CERTIFICATE OF DESIGNATION
OF
SERIES A PREFERRED
OPERATING PARTNERSHIP UNITS
OF
LIMITED PARTNERSHIP INTEREST
OF
ACADIA REALTY LIMITED PARTNERSHIP
Series A Preferred Units
A series of ______ operating units of Preferred Limited Partnership
Interests, par value $0.001 per unit of ACADIA REALTY LIMITED PARTNERSHIP (the
"Company"), a Delaware limited partnership, shall be created and be designated
"Series A Preferred Units" having the following rights and preferences:
DESIGNATION OF SERIES A PREFERRED UNITS. The rights, references,
powers, privileges and restrictions, qualifications and limitations granted to
or imposed upon the Series A Preferred Units (referred to hereinafter sometimes
as the "Designation") shall be as set forth below. This Certificate of
Designation shall incorporate by reference the terms and obligations set forth
in Article 13 of that certain Agreement of Contribution between AmCap,
Incorporated, Berlind Group, Inc., H. Robert Holmes, Lennox Securities, Inc. and
Ralph Worthington IV and Pacesetter/Ramapo Associates, Acadia Pacesetter LLC
("Acadia"), the Company and Acadia Realty Trust, dated as of November 8, 1999.
The Company may issue other additional series of Preferred Units whose rights,
preferences, powers, privileges and restrictions, qualifications and limitations
regarding Distributions (as hereinafter defined) and or liquidation are either
subordinate to, or pari passu with, the Designations of the Series A Preferred
Units, but in no event shall the Company issue any other Series A Preferred
Units except to the holders thereof in accordance with the terms hereof.
Notwithstanding anything to the contrary contained herein, the Company may issue
Preferred Units which are senior to the Series A Preferred Units but only in
exchange for a cash capital contribution. Capitalized terms used and not
otherwise defined herein shall have the meanings set forth in the Company's
Amended and Restated Partnership Agreement, dated as of March 22, 1999, (the
"Partnership Agreement"). The Partnership Agreement is on file at the principal
place of business of the Company and copies will be made available on request
and without cost to any unit holder of the Company so requesting.
1. Stated Value. The stated value of the Series A Preferred Units shall
be One Thousand Dollars ($1,000.00) per unit (the "Stated Value").
2. Distributions,
(a) Subject to Section 2(b) below, commencing from the date of
initial Issuance of units of Series A Preferred Units (the "Date of Issuance"),
distributions (the "Distributions") on each unit of Series A Preferred Units
shall be payable in arrears quarterly in an amount equal to the greater of(i)
$22.50 or (ii) the quarterly distribution attributable to a unit of Series A
Preferred Units if such unit had been converted into Common Units (as
hereinafter defined) pursuant to Section 4 hereof. The Distributions shall be
declared and payable whenever distributions on the Common Units (defined below)
are declared and paid (a "Distribution Payment Date"). If on any Distribution
Payment Date the Company shall not be lawfully permitted under Delaware law to
pay all or a portion of any such
declared Distributions, the Company shall take such action as may be lawfully
permitted in order to enable the Company to the extent permitted by Delaware
law, lawfully to pay such Distributions. Distributions shall be cumulative in
amounts equal to amounts described in subparagraphs (i) and (ii) above of this
Section 2 (a) (the "Distribution Rate") from the Date of Issuance, whether or
not in any Distribution period such Distribution shall be declared or there
shall be funds of the Company legally available for payment of such
Distributions. In addition, if a Distribution is not made in any quarter at the
Distribution Rate, then such Distribution shortfall shall bear interest from the
last day of such quarter until the date paid (whether in cash or, pursuant to
the next sentence, in Common Units) at an annual rate equal to the greater of
(a) nine percent (9%) per annum or (b) the Prime Rate as published in the New
York Times or the Wall Street Journal. If during any period of five consecutive
quarters, the Partnership has failed to make Distributions to holders of the
Series A Preferred Units in amounts which, in the aggregate, equal or exceed the
Distribution Rate for such five quarter period, the holders of the Series A
Preferred Units may convert some or all of such Units to Common Units at the
lesser of (1) $7.50 or (ii) the Market Price (as defined in the Partnership
Agreement) on the date of such conversion. If during any period of five
consecutive quarters, the Partnership has failed to make Distributions to
holders of the Series A Preferred Units in amounts which, in the aggregate,
equal or exceed the Distribution Rate for such five quarter period, such holders
may also require the Company to issue to such holders, at any time and from time
to time, Common Units equal in value to the amount by which Distributions for
the period are less than the Distribution Rate for the period, plus interest on
such shortfall as provided above (based on the Market Price on the date such
holder requests payment in the form of Common Units). No Distributions shall be
declared or paid on any class of Common Units or any other class or series of
Preferred Units, other than Distributions declared and paid on such series of
Preferred Units which, by the terms of such series, Certificate of Designation,
have rights, preferences, powers, privileges and restrictions, qualifications
and limitations that are senior or pari passu with the Series A Preferred Units
(such Preferred Units hereinafter referred to as "Qualifying Preferred Units")
until all Distributions, if any, due and legally payable on the Series A
Preferred Units have been paid to the holders of such units. The record date for
the payment of Distributions on the Series A Preferred Units shall be the day
immediately prior to each such Distribution Payment Date.
(b) For purposes of this Certificate of Designation "Business
Day" shall mean any day, excluding Saturday, Sunday and any other day on which
commercial banks in New York are authorized or required by law to close.
3. Liquidation. The Series A Preferred Units shall be preferred as to
assets over any class of Common Units or other class of preferred units of the
Company, other than Qualifying Preferred Units, such that in the event of the
voluntary or involuntary liquidation, dissolution or winding up of the Company,
the holders of the Series A Preferred Units shall be entitled to have set apart
for them, or to be paid out of the assets of the Company, before any
distribution is made to or set apart for the holders of the Common Units or
other series of preferred units or any other capital interest heretofore or
hereafter issued, other than Qualifying Preferred Units, an amount in cash equal
to the Stated Value per unit plus any "Accrued Distributions" (as defined below)
as of such date of payment. "Accrued Distributions" shall mean, as of any date
of determination, an amount equal to the amount of Distributions, determined at
the rate fixed for the payment of distributions on the Series A Preferred Units
on such date as provided in Section 2 hereof which would be paid on the Series A
Preferred Units for the period of time elapsed from the most recent actual
Distribution Payment Date to the date of determination together with any
Distribution shortfall and interest thereon as provided in Section 2(a). If the
assets or surplus funds to be distributed to the holders of the Series A
Preferred Units are insufficient to permit the payment to such holders of their
full preferential amount, the assets and surplus funds legally available for
distribution shall be distributed ratably among the holders of the Series A
Preferred Units in proportion to the full preferential amount each such holder
is otherwise entitled to receive.
4. Conversion of Series A Preferred Units.
The holders of Series A Preferred Units shall have the
following conversion rights:
(i) Optional Right to Convert. Each Series A Preferred Unit
shall be convertible, at any time or from time to time (with each such date
being referred to as the "Conversion Date") and at the Conversion Price set
forth below, into fully paid and nonassessable common units of limited partner
interests of the Company ("Common Units"), at the option of the holder as set
forth below ("Optional Conversion").
(ii) Mechanics of Conversion. Each holder of Series A
Preferred Units who desires to convert part or all of the Series A Preferred
Units held by it from time to time into Common Units shall provide notice to the
Company in the form of the Notice of Conversion attached to the certificate
pursuant to which the Series A Preferred Units were issued (which certificate
and conversion notice (a "Conversion Notice") shall be in the form annexed
hereto as Exhibit A) via telecopy, hand delivery or other mail or messenger
service. The original Conversion Notice and the certificate or certificates
representing the Series A Preferred Units for which conversion is elected (or an
affidavit in form and substance reasonably satisfactory to the Company as to
loss or destruction of such certificate or certificates), shall be delivered to
the Company by nationally recognized courier, duly endorsed. The date upon which
a Conversion Notice is initially received by the Company shall be a "Notice
Date."
The Company shall issue and deliver within three (3) Business
Days after the Notice Date, to such holder of Series A Preferred Units at the
address of the holder on the books of the Company, (i) a certificate or
certificates for the number of Common Units to which the holder shall be
entitled as set forth herein and (ii) if the Series A Preferred Units
represented by such certificate have been converted only in part, a new
certificate evidencing the Series A Preferred Units not subject to the
conversion. The person or persons entitled to receive the Common.Units issuable
upon such conversion shall be treated for all purposes as the record holder or
holders of such Common Units on the date both of the Conversion Notice and
original certificates (or affidavits) are received.
(iii) Conversion Price. Each Series A Preferred Unit shall be
convertible into a number of Common Units or fraction of Common Units obtained
pursuant to the following formula (the "Conversion Formula"):
Redemption Price
----------------
Conversion Price
where:
Redemption for each Series A Preferred Unit for which
Price = conversion is being elected, such unit's Stated
Value, plus any Accrued Distributions:
Conversion
Price = $7.50
Notwithstanding the foregoing, with respect to (i) an Optional
Conversion after the seventh anniversary of the date hereof ("Seventh
Anniversary") or (ii) any Mandatory Conversion, the Conversion Price shall be
$7.50 unless during the period commencing on the first anniversary of the date
hereof and ending on the Seventh Anniversary, the average closing price of a
Common Share for any three (3) out of four (4) consecutive calendar quarters
does not equal or exceed $7.50, in which event the Conversion Price shall equal
the lesser of (i) $7.50 and (ii) the Market Price on the Mandatory Conversion
Date or Notice Date, as applicable. The Conversion Price for an Optional
Conversion prior to the Seventh Anniversary shall be $7.50.
(iv) Mandatory Conversion. At any time following the Seventh
Anniversary, the Company may cause the conversion (a "Mandatory Conversion") of
the Series A Preferred Units outstanding on the Mandatory Conversion Date (as
hereinafter defined) into Common Units pursuant to the Conversion Formula as set
forth above; provided, however, that no Mandatory Conversion may be effective
with a Mandatory Conversion Date during the time between the record date for
Distributions and the Distribution Payment Date for such record date.
To effect a Mandatory Conversion, the Company shall issue to
each holder of record an irrevocable notice stating that the Company is
effecting a Mandatory Conversion with regard to the Series A Preferred Units.
Such notice shall contain a statement indicating the number of Series A
Preferred Units subject to the Mandatory Conversion, and if less than all
outstanding Series A Preferred Units are being so converted, the percentage of
Series A Preferred Units held by each holder subject to the Mandatory
Conversion. Unless otherwise agreed to by all the holders of Series A Preferred
Units and the Company, any such Mandatory Conversion shall be exercised by the
Company on a pro rata basis among all holders of Series A Preferred Units. On
the Mandatory Conversion Date, each certificate representing Series A Preferred
Units outstanding shall automatically, with no further action required by any
holder or the Company, represent the number of Common Units of such holder, and
such Series A Preferred Units remaining if less than all outstanding units of
Series A Preferred Units were so converted, for which each Series A Preferred
Unit was converted in accordance with this Section 4(iv). As promptly as
practicable after the Mandatory Conversion Date and in no event more than three
(3) Business Days after the Mandatory Conversion Date, the Company shall issue
and shall deliver to the holders of Series A Preferred Units subject to the
Mandatory Conversion (i) a certificate representing the number of Common Units
to which the Series A Preferred Units were converted in accordance with the
provisions of this Section 4(iv) and (ii) if less than all outstanding Series A
Preferred Units were so converted, upon submission to the Company of the
certificate or certificates representing the Series A Preferred Units held by
such holder immediately prior to the Mandatory Conversion, a new certificate
evidencing the Series A Preferred Units held by such holder immediately
following the Mandatory Conversion (until such time as such certificate or
certificates are submitted to the Company, the certificate or certificates
representing the Series A Preferred Units held by a holder immediately prior to
the Mandatory Conversion shall be deemed to represent the number of Series A
Preferred Units held by such holder immediately following the Mandatory
Conversion). Such conversion shall be deemed to have been effected on the
opening of business on the date the notice was received by the holders of record
of Series A Preferred Units (the "Mandatory Conversion Date"), and at such time
the rights of the holder as holder of the converted Series A Preferred Units
shall cease and the person or persons in whose name or names any certificate or
certificates for Common Units shall be issuable upon such Mandatory Conversion
shall be deemed to have become the holder or holders of record of the Common
Units represented thereby and shall be immediately eligible to convert such
Common Units to shares of the REIT by notice to the Company without further
deliveries.
(v) Reservation of Common Units Issuable Upon Conversion. The
Company shall at all times reserve and keep available out of its authorized but
unissued Common Units, solely for the purpose of effecting the conversion of the
Series A Preferred Units, such number of its Common Units as shall from time to
time be sufficient to effect the conversion of all then outstanding Series A
Preferred Units. If at any time the number of authorized but unissued Common
Units shall not be sufficient to effect the conversion of all then outstanding
Series A Preferred Units, no Mandatory Conversion may take place and the Company
will take such action as may be necessary to increase its authorized but
unissued Common Units to such number of units as shall be sufficient for such
purpose.
(vi) Adjustment to Conversion Price.
------------------------------
(a) If, prior to the conversion of all Series A
Preferred Units, the number of outstanding Common Units is increased by a unit
split, reclassification Of units or other similar event, the Conversion Price
shall be proportionately reduced, or if the number of outstanding Common Units
is decreased by a combination or reclassification of units. or other similar
event, the Conversion Price shall be proportionately increased.
(b) If prior to the conversion of all Series A
Preferred Units, there shall be any merger, consolidation, exchange of units,
recapitalization reorganization, or other similar event (each, an "Adjustment
Event"), as a result of which Common Units of the Company shall be changed into
the same or a different number of securities of the same or another class or
classes of units or securities of the Company or another entity (the "Substitute
Units:), then the holders of Series A Preferred Units shall thereafter have the
right to receive upon conversion of Series A Preferred Units, upon the basis and
upon the terms and conditions specified herein and in lieu of the Common Units
otherwise issuable upon conversion, such number of Substitute Units as would
have been issuable with respect to or in exchange for the number of Common Units
that would have been issuable upon the conversion of Series A Preferred Units
held by such holders immediately prior to such Adjustment Event. In any such
case appropriate provisions shall be made with respect to the rights and
interest of the holders of the Series A Preferred Units to the end that the
provisions hereof (including, without limitation, provisions for adjustment of
the Conversion Price and of the number of Common Units issuable upon conversion
of the Series A Preferred Units) shall thereafter be applicable, as nearly as
may be practicable in relation to any units or securities thereafter deliverable
upon the exercise hereof. The Company shall not effect any transaction described
in this subsection unless the resulting successor or acquiring entity (if not
the Company) assumes by written instrument the obligation to deliver to the
holders of the Series A Preferred Units such units and/or securities as, in
accordance with the foregoing provisions, the holders of the Series A Preferred
Units may be entitled to receive upon conversion thereof.
(c) If any adjustment under this subsection would
create a fractional unit of Common Units or a right to acquire a fractional unit
of Common Units, such fractional units shall be issued.
v. Status of Converted Units. In the event any Series A
Preferred Units shall be converted as contemplated by this Certificate of
Designation, the units so converted shall be retired, canceled, and shall not be
issuable by the Company as Series A Preferred Units.
vi. Distributions on Converted Units. All distributions to be
made with respect to Common Units received pursuant to an Optional Conversion of
Series A Preferred Units or a Mandatory Conversion of Series A Preferred Units
shall be determined as if the Common Units were received on the first Business
Day following the date of the last regular distribution made with respect to the
Common Units (i.e. the holders of the Common Units received upon conversion
shall be entitled to the full quarterly distribution with respect to such Common
Units); provided, however, that in the case of a Mandatory Conversion, if such
Mandatory Conversion occurs on a date other than a Distribution Payment Date, on
the Distribution Payment Date immediately following the Mandatory Conversion,
the holder of Common Units received pursuant to such Mandatory Conversion shall
receive a distribution equal to the greater of (i) the distribution to be
received by holders of Common Units on such date (the "Common Unit
Distribution") and (ii) the sum of (A) the Distribution multiplied by the
quotient obtained by dividing (i) the number of days elapsed between the
previous Distribution Payment Date and the Mandatory Conversion Date by (ii) the
total number of days elapsed between the previous Distribution Payment Date and
the then current Distribution Payment Date (the "Total Conversion Period Days")
and (B) the Common Unit Distribution multiplied by the quotient obtained by
dividing (i) the number of days elapsed between the Mandatory Conversion Date
and the then current Distribution Payment Date by (ii) the Total Conversion
Period Days.
5. No Reissuance. Any Series A Preferred Units exchanged, redeemed,
purchased or otherwise acquired by the Company in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof.
6. Voting. The Company shall not, without the affirmative consent of
the holders of at least seventy-five percent (75%) of the outstanding Series A
Preferred Units:
(a) in any manner authorize, create or issue any additional
preferred units or any class or series of capital interests, in either case (i)
ranking, either as to payment of distributions or distribution of assets, prior
to, the Series A Preferred Units or (ii) which in any manner adversely affects
the holders of units of Series A Preferred Units., or authorize, create or issue
any capital interests of any class or series or any bonds, debentures, notes or
other obligations convertible into a exchangeable for, or having optional rights
to purchase, any capital interests having any such preference or priority or so
adversely affecting the holder of Series A Preferred Units; or
(b) in any manner alter or change the designations or the
powers, preferences or rights, or the qualifications, limitations or
restrictions of the Series A Preferred Units; or
(c) reclassify the Common Units or any other units of any
class or series of capital interests hereafter created junior to the Series A
Preferred Units into capitalization of any class or series of capital interests
(i) ranking, either as to payment of dividends or distribution of assets prior
to or pari passu with the Series A Preferred Units. or (ii) which in any manner
adversely affects the holders of Series A Preferred Units; or
(d) alter the one-to-one equivalence of a Common Unit and a
Common Share (as adjusted to reflect anti-dilution protection).
7. Notice of Certain Events. If at any time, the Company and/or Acadia
Realty Trust, a Maryland trust ("Acadia") proposes:
(a) to pay any distribution or dividend payable in securities
(of any class or classes) or any obligations, stock or units convertible into or
exchangeable for Common Units or the common shares of beneficial interest of
Acadia, par value $.0l per share ("Common Shares") upon either of their capital
securities, including without limitation (i) Common Units or Common Shares or
(ii) a cash distribution other than its customary quarterly cash distribution
(collectively, an "Extraordinary Distribution");
(b) to grant to the holders of its Common Units or Common
Shares generally any rights or warrants (excluding any warrants or other rights
granted to any employee, director, officer contractor or consultant of the
Company or Acadia pursuant to any plan approved by the general partner of the
Company or the Board of Trustees of Acadia (a "Rights Distribution");
(c) to effect any capital reorganization or reclassification
of capital securities of the Company or Acadia;
(d) to consolidate with, or merge into, any other company or
to transfer its property as an entity or substantially as an entirety; or
(e) to effect the liquidation, dissolution or winding up of
the Company or Acadia, then, in any one or more of the foregoing cases, the
Company shall give, by certified or registered mail, postage prepaid, addressed
to the holders of Series A Preferred Units at the address of such holders as
shown on the record books of the Company, (i) at least thirty (30) days' prior
written notice of the date on which the books of the Company shall close or of a
record date fixed for such dividend. distribution or subscription rights or for
determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, and (ii) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up, at least
thirty (30) days' prior written notice of the date when the same shall take
place. Any notice given in accordance with the foregoing clause (i) shall also
specify, in the case of any such dividend, distribution or subscription rights,
the date on which the holders of any class of capital securities shall be
entitled thereto; or
(f) to issue Preferred Units senior to the Series A Preferred
Units; it shall give at least ten (10) days' prior written notice of such event
to the holders of the series A Preferred Units. In addition, it will give such
notice as it is required to give to holders of any other Series of Preferred
Units.
8. Rank and Limitations of Preferred Units. All Series A Preferred
Units shall rank equally with each other Series A Preferred Units and shall be
identical in all respects.
9. Joinder with Acadia Realty Trust hereunder. The Company joins in the
covenant of Acadia set forth below.
10. Notices. All notices to be given hereunder shall be personally
delivered (including by nationally recognized overnight carriers, such as
Federal Express) or sent by registered or certified mail, return receipt
requested, with postage prepaid.
11. Certificate Governs. In the event of any conflict between the
provisions of this Certificate of Designation and the provisions of the
Partnership Agreement, the provisions of this Certificate of Designation shall
govern.
All notices sent by mail shall be deemed effectively given on the date that is
three (3) business days after the date of such mailing. All notices personally
delivered shall be deemed effectively given on the date of such delivery.
November 18, 1999 ACADIA REALTY LIMITED PARTNERSHIP
By: Acadia Realty Trust
its General Partner
By:/s/Kenneth F. Bernstein
----------------------------------
Kenneth F. Bernstein
President
So long as any Series A Preferred Units or Common Units issued upon the
conversion thereof are outstanding, the undersigned agrees to (i) maintain the
one-to-one equivalence of a Common Share and a Common Unit (subject to
anti-dilution protections) and (ii) abide by this Agreement and cause the
General Partner of the Company to abide by this Agreement.
November 18, 1 999 Acadia Realty Trust
By:/s/Kenneth F. Bernstein
----------------------------------
Kenneth F. Bernstein
President