Partner for, the purchase of all or any portion
of any capital stock
-8-
9
pursuant to Article NINTH of the Charter (any such distribution shall be
referred to as an "Excess Stock Purchase Distribution"). There shall be no
adjustment of the then current Percentage Interests of the Partners on
account of any Excess Stock Purchase Distribution.
13. A new Section 11.4 is hereby added to the Partnership Agreement as
follows:
11.4 Series D Rights. (a) Right to Exchange. (i) Series D Preferred
Units will be exchangeable in whole or in part at anytime on or after April
20, 2008, at the option of the holders thereof, for authorized but
previously unissued shares of Series D Cumulative Redeemable Preferred
Stock of the General Partner (the "Series D Preferred Stock") at an
exchange rate of one share of Series D Preferred Stock for one Series D
Preferred Unit, subject to adjustment as described below (the "Series D
Exchange Price"), provided that the Series D Preferred Units will become
exchangeable at any time, in whole or in part, at the option of the holders
of Series D Preferred Units for Series D Preferred Stock if (y) at any time
full distributions shall not have been timely made on any Series D
Preferred Unit with respect to six (6) prior quarterly distribution
periods, whether or not consecutive, provided, however, that a distribution
in respect of Series D Preferred Units shall be considered timely made if
made within two (2) Business Days after the applicable Series D
Distribution Payment Date if at the time of such late payment there shall
not be any prior quarterly distribution periods in respect of which full
distributions were not made or (z) upon receipt by a holder or holders of
Series D Preferred Units of (A) notice from the General Partner that the
General Partner or a subsidiary of the General Partner has taken the
position that the Partnership is, or upon the occurrence of a defined event
in the immediate future will be, a PTP and (B) an opinion rendered by a
nationally recognized counsel familiar with such matters addressed to a
holder or holders of Series D Preferred Units, that the Partnership is or
likely is, or upon the occurrence of a defined event in the immediate
future will be or likely will be, a PTP. In addition, the Series D
Preferred Units may be exchanged for Series D Preferred Stock, in whole or
in part, at the option any holder prior to April 20, 2008 and after April
20, 2001 if such holders of a Series D Preferred Units shall deliver to the
General Partner either (i) a private letter ruling addressed to such holder
of Series D Preferred Units or (ii) an opinion of counsel reasonably
acceptable to the General Partner based on the enactment of temporary or
final Treasury Regulations or the publication of a Revenue Ruling, in
either case to the effect that an exchange of the Series D
-9-
10
Preferred Units at such earlier time would not cause the Series D Preferred
Units to be considered "stock and securities" within the meaning of section
351(e) of Code for purposes of determining whether the holder of such
Series D Preferred Units is an "investment company" under section 721(b) of
the Code if an exchange is permitted at such earlier date. Furthermore, the
Series D Preferred Units may be exchanged in whole or in part for Series D
Preferred Stock, if both (1) the holder concludes based on results or
projected results that there exists (in the reasonable judgment of the
holder) an imminent and substantial risk that such holder's interest in the
Partnership represents or will represent more than 19.5% of the total
profits or capital interests in the partnership for a taxable year, and (2)
the holder thereof delivers to the Company an opinion of a nationally
recognized counsel, to the effect that there is a substantial risk that
such holder's interest in the Partnership will represent more than 19.5% of
the total profits or capital interests in the Partnership (determined in
accordance with Treasury Regulations Section 1.731-2(e)(4)); provided,
however, in no event shall such a risk be deemed to exist unless such
percentage exceeds 15% at such time.
(ii) Notwithstanding anything to the contrary set forth in Section
11.4(a)(i), if a Series D Exercise Notice has been delivered to the General
Partner, then the General Partner may, at its option, elect to redeem or
cause the Partnership to redeem all or a portion of the outstanding Series
D Preferred Units for cash in an amount equal to the original Capital
Contribution per Series D Preferred Unit and all accumulated and unpaid
distributions thereon to the date of redemption. The General Partner may
exercise its option to redeem the Series D Preferred Units for cash
pursuant to this Section 11.4(a)(ii) by giving each holder of record of
Series D Preferred Units notice of its election to redeem for cash, within
five (5) Business Days after receipt of the Series D Exercise Notice, by
telecopier (if possible) in accordance with Section 13.1 of the Partnership
Agreement stating (i) the redemption date, which shall be no later than
sixty (60) days following the receipt of the Series D Exercise Notice, (ii)
the redemption price, (iii) the place or places where the Series D
Preferred Units are to be surrendered for payment of the redemption price,
(iv) that distributions on the Series D Preferred Units will cease to
accrue on such redemption date, (v) that payment of the redemption price
will be made upon presentation and surrender of the Series D Preferred
Units and delivery of a duly executed certificate in the form attached
hereto as Exhibit J-1 and (vi) the aggregate number of Series D Preferred
Units to be redeemed, and if fewer than all of the outstanding Series D
Preferred Units are to be redeemed, the number of Series D Preferred Units
to be redeemed held by such holder, which number shall equal such holder's
pro-rata share (based on the percentage of the aggregate number of
outstanding Series D Preferred Units
-10-
11
that the total number of Series D Preferred Units held by such holder
represents) (as nearly as possible without creating fractional units) of
the aggregate number of Series D Preferred Units being redeemed.
(iii) In the event an exchange of all or a portion of Series D
Preferred Units pursuant to Section 11.4(a)(i) would violate the provisions
on ownership limitation of the General Partner set forth in Article NINTH
of the Charter, the General Partner shall give written notice thereof to
each holder of record of Series D Preferred Units, within five (5) Business
Days following receipt of the Series D Exercise Notice, by telecopier (if
possible) in accordance with Section 13.1 of the Partnership Agreement. In
such event, each holder of Series D Preferred Units shall be entitled to
exchange a number of Series D Preferred Units which would comply with the
provisions on the ownership limitation of the General Partner set forth in
such Article NINTH of the Charter and any Series D Preferred Units not so
exchanged (the "Series D Excess Units") shall be redeemed by the
Partnership for cash in an amount equal to the original Capital
Contribution per Excess Unit, plus any accrued and unpaid distributions
thereon, whether or not declared, to the date of redemption. The written
notice of the General Partner shall state (i) the number of Series D Excess
Units held by such holder, (ii) the redemption price of the Series D Excess
Units, (iii) the date on which such Series D Excess Units shall be
redeemed, which date shall be no later than sixty (60) days following the
receipt of the Series D Exercise Notice, (iv) the place or places where
such Series D Excess Units are to be surrendered for payment of the
redemption price, (v) that distributions on the Series D Excess Units will
cease to accrue on such redemption date and (vi) that payment of the
redemption price will be made upon presentation and surrender of such
Series D Excess Units and delivery of a duly executed certificate in the
form attached hereto as Exhibit J-1. In the event an exchange would result
in Series D Excess Units, as a condition to such exchange, each holder of
such units agrees to provide representations and covenants reasonably
requested by the General Partner relating to (i) the widely held nature of
the interests in such holder, sufficient to assure the General Partner that
the holder's ownership of stock of the General Partner (without regard to
the limits described above) will not cause any individual to own in excess
of 9.9% of the stock of the General Partner; and (ii) to the extent such
holder can so represent and covenant without obtaining information from its
owners, the holder's ownership of tenants of the Partnership and its
Affiliates. For purposes of determining the number of Series D Excess Units
under this Section 11.4(a)(iii), the "Ownership Limit" set forth in Article
NINTH of the General Partner's Charter shall be deemed to be 0.8 percentage
points less than the limit set forth in such Article NINTH.
(iv) The redemption of Series D Preferred Units described in Section
11.4(a)(ii) and (iii) shall be subject to the provisions of Section
4.14(b)(i) and
-11-
12
Section 4.14(c)(ii); provided, however, that the term "Series D Redemption
Price" in such Sections shall be read to mean the original Capital
Contribution per Series D Preferred Unit being redeemed plus all accrued
and unpaid distributions to the redemption date.
(v) All exchanges shall be in accordance with the attached Exhibit I.
(vi) In the event of an exchange of Series D Preferred Units into
shares of Series D Preferred Stock, the Series D Preferred Units shall no
longer be outstanding and the General Partner shall receive a Series D
Preferred Interest in exchange for the issuance of the Series D Preferred
Stock.
14. A new Section 13.7(d) is hereby added to the Partnership Agreement as
follows:
(d) The Series D Limited Partners shall have no voting or consent
rights except for such matters as are required by California law or as set
forth below. So long as any Series D Preferred Units remain outstanding,
the Partnership shall not, without the affirmative vote of the holders of
at least two-thirds of the Series D Preferred Units outstanding at the time
(i) authorize or create, or increase the authorized or issued amount of,
any class or series of Partnership Interests ranking senior to the Series D
Preferred Units with respect to payment of distributions or rights upon
liquidation, dissolution or winding-up or reclassify any Partnership
Interests of the Partnership into any such Partnership Interest, or create,
authorize or issue any obligations or security convertible into or
evidencing the right to purchase any such Partnership Interests, (ii)
authorize or create, or increase the authorized or issued amount of any
Series D Parity Preferred Units or reclassify any Partnership Interest of
the Partnership into any such Partnership Interest or create, authorize or
issue any obligations or security convertible into or evidencing the right
to purchase any such Partnership Interests, but only to the extent such
Series D Parity Preferred Units are authorized, created or increased solely
for the purpose of issuance to an affiliate of the Partnership, other than
the General Partner to the extent the issuance of such interests was to
allow the General Partner to issue corresponding preferred stock to persons
who are not affiliates of the Partnership, (iii) amend any provision of
this Section 13.7(d) or (iv) amend, alter or repeal the provisions of the
Partnership Agreement, whether by merger, consolidation, sale or lease of
all of the Partnership's assets as an entirety or otherwise, that would
materially and adversely affect the powers, special rights, preferences,
privileges or voting power of the Series D Preferred Units or the holders
thereof; provided, however, that with
-12-
13
respect to the occurrence of a merger, consolidation or a sale or lease of
all of the Partnership's assets as an entirety, so long as (a) the
Partnership is the surviving entity and the Series D Preferred Units remain
outstanding with the terms thereof unchanged, or (b) the resulting,
surviving or transferee entity is a partnership, limited liability company
or other pass-through entity organized under the laws of any state and
substitutes the Series D Preferred Units for other interests in such entity
having substantially the same terms and rights as the Series D Preferred
Units, including with respect to distributions, voting rights and rights
upon liquidation, dissolution or winding-up, then the occurrence of any
such event shall not be deemed to materially and adversely affect such
rights, privileges or voting powers of the holders of the Series D
Preferred Units; and provided further that any increase in the amount of
Partnership Interests or the authorization, creation or issuance of any
other class or series of Partnership Interests, in each case ranking (a)
junior to the Series D Preferred Units with respect to payment of
distributions or the distribution of assets upon liquidation, dissolution
or winding-up, or (b) on a parity to the Series D Preferred Units with
respect to payment of distributions or the distribution of assets upon
liquidation, dissolution or winding-up to the extent such Partnership
Interest are not authorized, created or increased solely for the purpose of
issuance to an affiliate of the Partnership, other than the General Partner
to the extent the issuance of such interests was to allow the General
Partner to issue corresponding preferred stock to persons who are not
affiliates of the Partnership, shall not be deemed to materially and
adversely affect such rights, preferences, privileges or voting powers.
15. Exhibit B to the Partnership Agreement is hereby deleted in its
entirety, and Exhibit B attached hereto is hereby inserted in the place thereof.
16. Exhibit F to the Partnership Agreement is hereby amended to add the
address for the Initial Series D Limited Partner that is set forth on Schedule 2
attached hereto.
17. The Partnership Agreement is hereby amended by adding a new Exhibit I
in the form attached to this Second Amendment.
18. The Partnership Agreement is hereby amended by adding new Exhibits J-1
and J-2 in the forms attached to this Second Amendment.
19. This Second Amendment may be executed in two or more counterparts,
each of which shall be deemed originals, and all of which taken together
-13-
14
shall constitute one instrument. By executing this Second Amendment below, each
signatory hereby agrees that a facsimile signature shall be deemed to have the
same effect as an original signature.
20. This Second Amendment shall be governed by and construed in conformity
with the laws of the State of California.
21. Except as specifically provided herein, the Partnership Agreement
shall remain in full force and effect.
22. To the extent that the Belair Contribution Agreement provides that the
parties obligations thereunder shall survive the Closing (as defined in the
Belair Contribution Agreement), such provisions of the Belair Contribution
Agreement and the parties obligations thereunder shall not be merged into the
provisions of this Second Amendment and shall survive the execution and delivery
of this Second Amendment.
23. Pursuant to Section 9.2 of the Partnership Agreement, the General
Partner hereby consents to the pledge of the Series D Preferred Units by the
Initial Series D Limited Partner pursuant to the Securities Account Agreement
(the "Securities Account Agreement"), dated as of February 5, 1998, among
▇▇▇▇▇▇▇ ▇▇▇▇▇ International Bank Limited, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital Services, Inc.
and Investors Bank & Trust Company (collectively, the "Pledgees") and the
Initial Series D Limited Partner. The General Partner also hereby consents to
any Pledgee's assignment of their respective rights as secured party to any
person each may designate upon the occurrence of an event of default (as defined
in the Securities Account Agreement). Such pledge shall not give any Pledgee any
rights as a holder of Series D Preferred Units until the Pledgee provides
written notice to the General Partner that an event of default has occurred
under the Securities Account Agreement and, in such event, as set forth in
Section 19.2 of the Partnership Agreement, such Pledgee shall be deemed an
Assignee with respect to such Series D Preferred Units. Neither the Partnership
nor the General Partner shall have any liability or obligation, matured,
contingent or otherwise, to the Pledgees (i) under the Securities Account
Agreement or (ii) with respect to the value or liquidity of the Series D
Preferred Units or the Series D Preferred Stock.
-14-
15
IN WITNESS WHEREOF, this Second Amendment is hereby entered into among the
undersigned parties as of the Effective Date.
GENERAL PARTNER: ▇▇▇▇▇▇▇ PROPERTIES, INC., a Maryland
corporation
By:
---------------------------------
Its:
--------------------------------
NEW LIMITED PARTNER: BELAIR CAPITAL FUND LLC, a Massachusetts
limited liability company
By: ▇▇▇▇▇ ▇▇▇▇▇ Management, as its Manager
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: Vice President
16
IN WITNESS WHEREOF, this Second Amendment is hereby entered into among the
undersigned parties as of the Effective Date.
GENERAL PARTNER: ▇▇▇▇▇▇▇ PROPERTIES, INC., a Maryland
corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Its: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President
--------------------------------
NEW LIMITED PARTNER: BELAIR CAPITAL FUND LLC, a Massachusetts
limited liability company
By:
---------------------------------
Name:
Title:
17
Schedule 1 to Second Amendment
Form of Series D Exercise Notice
To: ▇▇▇▇▇▇▇ Properties, Inc.
Reference is made to that certain Second Amendment to Second Amended and
Restated Agreement of Limited Partnership of ▇▇▇▇▇▇▇ Properties, L.P. dated as
of April 20, 1998 (as amended, the "Partnership Agreement"), between ▇▇▇▇▇▇▇
Properties, Inc., a Maryland corporation, and the undersigned, governing that
certain California limited partnership known as ▇▇▇▇▇▇▇ Properties, L.P. (the
"Partnership"). Capitalized terms used but not defined herein shall have the
meanings set forth in the Partnership Agreement. Pursuant to Section 11.4 of the
Partnership Agreement and Exhibit I to the Partnership Agreement, the
undersigned, being a Series D Limited Partner, hereby elects to exercise its
Series D Rights as to the number of Series D Preferred Units specified below:
Number of Series D Preferred Units:
----------------------------------
Printed Name
------------------------------------
Signature
----------------------------
Date
18
Schedule 2 to Second Amendment
Address
Belair Capital Fund LLC
c/o ▇▇▇▇▇ ▇▇▇▇▇ Management
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
19
EXHIBIT B
ALLOCATIONS
1. Allocation of Net Income and Net Loss.
(a) Net Income. Except as otherwise provided herein, Net Income for any
fiscal year or other applicable period shall be allocated in the following order
and priority:
(1) First, to the Partners, until the cumulative Net Income allocated
pursuant to this Subparagraph 1(a)(1) for the current and all prior periods
equals the cumulative Net Loss allocated pursuant to Subparagraphs 1(b)(3) and
(4) hereof for all prior periods, among the Partners in the reverse order that
such Net Loss was allocated (and, in the event of a shift of a Partner's
interest in the Partnership, to the Partners in a manner that most equitably
reflects the successors in interest of such Partners);
(2) Second, to the General Partner, the WCB Limited Partners and the
Series D Limited Partners, until the cumulative Net Income allocated pursuant to
this Subparagraph 1(a)(2) for the current and all prior periods equals the
cumulative Net Loss allocated pursuant to Subparagraph 1(b)(2) hereof for all
prior periods;
(3) Third, in equal priority, (x) to the General Partner until the
cumulative amount of Net Income allocated pursuant to this Subparagraph 1(a)(3),
Subparagraph 1(a)(3) of Exhibit E to the First Restated Agreement as in effect
immediately prior to the Fourth Amendment thereto and Subparagraph 1(c)(1)(iii)
of Exhibit E to the First Restated Agreement as in effect immediately prior to
the Third Amendment thereto equals the total amount of dividends paid on the
Series A Preferred Stock as of or prior to the date of such allocation plus the
total amount of accrued but unpaid dividends on any Series A Preferred Stock
issued and outstanding as of such date, plus the total amount of dividends paid
on the Series B Cumulative Redeemable Preferred Stock as of or prior to the date
of such allocation plus the total amount of accrued but unpaid dividends on any
Series B Cumulative Redeemable Preferred Stock issued and outstanding as of such
date, plus the total amount of dividends paid on the Series C Cumulative
Redeemable Preferred Stock as of or prior to the date of such allocation plus
the total amount of accrued but unpaid dividends on any Series C Cumulative
Redeemable Preferred Stock issued and outstanding as of such date, (y) to the
WCB Limited Partners until the cumulative amount of Net Income allocated
pursuant to this Subparagraph 1(a)(3) equals the total amount of distributions
made to the WCB Limited Partners pursuant to Section 6.2(a)(i) of this Agreement
and (z) to the Series D Limited Partners until the cumulative amount of Net
Income allocated pursuant to this
B-1
20
Subparagraph 1(a)(3) equals the total amount of distributions made to the Series
D Limited Partners pursuant to Section 6.2(a)(i) of this Agreement;
(4) Fourth, to the General Partner on account of the Common B Interest
and the Common C Interest, an amount equal to the sum of (x) $0.0625 per annum
multiplied by the number of shares issued and outstanding of Class B Common
Stock, plus (y) $0.05 per annum multiplied by the number of shares issued and
outstanding of Class C Common Stock, prorated on a daily basis over each
calendar year, and adjusted, as appropriate, to reflect any variance in the
number of such shares issued and outstanding from time to time; and
(5) Thereafter, the balance of the Net Income, if any, shall be
allocated to the Partners holding Standard Partnership Units in accordance with
their respective Standard Percentages.
(b) Net Loss. Net Loss of the Partnership for each fiscal year or other
applicable period shall be allocated as follows:
(1) First, to the Partners (other than the WCB Limited Partners with
respect to their WCB Partnership Units and the Series D Limited Partners with
respect to their Series D Preferred Units) in accordance with their respective
Standard Percentages until the Capital Account balances of the Limited Partners
(other than the WCB Limited Partners with respect to their WCB Partnership Units
and the Series D Limited Partners with respect to their Series D Preferred
Units) are reduced to zero (for purpose of this calculation, such Partners'
share of Partnership Minimum Gain shall be added back to their Capital
Accounts);
(2) Second, to the General Partner, the WCB Limited Partners (to the
extent of their WCB Partnership Units) and the Series D Limited Partners (to the
extent of their Series D Preferred Units), in proportion to their positive
Capital Account balances, until their Capital Account balances have been reduced
to zero (for purpose of this calculation, such Partners' share of Partnership
Minimum Gain shall be added back to their Capital Accounts);
(3) Thereafter, to the Partners holding Standard Partnership Units in
accordance with their then Standard Percentages; and
(4) Notwithstanding the preceding provisions of this Subparagraph
1(b), to the extent that any Net Loss allocated to a Partner under Subparagraph
1(b) would cause such Partner (hereinafter, a "Restricted Partner") to have an
Adjusted Capital Account Deficit as of the end of the fiscal year to which such
Net Loss relates, such Net Loss shall not be allocated to such Restricted
Partner and instead
B-2
21
shall be allocated to the other Partner(s) (hereinafter, the "Permitted
Partners") pro rata in accordance with their relative Percentage Interests.
(c) Book-Up and Capital Account Adjustments. On any day on which Series A
Preferred Stock is redeemed or converted into Common Stock or the Series B
Cumulative Redeemable Preferred Stock is redeemed or the Series C Cumulative
Redeemable Preferred Stock is redeemed or any WCB Partnership Units are
converted into Standard Partnership Units, the Partnership may, in the
discretion of the General Partner, adjust the Gross Asset Values of all
Partnership assets to equal their respective gross fair market values and shall
allocate the amount of such adjustment as Net Income or Net Loss pursuant to
Paragraph 1(a) hereof.
2. Special Allocations.
Notwithstanding any provisions of Paragraph 1 of this Exhibit B, the
following special allocations shall be made in the following order:
(a) Minimum Gain Chargeback (Nonrecourse Liabilities). If there is a net
decrease in Partnership Minimum Gain for any Partnership fiscal year (except as
a result of conversion or refinancing of Partnership indebtedness, certain
capital contributions or revaluation of the Partnership property as further
outlined in Regulation Sections 1.704- 2(d)(4), (f)(2) or (f)(3)), each Partner
shall be specially allocated items of Partnership income and gain for such year
(and, if necessary, subsequent years) in an amount equal to that Partner's share
of the net decrease in Partnership Minimum Gain. The items to be so allocated
shall be determined in accordance with Regulation Section 1.704-2(f). This
Paragraph 2(a) is intended to comply with the minimum gain chargeback
requirement in said section of the Regulations and shall be interpreted
consistently therewith. Allocations pursuant to this Paragraph 2(a) shall be
made in proportion to the respective amounts required to be allocated to each
Partner pursuant hereto.
(b) Minimum Gain Attributable to Partner Nonrecourse Debt. If there is a
net decrease in Minimum Gain Attributable to Partner Nonrecourse Debt during any
fiscal year (other than due to the conversion, refinancing or other change in
the debt instrument causing it to become partially or wholly nonrecourse,
certain capital contributions, or certain revaluations of Partnership property
as further outlined in Regulation Section 1.704-2(i)(4)), each Partner shall be
specially allocated items of Partnership income and gain for such year (and, if
necessary, subsequent years) in an amount equal to that Partner's share of the
net decrease in the Minimum Gain Attributable to Partner Nonrecourse Debt. The
items to be so allocated shall be determined in accordance with Regulation
Section 1.704-2(i)(4) and (j)(2). This Paragraph 2(b) is intended to comply with
the minimum gain chargeback requirement with respect to Partner Nonrecourse Debt
contained in said section of the Regulations and shall be interpreted
consistently therewith.
B-3
22
Allocations pursuant to this Paragraph 2(b) shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant hereto.
(c) Qualified Income Offset. In the event a Limited Partner unexpectedly
receives any adjustments, allocations or distributions described in Regulation
Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6), and such Limited Partner has an
Adjusted Capital Account Deficit, items of Partnership income and gain shall be
specially allocated to such Partner in an amount and manner sufficient to
eliminate the Adjusted Capital Account Deficit as quickly as possible. This
Paragraph 2(c) is intended to constitute a "qualified income offset" under
Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith.
(d) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal year or
other applicable period shall be allocated to the Partners in accordance with
their respective Percentage Interests.
(e) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for any
fiscal year or other applicable period shall be specially allocated to the
Partner that bears the economic risk of loss for the debt (i.e., the Partner
Nonrecourse Debt) in respect of which such Partner Nonrecourse Deductions are
attributable (as determined under Regulation Section 1.704-2(b)(4) and (i)(1)).
(f) Curative Allocations. It is the intent of the Partnership that, to the
extent possible, the Capital Account balances of the Partners be in the
following relationship: (1) first, the Capital Account of the General Partner
should be at least equal to $25.00 multiplied by the number of issued and
outstanding shares of Series A Preferred Stock, Series B Cumulative Redeemable
Preferred Stock and Series C Cumulative Redeemable Preferred Stock, the Capital
Accounts of the WCB Limited Partners should be at least equal to the WCB
Partnership Unit Issue Price multiplied by the number of issued and outstanding
WCB Partnership Units and the Capital Accounts of the Series D Limited Partners
should be at least equal to the Series D Preferred Unit Issue Price multiplied
by the number of issued and outstanding Series D Preferred Units; and (2)
second, the Limited Partners' (other than the WCB Limited Partners with respect
to their WCB Partnership Units and the Series D Limited Partners with respect to
their Series D Preferred Units) Capital Account balances and the General
Partner's Capital Account balance in excess of the product described in clause
(1) above should be in proportion to their Standard Percentages. Thus, items of
"book" income, gain, loss, and deduction shall be allocated among the Partners
so that, to the extent possible, the resulting Partners' Capital Account
balances bear this relationship. This Paragraph 2(f) is intended to minimize to
the extent possible and to the extent necessary any economic distortions which
may result from application of the Regulatory Allocations and shall be
interpreted in a manner consistent therewith. For purposes hereof, "Regulatory
Allocations" shall mean
B-4
23
the allocations provided under Subparagraph 1(b)(2) and this Paragraph 2 (save
Subparagraphs 2(d) and (f) hereof).
(g) Merit Plan. To the extent that the Partnership recognizes income or
gain or is entitled to deduction, expense or loss with respect to transfers of
interests pursuant to the Merit Plan, all such items shall be allocated among
the Limited Partners in accordance with the Merit Plan.
3. Tax Allocations.
(a) Generally. Subject to Paragraphs 3(b) and (c) below, items of income,
gain, loss, deduction and credit to be allocated for income tax purposes
(collectively, "Tax Items") shall be allocated among the Partners on the same
basis as their respective book items.
(b) Sections 1245/1250 Recapture. If any portion of gain from the sale of
property is treated as gain which is ordinary income by virtue of the
application of Code Section 1245 or 1250 ("Affected Gain"), then (A) such
Affected Gain shall be allocated among the Partners in the same proportion that
the depreciation and amortization deductions giving rise to the Affected Gain
were allocated and (B) other Tax Items of gain of the same character that would
have been recognized, but for the application of Code Sections 1245 and/or 1250,
shall be allocated away from those Partners who are allocated Affected Gain
pursuant to Clause (A) so that, to the extent possible, the other Partners are
allocated the same amount, and type, of capital gain that would have been
allocated to them had Code Sections 1245 and/or 1250 not applied; provided,
however, that the net amount of Tax Items allocated to each Partner shall be the
same as if this Paragraph 3(a) did not exist. For purposes hereof, in order to
determine the proportionate allocations of depreciation and amortization
deductions for each fiscal year or other applicable period, such deductions
shall be deemed allocated on the same basis as Net Income and Net Loss for such
respective period.
(c) Allocations Respecting Section 704(c) and Revaluations. If any
Partnership property is subject to Code Section 704(c) or is reflected in the
Capital Accounts of the Partners and on the books of the Partnership at a book
value that differs from the adjusted tax basis of such property, then the tax
items with respect to such property shall, in accordance with the requirements
of Regulations Section 1.704- 1(b)(4)(i), be shared among the Partners in a
manner that takes account of the variation between the adjusted tax basis of the
applicable property and its book value in the same manner as variations between
the adjusted tax basis and fair market value of property contributed to the
Partnership are taken into account in determining the Partners' share of tax
items under Code Section 704(c). The General Partner is authorized to choose any
reasonable method permitted by the Regulations pursuant to Code Section 704(c),
B-5
24
including the "remedial" method, the "curative" method and the "traditional"
method; provided that the General Partner agrees to use reasonable efforts to
minimize the amount of taxable income in excess of book income allocated to the
holders of the Series D Preferred Units.
(d) Code Section 752 Specification. Pursuant to Regulations Section
1.752-3, the interest of the Partners holding Standard Partnership Units in
Partnership profits for purposes of determining the Partners' shares of excess
nonrecourse liabilities shall be their Standard Percentages.
B-6
25
EXHIBIT I
SERIES D RIGHTS TERMS
The Series D Rights shall be subject to the following terms and conditions:
1. DELIVERY OF SERIES D EXERCISE NOTICES. Any one or more Series D
Limited Partners possessing Series D Rights may deliver to the General Partner a
Series D Exercise Notice pursuant to which such Series D Limited Partners elect
to exercise their Series D Rights to convert all or any portion of their Series
D Preferred Units into shares of Series D Preferred Stock.
2. TIMING OF EXERCISE. The exchange of Series D Preferred Units, or a
specified portion thereof, may be effected after the fifth (5th) Business Day
following receipt by the General Partner of the Series D Exercise Notice by
delivering certificates, if any, representing such Series D Preferred Units to
be exchanged together with a duly executed certificate in the form attached
hereto as Exhibit J-1 and, if applicable, written notice of exchange and a
proper assignment of such Series D Preferred Units to the principal place of
business of the General Partner set forth in Section 2.4 of the Partnership
Agreement. Each exchange will be deemed to have been effected immediately prior
to the close of business on the date on which such Series D Preferred Units to
be exchanged (together with all required documentation) shall have been
surrendered and notice shall have been received by the General Partner as
aforesaid and the Series D Exchange Price shall have been paid. Any Series D
Preferred Stock issued pursuant to this Exhibit I shall be delivered as shares
which are duly authorized, validly issued, fully paid and nonassessable, free of
pledge, lien, encumbrance or restriction other than those granted or imposed
upon the holder or provided in the Charter, the Bylaws of the General Partner,
the Securities Act and relevant state securities or blue sky laws.
(ii) In the event of an exchange of Series D Preferred Units in shares
of Series D Preferred Stock, an amount equal to the accrued and unpaid
distributions, whether or not declared, to the date of exchange on any Series D
Preferred Units tendered for exchange shall accumulate on the shares of the
Series D Preferred Stock into which such Series D Preferred Units are exchanged.
Notwithstanding anything to the contrary set forth herein, in no event shall a
holder of a Series D Preferred Unit that was validly exchanged into Series D
Preferred Stock pursuant to this section, receive a distribution out of Net
Operating Cash Flow of the Partnership, if such holder, after exchange, is
entitled to receive a distribution out of Net Operating Cash Flow with respect
to the share of Series D Preferred Stock for which such Series D Preferred Unit
was exchanged or redeemed.
I-1
26
(iii) Fractional shares of Series D Preferred Stock are not to be
issued upon exchange but, in lieu thereof, the General Partner will pay a cash
adjustment based upon the fair market value of the Series D Preferred Stock on
the day prior to the exchange date as determined in good faith by the Board of
Directors of the General Partner.
3. COMPUTATION OF CONSIDERATION. With respect to the exercise of Series D
Rights, the consideration payable for the Series D Preferred Units shall be the
issuance by the General Partner of the Series D Exchange Price. The Series D
Exchange Price is subject to adjustment upon certain events, including, (i)
subdivisions, combinations and reclassification of the Series D Preferred Stock,
and (ii) distributions to all holders of Series D Preferred Stock of evidences
of indebtedness of the General Partner or assets (including securities, but
excluding dividends and distributions paid in cash on the Series D Preferred
Stock).
(ii) In case the General Partner shall be a party to any transaction
(including, without limitation, a merger, consolidation, statutory share
exchange, tender offer for all or substantially all of the General Partner's
capital stock or sale of all or substantially all of the General Partner's
assets), in each case as a result of which the Series D Preferred Stock will be
converted into the right to receive shares of capital stock, other securities or
other property (including cash or any combination thereof), each Series D
Preferred Unit will thereafter be exchangeable into the kind and amount of
shares of capital stock and other securities and property (including cash or any
combination thereof) receivable upon the consummation of such transaction by a
holder of that number of shares of Series D Preferred Stock or fraction thereof
into which one Series D Preferred Unit was exchangeable immediately prior to
such transaction. The General Partner may not become a party to any such
transaction without the affirmative vote of the holders of at least two-thirds
of the Series D Preferred Units outstanding at the time unless the terms thereof
are consistent with the foregoing.
4. CLOSING. The closing of the exercise of the Series D Rights shall,
unless otherwise mutually agreed, be held at the principal offices of the
General Partner. At such closing, the General Partner shall deliver a stock
certificate or certificates representing the Series D Exchange Price and
evidencing the Series D Preferred Stock to be issued and registered in the name
of such Series D Limited Partner or its designee and such Series D Limited
Partner shall deliver to the General Partner certificates or other instruments
in form satisfactory to the General Partner evidencing such Series D Preferred
Units together with a certificate in the form attached hereto as Exhibit J-2.
5. COVENANT OF THE GENERAL PARTNER. To facilitate the General Partner's
ability to fully perform its obligations hereunder, the General Partner
covenants and agrees that at all times during the pendency of the Series D
Rights, the General Partner shall reserve for issuance such number of shares of
Series D Preferred Stock as
I-2
27
may be necessary to enable the General Partner to issue such shares in exchange
for all of the Series D Preferred Units held by Series D Limited Partners which
are from time to time outstanding.
6. SERIES D LIMITED PARTNER'S COVENANT. Each Series D Limited Partner
covenants and agrees with the General Partner that all Series D Preferred Units
tendered to the General Partner in accordance with the exercise of Series D
Rights herein provided shall be delivered to the General Partner free and clear
of all Liens, and should any Liens exist or arise with respect to such Series D
Preferred Units, the General Partner shall be under no obligation to acquire the
same. Each Series D Limited Partner further agrees that, in the event any state
or local property transfer tax or sales tax is payable as a result of the
transfer of its Series D Preferred Units to the General Partner (or its
designee), such Series D Limited Partner shall assume and pay such transfer
and/or sales tax.
I-3
28
EXHIBIT J-1
FORM OF SERIES D LIMITED PARTNER CERTIFICATE
(REDEMPTION)
Reference is made to that certain Second Amendment to Second Amended and
Restated Limited Partnership Agreement of ▇▇▇▇▇▇▇ Properties, L.P., dated as of
April 20, 1998 (as amended from time to time, the "Partnership Agreement").
Capitalized terms used herein and not otherwise defined herein shall have the
same meanings as set forth in the Partnership Agreement.
Pursuant to Section 4.14 of the Partnership Agreement, and in connection
with the General Partner's delivery to the undersigned of the Series D
Redemption Price, the undersigned hereby represents and warrants to the General
Partner that the undersigned has the authority to sell, transfer and convey to
the General Partner all of its right, title and interest in and to the Series D
Preferred Units specified in the notice of redemption dated __________, ____ and
that such Series D Preferred Units are being sold, transferred and conveyed to
the General Partner free and clear of all Liens.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Certificate as of this ____ day of _________, ____.
BELAIR CAPITAL FUND LLC, a Massachusetts
limited liability company
By: ▇▇▇▇▇ ▇▇▇▇▇ Management, its Manager
By:
-------------------------------------
Name:
Title:
J-1
29
EXHIBIT J-2
FORM OF SERIES D LIMITED PARTNER CERTIFICATE
(SERIES D RIGHTS)
Reference is made to that certain Second Amendment to Second Amended and
Restated Limited Partnership Agreement of ▇▇▇▇▇▇▇ Properties, L.P., dated as of
April 20, 1998 (as amended from time to time, the "Partnership Agreement").
Capitalized terms used herein and not otherwise defined herein shall have the
same meanings as set forth in the Partnership Agreement.
Pursuant to Section 11.4 of, and Exhibit I to, the Partnership Agreement,
and in connection with the General Partner's delivery to the undersigned of the
Series D Exchange Price, the undersigned hereby represents and warrants to the
General Partner that the undersigned has the authority to sell, transfer and
convey to the General Partner all of its right, title and interest in and to the
Series D Preferred Units specified in the Series D Exercise Notice dated
__________, ____ and that such Series D Preferred Units are being sold,
transferred and conveyed to the General Partner free and clear of all Liens.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Certificate as of this ____ day of _________, ____.
BELAIR CAPITAL FUND LLC, a Massachusetts
limited liability company
By: ▇▇▇▇▇ ▇▇▇▇▇ Management, its Manager
By:
-------------------------------------
Name:
Title:
J-2