EXHIBIT 10.9
AMENDMENT NO. 8 TO THE SECOND AMENDED
AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
▇▇▇▇ LIMITED PARTNERSHIP
This Amendment No. 8 (this "Amendment") to the Second Amended and
Restated Agreement of Limited Partnership of ▇▇▇▇ Limited Partnership dated July
11, 1997 (the "Partnership Agreement") is entered into as of February 24, 2004,
by and among Winston Hotels, Inc., a North Carolina corporation (the "General
Partner"), and the limited partners (the "Limited Partners") of ▇▇▇▇ Limited
Partnership (the "Partnership"). All capitalized terms used herein and not
otherwise defined shall have the meanings assigned to them in the Partnership
Agreement.
WHEREAS, the General Partner, on even date herewith, has issued
3,680,000 shares of its 8.00% Series B Cumulative Preferred Stock, $.01, par
value per share, having a liquidation preference equivalent to $25.00 per share
(the "Series B Preferred Stock"), and has sold such Series B Preferred Stock in
an underwritten public offering (the "Series B Offering");
WHEREAS, the General Partner desires to contribute the net proceeds of
the sale of the Series B Preferred Stock to the Partnership in exchange for the
issuance to the General Partner of preferred 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 the General Partner in exchange for such
contribution of such net proceeds made by the General Partner;
WHEREAS, the Partnership will use a portion of the net proceeds to
redeem from the General Partner currently outstanding Series A Preferred Units
in the Partnership (as set forth herein).
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree to amend
the Partnership Agreement as follows:
SECTION 1. CONTRIBUTION.
The General Partner hereby contributes to the Partnership the entire
net proceeds received by the Corporation from the issuance of the Series B
Preferred Stock. As provided in Section 4.02(g) of the Partnership Agreement,
the Corporation shall be deemed to have made a Capital Contribution to the
Partnership in an amount equal to the gross proceeds raised in connection with
the issuance of such shares of Series B Preferred Stock, which is $92,000,000,
and the Partnership shall be deemed simultaneously to have paid, pursuant to
Section 6.05(b) of the Partnership Agreement, for the costs and expenses
relating to the offer, registration and sale of the Series B Preferred Stock.
SECTION 2. ISSUANCE OF SERIES B PREFERRED 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 3,680,000 Series B Preferred Units (as defined below).
SECTION 3. DEFINITIONS.
Article I of the Partnership Agreement is hereby amended by inserting
in the appropriate alphabetical locations the following definitions of Series B
Preferred Return, Series B Preferred Stock and Series B Preferred Units, as
follows:
"Series B Preferred Return" means an annualized amount equal to $2.00
per Series B Preferred Unit.
"Series B Preferred Stock" means the 8.00% Series B Cumulative
Preferred Stock, $.01 par value per share, of the Corporation.
"Series B Preferred Units" means the Preferred Units issued to the
General Partner in exchange for the net proceeds of the issuance by the
Corporation of its Series B Preferred Stock, which Series B Preferred Units
shall have the designations, preferences, privileges, limitations and relative
rights set forth in Section 4.02(c)(ii) hereof.
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SECTION 4. REDEMPTION OF SERIES A PREFERRED UNITS.
The Partnership hereby redeems the Series A Preferred Units in the
Partnership. Effective upon the redemption of the Series A Preferred Units,
Section 4.02(c)(i) of the Partnership Agreement, as set forth in Section 4 of
Amendment No. 1 to the Partnership Agreement, shall be deleted in its entirety
and Section 4.02(c)(i) shall hereinafter read "[Intentionally Left Blank]."
SECTION 5. CREATION OF SERIES B PREFERRED UNITS.
Article IV of the Partnership Agreement is hereby amended by adding
Section 4.02(c)(ii) as follows:
"(ii) 8.00% Series B Cumulative Preferred Units.
(1) Designation and Number. A series of Preferred Units,
designated the "8.00% Series B Cumulative Preferred Units" (the "Series
B Preferred Units"), is hereby established. The number of Series B
Preferred Units shall be 3,680,000.
(2) Rank. The Series B Preferred Units will, with respect to
distribution rights and rights upon liquidation, dissolution or winding
up of the Partnership, rank (i) senior to all classes or series of
Common Units of the Partnership, and to all Partnership Units ranking
junior to the Series B Preferred Units with respect to distribution
rights or rights upon liquidation, dissolution or winding up of the
Partnership; (ii) on a parity with all Partnership Units issued by the
Partnership the terms of which specifically provide that such
Partnership Units rank on a parity with the Series B Preferred Units
with respect to distribution rights or rights upon liquidation,
dissolution or winding up of the Partnership; and (iii) junior to all
existing and future indebtedness of the Partnership. The term
"Partnership Units" does not include convertible debt securities, which
will rank senior to the Series B Preferred Units prior to conversion.
(3) Distributions.
(a) Holders of the Series B Preferred Units are entitled
to receive, when and as distributed by the General Partner out of
available cash flow, preferential cumulative cash distributions in an
amount equal to the excess, if any, of (i) the cumulative Series B
Preferred Return for the current and all prior years over (ii) the sum
of all prior Series B Preferred Return distributions pursuant to this
Section 4.02(c)(ii)(3). Distributions on the Series B Preferred Units
shall be cumulative from the date of original issue and shall be
payable quarterly in arrears on or before the 16th day of January,
April, July and October of each year, or, if not a Business Day (as
defined below), the next succeeding business day (each, a "Distribution
Payment Date"). The first distribution will be paid on or before April
16, 2004. The first distribution will be prorated for less than a full
quarter. Any distribution payable on the Series B Preferred Units for
any partial distribution period will be computed on the basis of a
360-day year consisting of twelve 30 day months. Distributions will be
payable to holders of record as they appear in the ownership records of
the Partnership at the close of business on the applicable record date,
which shall be the last Business Day of each of March, June, September
and December immediately preceding such Distribution Payment Date, or
on such other date designated by the General Partner of the Partnership
for the payment of distributions that is not more than 30 nor less than
10 days prior to such Distribution Payment Date (each, a "Distribution
Record Date"). "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 New York City are authorized or required by law,
regulation or executive order to close.
(b) The amount of any distributions accrued on any Series
B Preferred Units at any Distribution Payment Date shall be the amount
of any unpaid distributions accumulated thereon, to and including such
Distribution Payment Date, whether or not earned or declared, and the
amount of distributions accrued on any Series B Preferred Units at any
date other than a Distribution Payment Date shall be equal to the sum
of the amount of any unpaid distributions accumulated thereon, to and
including the last preceding Distribution Payment Date, whether or not
earned or declared, plus an amount calculated on the basis of the
Series B Preferred Return for the period after such last preceding
Distribution Payment Date to and including the date as of which the
calculation is made based on a 360-day year of twelve 30-day months.
(c) Except as provided in subsection (a) hereof, the
holder of the Series B Preferred Units will not be entitled to any
distributions in excess of full cumulative distributions as described
above and shall not be entitled to
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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 payment or payments on the Series B
Preferred Units which may be in arrears.
(d) No distributions on Series B Preferred Units shall be
declared by the General Partner or paid or set apart for payment by the
Partnership if the terms and provisions of any agreement of the
Partnership, including any agreement relating to its indebtedness,
prohibit such declaration, payment or setting apart for payment or
provide that such declaration, payment or setting apart for payment
would constitute a breach thereof or a default thereunder, or if such
declaration or payment shall be restricted or prohibited by law.
Notwithstanding the foregoing, distributions on the Series B Preferred
Units will accrue whether or not the Partnership has earnings, whether
or not there is available cash flow for the payment of such
distributions and whether or not such distributions are declared.
Accrued but unpaid distributions on the Series B Preferred Units will
not bear interest and holders of the Series B Preferred Units will not
be entitled to any distributions in excess of full cumulative
distributions described above.
(e) Except as set forth in the next sentence, no
distributions will be declared or paid or set apart for payment on any
Partnership Units or any other series of Preferred Units ranking, as to
distributions, on a parity with or junior to the Series B Preferred
Units (other than a distribution of the Partnership's Common Units or
any other class of Partnership Units ranking junior to the Series B
Preferred Units as to distributions and upon liquidation) for any
period unless full cumulative distributions have been or
contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof is set apart for such payment on the
Series B Preferred Units for all past distribution periods and the then
current distribution period. When distributions are not paid in full
(or a sum sufficient for such full payment is not so set apart) upon
the Series B Preferred Units and any other series of Preferred Units
ranking on a parity as to distributions with the Series B Preferred
Units, all distributions declared upon the Series B Preferred Units and
any other series of Preferred Units ranking on a parity as to
distributions with the Series B Preferred Units shall be declared pro
rata so that the amount of distributions declared per Series B
Preferred Unit and such other series of Preferred Units shall in all
cases bear to each other the same ratio that accrued distributions per
Series B Preferred Unit and such other series of Preferred Units (which
shall not include any accrual in respect of unpaid distributions for
prior distribution periods if such Preferred Units do not have a
cumulative distribution) bear to each other.
(f) Except as provided in the immediately preceding
paragraph, unless full cumulative distributions on the Series B
Preferred Units have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof is set apart for
payment for all past distribution periods and the then current
distribution period, no distributions (other than a distribution of
Common Units or other Partnership Units ranking junior to the Series B
Preferred Units as to distributions and upon liquidation) shall be
declared or paid or set aside for payment nor shall any other
distribution be declared or made upon the Common Units, or any other
Partnership Units ranking junior to or on a parity with the Series B
Preferred Units as to distributions or upon liquidation, nor shall any
Common Units, or any other Partnership Units in the Partnership ranking
junior to or on a parity with the Series B Preferred Units as to
distributions or upon liquidation be redeemed, purchased or otherwise
acquired for any consideration (or any monies be paid to or made
available for a sinking fund for the redemption of any such units) by
the Partnership. Holders of Series B Preferred Units shall not be
entitled to any distribution, whether payable in cash, property or
securities in excess of full cumulative distributions on the Series B
Preferred Units as provided above.
(4) Liquidation Preference. Upon any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Partnership, the holders of Series B Preferred Units are entitled to be
paid out of the assets of the Partnership legally available for
distribution to its partners a liquidation preference of $25.00 per
Series B Preferred Unit (the "Liquidation Preference"), plus an amount
equal to any accrued and unpaid distributions with respect to the
Series B Preferred Units to the date of payment, but without interest,
before any distribution of assets is made to holders of Common Units or
any other class or series of Partnership Units in the Partnership that
ranks junior to the Series B Preferred Units as to liquidation rights.
The Partnership will promptly provide to the holders of Series B
Preferred Units written notice of any event triggering the right to
receive such Liquidation Preference. After payment of the full amount
of the Liquidation Preference, the holders of Series B Preferred Units
will have no right or claim to any of the remaining assets of the
Partnership. If, upon any voluntary or involuntary dissolution,
liquidation, or winding up of the Partnership, the amounts payable with
respect to the Liquidation Preference, plus an amount equal to any
accrued and unpaid distributions to the date of payment, of the Series
B Preferred Units and any other units of the Partnership ranking as to
any such distribution on a parity with the Series B Preferred Units are
not paid in full, the holders of the Series B Preferred Units and of
such other units will share ratably in any such distribution of assets
of the Partnership in proportion to the full respective preference
amounts to which they are entitled. The consolidation or merger of the
Partnership with or into any other partnership, corporation, trust or
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entity or of any other partnership or corporation with or into the
Partnership, or the sale, lease or conveyance of all or substantially
all of the property or business of the Partnership, shall not be deemed
to constitute a liquidation, dissolution or winding up of the
Partnership.
(5) Redemption.
(a) Except as provided in Section 5(b) hereof, the Series
B Preferred Units are not redeemable by the Partnership prior to
February 24, 2009. On and after February 24, 2009, the Partnership, at
its option upon not less than 30 nor more than 60 days' written notice,
may redeem the Series B Preferred Units, in whole or in part, at any
time or from time to time, for cash at a redemption price of $25.00 per
Series B Preferred Unit, plus all accrued and unpaid distributions
thereon to the date fixed for redemption, without interest. A holder
shall surrender its Series B Preferred Units at the place designated in
such notice and shall be entitled to the redemption price and any
accrued and unpaid distributions payable upon such redemption following
such surrender. If notice of redemption of any Series B Preferred Units
has been given and if the funds necessary for such redemption have been
set aside by the Partnership in trust for the benefit of the holders of
any Series B Preferred Units so called for redemption, then from and
after the redemption date distributions will cease to accrue on such
Series B Preferred Units, such Series B Preferred Units shall no longer
be deemed outstanding and all rights of the holders of such Series B
Preferred Units will terminate, except the right to receive the
redemption price. If less than all of the outstanding Series B
Preferred Units are to be redeemed, the Series B Preferred Units to be
redeemed shall be selected pro rata (as nearly as may be practicable
without creating fractional Series B Preferred Units) or by any other
equitable method determined by the General Partner.
(b) (i) At any time prior to February 24, 2009, for
so long as a separate class vote of the holders of the Series B
Preferred Stock is required under applicable law upon the occurrence of
a Change of Control Event (as defined below), the Partnership may, at
its option, upon the occurrence of a Change of Control Event (as
defined below) redeem all of the outstanding Series A Preferred Units
at the applicable redemption price reflected below, plus accrued and
unpaid distributions (if any) to the date of redemption. The redemption
price shall be as follows:
DATE OF REDEMPTION
----------------------------------------------------------------------
PURCHASE
FROM THROUGH PRICE
----------------- -------------------------------- --------
February 24, 2004 March 31, 2004.................. $26.25
April 1, 2004 June 30, 2004................... 26.19
July 1, 2004 September 30, 2004.............. 26.13
October 1, 2004 December 31, 1004............... 26.06
January 1, 2005 March 31, 2005.................. 26.00
April 1, 2005 June 30, 2005................... 25.94
July 1, 2005 September 30, 2005.............. 25.88
October 1, 2005 December 31, 2005............... 25.81
January 1, 2006 March 31, 2006.................. 25.75
April 1, 2006 June 30, 2006................... 25.69
July 1, 2006 September 30, 2006.............. 25.63
October 1, 2006 December 31, 2006............... 25.56
January 1, 2007 March 31, 2007.................. 25.50
April 1, 2007 June 30, 2007................... 25.44
July 1, 2007 September 30, 2007.............. 25.38
October 1, 2007 December 31, 2007............... 25.31
January 1, 2008 March 31, 2008.................. 25.25
April 1, 2008 June 30, 2008................... 25.19
July 1, 2008 September 30, 2008.............. 25.13
October 1, 2008 December 31, 2008............... 25.06
January 1, 2009 February 24, 2009............... 25.00
Such redemption may be consummated at any time prior to,
contemporaneously with or after the Change of Control (as defined
below), provided that notice of any such redemption pursuant to this
paragraph is given no later than 90 days following the date upon which
the Change of Control Event occurred, the repurchase date must be
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within 60 days of the date of notice and a sum sufficient to redeem the
shares must be set apart to effect the redemption.
(ii) For purposes of this clause (b), the terms
"Change of Control" and "Change of Control Event" shall mean a Change
of Control or Change of Control Event with respect to the General
Partner, each as defined in the Articles of Amendment to the Restated
Articles of Incorporation of the General Partner, as filed with the
Secretary of State of the State of North Carolina on February 18, 2004.
(c) Notice of redemption will be mailed or delivered to
holders of Series B Preferred Units not less than 30 nor more than 60
days prior to the redemption date. In addition to any information
required by law, each notice shall state: (i) the Redemption Date; (ii)
the Redemption Price; (iii) the number of Series B Preferred Units to
be redeemed; (iv) the place or places where the Series B Preferred
Units are to be surrendered for payment of the redemption price; and
(v) that distributions on the Series B Preferred Units to be redeemed
will cease to accrue on such redemption date. If less than all of the
Series B Preferred Units held by any holder are to be redeemed, the
notice mailed to such holder shall also specify the number of Series B
Preferred Units held by such holder to be redeemed.
(d) Immediately prior to any redemption of Series B
Preferred Units, the Partnership shall pay, in cash, any accumulated
and unpaid distributions through the redemption date, unless a
redemption date falls after a Distribution Record Date and prior to the
corresponding Distribution Payment Date, in which case each holder of
Series B Preferred Units at the close of business on such Distribution
Record Date shall be entitled to the distribution payable on such
shares on the corresponding Distribution Payment Date notwithstanding
the redemption of such shares before such Distribution Payment Date.
(e) If the Partnership exercises its optional redemption
right with respect to the Series B Preferred Units pursuant to this
Section 4.02(c)(ii)(5), then the General Partner must redeem a
corresponding number of shares of Series B Preferred Stock. Similarly,
if the General Partner exercises its optional redemption right with
respect to shares of Series B Preferred Stock, then the Partnership
must redeem a corresponding number of Series B Preferred Units.
(6) Voting Rights. Except as provided by law, the General Partner,
in its capacity as the holder of the Series B Preferred Units, shall
not be entitled to vote for any purpose or otherwise participate in any
action taken by the Partnership or the Partners.
(7) Conversion. Except as provided in Section 4.02(c)(ii)(5)
hereof, the Series B Preferred Units are not redeemable for,
convertible into or exchangeable for any other property or securities
of the Partnership or the General Partner."
SECTION 6. ALLOCATION OF PROFIT AND LOSS.
Article V, Section 5.01(e) is hereby deleted in its entirety and the
following new Section 5.01(e) is inserted in its place:
"(e) Priority Allocations With Respect To Series B Preferred
Units. After giving effect to the allocations set forth in Sections
5.01(b), (c), and (d) hereof, but before giving effect to the
allocations set forth in Section 5.01(a), Net Operating Income shall be
allocated to the General Partner until the aggregate amount of Net
Operating Income allocated to the General Partner under this Section
5.01(e) for the current and all prior years equals the aggregate amount
of the Series B Preferred Return paid to the General Partner pursuant
to Sections 4.02(c)(ii)(3) and 4.02(c)(ii)(4) hereof for the current
and all prior years. For purposes of this Section 5.01(e), "Net
Operating Income" means the excess, if any, of the Partnership's gross
income over its expenses (but not taking into account depreciation,
amortization, or any other noncash expenses of the Partnership),
calculated in accordance with the principles of Section 5.01(g)
hereof."
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IN WITNESS WHEREOF, the foregoing Amendment No. 8 to the Second Amended
and Restated Agreement of Limited Partnership of ▇▇▇▇ Limited Partnership has
been signed and delivered as of this 24th day of February, 2004, by the
undersigned sole general partner of the Partnership, as general partner and on
behalf of the Limited Partners.
WINSTON HOTELS, INC.,
as General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Financial Officer
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EXHIBIT A
SERIES B PREFERRED UNITS
(EFFECTIVE AS OF FEBRUARY 24, 2004)
CASH AMOUNT OF CAPITAL PERCENTAGE OF SERIES B
PARTNER AND ADDRESS CONTRIBUTION PREFERRED UNITS PREFERRED UNITS
------------------- ------------ --------------- ---------------
Winston Hotels, Inc. $92,000,000 3,680,000 100.0%
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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