Exhibit 3.4
AMENDMENT NO. 2 TO
AGREEMENT OF LIMITED PARTNERSHIP
OF
CHELSEA GCA REALTY PARTNERSHIP, L.P.
This Amendment No. 2 to Agreement of Limited Partnership (the
"Partnership Agreement") of Chelsea GCA Realty Partnership, L.P. (this
"Amendment") is entered into as of October 7, 1997, by and among Chelsea GCA
Realty, Inc. (the "General Partner") and the Limited Partners of Chelsea GCA
Realty Partnership, L.P. (the "Partnership"). All capitalized terms used herein
shall have the meanings given to them in the Partnership Agreement.
WHEREAS, the General Partner, on even date herewith, has issued
1,000,000 shares of its 8 3/8% Series A Cumulative Redeemable Preferred Stock,
par value $0.01 per share, having a liquidation preference equivalent to $50.00
per share (the "Series A Preferred Shares"), and has sold such Series A
Preferred Shares in a private placement;
WHEREAS, the General Partner desires to contribute the net proceeds of
the sale of the Series A Preferred Shares to the Partnership in exchange for
partnership interests in the Partnership as set forth herein;
WHEREAS, the General Partner is authorized to cause the Partnership to
issue interests in the Partnership to General Partner in exchange for such
contribution;
NOW THEREFORE, in consideration of the mutual covenants herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
Section 1. Contribution.
The General Partner hereby contributes to the Partnership the entire
net proceeds received by the General Partner from the issuance of the Series A
Preferred Shares. As provided in Section 4.5 of the Partnership Agreement, the
General Partner shall be deemed to have made a Capital Contribution to the
Partnership in the amount of the gross proceeds of such issuance, which is
$50,000,000.00, and the Partnership shall be deemed simultaneously to have
reimbursed the General Partner pursuant to Section 7.4.B of the Partnership
Agreement for the amount of the private placement discounts and commissions and
other costs incurred by the General Partner in connection with such issuance.
Section 2. Issuance of Series A Preferred Partnership Units.
In consideration of the contribution to the Partnership made by the
General Partner pursuant to Section 1 hereof, the Partnership hereby issues to
the General Partner 1,000,000 Series A Preferred Partnership Units (as defined
herein).
Section 3. Definitions.
In addition to those terms defined in the Partnership Agreement, the
following definitions shall be for all purposes, unless otherwise clearly
indicated to the contrary, applied to the terms used in the Partnership
Agreement and in this Amendment:
"Common Partnership Unit" means a Partnership Unit that is not a
Preferred Partnership Unit.
"Liquidation Preference Amount" means, with respect to any Preferred
Partnership Unit, the amount payable with respect to such Preferred Partnership
Unit (as established by the instrument designating such Preferred Partnership
Unit) upon the voluntary or involuntary dissolution, liquidation or winding up
of the Partnership, or upon the earlier redemption of such Preferred Partnership
Units, as the case may be.
"Preferred Partnership Unit" means any Partnership Unit issued from
time to time pursuant to Section 4.5 of the Partnership Agreement hereof that is
designated by the General Partner at the time of its issuance as a Preferred
Partnership Unit. Each Preferred Partnership Unit shall have such designations,
preferences and relative, participating, optional or other special rights,
powers and duties, including rights, powers and duties senior to Limited Partner
Interests and Common Partnership Units, all as shall be determined by the
General Partner subject to the requirements of Section 4.5 of the Partnership
Agreement.
"Series A Preferred Partnership Unit" means a Partnership Unit issued
by the Partnership to the General Partner in consideration of the contribution
by the General Partner to the Partnership of the entire net proceeds received by
the General Partner from the issuance of the Series A Preferred Shares. The
Series A Preferred Partnership Units shall constitute Preferred Partnership
Units. The Series A Preferred Partnership Units shall have the voting powers,
designation, preferences and relative, participating, optional or other special
rights and qualifications, limitations or restrictions as are set forth in
Exhibit 1 attached hereto. It is the intention of the General Partner, in
establishing the Series A Preferred Partnership Units, that each Series A
Preferred Partnership Unit shall be substantially the economic equivalent of a
Series A Preferred Share.
"Series A Preferred Shares" means the 8 3/8% Series A Cumulative
Redeemable Preferred Stock, par value $0.01 per share, having a liquidation
preference equivalent to $50.00 per share, issued by the General Partner.
In addition, the definitions of "Partnership Unit," "Partnership
Interest" and "REIT Shares Amount" appearing in Article 1 of the Partnership
Agreement are hereby deleted in their entirety and the following definitions are
inserted in their place:
"Partnership Interest" means, as to a Partner, with respect to any
class of Partnership Units held by such Partner, an ownership interest in such
class of Partnership Units (including any and all benefits to which the holder
of such a Partnership Interest may be entitled as provided in the Partnership
Agreement, together with all obligations of such Person to comply with the terms
and provisions of this Agreement) as determined by dividing the number of
Partnership Units in such class owned by such Partner by the total number of
Partnership Units in such class then outstanding. A Partnership Interest may be
expressed as a number of Partnership Units.
"Partnership Unit" means a fractional, undivided share of the
Partnership Interests of all Partners issued pursuant to Sections 4.1, 4.2 and
4.5 of the Partnership Agreement. The ownership of Partnership Units shall be
evidenced by such form, if any, of certificate for units as the General Partner
adopts from time to time on behalf of the Partnership. Without limitation on the
authority of the General Partner as set forth in Section 4.5 of the Partnership
Agreement, the General Partner may designate any Partnership Units, when issued,
as Common Partnership Units, Special Units or as Preferred Partnership Units,
may establish any other class of Partnership Units, and may designate one or
more series of any class of Partnership Units.
"REIT Shares Amount" shall mean a number of REIT Shares equal to the
product of the number of Common Partnership Units made subject to an Exchange by
a Limited Partner, multiplied by the Exchange Factor; provided that in the event
the General Partner issues to all holders of REIT Shares rights, options,
warrants or convertible or exchangeable securities entitling the shareholders to
subscribe for or purchase REIT Shares, or any other securities or property
(collectively, the "rights") then the REIT Shares Amount shall also include such
rights that a holder of that number of REIT Shares would be entitled to receive.
Section 4. Requirement and Characterization of Distributions.
Section 5.1 of the Partnership Agreement is hereby deleted in its
entirety and the following new Section 5.1 is inserted in its place:
"Section 5.1 Requirement and Characterization of Distributions.
The General Partner shall cause the Partnership make quarterly
distributions of an amount equal to 100% of Available Cash generated by the
Partnership during such quarter to the Partners who are Partners on the
Partnership Record Date with respect to such quarter in the following order of
priority:
(i) First, to the holders of the Preferred Partnership
Units in such amount as is required for the
Partnership to pay all distributions with respect
to such Preferred Partnership Units due or
payable in accordance with the instruments
designating such Preferred Partnership Units
through the last day of such quarter; such
distributions shall be made to such Partners in
such order of priority and with such preferences
as have been established with respect to such
Preferred Partnership Units as of the last day of
such calendar quarter; and
(ii) Second, to the Partners in proportion to
their respective Percentage Interests in Common
Partnership Units on such Partnership Record Date;
provided that in no event may a Partner receive a
distribution of Available Cash with respect to a
Partnership Unit if such Partner is entitled to
receive a distribution out of such Available Cash
with respect to a REIT Share for which such
Partnership Unit has been redeemed or exchanged.
The General Partner shall take such reasonable
efforts, as determined by it in its sole and
absolute discretion and consistent with its
qualification as a REIT, to cause the Partnership
to distribute sufficient amounts to enable the General
Partner to pay stockholder dividends that will satisfy
the requirements for qualifying as a REIT under the
Code and Regulations ("REIT Requirements").
Notwithstanding anything to the contrary contained herein, in no event
shall any Partner receive a distribution of Available Cash with respect to any
Common Partnership Unit with respect to any quarter until such time as the
Partnership has distributed to the holders of the Preferred Partnership Units an
amount sufficient to pay all distributions payable with respect to such
Preferred Partnership Units through the last day of such quarter, in accordance
with the instruments designating such Preferred Partnership Units."
Section 5. Tax Provisions.
Section 6.2 of the Partnership Agreement is hereby deleted in its
entirety and the following new Section 6.2 is inserted in its place:
"Section 6.2 Allocations of Net Income and Net Loss
For purposes of maintaining the Capital Accounts and in determining
the rights of the Partners among themselves, the Partnership's items of income,
gain, loss and deduction shall be allocated among the Partners in each taxable
year (or portion thereof) as provided herein below.
A. Net Income. After giving effect to the special
allocations set forth in Section 6.3, Net Income
shall be allocated in the following manner and
order of priority:
(1) First, to the General Partner until the cumulative
allocations of Net Income under this Section 6.2.A.(1) equal
the cumulative Net Losses allocated to the General Partner
under Section 6.1.B.(4) hereof;
(2) Second, to the General Partner until the cumulative
allocations of Net Income under this Section 6.2.A.(2) equal
the cumulative allocations of Net Loss to the General Partner
under Section 6.1.B.(3) hereof;
(3) Third, to those Partners who have received
allocations of Net Loss under Section 6.2.B.(3) hereof until
the cumulative allocations of Net Income under this Section
6.2.A.(4) equal such cumulative allocations of Net Loss (such
allocation of Net Income to be in proportion to the cumulative
allocations of Net Loss under such section to each such
Partner);
(4) Fourth, to the Partners until the cumulative
allocations of Net Income under this Section 6.2.A.(4) equal
the cumulative allocations of Net Loss to such Partners under
Section 6.2.B.(1) hereof (such allocation of Net Income to be
in proportion to the cumulative allocations of Net Loss under
such section to each such Partner); and
(5) Fifth any remaining Net Income shall be allocated to
the Partners who hold Common Partnership Units in proportion
to their respective Percentage Interests as holders of Common
Partnership Units.
B. Net Losses. After giving effect to the special
allocations set forth in Section 6.3, Net Losses shall
be allocated to the Partners as follows:
(1) To the Partners who hold Common Partnership Units in
accordance with their respective Percentage Interests as
holders of Common Partnership Units, except as otherwise
provided in this Section 6.2.B.
(2) To the extent that an allocation of Net Loss under
Section 6.2.B.(1) would cause a Partner to have an Adjusted
Capital Account Deficit at the end of such taxable year (or
increase any existing Adjusted Capital Account Deficit of such
Partner), such Net Loss shall instead be allocated to those
Partners, if any, for whom such allocation of Net Loss would
not cause or increase an Adjusted Capital Account Deficit.
Solely for purposes of this Section 6.2.B.(2), the Adjusted
Capital Account Deficit, in the case of the General Partner,
shall be determined without regard to the amount credited to
the General Partner's Capital Account for the aggregate
Liquidation Preference Amount attributable to the General
Partner's Preferred Partnership Units. The Net Loss allocated
under this Section 6.2.B.(2) shall be allocated among the
Partners who may receive such allocation in proportion to and
to the extent of the respective amounts of Net Loss that could
be allocated to such Partners without causing such Partners to
have an Adjusted Capital Account Deficit.
(3) Any remaining Net Loss shall be allocated to the
General Partner to the extent that such allocation of Net Loss
would not cause or increase an Adjusted Capital Account
Deficit of the General Partner.
(4) Any remaining Net Loss shall be allocated to the
General Partner.
Section 6. Preferred Unit Allocation.
The Partnership Agreement is hereby amended by adding the following
new Sections 6.3(C) to the Partnership Agreement, immediately following Section
6.3(B):
"(C) Priority Allocation With Respect To Preferred
Partnership Units. After taking into account
the special allocation provisions of Section
6.3(A), all or a portion of the remaining items
of Partnership gross income or gain for the
Partnership Year, if any, shall be specially
allocated to the General Partner in an amount
equal to the excess, if any, of the cumulative
distributions received by the General Partner
pursuant to Section 5.1(i) hereof for the
current Partnership Year and all prior
Partnership Years (other than any distributions
that are treated as being in satisfaction of the
Liquidation Preference Amount for any Preferred
Partnership Units) over the cumulative
allocations of Partnership gross income and gain
to the General Partner under this Section 6.3(c)
for all prior Partnership Years."
Section 7. Exchange Right.
The Partnership Agreement is hereby amended by adding the following
new Sections 8.6.E and 8.6.F to the Partnership Agreement, immediately following
Section 8.6.D:
"E. Notwithstanding anything contained in Sections
8.6.A, 8.6.B, 8.6.C and 8.6.D, except as set
forth in Section 8.6.F, no Partner shall be
entitled to exercise the Exchange pursuant to
Section 8.6.A with respect to any Preferred
Partnership Unit unless (i) such Preferred
Partnership Unit has been issued to and is held
by a Partner other than the General Partner, and
(ii) the General Partner has expressly granted to
such Partner the right to exchange such Preferred
Partnership Units pursuant to Section 8.6.A.
F. Preferred Partnership Units shall be redeemed, if at
all, only in accordance with such redemption rights or
options as are set forth with respect to such Preferred
Partnership Units (or class or series thereof) in the
instruments designating such Preferred Partnership
Units (or class or series thereof)."
Section 8. General Amendments to Partnership Agreement.
Notwithstanding anything contained herein, all references to
Partnership Units in Sections 7.3.B, 7.5.B and 11.3.C of the Partnership
Agreement shall be deemed to refer solely to Common Partnership Units, and not
to Preferred Partnership Units. In addition, references in Section 14.2 of the
Partnership Agreement to Percentage Interests of the Limited Partners shall be
deemed to refer solely to Percentage Interests of Limited Partners with respect
to Common Partnership Units. Further, the reference to Partnership Interests
appearing in Section 14.2.A shall be deemed to refer only to Partnership
Interests held with respect to Common Partnership Units.
Section 8. Exhibits to Partnership Agreement.
The General Partner shall maintain the information set forth in
Exhibit A to the Partnership Agreement, as such information shall change from
time to time, in such form as the General Partner deems appropriate for the
conduct of the Partnership affairs, and Exhibit A shall be deemed amended from
time to time to reflect the information so maintained by the General Partner,
whether or not a formal amendment to the Partnership Agreement has been executed
amending such Exhibit A. In addition to the issuance of Series A Preferred
Partnership Units to the General Partner pursuant to this Amendment, such
information shall reflect (and Exhibit A shall be deemed amended from time to
time to reflect) the issuance of any additional Partnership Units to the General
Partner or any other Person, the transfer of Partnership Units and the
redemption of any Partnership Units, all as contemplated herein.
In addition, the Partnership Agreement is hereby amended by attaching
thereto as Exhibit 1 the Exhibit 1 attached hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
2 to the Partnership Agreement to be executed as of the day and year first above
written.
CHELSEA GCA REALTY
PARTNERSHIP, L.P.
By: Chelsea GCA Realty, Inc.
General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
LIMITED PARTNERS
WOODBURY FAMILY ASSOCIATES, L.P.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
EXHIBIT 1
CHELSEA GCA REALTY PARTNERSHIP, L.P.
DESIGNATION OF THE VOTING POWERS, DESIGNATIONS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS AND
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS
OF THE
SERIES A PREFERRED PARTNERSHIP UNITS
The following are the terms of the Series A Preferred Partnership
Units established pursuant to this Amendment:
(a) NUMBER. The maximum number of authorized Series A
Preferred Partnership Units shall be 1,000,000.
(b) RELATIVE SENIORITY. In respect of rights to
receive quarterly distributions and to
participate in distributions of payments in the
event of any liquidation, dissolution or winding
up of the Partnership, the Series A Preferred
Partnership Units shall rank senior to the Common
Partnership Units and any other class or series
of Partnership Units of the Partnership ranking,
as to quarterly distributions and upon
liquidation, junior to the Series A Preferred
Partnership Units (collectively, "Junior Partnership
Units").
(c) QUARTERLY DISTRIBUTIONS.
(1) The General Partner, in its capacity as the holder of
the then outstanding Series A Preferred Partnership Units,
shall be entitled to receive, when and as declared by the
General Partner out of any funds legally available therefor,
cumulative quarterly distributions at the rate of $4.1875 per
Series A Preferred Partnership Unit per year, payable in
arrears in equal amounts of $1.046875 per unit quarterly in
cash on the 15th day of each January, April, July and October
or, if not a Business Day (as hereinafter defined), the next
succeeding Business Day beginning on January 15, 1998 (each
such day being hereafter called a "Quarterly Distribution
Date" and each period ending on the calendar day preceding a
Quarterly Distribution Date being hereinafter called a
"Distribution Period"). Quarterly distributions on each Series
A Preferred Partnership Unit shall accrue and be cumulative
from and including the date of original issue thereof, whether
or not (i) quarterly distributions on such Series A Preferred
Partnership Units are earned or declared or (ii) on any
Quarterly Distribution Date there shall be funds legally
available for the payment of quarterly distributions.
"Business Day" shall mean any day, other than a Saturday or Sunday,
that is neither a legal holiday nor a day on which banking institutions in The
City of New York are authorized or required by law, regulation or executive
order to close.
(2) The amount of any quarterly distributions accrued on
any Series A Preferred Partnership Units at any Quarterly
Distribution Date shall be the amount of any unpaid
quarterly distributions accumulated thereon to
but excluding such Quarterly Distribution Date, and the amount
of quarterly distributions accumulated on any Series A
Preferred Partnership Units at any date other than a Quarterly
Distribution Date shall be equal to the sum of the amount of
any unpaid quarterly distributions accumulated thereon to but
excluding the last preceding Quarterly Distribution Date, plus
an amount calculated on the basis of the annual distribution
rate of $4.1875 per unit for the period after such last
preceding Quarterly Distribution Date to and including the
date as of which the calculation is made based on a 360-day
year of twelve 30-day months. Quarterly distributions on the
Series A Preferred Partnership Units will accumulate whether
or not the Partnership has earnings, whether or not there are
funds legally available for the payment of such quarterly
distributions and whether or not such quarterly distributions
are authorized or declared.
(3) Except as provided herein, the Series A Preferred
Partnership Units shall not be entitled to participate in the
earnings or assets of the Partnership, and no interest, or sum
of money in lieu of interest, shall be payable in respect of
any distribution or distributions on the Series A Preferred
Partnership Units which may be in arrears.
(4) Any distribution made on the Series A Preferred
Partnership Units shall be first credited against the earliest
accrued but unpaid quarterly distribution due with respect to
such Partnership Units which remains payable.
(5) No quarterly distributions on the Series A Preferred
Partnership Units shall be authorized by the General Partner
or be paid or set apart for payment by the Partnership at such
time as the terms and provisions of any agreement of the
General Partner or the Partnership, including any agreement
relating to its indebtedness, prohibits such authorization,
payment or setting apart for payment or provides that such
authorization, payment or setting apart for payment would
constitute a breach thereof or a default thereunder, or if
such authorization or payment shall be restricted or
prohibited by law.
(6) No distributions will be declared or paid or set
apart for payment on any Partnership Units ranking, as to
distributions, on a parity with or junior to the Series A
Preferred Partnership Units for any period unless full
cumulative distributions have been or contemporaneously are
declared and paid or declared and a sum sufficient for the
payment therefor set apart for such payment on the Series A
Preferred Partnership Units for all past Quarterly
Distribution Dates and the then current Quarterly Distribution
Date. When distributions are not paid in full (or
a sum sufficient for such full payment is not so set
apart) upon the Series A Preferred Partnership Units, all
distributions declared on the Series A Preferred Partnership
Units shall be declared pro rata so that the amount of
distributions declared per Series A Preferred Partnership Unit
shall in all cases bear to each other the same ratio that
accumulated distributions per Series A Preferred Partnership
Unit bear to each other.
(7) Except as provided in subparagraph 6, unless full
cumulative distributions on the Series A Preferred Partnership
Units have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment therefor set
apart for such payment on the Series A Preferred Partnership
Units for all past Quarterly Distribution Dates and the then
current Quarterly Distribution Date, no distributions shall be
declared or paid or set aside for payment nor shall any other
distribution be declared or made upon the Junior Partnership
Units, nor shall any Junior Partnership Units be redeemed,
purchased or otherwise acquired for any consideration (or any
moneys be paid or made available for a sinking fund for the
redemption of such units) by the Partnership (except by
conversion into or exchange for other Junior Partnership
Units).
(d) LIQUIDATION RIGHTS.
(1) Upon the voluntary or involuntary dissolution,
liquidation or winding up of the Partnership (a
"liquidation"), the General Partner, in its capacity as the
holder of the Series A Preferred Partnership Units then
outstanding, shall be entitled to receive in cash or property
(at its fair market value determined by the General Partner)
and to be paid out of the assets of the Partnership available
for distribution to its partners, before any payment or
distribution shall be made on any Junior Partnership Units,
the amount of $50.00 per Series A Preferred Partnership Unit,
plus accumulated and unpaid quarterly distributions, if any,
thereon to and including the date of liquidation.
(2) After the payment to the holders of the Series A
Preferred Partnership Units of the full liquidation amounts
provided for herein, the General Partner, in its capacity as
the holder of the Series A Preferred Partnership Units as
such, shall have no right or claim to any of the remaining
assets of the Partnership.
(3) If, upon any voluntary or involuntary dissolution,
liquidation, or winding up of the Partnership, the amounts
payable with respect to the preference distributions on the
Series A Preferred Partnership Units and the Preferred
Partnership Units of the Partnership ranking, as to any
liquidation rights, on a parity with the Series A Preferred
Partnership Units are not paid in full, the holders of the
Series A Preferred Partnership Units and any other Preferred
Partnership Units ranking, as to liquidation rights, on a
parity with the Series A Preferred Units shall share ratably
in any such distribution of assets of the Partnership in
proportion to the full respective preference amounts to which
they would otherwise be respectively entitled.
(4) Neither the sale, lease or conveyance of all or
substantially all of the property or business of the
Partnership, nor the merger or consolidation of the
Partnership into or with any other entity or the merger or
consolidation of any other entity into or with the
Partnership, shall be deemed to be a dissolution, liquidation
or winding up, voluntary or involuntary, for the purposes
hereof.
(e) REDEMPTION.
(1) OPTIONAL REDEMPTION. On and after October 15, 2027,
the General Partner may, to the extent that it redeems any of
its Series A Preferred Shares (subject to the provisions of
this paragraph (e)), cause the Partnership to redeem at any
time an identical amount of the Series A Preferred Partnership
Units at a price per unit (the "Redemption Price"), payable in
cash, of $50 per Unit, together with all accumulated and
unpaid distributions, if any, to and including the date fixed
for redemption (the "Redemption Date"). The Series A Preferred
Partnership Units have no stated maturity and will not be
subject to any sinking fund or mandatory redemption
provisions.
(2) PROCEDURES OF REDEMPTION.
(i) At any time that the General Partner
exercises its right to redeem all or any of the Series A
Preferred Shares, the General Partner shall exercise its right
to cause the Partnership to redeem an equal number of Series A
Preferred Partnership Units in the manner set forth herein.
(ii) No Series A Preferred Partnership Units may
be redeemed except from proceeds from the sale of capital
stock of the General Partner, including but not limited to
common stock, preferred stock, depository shares, interests,
participations or other ownership interests (however
designated) and any rights (other than debt securities
convertible into or exchangeable for equity securities) or
options to purchase any of the foregoing. The proceeds of such
sale of capital stock of the General Partner shall be
contributed by the General Partner to the Partnership pursuant
to the requirements of Section 4.5 of the Partnership
Agreement.
(f) VOTING RIGHTS. Except as required by law, the
General Partner, in its capacity as the holder of
the Series A Preferred Partnership Units, shall
not be entitled to vote at any meeting of the
Partners or for any other purpose or otherwise to
participate in any action taken by the Partnership
or the Partners, or to receive notice of any
meeting of Partners.
(g) CONVERSION. The Series A Preferred Partnership Units
are not convertible into or exchangeable for an other
property or securities of the Partnership.
(h) RESTRICTIONS ON OWNERSHIP. The Series A Preferred
Partnership Units shall be owned and held solely by the
General Partner.
(i) GENERAL. The rights of the General Partner, in
its capacity as holder of the Series A Preferred
Partnership Units, are in addition to and not in
limitation on any other rights or authority of the
General Partner, in any other capacity, under the
Partnership Agreement. In addition, nothing
contained herein shall be deemed to limit or
otherwise restrict any rights or authority of the
General Partner under the Partnership Agreement,
other than in its capacity as the holder of the
Series A Preferred Partnership Units.
AMENDMENT NO. 1
TO PARTNERSHIP AGREEMENT
Amendment No. 1 dated as of March 31, 1997 by and among Chelsea GCA
Realty, Inc., a Maryland corporation, as the General Partner, and the Limited
Partners to Agreement of Limited Partnership (the "Partnership Agreement") of
Chelsea GCA Realty Partnership, L.P. dated as of October 14, 1993.
W I T N E S S E T H
WHEREAS, the General Partner and the Limited Partners are parties to
the Partnership Agreement and desire to amend the Partnership Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Terms defined in the Partnership Agreement shall have the same
meaning when used herein.
2. Section 1.1 of the Partnership Agreement is hereby amended to add
the following definitions in their appropriate alphabetical place:
"Built-in-Gain Amount" means with respect to the building
situated on the Waikele Property (as defined herein) the difference
between the Gross Asset Value and the tax basis as set forth on Exhibit
1 to this Amendment.
"Special Units" means partnership units issued in exchange
for the contribution of the Waikele Outlet Stores (the "Waikele
Property"), each of which unit being identical to a unit of Limited
Partnership Interest with all rights, benefits and privileges as are
available to the holder thereof except as specifically provided in this
Amendment. 3. The following terms contained in Section 1.1 of the
Partnership Agreement are hereby amended to read as follows:
"Holder" means either a Partner or Assignee owning a Partnership
Unit.
"Valuation Date" means the date of receipt by the General
Partner of a Notice of Exchange or Notice of Redemption or, if such
date is not a Business Day, the immediately preceding Business Day.
4. The term "Agreed Value" contained in Section 1.1 of the Partnership
Agreement is hereby amended by adding at the end thereof the following:
"and (iv) in the case of the Waikele Property
an amount equal to the difference between $76.2
million and the amount of the loans on the Waikele
Property being assumed and repaid by the Partnership
in connection with the conveyance thereof."
5. The term "Gross Asset Value" contained Section 1.1 of the
Partnership Agreement is hereby amended by adding at the end of subparagraph (a)
thereof the following:
"The initial Gross Asset Value of the Waikele Property
shall be as set forth on Exhibit 1 to this
Amendment."
6. Article 4 of the Partnership Agreement is hereby amended by adding
a new Section 4.6 to read as follows:
Section 4.6. Capital Contribution of Holders of Special Units. Upon
Contribution of the Waikele Property, holders of the Special Units shall have
initial aggregate Capital Accounts equal to the difference between $76.2 million
and the amount of the loans on the Waikele Property being assumed and repaid by
the Partnership in connection with the conveyance thereof. If an election is
made pursuant to Section 5.5 of this Amendment to receive a Special Distribution
then, following such distribution, holders of the Special Units shall have
aggregate Capital Accounts of $500,000 and the Special Units shall have an
aggregate market value of $500,000, with market value meaning the average of the
per share closing prices of a REIT Share on the New York Stock Exchange for the
ten consecutive trading days ending on the fifth trading day prior to the
acquisition of the Waikele Property. After the Special Distribution, the Capital
Account of the Special Units will be subject to all the same adjustments as
provided in the Partnership Agreement.
7. Article 5 of the Partnership Agreement is hereby amended to add new
Section 5.5 to read as follows:
Section 5.5 Special Distribution to Holders of Special Units.
The holders of Special Units in the aggregate shall have the
one time right, at such holders' sole option, to receive a debt
financed cash distribution (the "Special Distribution") which is
intended to qualify as a distribution under Regulations Section
1.707-5(b) in an amount equal to the difference between $75.7 million
and the amount of the loans on the Waikele Property being assumed and
repaid by the Partnership in connection with the conveyance thereof. In
the event holders of Special Units exercise their option to receive a
Special Distribution, the Partnership shall finance such distribution
by borrowing the proceeds under a specific loan arrangement in which
the holders of Special Units are to either guarantee or indemnify a
prior guarantor on a last loss basis.
8. Article 6 of the Partnership Agreement is hereby amended to add new
Section 6.3.A(ix) to read as follows:
(ix) Allocation in connection with Special Distribution.
There shall be specially allocated to holders of Special
Units any interest deduction attributable to the borrowing
contemplated by Section 5.5 of this Amendment and a corresponding
amount of the Partnership's income.
9. Article 6 of the Partnership Agreement is hereby amended to add new
Section 6.4.C to read as follows:
Curative Allocation to holders of Special Units
Notwithstanding Section 6.4.A and 6.4.B, the
Partnership shall account for the variation between the Waikele
Property's initial Gross Asset Value and its tax basis under the
"traditional method with curative allocations" contemplated in
Regulations Section 1.704-3(c)(3)(iii)(B). Upon the occurrence of an
event (a "Recognition Event") which otherwise would result in an
allocation of income or gain to holders of Special Units under Section
704(c) of the Code in respect of the building situated on the Waikele
Property assuming, whether or not it is in fact the case, that at the
time of such Recognition Event such building's Gross Asset Value
exceeds its tax basis, there shall be specially allocated to the
holders of Special Units (without regard to the number of Special Units
outstanding) an aggregate amount of income or gain from the disposition
of the building or other source equal to the Built-in Gain Amount.
Notwithstanding any other provisions, the character of any income or
gain (as ordinary or capital) recognized by the Partnership and
allocated to holders of Special Units shall, to the extent possible, be
consistent with the character of income or gain which would have been
recognized by holders of Special Units had such holders sold the
building situated on the Waikele Property for the Waikele Property's
initial Gross Asset Value. Allocations pursuant to this Section 6.4.C
are solely for purposes of federal, state, and local taxes and shall
not affect, or in any way be taken into account in computing, the
Capital Account or share of Profits, Losses, other items, or
distributions pursuant to any provision of the other items, or
distributions pursuant to any provision of the Partnership Agreement.
10. Article 8 of the Partnership Agreement is hereby amended to add
new Section 8.6.C.(3) to read as follows:
(3) A holder of Special Units shall not be entitled to effect an
Exchange.
11. Article 8 of the Partnership Agreement is hereby amended by adding
a new Section 8.8 to read as follows:
Section 8.8. Redemption Rights. Each holder of a Special Unit
shall have the right at any time or from time to time following the second
anniversary of the issuance of such Units to require the Partnership to redeem
(the "Redemption") for cash all or part of its Special Units at their Value (the
"Redeemed Special Units"). Such Redemption shall be exercised pursuant to a
notice of redemption (the "Notice of Redemption") substantially in the form of
Exhibit 2 to this Amendment delivered to the General Partner by the holder of
the Special Units who is exercising the relevant right (the "Tendering Special
Partner"). The Tendering Special Partner shall have no right, with respect to
any Special Units so redeemed, to receive any distributions paid after the date
of receipt by the General Partner of a Notice of Redemption. The Partnership
shall pay the Value for the Redeemed Special Units within five business days
after receipt of the Notice of Redemption in accordance with the instructions
contained in the Notice of Redemption. Upon the Redemption of all Special Units,
any indemnity or guarantee given by the holders of Special Units with respect to
any debt obligation of the Partnership (whether pursuant to Section 5.5 of this
Amendment or otherwise) shall be eliminated and of no further force or effect.
For purposes of this Section 8.8, "Value" with respect to a Special Unit shall
have the same meaning as the term "Value" is used herein with respect to a REIT
share.
12. Section 11.6A of the Partnership Agreement is hereby amended to
read as follows:
"A. No Limited Partner may withdraw from the Partnership other
than as a result of a permitted transfer of all of such
Limited Partner's Partnership Units in accordance with this
Article 11, pursuant to the exercise of its right of Exchange
of all of its Partnership Units under Section 8.6 or pursuant
to the exercise of its Redemption rights under Section 8.8."
13. Section 11.D of the Partnership Agreement is hereby amended by
adding the following sentence after the first sentence:
"With respect to the transfer of a Partnership Interest in any
Special Unit during any quarterly segment of the Partnership's
fiscal year in compliance with the provisions of this Article
11 or redeemed pursuant to Section 8.8, Net Income, Net
Losses, each item thereof and all other items attributable to
such interest for such fiscal year shall be divided and
allocated between the transferor Partner and the transferee
Partner by taking into account their varying interests during
the fiscal year in accordance with Section 706(c) of the Code,
using the interim closing of the books method or any other
permissible method selected by the General Partner in the
exercise of its reasonable discretion."
14. The holder or holders of Special Units shall be admitted to the
Partnership as Additional Limited Partners and Exhibit A to the Partnership
Agreement is hereby amended to add the holders as set forth on Exhibit A to this
Amendment.
15. Except as amended hereby, the Partnership Agreement remains
unmodified and in full force and effect.
16. This Amendment may be executed in counterparts, all of which taken
together shall be deemed to be one and the same document.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
1 to the Partnership Agreement to be executed as of the day and year first above
written.
CHELSEA GCA REALTY
PARTNERSHIP, L.P.
By: Chelsea GCA Realty, Inc.
General Partner
By: _________________________
LIMITED PARTNERS
WOODBURY FAMlLY ASSOCIATES, L.P.
By: ___________________________
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EXHIBIT A
Name and Address Number of Units
KM Halawa Partners 13,708 (Special Units)
Suite 1050, Pauahi Tower
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EXHIBIT 1
Adjusted Tax Basis Gross Asset Value
Land $22.8 million $22.8 million
Personal Property (5&7 Yr Assets) 0.2 million 0.2 million
Land improvements (15 Yrs Assets) 8.2 million 8.2 million
Building (31.5 & 39 Yr Assets) 28.8 million 45 million
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EXHIBIT 2
NOTICE OF REPURCHASE
The undersigned hereby irrevocably (i) elects to require Chelsea GCA
Realty Partnership, L.P. to repurchase __ Special Units in accordance with the
terms of the Limited Partnership Agreement of Chelsea GCA Realty Partnership,
L.P., as amended, (ii) surrenders such Special Units and all right, title and
interest therein, and (iii) directs that the check deliverable upon such
repurchase be delivered to the address specified below, and such check be issued
in the name(s) specified below.
Dated: __________________________
Name of Limited Partner
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(Signature of Limited Partner)
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(Street Address)
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(City) (State) (Zip Code)
Issue Check to:
Please insert social security or identifying number:
Name: