FORM OF
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
PRIME RETAIL, L.P.
Dated as of ____________, 1998
TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS; ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Accountants. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Adjusted Capital Account Deficit . . . . . . . . . . . . . . . . 2
Administrative Expenses. . . . . . . . . . . . . . . . . . . . . 3
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Antidilution Provisions. . . . . . . . . . . . . . . . . . . . . 4
Audited Financial Statements . . . . . . . . . . . . . . . . . . 4
Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Capital Account. . . . . . . . . . . . . . . . . . . . . . . . . 6
Capital Contribution . . . . . . . . . . . . . . . . . . . . . . 7
Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Closing Price. . . . . . . . . . . . . . . . . . . . . . . . . . 8
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Common Distribution. . . . . . . . . . . . . . . . . . . . . . . 9
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Common Units . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Consent of the Partners. . . . . . . . . . . . . . . . . . . . . 9
Contributed Partnership Interests. . . . . . . . . . . . . . . .10
Control. . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Convertible Preferred Distribution . . . . . . . . . . . . . . .10
Convertible Preferred Distribution Shortfall . . . . . . . . . .10
Convertible Preferred Rights . . . . . . . . . . . . . . . . . .11
Convertible Preferred Stock. . . . . . . . . . . . . . . . . . .11
Convertible Preferred Unit Redemption Amount . . . . . . . . . .11
Convertible Preferred Units. . . . . . . . . . . . . . . . . . .11
Current Per Share Market Price . . . . . . . . . . . . . . . . .11
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . .11
Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
General Partner. . . . . . . . . . . . . . . . . . . . . . . . .12
Gross Asset Value. . . . . . . . . . . . . . . . . . . . . . . .13
Xxxx Xxxxx Act . . . . . . . . . . . . . . . . . . . . . . . . .14
Horizon Limited Partnership. . . . . . . . . . . . . . . . . . .14
"HORIZON PROPERTIES. . . . . . . . . . . . . . . . . . . . . . .14
Immediate Family . . . . . . . . . . . . . . . . . . . . . . . .14
Incentive Option . . . . . . . . . . . . . . . . . . . . . . . .14
Incentive Option Agreement . . . . . . . . . . . . . . . . . . .14
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Limited Partner. . . . . . . . . . . . . . . . . . . . . . . . .15
Liquidating Events . . . . . . . . . . . . . . . . . . . . . . .15
Liquidating Trustee. . . . . . . . . . . . . . . . . . . . . . .15
Major Decisions. . . . . . . . . . . . . . . . . . . . . . . . .15
Majority-in-Interest of the Partners . . . . . . . . . . . . . .15
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PAGE
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Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Merger Agreement . . . . . . . . . . . . . . . . . . . . . . . .15
Minimum Gain Capital Account . . . . . . . . . . . . . . . . . .15
Net Cash Flow. . . . . . . . . . . . . . . . . . . . . . . . . .16
Net Income or Net Loss . . . . . . . . . . . . . . . . . . . . .17
Nonrecourse Deductions . . . . . . . . . . . . . . . . . . . . .19
Nonrecourse Liabilities. . . . . . . . . . . . . . . . . . . . .19
Original Agreement . . . . . . . . . . . . . . . . . . . . . . .19
Partner Minimum Gain . . . . . . . . . . . . . . . . . . . . . .19
Partner Nonrecourse Debt . . . . . . . . . . . . . . . . . . . .19
Partner Nonrecourse Deductions . . . . . . . . . . . . . . . . .19
Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Partnership. . . . . . . . . . . . . . . . . . . . . . . . . . .19
Partnership Interest . . . . . . . . . . . . . . . . . . . . . .19
Partnership Minimum Gain . . . . . . . . . . . . . . . . . . . .20
Partnership Payment Date . . . . . . . . . . . . . . . . . . . .20
Partnership Record Date. . . . . . . . . . . . . . . . . . . . .20
Partnership Units. . . . . . . . . . . . . . . . . . . . . . . .20
Permitted Transferee . . . . . . . . . . . . . . . . . . . . . .20
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Preferred Distribution . . . . . . . . . . . . . . . . . . . . .21
Preferred Distribution Shortfall . . . . . . . . . . . . . . . .21
Preferred Stock. . . . . . . . . . . . . . . . . . . . . . . . .21
Preferred Unit Redemption Amount . . . . . . . . . . . . . . . .21
Preferred Units. . . . . . . . . . . . . . . . . . . . . . . . .21
"PRIME/HORIZON MERGER. . . . . . . . . . . . . . . . . . . . . .21
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Property Partnership Interests . . . . . . . . . . . . . . . . .22
Property Partnerships. . . . . . . . . . . . . . . . . . . . . .22
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . .22
Quarter. . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Regulations. . . . . . . . . . . . . . . . . . . . . . . . . . .22
Regulatory Allocations . . . . . . . . . . . . . . . . . . . . .22
REIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
REIT Expenses. . . . . . . . . . . . . . . . . . . . . . . . . .22
REIT Requirements. . . . . . . . . . . . . . . . . . . . . . . .23
Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
SEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Section 704(c) Tax Items . . . . . . . . . . . . . . . . . . . .24
September 9, 1997 Agreement. . . . . . . . . . . . . . . . . . .24
Series C Preferred Distribution. . . . . . . . . . . . . . . . .24
Series C Preferred Distribution Shortfall. . . . . . . . . . . .24
Series C Preferred Purchase Agreement. . . . . . . . . . . . . .24
Series C Preferred Rights. . . . . . . . . . . . . . . . . . . .24
Series C Preferred Stock . . . . . . . . . . . . . . . . . . . .24
Series C Preferred Unit Redemption Amount. . . . . . . . . . . .24
Series C Preferred Units . . . . . . . . . . . . . . . . . . . .25
Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Shopping Center Project. . . . . . . . . . . . . . . . . . . . .25
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Special Distribution . . . . . . . . . . . . . . . . . . . . . .25
Stock Incentive Plan . . . . . . . . . . . . . . . . . . . . . .25
Substituted Limited Partner. . . . . . . . . . . . . . . . . . .25
Tax Items. . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Trading Day. . . . . . . . . . . . . . . . . . . . . . . . . . .26
Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
1.2 EXHIBITS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . .26
ARTICLE II
ORGANIZATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
2.1 FORMATION AND CONTINUATION . . . . . . . . . . . . . . . . . . .26
2.2 NAME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
2.3 CHARACTER OF THE BUSINESS. . . . . . . . . . . . . . . . . . . .27
2.4 LOCATION OF THE PRINCIPAL PLACE OF BUSINESS. . . . . . . . . . .28
2.5 REGISTERED AGENT AND REGISTERED OFFICE . . . . . . . . . . . . .28
2.6 POWER OF ATTORNEY. . . . . . . . . . . . . . . . . . . . . . . .29
ARTICLE III
TERM; DISSOLUTION . . . . . . . . . . . . . . . . . . . . . . . . . . .31
3.1 TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
3.2 DISSOLUTION. . . . . . . . . . . . . . . . . . . . . . . . . . .31
3.3 BANKRUPTCY OF A LIMITED PARTNER. . . . . . . . . . . . . . . . .32
ARTICLE IV
CONTRIBUTIONS TO CAPITAL; FINANCING . . . . . . . . . . . . . . . . . .32
4.1 GENERAL PARTNER CAPITAL CONTRIBUTION . . . . . . . . . . . . . .32
4.2 LIMITED PARTNER CAPITAL CONTRIBUTIONS. . . . . . . . . . . . . .33
4.3 ADDITIONAL FUNDS; RESTRICTIONS ON GENERAL PARTNER. . . . . . . .33
4.5 STOCK INCENTIVE PLAN . . . . . . . . . . . . . . . . . . . . . .37
4.6 NO THIRD PARTY BENEFICIARY . . . . . . . . . . . . . . . . . . .38
4.7 NO INTEREST; NO RETURN . . . . . . . . . . . . . . . . . . . . .38
4.8 CONVERSION OF CONVERTIBLE PREFERRED UNITS OR SERIES C PREFERRED
UNITS; REDEMPTION OR PURCHASE OF SERIES C PREFERRED UNITS,
CONVERTIBLE PREFERRED UNITS OR PREFERRED UNITS . . . . . . . . .38
4.9 REDEMPTION OF SERIES C PREFERRED UNITS . . . . . . . . . . . . .41
4.10 REDEMPTION OF CONVERTIBLE PREFERRED UNITS. . . . . . . . . . . .43
ARTICLE V
INTENTIONALLY OMITTED . . . . . . . . . . . . . . . . . . . . . . . . .45
ARTICLE VI
ALLOCATIONS, DISTRIBUTIONS AND OTHER TAX AND ACCOUNTING MATTERS . . . .46
6.1 ALLOCATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . .46
6.2 DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . . . .46
6.3 BOOKS OF ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . .50
6.4 REPORTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
6.5 AUDITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
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6.6 TAX ELECTIONS AND RETURNS. . . . . . . . . . . . . . . . . . . .51
6.7 TAX MATTERS PARTNER. . . . . . . . . . . . . . . . . . . . . . .52
ARTICLE VII
RIGHTS, DUTIES AND RESTRICTIONS OF THE GENERAL PARTNER. . . . . . . . .53
7.1 EXPENDITURES BY PARTNERSHIP. . . . . . . . . . . . . . . . . . .53
7.2 POWERS AND DUTIES OF GENERAL PARTNER . . . . . . . . . . . . . .53
7.3 MAJOR DECISIONS. . . . . . . . . . . . . . . . . . . . . . . . .58
7.4 NO REMOVAL . . . . . . . . . . . . . . . . . . . . . . . . . . .58
7.5 GENERAL PARTNER PARTICIPATION. . . . . . . . . . . . . . . . . .58
7.6 PROSCRIPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . .59
7.7 ADDITIONAL PARTNERS. . . . . . . . . . . . . . . . . . . . . . .59
7.8 TITLE HOLDER . . . . . . . . . . . . . . . . . . . . . . . . . .59
7.9 COMPENSATION OF THE GENERAL PARTNER. . . . . . . . . . . . . . .60
7.10 WAIVER AND INDEMNIFICATION . . . . . . . . . . . . . . . . . . .60
7.11 OPERATION IN ACCORDANCE WITH REIT REQUIREMENTS . . . . . . . . .64
ARTICLE VIII
DISSOLUTION, LIQUIDATION AND WINDING-UP . . . . . . . . . . . . . . . .65
8.1 WINDING UP . . . . . . . . . . . . . . . . . . . . . . . . . . .65
8.2 DISTRIBUTION ON DISSOLUTION AND LIQUIDATION. . . . . . . . . . .67
8.3 TIMING REQUIREMENTS. . . . . . . . . . . . . . . . . . . . . . .68
8.4 DEEMED DISTRIBUTION AND RECONTRIBUTION . . . . . . . . . . . . .68
8.5 DISTRIBUTIONS IN KIND. . . . . . . . . . . . . . . . . . . . . .69
8.6 DOCUMENTATION OF LIQUIDATION . . . . . . . . . . . . . . . . . .69
8.7 DEFICIT CAPITAL ACCOUNT BALANCE. . . . . . . . . . . . . . . . .69
ARTICLE IX
TRANSFER OF PARTNERSHIP INTERESTS;
WITHDRAWAL; ADMISSION OF ADDITIONAL PARTNERS. . . . . . . . . . . . . .70
9.1 GENERAL PARTNER TRANSFER; WITHDRAWAL; SUBSTITUTE GENERAL
PARTNER. . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
9.2 TRANSFERS BY LIMITED PARTNERS. . . . . . . . . . . . . . . . . .72
9.3 RESTRICTIONS ON TRANSFER . . . . . . . . . . . . . . . . . . . .74
ARTICLE X
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS. . . . . . . . . . . . .78
10.1 NO PARTICIPATION IN MANAGEMENT; NO PERSONAL LIABILITY. . . . . .78
10.2 DUTIES AND CONFLICTS . . . . . . . . . . . . . . . . . . . . . .79
ARTICLE XI
GRANT OF RIGHTS TO LIMITED PARTNERS . . . . . . . . . . . . . . . . . .80
11.1 GRANT OF RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . .80
11.2 TERMS OF RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . .80
11.3 REISSUANCE OR REALLOCATION OF COMMON UNITS . . . . . . . . . . .81
11.1A GRANT OF RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . .81
11.2A TERMS OF CONVERTIBLE PREFERRED RIGHTS. . . . . . . . . . . . . .82
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11.3A REISSUANCE OR REALLOCATION OF CONVERTIBLE PREFERRED UNITS. . . .82
ARTICLE XII
GRANT OF RIGHTS TO LIMITED PARTNERS HOLDING SERIES C
PREFERRED UNITS; REDEMPTION OF SERIES C PREFERRED UNITS . . . . . . . .82
12.1 GRANT OF RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . .83
12.2 TERMS OF RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . .83
12.3 REISSUANCE OR REALLOCATION OF SERIES C PREFERRED UNITS . . . . 83
ARTICLE XIII
PARTNER REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . .84
(a) ORGANIZATION. . . . . . . . . . . . . . . . . . . . . . . .84
(b) DUE AUTHORIZATION; BINDING AGREEMENT. . . . . . . . . . . .84
(c) CONSENTS AND APPROVALS. . . . . . . . . . . . . . . . . . .84
ARTICLE XIV
GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . .85
14.1 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .85
14.2 SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . . .85
14.3 EFFECT AND INTERPRETATION. . . . . . . . . . . . . . . . . . . .85
14.4 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . .86
14.5 PARTNERS NOT AGENTS. . . . . . . . . . . . . . . . . . . . . . .86
14.6 ENTIRE UNDERSTANDING, ETC. . . . . . . . . . . . . . . . . . . .86
14.7 AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . .86
14.8 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . .90
14.9 TRUST PROVISION. . . . . . . . . . . . . . . . . . . . . . . . .90
14.10 PRONOUNS AND HEADINGS. . . . . . . . . . . . . . . . . . . . . .90
14.11 ASSURANCES . . . . . . . . . . . . . . . . . . . . . . . . . . .90
14.12 REMEDIES CUMULATIVE. . . . . . . . . . . . . . . . . . . . . . .91
14.13 CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . .91
14.14 INCORPORATION BY REFERENCE . . . . . . . . . . . . . . . . . . .91
14.15 WAIVER OF ACTION FOR PARTITION . . . . . . . . . . . . . . . . .91
EXHIBITS
A Common Units, Preferred Units, Convertible Preferred Units and Series C
Preferred Units
B Allocations
C Rights Terms
D Conversion Rights of Series C Preferred Units
E Section 6.2(e) Agreements
F Conversion Rights of Convertible Preferred Units
G Form of Specimen Common, Series B, Preferred, Etc. Unit Certificate
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SCHEDULES TO EXHIBIT C
1 Exchange Exercise Notice
2 Election Notice
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SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
PRIME RETAIL, L.P.
THIS SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP is
made and entered into as of the ____ day of __________, _____.
W I T N E S S E T H:
WHEREAS, the Partnership's Agreement of Limited Partnership dated
March 22, 1994 (the "Original Agreement"), was amended by a First Amendment
thereto dated as of June 24, 1996, and amended and restated in its entirety as
of September 7, 1997 (the "September 9, 1997 Agreement") to provide for, among
other things, the creation and issuance of Series C Preferred Units and the
admission of the holder or holders thereof as a limited partner or limited
partners of the Partnership;
WHEREAS, the Partnership entered into a certain amended and restated
agreement and plan of merger dated as of February 1, 1998 (the "Merger
Agreement"), pursuant to which the Partnership merged with and into Horizon
Limited Partnership, which merger is effective as of the date hereof;
WHEREAS, the Partners of the Partnership desire to amend and restate
the September 9, 1997 Agreement to reflect the consummation of the merger of the
Partnership, the Special Distribution (as defined herein), the Common
Distribution (as defined herein) and the other transactions contemplated by the
Merger Agreement, and the admittance of the persons listed on Exhibit A as
limited partners in the Partnership;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the partners
of the Partnership hereto, intending legally to be bound, hereby amend and
restate the September 9, 1997 Agreement and otherwise agree as follows:
ARTICLE I
DEFINITIONS; ETC.
1.1 DEFINITIONS. Except as otherwise herein expressly provided, the
following terms and phrases shall have the meanings set forth below:
"ACCOUNTANTS" shall mean the firm or firms of independent certified
public accountants selected by the General Partner on behalf of the Partnership
and the Property Partnerships to audit the books and records of the Partnership
and the Property Partnerships and to prepare statements and reports in
connection therewith.
"ACT" shall mean the Revised Uniform Limited Partnership Act as
enacted in the State of Delaware, and as the same may hereafter be amended from
time to time.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" shall mean, with respect to any
Partner, the deficit balance, if any, in such
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Partner's Capital Account as of the end of any relevant Partnership taxable year
and after giving effect to the following adjustments:
(a) credit to such Capital Account any amounts which such Partner is
obligated or treated as obligated to restore with respect to any deficit
balance in such Capital Account pursuant to this Agreement or the
provisions of Section 1.704-1(b)(2)(ii)(c) of the Regulations, or is deemed
to be obligated to restore with respect to any deficit balance pursuant to
the penultimate sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of
the Regulations; and
(b) debit to such Capital Account the items described in Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the requirements of the alternate test for economic effect contained
in Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted
consistently therewith.
"ADMINISTRATIVE EXPENSES" shall mean (i) all administrative and
operating costs and expenses incurred by the Partnership, (ii) all
administrative, operating and other costs and expenses incurred by the Property
Partnerships, which expenses are being assumed by the Partnership pursuant to
SECTION 7.1 hereof, (iii) those administrative costs and expenses of the General
Partner, including salaries paid to officers of the General Partner, and
accounting and legal expenses undertaken by the General Partner on behalf or for
the benefit of the Partnership,
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and (iv) to the extent not included in clause (iii) above, REIT Expenses.
"AFFILIATE" shall mean, with respect to any Partner (or with respect
to any other Person whose affiliates are relevant for purposes of any of the
provisions of this Agreement), (i) any member of the Immediate Family of such
Partner or a trust established for the benefit of such member; (ii) any
beneficiary of a trust described in (i); or (iii) any Entity which directly or
indirectly through one or more intermediaries, Controls, is Controlled by, or is
under common Control with, any Partner or any Person referred to in the
preceding clauses (i) and (ii).
"AGREEMENT" shall mean this Second Amended and Restated Agreement of
Limited Partnership, as originally executed and as amended, modified,
supplemented or restated from time to time, as the context requires.
"ANTIDILUTION PROVISIONS" shall mean the provisions of SECTION XI of
EXHIBIT C hereto.
"AUDITED FINANCIAL STATEMENTS" shall mean financial statements (which
shall consist of a balance sheet, statement of income, statement of partners'
equity and statement of cash flows) prepared in accordance with GAAP.
"BANKRUPTCY" shall mean, with respect to any Partner, (i) the
commencement by such Partner of any proceeding seeking relief under any
provision or chapter of the federal Bankruptcy Code or any other federal or
state law relating to insolvency, bankruptcy or reorganization; (ii) an
adjudication that such Partner is
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insolvent or bankrupt; (iii) the entry of an order for relief under the federal
Bankruptcy Code with respect to such Partner; (iv) the filing of any petition or
the commencement of any case or proceeding against such Partner seeking relief
under any provision or chapter of the federal Bankruptcy Code or other federal
or state laws relating to insolvency, bankruptcy or receivership, unless such
petition and the case or proceeding initiated thereby are dismissed within
ninety (90) days from the date of such filing; (v) the filing of an answer by
such Partner admitting the allegations of any petition described in (iv) above;
(vi) the appointment of a trustee, receiver or custodian for all or
substantially all of the assets of such Partner unless such appointment is
vacated or dismissed within ninety (90) days from the date of such appointment
but not less than five (5) days before the proposed sale of any assets of such
Partner; (vii) the insolvency of such Partner or the execution by such Partner
of a general assignment for the benefit of creditors; (viii) the convening by
such Partner of a meeting of its creditors, or any class thereof, for purposes
of effecting a moratorium upon or extension or composition of its debts; (ix)
the levy, attachment, execution or other seizure of substantially all of the
assets of such Partner where such seizure is not discharged within thirty (30)
days thereafter; or (x) the admission by such Partner in writing of its
inability to pay its debts as they mature or that it is generally not paying its
debts as they become due.
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"CAPITAL ACCOUNT" shall mean, with respect to any Partner, the Capital
Account maintained for such Partner in accordance with the following provisions:
(i) To each Partner's Capital Account there shall be credited such
Partner's Capital Contributions, such Partner's distributive share of Net
Income and any items in the nature of income or gain which are specially
allocated pursuant to Section II or III of EXHIBIT B hereto and the amount
of any Partnership liabilities assumed by such Partner or which are secured
by any asset distributed to such Partner.
(ii) To each Partner's Capital Account there shall be debited the
amount of cash and the Gross Asset Value of any Property distributed to
such Partner pursuant to any provision of this Agreement, such Partner's
distributive share of Net Losses and any items in the nature of expenses or
losses which are specially allocated pursuant to Section II or III of
EXHIBIT B hereto, and the amount of any liabilities of such Partner assumed
by the Partnership or which are secured by any asset contributed by such
Partner to the Partnership.
(iii) In the event all or a portion of an Interest in the Partnership
is transferred in accordance with the terms of this Agreement, the
transferee shall succeed to the Capital Account of the transferor to the
extent it relates to the transferred Interest.
(iv) In determining the amount of any liability for purposes of
the foregoing subparagraphs (i) and (ii), there shall be taken into account
Code Section 752(c) and any other applicable provisions of the Code and
Regulations.
For purposes of this definition, in the event that (i) the date on
which a Limited Partner is paid, or constructively receives (if earlier), an
amount of Net Cash Flow under SECTION 6.2(e) in respect of subsection (a)(vii)
of SECTION 6.2 is after the date on which the Cash Conversion Price is paid and
(ii) such Limited Partner otherwise owns no Common Units at such time, such
distribution of Net Cash Flow shall be treated as a distribution to the General
Partner. The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital
- 6 -
Accounts are intended to comply with Sections 1.704-1(b) and 1.704-2 of the
Regulations, and shall be interpreted and applied in a manner consistent with
such Regulations. In the event the General Partner shall reasonably determine
that it is prudent to modify the manner in which the Capital Accounts, or any
debits or credits thereto (including, without limitation, debits or credits
relating to liabilities which are secured by contributed or distributed assets
or which are assumed by the Partnership, the General Partner or any Limited
Partner) are computed in order to comply with such Regulations, the General
Partner may make such modification; PROVIDED that it does not have an adverse
effect on the amounts distributable to any Partner pursuant to ARTICLE VIII
hereof upon the dissolution of the Partnership. The General Partner also shall
(i) make any adjustments that are necessary or appropriate to maintain equality
between the Capital Accounts of the Partners and the amount of Partnership
capital reflected on the Partnership's balance sheet, as computed for book
purposes, in accordance with Section 1.704-1(b)(2)(iv)(q) of the Regulations,
and (ii) make any appropriate modifications in the event unanticipated events
might otherwise cause this Agreement not to comply with Sections 1.704-1(b) or
1.704-2 of the Regulations.
"CAPITAL CONTRIBUTION" shall mean, with respect to any Partner, the
amount of money and the initial Gross Asset Value of any asset other than money,
net of the amount of any liabilities to which such asset is subject, contributed
or treated as contributed to the Partnership with respect to the Partnership
Interest held by
- 7 -
such Partner. The principal amount of a promissory note that is not readily
tradable on an established securities market and that is contributed to the
Partnership by the maker of the note shall not be included in the Capital
Account of any Person until the Partnership makes a taxable disposition of the
note or until (and to the extent) such Partner makes principal payments on the
note, all in accordance with Section 1.704-1(b)(2)(iv)(d)(2) of the Regulations.
"CERTIFICATE" shall mean the Certificate of Limited Partnership
establishing the Partnership, as filed with the office of the Delaware Secretary
of State, as it may be amended from time to time in accordance with the terms of
this Agreement and the Act.
"CLOSING PRICE" on any date shall mean the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Common
Stock is not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Common Stock is listed or admitted to trading or, if the Common Stock is not
listed or admitted to trading on any national securities exchange, the last
quoted price, or if not so quoted, the average of the high bid and low asked
prices in the over-the-counter
- 8 -
market, as reported by the National Association of Securities Dealers, Inc.
Automated Quotations System or, if such system is no longer in use, the
principal other automated quotations system that may then be in use or, if the
Common Stock is not quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker making a market
in the Common Stock as such person is selected from time to time by the Board of
Directors of the General Partner.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time or any successor statute thereto.
"COMMON DISTRIBUTION" shall mean the Partnership distribution
described in SECTION 6.2(c) hereof.
"COMMON STOCK" shall mean the shares of the common stock, par value
$.01 per share, of the General Partner.
"COMMON UNITS" shall mean the Partnership Units designated as Common
Units under this Agreement, received by the Partners in exchange for their
capital contributions or a portion of their capital contributions or pursuant to
the Merger Agreement and having the rights described in this Agreement. The
number of Common Units outstanding, and the allocation of Common Units to each
Partner, is as set forth opposite its or his name in EXHIBIT A, as amended by
the General Partner from time to time.
"CONSENT OF THE PARTNERS" means the written consent of a
Majority-in-Interest of the Partners, which consent shall be obtained prior to
the taking of any action for which it is required by this Agreement and may be
given or withheld by a Majority-in-
- 9 -
Interest of the Partners, unless otherwise expressly provided herein, in their
sole and absolute discretion.
"CONTRIBUTED PARTNERSHIP INTERESTS" shall mean, with respect to each
Limited Partner, the partnership interests in the Property Partnership(s)
contributed to the Partnership by such Limited Partner on the date of formation
of the Partnership.
"CONTROL" shall mean the ability, whether by the direct or indirect
ownership of shares or other equity interests, by contract or otherwise, to
elect a majority of the directors of a corporation, to select the managing
partner of a partnership, or otherwise to select, or have the power to remove
and then select, a majority of those persons exercising governing authority over
an Entity. In the case of a limited partnership, the sole general partner, all
of the general partners to the extent each has equal management control and
authority, or the managing general partner or managing general partners thereof
shall be deemed to have control of such partnership and, in the case of a trust,
any trustee thereof or any Person having the right to select any such trustee
shall be deemed to have control of such trust.
"CONVERTIBLE PREFERRED DISTRIBUTION" means an amount equal to the
quarterly dividend payable in respect of one share of Convertible Preferred
Stock of the General Partner pursuant to Section 4.5.1(a) of the General
Partner's Articles of Incorporation.
"CONVERTIBLE PREFERRED DISTRIBUTION SHORTFALL" shall have the meaning
set forth in SECTION 6.2(a)(iii).
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"CONVERTIBLE PREFERRED RIGHTS" shall have the meaning set forth in
Section 11.1A.
"CONVERTIBLE PREFERRED STOCK" means the Series B Cumulative
Participating Convertible Preferred Stock, par value $.01 per share, of the
General Partner.
"CONVERTIBLE PREFERRED UNIT REDEMPTION AMOUNT" means, with respect to
any Convertible Preferred Unit, the amount payable by the General Partner on
account of the redemption of one share of Convertible Preferred Stock pursuant
to Section 4.5.3 of the General Partner's Articles of Incorporation.
"CONVERTIBLE PREFERRED UNITS" shall mean the Partnership Units
designated as Convertible Preferred Units under this Agreement having the rights
described in this Agreement. The number of Convertible Preferred Units
outstanding from time to time is as set forth on EXHIBIT A, as amended by the
General Partner from time to time.
"CURRENT PER SHARE MARKET PRICE" on any date shall mean the average of
the Closing Price for the five consecutive Trading Days ending on such date.
"DEPRECIATION" shall mean, with respect to any asset of the
Partnership for any Partnership taxable year or other period, the depreciation,
depletion, amortization or other cost recovery deduction, as the case may be,
allowed or allowable for Federal income tax purposes in respect of such asset
for such Partnership taxable year or other period; PROVIDED, HOWEVER, that if
there is a difference between the Gross Asset Value and the adjusted tax
- 11 -
basis of such asset at the beginning of such Partnership taxable year or other
period, Depreciation for such asset shall be an amount that bears the same ratio
to the beginning Gross Asset Value of such asset as the Federal income tax
depreciation, depletion, amortization or other cost recovery deduction for such
Partnership taxable year or other period bears to the beginning adjusted tax
basis of such asset; PROVIDED, FURTHER, that if the Federal income tax
depreciation, depletion, amortization or other cost recovery deduction for such
asset for such Partnership taxable year or other period is zero, Depreciation
for such asset shall be determined with reference to the beginning Gross Asset
Value of such asset using any reasonable method selected by the General Partner.
"ENTITY" shall mean any general partnership, limited partnership,
corporation, joint venture, trust, business trust, limited liability company,
cooperative or association.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time (or any corresponding provisions of
succeeding laws).
"GAAP" shall mean generally accepted accounting principles
consistently applied.
"GENERAL PARTNER" shall mean Prime Retail, Inc., a Maryland
corporation, and any other Person who is admitted as a successor general partner
of the Partnership at the time of reference thereto.
- 12 -
"GROSS ASSET VALUE" shall mean, with respect to any asset of the
Partnership, such asset's adjusted basis for Federal income tax purposes, except
as follows:
(a) the initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such
asset as determined by the contributing Partner and the Partnership;
(b) if the General Partner reasonably determines that an adjustment
is necessary or appropriate to reflect the relative economic interests of
the Partners, the Gross Asset Values of all Partnership assets shall be
adjusted to equal their respective gross fair market values, as reasonably
determined by the General Partner, as of the following times:
(i) a Capital Contribution (other than a DE MINIMIS Capital
Contribution) to the Partnership by a new or existing Partner as
consideration for a Partnership Interest;
(ii) the distribution by the Partnership to a Partner of more
than a DE MINIMIS amount of Partnership assets as consideration for
the redemption of a Partnership Interest; and
(iii) the liquidation of the Partnership within the meaning of
Section 1.704-1(b)(2)(ii)(g) of the Regulations;
(c) the Gross Asset Values of Partnership assets distributed to any
Partner shall be the gross fair market values of such assets (taking
Section 7701(g) of the Code into account) as reasonably determined by the
General Partner as of the date of distribution; and
(d) the Gross Asset Values of Partnership assets shall be increased
(or decreased) to reflect any adjustments to the adjusted basis of such
assets pursuant to Sections 734(b) or 743(b) of the Code, but only to the
extent that such adjustments are taken into account in determining Capital
Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the Regulations (See
EXHIBIT B); PROVIDED, HOWEVER, that Gross Asset Values shall not be
adjusted pursuant to this paragraph (d) to the extent that the General
Partner reasonably determines that an adjustment pursuant to paragraph (b)
above is necessary or appropriate in connection with a transaction that
would otherwise result in an adjustment pursuant to this paragraph (d).
- 13 -
At all times, Gross Asset Values shall be adjusted by any Depreciation taken
into account with respect to the Partnership's assets for purposes of computing
Net Income and Net Loss. Any adjustment to the Gross Asset Values of
Partnership assets shall require an adjustment to the Partners' Capital
Accounts; as for the manner in which such adjustments are allocated to the
Capital Accounts, see EXHIBIT B.
"XXXX XXXXX ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"HORIZON LIMITED PARTNERSHIP" shall mean Horizon/Xxxx Outlet Centers
Limited Partnership, a Delaware limited partnership.
"HORIZON PROPERTIES" shall mean the Partnership property acquired by
the Partnership pursuant to the Merger.
"IMMEDIATE FAMILY" shall mean, with respect to any Person, such
Person's spouse, parents, parents-in-law, descendants, nephews, nieces,
brothers, sisters, brothers-in-law, sisters-in-law, stepchildren, sons-in-law
and daughters-in-law.
"INCENTIVE OPTION" means an option to purchase Common Stock granted
under the Stock Incentive Plan.
"INCENTIVE OPTION AGREEMENT" means the Incentive Option Agreement to
be used under the Stock Incentive Plan.
"LIEN" shall mean any liens, security interests, mortgages, deeds of
trust, charges, claims, encumbrances, pledges, options, rights of first offer or
first refusal and any other rights or interests of others of any kind or nature,
actual or contingent, or other similar encumbrances of any nature whatsoever.
- 14 -
"LIMITED PARTNER" shall mean any Person named as a "Limited Partner"
on EXHIBIT A hereto, as it may be amended from time to time, or any Person
admitted as a Substituted Limited Partner or additional Limited Partner, in such
Person's capacity as a limited partner of the Partnership.
"LIQUIDATING EVENTS" shall have the meaning set forth in SECTION 3.2.
"LIQUIDATING TRUSTEE" shall mean the General Partner or, if there is
no remaining General Partner, such Person as is selected as the Liquidating
Trustee hereunder by the Consent of the Partners, which Person may include an
Affiliate of the General Partner or any Limited Partner; PROVIDED such
Liquidating Trustee agrees in writing to be bound by the terms of this
Agreement.
"MAJOR DECISIONS" shall have the meaning set forth in SECTION 7.3
hereof.
"MAJORITY-IN-INTEREST OF THE PARTNERS" shall mean Partner(s) who hold
in the aggregate more than fifty percent (50%) of the Common Units.
"MERGER" shall mean the merger of the Partnership and Horizon Limited
Partnership pursuant to the Merger Agreement.
"MERGER AGREEMENT" has the meaning set forth in the Recitals hereof.
"MINIMUM GAIN CAPITAL ACCOUNT" shall mean, with respect to a Partner,
the sum of such Partner's Capital Account plus such Partner's share of Partner
Minimum Gain, as described in Section 1.704-2(i)(5) of the Regulations, and
Partnership Minimum Gain, as
- 15 -
described in Section 1.704-2(g) of the Regulations. For purposes of determining
Minimum Gain Capital Account, Nonrecourse Deductions and Partner Nonrecourse
Deductions for a Partnership taxable year or other applicable period shall be
allocated in a manner that is consistent with the method of allocation adopted
under SECTION 9.4 or SECTION 9.6(c) (to the extent SECTION 9.4 or SECTION 9.6(c)
is applicable to such Partnership taxable year or other applicable period).
"NET CASH FLOW" means, with respect to the applicable period of
measurement (i.e., any period beginning on the first day of the fiscal year,
quarter or other period commencing immediately after the last day of the fiscal
year, quarter or other applicable period for purposes of the most recent
calculation of Net Cash Flow for or with respect to which a distribution has
been made, and ending on the last day of the fiscal year, quarter or other
applicable period immediately preceding the date of the calculation) the excess,
if any, as of such date, of (a) the gross cash receipts of the Partnership for
such period from all sources whatsoever, including, without limitation, the
following:
(i) all rents, revenues, income and proceeds derived by the
Partnership from its operations, including, without limitation,
distributions received by the Partnership from any Entity in which the
Partnership has an interest; (ii) all proceeds and revenues received by the
Partnership on account of any sales of property of the Partnership or as a
refinancing of or payments of principal, interest, costs, fees, penalties
or otherwise on account of any borrowings or loans made by the Partnership
or financings or refinancings of any property of the Partnership; (iii) the
amount of any insurance proceeds and condemnation awards received by the
Partnership; (iv) all capital contributions or loans received by the
Partnership from its Partners; (v) any reduction in the cash amounts
previously reserved by the Partnership and
- 16 -
described in subsection (b)(ix) below, if the General Partner determines
that such amounts are no longer needed; and (vi) the proceeds of
liquidation of the Partnership's property in accordance with this
Agreement,
over (b) the sum of:
(i) all operating costs and expenses of the Partnership and capital
expenditures made during such period (without deduction, however, for any
capital expenditures, charges for depreciation or other expenses not paid
in cash or expenditures from reserves described in (ix) below); (ii) all
costs and expenses expended or paid during such period in connection with
the sale or other disposition, or financing or refinancing, of property of
the Partnership or the recovery of insurance or condemnation proceeds;
(iii) all fees provided for under this Agreement; (iv) all debt service,
including principal and interest, paid during such period on all
indebtedness of the Partnership; (v) all capital contributions, advances,
reimbursements or similar payments made to any Entity in which the
Partnership has an interest; (vi) all loans made by the Partnership in
accordance with the terms of this Agreement; (vii) all reimbursements to
the General Partner or its Affiliates during such period, including
Administrative Expenses (exclusive of REIT Expenses) to the extent not paid
or payable by the General Partner pursuant to the last sentence of SECTION
7.1; (viii) any distributions pursuant to SECTION 6.2(f); (ix) any
increases in reserves reasonably determined by the General Partner to be
necessary for working capital, capital improvements, payments of periodic
expenditures, debt service or other purposes for the Partnership or any
Person in which the Partnership has an interest; and (x) any amounts paid
pursuant to SECTION 4.8(b) in redemption of any Preferred Units or
Convertible Preferred Units.
"NET INCOME OR NET LOSS" shall mean, for each Partnership taxable year
or other applicable period, an amount equal to the Partnership's net income or
loss for such year or period as determined for federal income tax purposes by
the General Partner, determined in accordance with Section 703(a) of the Code
(for this purpose, all items of income, gain, loss or deduction required to be
stated separately pursuant to Section 703(a) of the Code shall be included in
taxable income or loss), adjusted as follows: (i) by
- 17 -
including as an item of gross income any tax-exempt income received by the
Partnership and not otherwise taken into account in computing Net Income or Net
Loss; (ii) by treating as a deductible expense any expenditure of the
Partnership described in Section 705(a)(2)(B) of the Code and not otherwise
taken into account in computing Net Income or Net Loss, including amounts paid
or incurred to organize the Partnership (unless an election is made pursuant to
Section 709(b) of the Code) or to promote the sale of interests in the
Partnership; (iii) by treating deductions for any losses incurred in connection
with the sale or exchange of Partnership property which are disallowed pursuant
to Sections 267(a)(1) or 707(b) of the Code as expenditures described in Section
705(a)(2)(B) of the Code; (iv) by taking into account Depreciation in lieu of
depreciation, depletion, amortization, and other cost recovery deductions taken
into account in computing taxable income or loss; (v) by computing gain or loss
resulting from any disposition of Partnership property with respect to which
gain or loss is recognized for federal income tax purposes by reference to the
Gross Asset Value of such property rather than its adjusted tax basis; (vi) in
the event of an adjustment of the Gross Asset Value of any Partnership asset
which requires that the Capital Accounts of the Partnership be adjusted pursuant
to Sections 1.704-1(b)(2)(iv)(e), (f) and (m) of the Regulations, by taking into
account the amount of such adjustment as additional Net Income or Net Loss
pursuant to EXHIBIT B; and (vii) subject to the immediately preceding clause
(vi), by excluding the Partnership
- 18 -
items of income, gain, loss or deduction that are specially allocated pursuant
to Sections II or III of EXHIBIT B attached hereto.
"NONRECOURSE DEDUCTIONS" shall have the meaning set forth in Sections
1.704-2(b)(1) and 1.704-2(c) of the Regulations.
"NONRECOURSE LIABILITIES" shall have the meaning set forth in Section
1.704-2(b)(3) of the Regulations.
"ORIGINAL AGREEMENT" shall have the meaning set forth in the Recitals
to this Agreement.
"PARTNER MINIMUM GAIN" shall mean an amount, with respect to each
Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would
result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Section 1.704-2(i)(3) of the Regulations.
"PARTNER NONRECOURSE DEBT" shall have the meaning set forth in Section
1.704-2(b)(4) of the Regulations.
"PARTNER NONRECOURSE DEDUCTIONS" shall have the meaning set forth in
Section 1.704-2(i)(2) of the Regulations.
"PARTNERS" shall mean the General Partner and the Limited Partners.
"PARTNERSHIP" shall mean the limited partnership constituted by the
Original Agreement, as such limited partnership may from time to time be
constituted.
"PARTNERSHIP INTEREST" shall mean the ownership interest now or
hereafter held by a Partner in the Partnership from time to time pursuant to
this Agreement, including, but not limited to,
- 19 -
Partnership Units, exchange rights, capital accounts, and profits and
distributions relating thereto, all other payments (if any) due or to become due
in respect of such ownership interest pursuant to this Agreement, all rights,
powers and remedies of a Partner under this Agreement, and all proceeds of all
or any of the foregoing.
"PARTNERSHIP MINIMUM GAIN" shall have the meaning set forth in
Sections 1.704-2(b)(2) and (d) of the Regulations.
"PARTNERSHIP PAYMENT DATE" shall mean the payment date established by
the General Partner for the distribution of Net Cash Flow pursuant to SECTION
6.2 hereof, which payment date shall be the same as the payment date established
by the General Partner for a distribution to its shareholders of some or all of
its portion of such distribution.
"PARTNERSHIP RECORD DATE" for any distribution shall mean the same
date as the record date established by the General Partner for a distribution to
its shareholders.
"PARTNERSHIP UNITS" shall mean fractional, undivided shares of
Partnership Interests issued pursuant to this Agreement. The ownership of
Partnership Units of any class or series may be evidenced by a certificate for
such Partnership Units in substantially the form of EXHIBIT G (including the
restrictive legends thereon), or as the General Partner may determine from time
to time.
"PERMITTED TRANSFEREE" shall mean any Person to whom any Partnership
Units are transferred in a Transfer permitted under the terms of this Agreement.
- 20 -
"PERSON" shall mean any individual or Entity.
"PREFERRED DISTRIBUTION" means an amount equal to the quarterly
dividend payable in respect of one share of Preferred Stock of the General
Partner pursuant to Section 4.3.1(a) of the General Partner's Articles of
Incorporation.
"PREFERRED DISTRIBUTION SHORTFALL" shall have the meaning set forth in
SECTION 6.2.
"PREFERRED STOCK" means the Series A Senior Cumulative Preferred
Stock, par value $.01 per share, of the General Partner.
"PREFERRED UNIT REDEMPTION AMOUNT" means, with respect to any
Preferred Unit, the amount payable by the General Partner on account of the
redemption of one share of Preferred Stock pursuant to Section 4.3.3 of the
General Partner's Articles of Incorporation.
"PREFERRED UNITS" shall mean the Partnership Units designated as
Preferred Units under this Agreement having the rights described in this
Agreement. The number of Preferred Units outstanding from time to time is as
set forth on EXHIBIT A, as amended by the General Partner.
"PRIME/HORIZON MERGER" shall mean the "Prime/Horizon Merger" as
defined in the Merger Agreement.
"PROPERTY" shall mean any Shopping Center Project or other real estate
project in which the Partnership or any Property Partnership, directly or
indirectly, acquires ownership of a fee or leasehold interest.
- 21 -
"PROPERTY PARTNERSHIP INTERESTS" shall mean and include the interest
of the Partnership as a partner or other equity participant in any Property
Partnership currently owned or hereafter acquired by the Partnership.
"PROPERTY PARTNERSHIPS" shall mean and include any partnership or
other Entity in which the Partnership, directly or indirectly, is or becomes a
partner or other equity participant and which is formed for the purpose of
acquiring, developing or owning a Property or a proposed Property.
"PURCHASE PRICE" shall have the meaning set forth in EXHIBIT C.
"QUARTER" shall mean each of the three (3) month periods ending on
March 31, June 30, September 30 and December 31 of any year.
"REGULATIONS" shall mean the final, temporary or proposed Income Tax
Regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
"REGULATORY ALLOCATIONS" shall have the meaning set forth in EXHIBIT
B.
"REIT" shall mean a real estate investment trust as defined in Section
856 of the Code.
"REIT EXPENSES" shall mean (i) costs and expenses relating to the
formation and continuity of existence of the General Partner and its
subsidiaries, if any, (which subsidiaries shall, for purposes of this definition
be included within the
- 22 -
definition of General Partner), including taxes, fees and assessments associated
therewith and any and all costs, expenses or fees payable to any director,
officer or trustee of the General Partner or such subsidiaries (including,
without limitation, any costs of indemnification), (ii) costs and expenses
relating to any offer or registration of securities by the General Partner and
all statements, reports, fees and expenses incidental thereto, including,
without limitation, underwriting discounts and selling commissions applicable to
any such offer of securities and any costs and expenses associated with any
claims made by any holder of such securities or any underwriter or placement
agent therefor, (iii) costs and expenses associated with the preparation and
filing of any periodic reports by the General Partner under federal, state or
local laws or regulations, including filings with the SEC, (iv) costs and
expenses associated with compliance by the General Partner with laws, rules and
regulations promulgated by any regulatory body, including the SEC, and (v) all
other operating or administrative costs of the General Partner incurred in the
ordinary course of its business.
"REIT REQUIREMENTS" shall have the meaning set forth in SECTION 6.2(b)
hereof.
"RIGHTS" shall have the meaning set forth in SECTION 11.1 hereof.
"SEC" shall mean the United States Securities and Exchange Commission.
- 23 -
"SECTION 704(c) TAX ITEMS" shall have the meaning set forth in
EXHIBIT B.
"SEPTEMBER 9, 1997 AGREEMENT" has the meaning set forth in the
Recitals to this Agreement.
"SERIES C PREFERRED DISTRIBUTION" means an amount equal to the
quarterly dividend payable in respect of one share of Series C Preferred Stock
pursuant to SECTION 3 of the General Partner's Articles of Incorporation.
"SERIES C PREFERRED DISTRIBUTION SHORTFALL" shall have the meaning set
forth in SECTION 6.2.
"SERIES C PREFERRED PURCHASE AGREEMENT" shall have the meaning set
forth in SECTION 4.2.
"SERIES C PREFERRED RIGHTS" shall have the meaning set forth in
SECTION 12.1.
"SERIES C PREFERRED STOCK" shall mean the Series C Cumulative
Convertible Redeemable Preferred Stock, $.01 par value, of the General Partner.
"SERIES C PREFERRED UNIT REDEMPTION AMOUNT" means, with respect to any
Series C Preferred Unit, the amount payable by the General Partner with respect
to the redemption of a share of Series C Preferred Stock pursuant to Section
5(a) of the General Partner's Articles of Incorporation and subject to Sections
5(b) and 5(c) thereof, using the amount, if any, of Series C Preferred
Distribution shortfall as the amount of accrued and unpaid dividends thereon.
- 24 -
"SERIES C PREFERRED UNITS" shall mean the Partnership Units designated
as Series C Preferred Units under this Agreement, having the rights described in
this Agreement. The number of Series C Preferred Units outstanding from time to
time is set forth in EXHIBIT A hereto, as amended by the General Partner from
time to time.
"SERVICE" shall mean the Internal Revenue Service and any successor
governmental agency.
"SHOPPING CENTER PROJECT" shall mean any shopping center, including
construction and improvement activities undertaken with respect thereto and
off-site improvements, on-site improvements, structures, buildings and/or
related parking and other facilities.
"SPECIAL DISTRIBUTION" shall mean the Partnership distribution
described in SECTION 6.2(b) hereof.
"STOCK INCENTIVE PLAN" means the Partnership's 1994 Stock Incentive
Plan, employee bonus plan and any other plan adopted from time to time by the
General Partner pursuant to which the General Partner issues Common Stock or
options to acquire Common Stock to employees or directors in partial
consideration for services.
"SUBSTITUTED LIMITED PARTNER" means any Person who (i) is permitted to
become a Limited Partner pursuant to the terms of SECTIONS 9.2 and 9.3 and (ii)
agrees in writing to be bound by the terms of this Agreement by execution of a
copy of this Agreement or by another written undertaking acceptable to the
General Partner.
"TAX ITEMS" shall have the meaning set forth in EXHIBIT B.
- 25 -
"TRADING DAY" shall mean a day on which the principal national
securities exchange on which the Common Stock is listed or admitted to trading
is open for the transaction of business or, if the Common Stock is not listed or
admitted to trading on any national securities exchange, shall mean any day
other than a Saturday, a Sunday or a day on which banking institutions in the
State of New York are authorized or obligated by law or executive order to
close.
"TRANSFER" as a noun, shall mean any sale, assignment, conveyance,
pledge, hypothecation, gift, encumbrance or other transfer, and as a verb, shall
mean to sell, assign, convey, pledge, hypothecate, give, encumber or otherwise
transfer.
Certain additional terms and phrases have the meanings set forth in
EXHIBIT B, C or D.
1.2 EXHIBITS, ETC. References to "Exhibit" or to a "Schedule" are,
unless otherwise specified, to one of the Exhibits or Schedules attached to this
Agreement, and references to an "Article" or a "Section" are, unless otherwise
specified, to one of the Articles or Sections of this Agreement. Each Exhibit
and Schedule attached hereto is hereby incorporated herein by reference as if
fully set forth herein.
ARTICLE II
ORGANIZATION
2.1 FORMATION AND CONTINUATION. The parties hereto do hereby
continue the Partnership as a limited partnership pursuant to the provisions of
the Act, and all other pertinent laws of the
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State of Delaware, for the purposes and upon the terms and conditions
hereinafter set forth. The Partners agree that the rights and liabilities of
the Partners shall be as provided in the Act except as otherwise herein
expressly provided. Promptly upon the execution and delivery hereof, the
General Partner shall cause any requisite amendment to the Certificate of
Limited Partnership and such other notice, instrument, document, or certificate
as may be required by applicable law, and which may be necessary to enable the
Partnership to conduct its business, and to own its properties, under the
Partnership name, to be filed or recorded in all appropriate public offices.
2.2 NAME. The business of the Partnership shall be conducted under
the name of Prime Retail, L.P. or such other name as the General Partner may
select, and all transactions of the Partnership, to the extent permitted by
applicable law, shall be carried on and completed in such name.
2.3 CHARACTER OF THE BUSINESS. The purpose of the Partnership shall
be to acquire, hold, own, develop, construct, improve, maintain, operate, sell,
lease, transfer, encumber, convey, exchange, mortgage, pledge and otherwise
dispose of or deal with (either directly or indirectly through one or more
Property Partnerships) the Properties; to acquire, hold, own, develop,
construct, improve, maintain, operate, manage, sell, lease, transfer, encumber,
convey, exchange, mortgage, pledge and otherwise dispose of or deal with (either
directly or indirectly through one or more Property Partnerships) real and
personal
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property of all kinds; to exercise all of the powers of a partner in Property
Partnerships; to acquire, own, deal with and dispose of Property Partnership
Interests; to undertake such other activities as may be necessary, advisable,
desirable or convenient to the business of the Partnership, and to engage in
such other activities as shall be necessary or desirable to effect the foregoing
purposes. The Partnership shall have all powers necessary or desirable to
accomplish the purposes herein set forth. In connection with the foregoing, but
subject to all of the terms, covenants, conditions and limitations contained in
this Agreement, the Partnership shall have full power and authority, directly or
through its interest in Property Partnerships, to enter into, perform, and carry
out contracts of any kind, to borrow money and to issue evidences of
indebtedness, whether or not secured by mortgage, trust deed, pledge or other
lien, and, directly or indirectly, to acquire and construct additional
Properties necessary or useful in connection with its business.
2.4 LOCATION OF THE PRINCIPAL PLACE OF BUSINESS. The location of the
principal place of business of the Partnership shall be at 000 Xxxx Xxxxx
Xxxxxx, 00xx Xxxxx, Xxxxxxxxx, Xxxxxxxx, 00000 or such other location as shall
be selected from time to time by the General Partner in its sole discretion.
2.5 REGISTERED AGENT AND REGISTERED OFFICE. The registered agent of
the Partnership in the State of Delaware shall be The Corporation Trust Company,
0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 or such other Person as the
General Partner may
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select in its sole discretion. The registered office of the Partnership in the
State of Delaware shall be The Corporation Trust Company, 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000 or such other location as the General Partner may
select in its sole and absolute discretion.
2.6 POWER OF ATTORNEY.
(a) Each Limited Partner and each assignee of a Limited Partner
hereby constitutes and appoints the General Partner, any Liquidating Trustee and
authorized officers and attorneys-in-fact of each, and each of those acting
singly, in each case with full power of substitution, as its true and lawful
agent and attorney-in-fact, with full power and authority in its name, place and
stead to:
(i) execute, swear to, acknowledge, deliver, file and
record in the appropriate public offices (a) all certificates, documents
and other instruments (including, without limitation, this Agreement and
the Certificate and all amendments or restatements thereof) that the
General Partner or the Liquidating Trustee deems appropriate or necessary
to form, qualify or continue the existence or qualification of the
Partnership as a limited partnership (or a partnership in which the Limited
Partners have limited liability) in the State of Delaware and in all other
jurisdictions in which the Partnership may or plans to conduct business or
own property; (b) all instruments that the General Partner or the
Liquidating Trustee deems appropriate or necessary to reflect any
amendment, change, modification or restatement of this Agreement in
accordance with its terms; (c) all conveyances and other instruments or
documents that the General Partner deems appropriate or necessary to
reflect the dissolution and liquidation of the Partnership pursuant to the
terms of this Agreement, including, without limitation, a certificate of
cancellation; (d) all instruments relating to the admission, withdrawal,
removal or substitution of any Partner pursuant to, or other events
described in, ARTICLES IV, VIII or IX hereof or the Capital Contribution of
any Partner; and (e) all certificates, documents and other instruments
relating to the determination of the rights, preferences and privileges of
Partnership Interests; and
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(ii) execute, swear to, seal, acknowledge and file all
ballots, consents, approvals, waivers, certificates and other instruments
appropriate or necessary, in the sole and absolute discretion of the
General Partner or any Liquidating Trustee, to evidence, confirm or ratify
any vote, consent, approval, agreement or other action which is made or
given by the Partners hereunder or is consistent with the terms of this
Agreement or appropriate or necessary, in the sole discretion of the
General Partner or any Liquidating Trustee, to effect the terms or intent
of this Agreement.
Nothing contained herein shall be construed as authorizing the General Partner
or any Liquidating Trustee to amend this Agreement except in accordance with
SECTION 14.7 hereof.
(b) The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, in recognition of the fact
that each of the Partners will be relying upon the power of the General Partner
and any Liquidating Trustee to act as contemplated by this Agreement in any
filing or other action by it on behalf of the Partnership, and it shall survive
and not be affected by the subsequent incapacity of any Limited Partner or
assignee of a Limited Partner and the transfer of all or any portion of such
Limited Partner's or assignee's Partnership Units and shall extend to such
Limited Partner's or assignee's heirs, successors, assigns and personal
representatives. Each such Limited Partner or assignee of a Limited Partner
hereby agrees to be bound by any representation made by the General Partner or
any Liquidating Trustee, acting in good faith pursuant to such power of
attorney, and each such Limited Partner or assignee hereby waives any and all
defenses which may be available to contest, negate or disaffirm the action of
the General Partner or any Liquidating Trustee, taken in good faith under such
power of attorney and in
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accordance with the provisions of this Agreement. Each Limited Partner or
assignee of a Limited Partner shall execute and deliver to the General Partner
or the Liquidating Trustee, within fifteen (15) days after receipt of the
General Partner's or Liquidating Trustee's request therefor, such further
designation, powers of attorney and other instruments as the General Partner or
the Liquidating Trustee, as the case may be, deems necessary to effect the
provisions of this SECTION 2.6.
ARTICLE III
TERM; DISSOLUTION
3.1 TERM. The Partnership shall continue until December 31, 2050,
unless the Partnership is dissolved sooner pursuant to the provisions of SECTION
3.2 or as otherwise provided by law.
3.2 DISSOLUTION. Except as set forth in this SECTION 3.2, no Partner
shall have the right to dissolve the Partnership. The Partnership shall not be
dissolved by the admission of Substituted Limited Partners or additional Limited
Partners or by the admission of a successor General Partner in accordance with
the terms of this Agreement. Upon the withdrawal of the General Partner, any
successor General Partner shall continue the business of the Partnership. The
Partnership shall dissolve, and its affairs shall be wound up, upon the first to
occur of any of the following ("Liquidating Events"):
(a) an event described in Section 17-402(a) of the Act by reason
of which the General Partner ceases to be the general partner, unless,
within ninety (90) days after such
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event, a Majority-in-Interest of the Partners (other than the General
Partner) that remain agree in writing to continue the business of the
Partnership and to appoint, effective as of the date of such event, a
successor General Partner;
(b) an election to dissolve the Partnership made by the General
Partner with the Consent of the Partners;
(c) the sale of all or substantially all of the assets and
properties of the Partnership;
(d) entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Act; or
(e) the expiration of the term of the Partnership as provided in
SECTION 3.1 hereof.
3.3 BANKRUPTCY OF A LIMITED PARTNER. The Bankruptcy of any Limited
Partner shall not cause a dissolution of the Partnership, but the rights of such
Limited Partner to share in the Net Income or Net Loss of the Partnership and to
receive distributions from the Partnership shall, on the happening of such
event, devolve on its successors or assigns, subject to and in accordance with
the terms and conditions of this Agreement, and the Partnership shall continue
as a limited partnership. However, in no event shall such assignee(s) become a
Substituted Limited Partner except in accordance with ARTICLE IX hereof.
ARTICLE IV
CONTRIBUTIONS TO CAPITAL; FINANCING
4.1 GENERAL PARTNER CAPITAL CONTRIBUTION.
(a) The General Partner has made contributions to the Partnership and
has the Common Units, Preferred Units, Convertible Preferred Units and Series C
Preferred Units (if any) as set forth on EXHIBIT A.
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(b) In the event the General Partner issues Series C Preferred Stock
pursuant to the Series C Preferred Stock Purchase Agreement, the General Partner
shall contribute to the Partnership the proceeds or consideration received
therefor and receive from the Partnership an equal number of Series C Preferred
Units, as contemplated by CLAUSE (B) of SUBSECTION (b) of SECTION 4.3.
4.2 LIMITED PARTNER CAPITAL CONTRIBUTIONS.
(a) Each Limited Partner had made contributions to the capital of the
Partnership and has the Common Units, Convertible Preferred Units or Series C
Preferred Units set forth opposite its name on EXHIBIT A.
(b) The General Partner is authorized to cause the Partnership to
issue Series C Preferred Units to an institutional investor from time to time
pursuant to that certain Series C Purchase Agreement dated as of August 8, 1997
by and among such institutional investor, the General Partner and the
Partnership (the "Series C Preferred Purchase Agreement") for the consideration
set forth therein, and upon payment of such consideration such Person shall be
admitted as a Limited Partner of the Partnership.
(c) The General Partner is authorized to cause the Partnership to
issue Common Units and Convertible Preferred Units to limited partners of
Horizon Limited Partnership as contemplated by the Merger Agreement, and upon
issuance thereof upon consummation of the Merger, such Persons shall be admitted
as Limited Partners of the Partnership.
4.3 ADDITIONAL FUNDS; RESTRICTIONS ON GENERAL PARTNER.
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(a) The sums of money required to finance the business and affairs of
the Partnership shall be derived from the initial Capital Contributions made to
the Partnership from the Partners as set forth in SECTIONS 4.1 and 4.2 hereof
(including the issuance of Series C Preferred Units from time to time) and from
funds generated from the operation and business of the Partnership, including
without limitation distributions directly or indirectly received by the
Partnership from the Property Partnerships. In the event additional financing
is needed from sources other than as set forth in the preceding sentence for any
reason, the General Partner may, in its sole discretion, in such amounts and at
such times as it solely shall determine to be necessary or appropriate, (i)
issue additional Partnership Interests in accordance with SECTION 4.4 hereof;
(ii) make additional Capital Contributions to the Partnership (subject to
SECTION 4.3(b) below); (iii) cause the Partnership to borrow money, enter into
loan arrangements, issue debt securities, obtain letters of credit or otherwise
borrow money on a secured or unsecured basis; (iv) make a loan or loans to the
Partnership (subject to SECTION 4.3(b) below); or (v) sell any assets or
properties of the Partnership. In no event shall the Limited Partners be
required to make any additional Capital Contributions or any loan to, or
otherwise provide any financial accommodation for the benefit of, the
Partnership.
(b) The General Partner shall not issue any debt securities, any
preferred stock (including any additional Preferred Stock or Convertible
Preferred Stock (other than Series C Preferred
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Stock issued in exchange for Series C Preferred Units)) or common stock
(including additional shares of Common Stock (other than (i) consideration to be
issued pursuant to the Merger Agreement or any subsequent merger, consolidation,
recapitalization or similar transaction which has been approved by the General
Partner, (ii) in connection with the exercise by a Limited Partner of Rights,
Convertible Preferred Rights or Series C Preferred Rights pursuant to ARTICLE XI
or XII hereof, (iii) in connection with the conversion of Convertible Preferred
Stock as contemplated by SECTION 4.8 hereof or any other conversion or exchange
of securities of the General Partner solely in conversion or exchange for other
securities of the General Partner or (iv) Common Stock exchanged for Series C
Preferred Stock or Series C Preferred Units)) or rights, options, warrants or
convertible or exchangeable securities containing the right to subscribe for or
purchase any of the foregoing (collectively, "Securities"), other than to all
holders of Common Stock (in which event the Antidilution Provisions shall apply
to the extent applicable), unless the General Partner shall (A) in the case of
debt securities, lend to the Partnership the proceeds of or consideration
received for such Securities on the same terms and conditions, including
interest rate and repayment schedule, as shall be applicable with respect to or
incurred in connection with such Securities and from any subsequent exercise,
exchange or conversion thereof (if applicable); (B) in the case of Preferred
Stock, Convertible Preferred Stock, Series C Preferred Stock or other equity
Securities senior or junior to the
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Common Stock as to dividends and distributions on liquidation, contribute to the
Partnership the proceeds or consideration (including any property or other
non-cash assets) received for such Securities and from any subsequent exercise,
exchange or conversion thereof (if applicable), and receive from the Partnership
Preferred Units, Convertible Preferred Units, Series C Preferred Units or other
interests in the Partnership in consideration therefor with the same terms and
conditions, including dividend, dividend priority and liquidation preference, as
are applicable to such Securities; and (C) in the case of Common Stock or other
equity Securities on a parity with the Common Stock as to dividends and
distributions on liquidation, contribute to the Partnership the net proceeds
(including any property or other non-cash assets) received for such Securities
or from any subsequent exercise, exchange or conversion thereof (if applicable),
and receive from the Partnership a number of additional Common Units in
consideration therefor equal to the product of (x) the number of shares of
Common Stock or other equity Securities issued by the General Partner,
multiplied by (y) a fraction the numerator of which is one and the denominator
of which is the Exchange Factor (as defined in EXHIBIT C hereto) in effect on
the date of such contribution.
4.4ISSUANCE OF ADDITIONAL PARTNERSHIP INTERESTS; ADMISSION OF
ADDITIONAL LIMITED PARTNERS. (a) In addition to any Partnership Interests
issuable by the Partnership pursuant to the Merger Agreement or SECTION 4.2,
SECTION 4.3 or SECTION 4.8 hereof, the General Partner is authorized to cause
the Partnership to issue
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additional Partnership Interests in the form of Convertible Preferred Units or
Common Units to any Persons at any time or from time to time, for consideration
not less than the fair value thereof, and on such terms and conditions, as the
General Partner shall establish in each case in its sole and absolute
discretion, without any approval being required from any Limited Partner or any
other Person; PROVIDED, HOWEVER, that there is no material adverse impact on (i)
the right of any Limited Partner to exercise the Rights pursuant to ARTICLE XI
or (ii) the economic effect upon the existing Limited Partners of the
allocations set forth in EXHIBIT B. Subject to the limitations set forth in the
preceding sentence, the General Partner may take such steps as it, in its
reasonable discretion, deems necessary or appropriate to admit any Person as a
Limited Partner of the Partnership, including, without limitation, amending the
Certificate, EXHIBIT A or any other provision of this Agreement.
4.5 STOCK INCENTIVE PLAN. If at any time or from time to time
Incentive Options granted in connection with the Stock Incentive Plan are
exercised in accordance with the terms of the Incentive Option Agreement:
(a) the General Partner shall, as soon as practicable after such
exercise, contribute to the capital of the Partnership an amount equal to
the exercise price paid, if any, to the General Partner by such exercising
party in connection with the exercise of the Incentive Option; and
(b) the General Partner shall receive the number of Common Units
corresponding to the number of shares of Common Stock delivered by the
General Partner to such exercising party multiplied by a fraction the
numerator of which is one and the denominator of which is the Exchange
Factor (as
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defined in EXHIBIT C hereto) in effect on the date of such contribution.
4.6 NO THIRD PARTY BENEFICIARY. No creditor or other third party
having dealings with the Partnership shall have the right to enforce the right
or obligation of any Partner to make Capital Contributions or loans or to pursue
any other right or remedy hereunder or at law or in equity, it being understood
and agreed that the provisions of this Agreement shall be solely for the benefit
of, and may be enforced solely by, the parties hereto and their respective
successors and assigns. None of the rights or obligations of the Partners
herein set forth to make Capital Contributions or loans to the Partnership shall
be deemed an asset of the Partnership for any purpose by any creditor or other
third party, nor may such rights or obligations be sold, transferred or assigned
by the Partnership or pledged or encumbered by the Partnership to secure any
debt or other obligation of the Partnership or of any of the Partners.
4.7 NO INTEREST; NO RETURN. No Partner shall be entitled to interest
on its Capital Contribution or on such Partner's Capital Account. Except as
provided herein or by law, no Partner shall have any right to demand or receive
the return of its Capital Contribution from the Partnership.
4.8 CONVERSION OF CONVERTIBLE PREFERRED UNITS OR SERIES C PREFERRED UNITS;
REDEMPTION OR PURCHASE OF SERIES C PREFERRED UNITS, CONVERTIBLE PREFERRED UNITS
OR PREFERRED UNITS.
(a) If at any time holders of the General Partner's Convertible
Preferred Stock shall exercise their rights under the General Partner's Articles
of Incorporation to convert any shares
- 38 -
of Convertible Preferred Stock to Common Stock, in whole or in part (including
any fractions thereof), then, simultaneously with such conversion, an equal
number of Convertible Preferred Units shall be automatically converted into the
number of Common Units equal to the product of (x) the number of shares of
Common Stock into which the Convertible Preferred Stock is converted, multiplied
by (y) a fraction the numerator of which is one and the denominator of which is
the Exchange Factor (as defined in EXHIBIT C hereto) in effect on such date.
(b) If at any time shares of the General Partner's Preferred Stock
are to be redeemed pursuant to the General Partner's Articles of Incorporation
or purchased by the General Partner, the Partnership shall redeem an equal
number of Preferred Units by payment to the General Partner of the Preferred
Unit Redemption Amount or purchase price to be paid by the General Partner
immediately prior to or concurrently with such redemption or purchase. If at
any time shares of the General Partner's Convertible Preferred Stock are to be
redeemed pursuant to the General Partner's Articles of Incorporation or
purchased by the General Partner, the Partnership shall redeem an equal number
of Convertible Preferred Units by payment of the Convertible Preferred Unit
Redemption Amount therefor or purchase price paid by the General Partner
immediately prior to or concurrently with such redemption or purchase. If at
any time shares of the General Partner's Series C Preferred Stock are to be
redeemed pursuant to the General Partner's Articles of Incorporation or
purchased by the
- 39 -
General Partner, the Partnership shall redeem an equal number of Series C
Preferred Units by payment of the Series C Preferred Unit Redemption Amount or
purchase price to be paid by the General Partner immediately prior to or
concurrently with such redemption or purchase.
(c) If at any time holders of the General Partner's Series C Preferred
Stock shall exercise their rights under the General Partner's Articles of
Incorporation to convert any shares of Series C Preferred Stock to Common Stock,
in whole or in part, then, simultaneously with such conversion, an equal number
of Series C Preferred Units shall be automatically converted into the number of
Common Units which is equal to the number of shares of Common Stock into which
the shares of the General Partner's Series C Preferred Stock which are being
converted are so converted, as such number is determined pursuant to the General
Partner's Articles of Incorporation.
(d) The Series C Preferred Units may be redeemed by the Partnership at
the option of the General Partner pursuant to the terms of Section 4.9.
(e) The General Partner shall amend EXHIBIT A hereto to reflect (i)
each conversion of Convertible Preferred Units, and the issuance of additional
Common Units in connection therewith, (ii) each exchange by a Limited Partner of
Series C Preferred Units for Series C Preferred Stock or Common Stock of the
General Partner, and the allocation or reissuance of such Series C Preferred
Units in the name of the General Partner, pursuant to Section 12.3 as
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Series C Preferred Units or Common Units, as the case may be, and (iii) each
redemption of Convertible Preferred Units, Preferred Units and Series C
Preferred Units and (iv) each exchange by a Limited Partner of Convertible
Preferred Units for Common Units or Common Units for Convertible Preferred Units
pursuant to the exchange offer contemplated by the Merger Agreement.
4.9 REDEMPTION OF SERIES C PREFERRED UNITS.
(a) On and after August 8, 2007, the Partnership, at the option of
the General Partner, may redeem the Series C Preferred Units, in whole at any
time or from time to time in part at a redemption price for each Series C
Preferred Unit, payable in cash, in an amount equal to the Series C Preferred
Unit Redemption Amount therefor.
(b) Notice of the redemption of any Series C Preferred Units shall be
mailed by first class mail to each Partner which is a holder of record of Series
C Preferred Units to be redeemed at the address of each such Partner as shown on
the Partnership's records, not less than 30 nor more than 90 days prior to the
date fixed for redemption (the "Call Date"). Neither the failure to mail any
notice required by this paragraph, nor any defect therein or in the mailing
thereof, to any particular Partner, shall affect the sufficiency of the notice
or the validity of the proceedings for redemption with respect to the other
Partners. Each such mailed notice shall state, as appropriate: (1) the Call
Date; (2) the number of Series C Preferred Units to be redeemed and, if fewer
than all the Series C Preferred Units held by such Partner are to
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be redeemed, the number of such Series C Preferred Units to be redeemed from
such Partner; (3) the redemption price; (4) the place or places of the closing
for such redemption; (5) the then-current conversion price; and (6) that the
Series C Preferred Distribution with respect to the Series C Preferred Units
shall cease to accrue on such Call Date except as otherwise provided herein.
Notice having been mailed as aforesaid, from and after the Call Date (unless the
Partnership shall fail to make available an amount of cash necessary to effect
such redemption), (i) except as otherwise provided herein, the Series C
Preferred Distribution on the Series C Preferred Units so called for redemption
shall cease to accrue, (ii) such Series C Preferred Units shall no longer be
deemed to be outstanding, and (iii) all rights of the holders thereof as holders
of Series C Preferred Units shall cease (except the rights to receive the cash
payable upon such redemption, without interest thereon). The Partnership's
obligation to provide cash in accordance with the preceding sentence shall be
deemed fulfilled if, on or before the Call Date, the Partnership shall deposit
with a bank or trust company (which may be an affiliate of the Partnership) that
has an office in the Borough of Manhattan, City of New York, and that has, or is
an affiliate of a bank or trust company that has, capital and surplus of at
least $50,000,000, necessary for such redemption, in trust, with irrevocable
instructions that such cash be applied to the redemption of the Series C
Preferred Units so called for redemption. No interest shall accrue for the
benefit of the holders of Series C Preferred
- 42 -
Units to be redeemed on any cash so set aside by the Partnership. Subject to
applicable escheat laws, any such cash unclaimed at the end of two years from
the Call Date shall revert to the general funds of the Partnership, after which
reversion the holders of such Series C Preferred Units so called for redemption
shall look only to the general funds of the Partnership for the payment of such
cash.
If fewer than all the outstanding Series C Preferred Units are to be
redeemed, units to be redeemed shall be selected by the General Partner from
outstanding Series C Preferred Units not previously called for redemption pro
rata (as nearly as may be), by lot or by any other method determined by the
General Partner in its sole discretion to be equitable.
4.10 REDEMPTION OF CONVERTIBLE PREFERRED UNITS.
(a) On and after March 31, 1999, the Partnership, at the option of
the General Partner, may redeem the Convertible Preferred Units, in whole at any
time or from time to time in part at a redemption price for each Convertible
Preferred Unit, payable in cash, in an amount equal to the Convertible Preferred
Unit Redemption Amount therefor.
(b) Notice of the redemption of any Convertible Preferred Units shall
be mailed by first class mail to each Partner which is a holder of record of
Convertible Preferred Units to be redeemed at the address of each such Partner
as shown on the Partnership's records, not less than 30 nor more than 90 days
prior to the date fixed for redemption (the "Call Date"). Neither the
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failure to mail any notice required by this paragraph, nor any defect therein or
in the mailing thereof, to any particular Partner, shall affect the sufficiency
of the notice or the validity of the proceedings for redemption with respect to
the other Partners. Each such mailed notice shall state, as appropriate: (1)
the Call Date; (2) the number of Convertible Preferred Units to be redeemed and,
if fewer than all the Convertible Preferred Units held by such Partner are to be
redeemed, the number of such Convertible Preferred Units to be redeemed from
such Partner; (3) the redemption price; (4) the place or places of the closing
for such redemption; (5) the then-current conversion price; and (6) that the
Convertible Preferred Distribution with respect to the Convertible Preferred
Units shall cease to accrue on such Call Date except as otherwise provided
herein. Notice having been mailed as aforesaid, from and after the Call Date
(unless the Partnership shall fail to make available an amount of cash necessary
to effect such redemption), (i) except as otherwise provided herein, the
Convertible Preferred Distribution on the Convertible Preferred Units so called
for redemption shall cease to accrue, (ii) such Convertible Preferred Units
shall no longer be deemed to be outstanding, and (iii) all rights of the holders
thereof as holders of Convertible Preferred Units shall cease (except the rights
to receive the cash payable upon such redemption, without interest thereon).
The Partnership's obligation to provide cash in accordance with the preceding
sentence shall be deemed fulfilled if, on or before the Call Date, the
Partnership shall deposit with
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a bank or trust company (which may be an affiliate of the Partnership) that has
an office in the Borough of Manhattan, City of New York, and that has, or is an
affiliate of a bank or trust company that has, capital and surplus of at least
$50,000,000, necessary for such redemption, in trust, with irrevocable
instructions that such cash be applied to the redemption of the Convertible
Preferred Units so called for redemption. No interest shall accrue for the
benefit of the holders of Convertible Preferred Units to be redeemed on any cash
so set aside by the Partnership. Subject to applicable escheat laws, any such
cash unclaimed at the end of two years from the Call Date shall revert to the
general funds of the Partnership, after which reversion the holders of such
Convertible Preferred Units so called for redemption shall look only to the
general funds of the Partnership for the payment of such cash.
If fewer than all the outstanding Convertible Preferred Units are to
be redeemed, units to be redeemed shall be selected by the General Partner from
outstanding Convertible Preferred Units not previously called for redemption pro
rata (as nearly as may be), by lot or by any other method determined by the
General Partner in its sole discretion to be equitable.
ARTICLE V
INTENTIONALLY OMITTED
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ARTICLE VI
ALLOCATIONS, DISTRIBUTIONS AND OTHER TAX AND ACCOUNTING MATTERS
6.1 ALLOCATIONS. The Net Income, Net Loss and/or other Partnership
items shall be allocated pursuant to the provisions of EXHIBIT B.
6.2 DISTRIBUTIONS.
(a) Except for the Special Distribution, the Common Distribution and
distributions pursuant to SECTION 8.2 in connection with the dissolution and
liquidation of the Partnership, the General Partner shall cause the Partnership
to distribute all Net Cash Flow to the Partners from time to time as determined
by the General Partner, but in any event not less frequently than quarterly, in
such amounts as the General Partner shall determine, and in the following
priority:
(i) First, to the extent that the amount of cash distributed to
the General Partner for all prior Quarters pursuant to SECTION
6.2(a)(ii) (other than the immediately preceding Quarter) was less
than the Preferred Distribution for each of the outstanding Preferred
Units for all such Quarters, and such deficiency was not previously
distributed pursuant to this subsection (i) or paid as part of a
Preferred Unit Redemption Amount (a "Preferred Distribution
Shortfall"), Net Cash Flow shall be distributed to the General Partner
in an amount equal to such Preferred Distribution Shortfall for all
such prior Quarters.
(ii) Second, Net Cash Flow shall be distributed to the General
Partner on the Partnership Payment Date in an amount equal to the
Preferred Distribution for the immediately preceding Quarter for each
outstanding Preferred Unit then held by the General Partner.
(iii) Third, to the extent the amount of cash distributed to the
Partners holding Convertible Preferred Units pursuant to SECTION
6.2(a)(iv) for all prior Quarters (other than the immediately
preceding Quarter) was less than the Convertible Preferred
Distribution for
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each of the outstanding Convertible Preferred Units for all such
Quarters, and such deficiency was not previously distributed pursuant
to this subsection (iii) or paid as part of Convertible Preferred Unit
Redemption Amount (a "Convertible Preferred Distribution Shortfall"),
Net Cash Flow shall be distributed to the Partners holding Convertible
Preferred Units, pro rata in accordance with their respective
Convertible Preferred Units, in an amount equal to such Convertible
Preferred Distribution Shortfall for all such prior Quarters.
(iv) Fourth, Net Cash Flow shall be distributed to the Partners
holding Convertible Preferred Units on the Partnership Payment Date in
an amount equal to the Convertible Preferred Distribution for the
immediately preceding Quarter for each outstanding Convertible
Preferred Unit then held by the Partners holding Convertible Preferred
Units, pro rata in accordance with their respective Convertible
Preferred Units.
(v) Fifth, to the extent that the amount of cash distributed to
Partners pursuant to SECTION 6.2(a)(vi) for all prior Quarters (other
than the immediately preceding Quarter) was less than the Series C
Preferred Distribution for each of the outstanding Series C Preferred
Units for all such Quarters, and such deficiency was not previously
distributed pursuant to this subsection (v) or paid as part of a
Series C Preferred Unit Redemption Amount (a "Series C Preferred
Distribution Shortfall"), Net Cash Flow in an amount equal to such
Series C Preferred Distribution Shortfall for all such prior quarters
shall be distributed to the Partners holding Series C Preferred Units
on the Partnership Payment Date for the immediately preceding Quarter,
pro rata, in accordance with their respective Series C Preferred
Units.
(vi) Sixth, Net Cash Flow shall be distributed to the Partners
holding Series C Preferred Units in an amount equal to the Series C
Preferred Distribution for the immediately preceding Quarter for each
outstanding Series C Preferred Unit, pro rata, in accordance with
their respective Series C Preferred Units.
(vii) Seventh, the balance of any Net Cash Flow to be distributed,
if any, shall be distributed to the Partners holding Common Units on
the Partnership Payment Date with respect to the immediately preceding
Quarter, pro rata in accordance with their respective Common Units.
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(b) On the date hereof, immediately prior to the Special
Distribution, the Partnership shall formally declare a cash distribution of (i)
$0.50 per outstanding Common Unit and Series C Preferred Unit and (ii) $0.60 per
outstanding Convertible Preferred Unit, in each case to each holder of record of
Common Units, Convertible Preferred Units and Series C Preferred Units as of the
close of the transfer books of the Partnership immediately prior to the Merger.
The payment date with respect to the Special Distribution shall be ________.
(c) On the date hereof immediately after consummation of the Merger,
the Common Distribution shall be effected by the distribution of each issued and
outstanding common unit of Repositioning Strategies, L.P. (each, a "RSLP Common
Unit") to each holder of record of Common Units, Convertible Preferred Units and
Series C Preferred Units as of the close of the transfer books of the
Partnership immediately after the consummation of the Merger such that (i) each
Convertible Preferred Unit shall entitle the holder to receive RSLP Common Units
equal to 1.196 multiplied by the number of RSLP Common Units being distributed
in respect of each Common Unit, and (ii) each Series C Preferred Unit shall
entitle the holder to receive that number of RSLP Common Units distributed in
respect of each Common Unit. The payment date with respect to the Common
Distribution shall be ________.
(d) The General Partner shall use its best efforts to cause the
Partnership to distribute sufficient amounts to enable the General Partner to
pay shareholder dividends that will (i)
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satisfy the requirements for qualifying as a REIT under the Code and Regulations
("REIT Requirements"), and (ii) avoid any federal income or excise tax liability
of the General Partner.
(e) With respect to any Limited Partner(s) from whom the General
Partner receives an Exercise Notice to exercise Rights in accordance with
ARTICLE XI for which the General Partner elects to pay the Cash Purchase Price
pursuant to EXHIBIT C, the General Partner shall cause the Partnership to
distribute to such Limited Partner(s), with respect to the Common Units for
which the Cash Purchase Price is paid, (i) on the Partnership Payment Date, if
any, thereafter occurring during the Quarter in which the Cash Purchase Price is
paid, an amount equal to a full PRO RATA share of any Net Cash Flow to which
such Limited Partner would have been entitled to receive pursuant to SECTION
6.2(a)(vii) had such Limited Partner held such Common Units on the Partnership
Payment Date occurring in such Quarter and (ii) on the Partnership Payment Date,
if any, occurring during the next succeeding Quarter after such Exercise Notice
is received, an amount equal to the Net Cash Flow to which such Limited Partner
would have been entitled to receive pursuant to SECTION 6.2(a)(vii) had such
Limited Partner held such Common Units on the Partnership Payment Date,
multiplied by a fraction, the numerator of which is the number of days in the
preceding Quarter (based on three 30-day months) that the Limited Partner held
such Common Units and the denominator of which is 90.
(f) Notwithstanding any other provision in this Agreement, from time to
time and at such times as the General
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Partner shall determine, and prior to any determination or distribution of Net
Cash Flow pursuant to SECTION 6.2(a), there shall be distributed to the General
Partner from the revenues, proceeds or other funds of the Partnership, an amount
equal to any REIT Expenses (other than those described in clause (ii) of the
definition of REIT Expenses), to the extent not paid or payable by the General
Partner from cash distributions which it receives directly from any Property
Partnerships on account of any interest in the Property Partnership which it
holds directly (as opposed to through the Partnership).
(g) The provisions of SECTION 6.2 of this Agreement are not intended
to supersede or replace, and are subject to, the agreements set forth on EXHIBIT
E hereto.
6.3 BOOKS OF ACCOUNT. At all times during the continuance of the
Partnership, the General Partner shall maintain or cause to be maintained full,
true, complete and correct books of account in accordance with GAAP wherein
shall be entered particulars of all monies, goods or effects belonging to or
owing to or by the Partnership, or paid, received, sold or purchased in the
course of the Partnership's business, and all of such other transactions,
matters and things relating to the business of the Partnership as are usually
entered in books of account kept by persons engaged in a business of a like kind
and character as the Partnership. In addition, the Partnership shall keep all
records as required to be kept pursuant to the Act. The books and records of
account shall be kept at the principal office of the
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Partnership, and each Partner shall at all reasonable times, and upon reasonable
notice, have access to such books and records and the right to inspect the same.
6.4 REPORTS. The General Partner shall cause to be submitted to the
Limited Partners promptly upon receipt of the same from the Accountants and in
no event later than April 1 of each year, copies of Audited Financial Statements
prepared on a consolidated basis for the Partnership and each of the Property
Partnerships, together with the reports thereon, and all supplementary schedules
and information, prepared by the Accountants. The Partnership also shall cause
to be prepared such reports and/or information as are necessary for the General
Partner to determine its qualification as a REIT and its compliance with REIT
Requirements.
6.5 AUDITS. Not less frequently than annually, the books and records
of the Partnership shall be audited by the Accountants. The General Partner
shall, unless determined otherwise by the General Partner with the Consent of
the Partners, engage the Accountants to audit the books and records of the
Property Partnerships.
6.6 TAX ELECTIONS AND RETURNS. All elections required or permitted
to be made by the Partnership under any applicable tax law shall be made by the
General Partner in its sole discretion (including the election to be a "large
partnership" under Code Section 775; PROVIDED, HOWEVER, if requested by a
transferee (or if the General Partner is a transferee, as it shall determine in
its
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sole discretion), the General Partner shall file an election on behalf of the
Partnership pursuant to Section 754 of the Code to adjust the basis of the
Partnership property in the case of a transfer of a Partnership Interest,
including transfers made in connection with the exercise of Rights, made in
accordance with the provisions of this Agreement. The General Partner shall be
responsible for preparing and filing all federal and state tax returns for the
Partnership and furnishing copies thereof to the Partners, together with
required Partnership schedules showing allocations of Tax Items and copies of
the tax returns of all Property Partnerships all within the period of time
prescribed by law (including extensions). The General Partner shall consult in
good faith with the Limited Partners regarding any proposed modifications to the
tax returns of the Partnership and/or the Property Partnerships by the Limited
Partners.
6.7 TAX MATTERS PARTNER. The General Partner is hereby designated as
the Tax Matters Partner for the Partnership within the meaning of Section
6231(a)(7) of the Code and is authorized, but not required, to take all actions
within its authority as tax matters partner, as described in subchapters C and D
of Chapter 63, subtitle F of the Code; PROVIDED, HOWEVER, that in exercising its
authority as Tax Matters Partner, the General Partner shall be limited by the
provisions of this Agreement affecting tax aspects of the Partnership.
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ARTICLE VII
RIGHTS, DUTIES AND RESTRICTIONS OF THE GENERAL PARTNER
7.1 EXPENDITURES BY PARTNERSHIP. The General Partner is hereby
authorized to pay compensation for accounting, administrative, legal, technical,
management and other services rendered to the Partnership. All of the aforesaid
expenditures shall be made on behalf of the Partnership and, except as provided
below, the General Partner shall be entitled to reimbursement by the Partnership
for any expenditures incurred by it on behalf of the Partnership which shall be
made other than out of the funds of the Partnership. The Partnership shall also
assume, and pay when due, all Administrative Expenses other than REIT Expenses,
but only to the extent not paid or payable by the General Partner from cash
distributions received by the General Partner directly from any Property
Partnership. The General Partner shall use any cash distributions which it
receives directly from any Property Partnerships on account of any interest in
the Property Partnership which it holds directly (as opposed to through the
Partnership) to pay REIT Expenses.
7.2 POWERS AND DUTIES OF GENERAL PARTNER. The General Partner shall
be responsible for the management of the Partnership's business and affairs.
Except as otherwise herein expressly provided, and subject to the limitations
contained in SECTION 7.3 hereof with respect to Major Decisions, the General
Partner shall have, and is hereby granted, full and complete power, authority
and discretion to take such action for and on behalf of
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the Partnership and in its name as the General Partner shall, in its sole and
absolute discretion, deem necessary or appropriate to carry out the purposes for
which the Partnership was organized. Except as otherwise expressly provided
herein, and subject to SECTION 7.3 hereof, the General Partner shall have the
following rights, powers and authorities, to the extent necessary and
appropriate to pursue and accomplish the purposes of the Partnership:
(a) To manage, control, invest, reinvest, acquire by purchase, lease
or otherwise, sell, contract to purchase or sell, hold for investment,
grant, obtain, or exercise options to purchase, options to sell or
conversion rights, assign, transfer, convey, deliver, endorse, exchange,
pledge, mortgage, abandon, improve, repair, maintain, insure, lease for any
term and otherwise deal with any and all property of whatsoever kind and
nature, and wheresoever situated, in furtherance of the business or
purposes of the Partnership;
(b) To acquire, directly or indirectly, interests in real estate of
any kind and of any type, and any and all kinds of interests therein, and
to determine the manner in which title thereto is to be held; to manage,
insure against loss, protect and subdivide any real estate, interests
therein or parts thereof; to improve, develop or redevelop any such real
estate; to participate in the ownership and development of any property; to
dedicate for public use, to vacate any subdivisions or parts thereof, to
resubdivide, to contract to sell, to grant options to purchase or lease, or
to sell on any terms; to convey, mortgage, pledge or otherwise encumber
said property, or any part thereof; to lease said property or any part
thereof from time to time, upon any terms and for any period of time, and
to renew or extend leases, to amend, change or modify the terms and
provisions of any leases and to grant options to lease and options to renew
leases and options to purchase; to partition or to exchange said real
property, or any part thereof, for other real or personal property or to
grant easements or charges of any kind; to relay, convey or assign any
right, title or interest in or about or easement appurtenant to said
property or any part thereof; to construct and reconstruct, remodel, alter,
repair, add to or take from buildings on any real property in which the
Partnership owns an interest; to insure any Person having an interest in or
responsibility for the care, management or repair of such property; to
direct the trustee of any land trust to mortgage,
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lease, convey or contract to convey the real estate held in such land trust
or to execute and deliver deeds, mortgages, notes, and any and all
documents pertaining to the property subject to such land trust or in any
matter regarding such trust; to execute assignments of all or any part of
the beneficial interest in any land trust in which the Partnership owns a
beneficial interest;
(c) To employ, engage or contract with or dismiss from employment or
engagement Persons to the extent deemed necessary by the General Partner
for the operation and management of the Partnership business, including but
not limited to, contractors, subcontractors, engineers, architects,
surveyors, mechanics, consultants, accountants, attorneys, insurance
brokers, real estate brokers, financial counsel, professional advisers and
others;
(d) To enter into, make, amend, perform and carry out, or cancel and
rescind, contracts and other obligations, including without limitation
guaranties and indemnity agreements for any purpose pertaining to the
business of the Partnership or any Property Partnership; and to loan money
to, borrow money from and engage in transactions with Affiliates of the
Partnership or any other Person;
(e) To borrow money or procure loans and advances from any Person for
Partnership purposes, and to apply for and secure, from any Person, credit
or accommodations, without limitation as to amount; to contract liabilities
and obligations, direct or contingent and of every kind and nature with or
without security; to repay, discharge, settle, adjust, compromise, or
liquidate any such loan, advance, credit, obligation or liability; and to
draw, make, accept, endorse, execute and issue promissory notes, drafts,
bills of exchange, warrants, bonds, debentures, evidences of indebtedness
and other instruments, and to secure the payment thereof, the interest
thereon and any other obligations or liabilities relating thereto, in any
manner, including without limitation by mortgage on, security interest in
or pledge of, or conveyance or assignment in trust of, the whole or any
part of the assets of the Partnership, real, personal or mixed, including
contract rights and options, whether at the time owned or thereafter
acquired, and future earnings, and to sell, pledge or otherwise dispose of
such securities or other obligations of the Partnership for the furtherance
of any purpose of the Partnership, and to guaranty or indemnify any Person
in connection with any of the foregoing or any other activity of the
Partnership;
(f) To pledge, hypothecate, mortgage, assign, deposit, deliver, enter
into sale and leaseback arrangements or otherwise give as security or as
additional or substitute
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security, or sell or otherwise dispose of any and all Partnership property,
tangible or intangible, including, but not limited to, real estate and
beneficial interests in land trusts, and to make substitutions thereof, and
to receive any proceeds thereof upon the release or surrender thereof; to
sign, execute and deliver any and all assignments, deeds and other
contracts and instruments in writing; to authorize, give, make, procure,
accept and receive moneys, payments, property, notices, demands, vouchers,
receipts, releases, compromises and adjustments; to waive notices, demands,
and protests and authorize and execute waivers of every kind and nature; to
enter into, make, execute, deliver and receive written agreements,
undertakings and instruments of every kind and nature; to give oral
instructions and make oral agreements; and generally to do any and all
other acts and things incidental to any of the foregoing or with reference
to any dealings or transactions which the General Partner may deem
necessary, proper or advisable to effect or accomplish any of the foregoing
or to carry out the business and purposes of the Partnership;
(g) To acquire and enter into any contract of insurance which the
General Partner deems necessary or appropriate for the protection of the
Partnership, for the conservation of the Partnership's assets or for any
purpose convenient or beneficial to the Partnership;
(h) To conduct any and all banking transactions on behalf of the
Partnership; to adjust and settle checking, savings, and other accounts
with such institutions as the General Partner shall deem appropriate; to
draw, sign, execute, accept, endorse, guarantee, deliver, receive and pay
any checks, drafts, bills of exchange, acceptances, notes, obligations,
undertakings and other instruments for or relating to the payment of money
in, into, or from any account in the Partnership's name; to execute,
procure, consent to and authorize extensions and renewals of any of the
foregoing; to make deposits into and withdrawals from the Partnership's
bank accounts and to negotiate or discount commercial paper, acceptances,
negotiable instruments, bills of exchange and dollar drafts; to invest
funds of the Partnership;
(i) To demand, xxx for, receive, and otherwise take steps to collect
or recover all debt, rents, proceeds, interests, dividends, goods,
chattels, income from property, damages and all other property, to which
the Partnership may be entitled or which are or may become due the
Partnership from any Person; to commence, prosecute or enforce, or to
defend, answer or oppose, contest and abandon all legal proceedings in
which the Partnership is or may hereafter be interested; and to settle,
compromise or submit to arbitration any accounts, debts, claims, disputes
and matters which may
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arise between the Partnership and any other Person and to grant an
extension of time for the payment or satisfaction thereof on any terms,
with or without security;
(j) To make arrangements for financing, including the taking of all
action deemed necessary or appropriate by the General Partner to cause any
approved loans to be closed;
(k) To take all reasonable measures necessary to insure compliance by
the Partnership with applicable arrangements, and other contractual
obligations and arrangements entered into by the Partnership from time to
time in accordance with the provisions of this Agreement, including
periodic reports as required to be submitted to lenders, and using all due
diligence to insure that the Partnership is in compliance with its
contractual obligations;
(l) To maintain the Partnership's books and records;
(m) To prepare and deliver, or cause to be prepared and delivered by
the Partnership's Accountants, all financial and other reports with respect
to the operations of the Partnership and all Federal and state tax returns
and reports;
(n) To act in any state or nation in which the Partnership may
lawfully act, for itself or as principal, agent or representative for any
Person with respect to any business of the Partnership;
(o) To become a partner or member in, and perform the obligations of
a partner or member of, any general or limited partnership or limited
liability company;
(p) To apply for, register, obtain, purchase or otherwise acquire
trademarks, trade names, labels and designs relating to or useful in
connection with any business of the Partnership, and to use, exercise,
develop and license the use of the same;
(q) To pay or reimburse any and all actual fees, costs and expenses
incurred in the formation and organization of the Partnership;
(r) To do all acts which are necessary, customary or appropriate for
the protection and preservation of the Partnership's assets, including the
establishment of reserves; and
(s) In general, to exercise all of the general rights, privileges and
powers permitted to be had and exercised by the provisions of the Act,
including without limitation the right
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to effect a merger of the Partnership with another Entity in accordance
with the provisions of the Act.
Except as otherwise provided herein, to the extent the duties of the General
Partner require expenditures of funds to be paid to third parties, the General
Partner shall not have any obligations hereunder except to the extent that
Partnership funds are reasonably available to it for the performance of such
duties, and nothing herein contained shall be deemed to require the General
Partner, in its capacity as such, to expend its individual funds to make any
payment to third parties on behalf of the Partnership or to undertake any
individual liability or obligation on behalf of the Partnership.
7.3 MAJOR DECISIONS. The General Partner shall not, without the
prior Consent of the Partners, on behalf of the Partnership, undertake any of
the following actions (the "Major Decisions"):
(a) Amend and/or modify this Agreement other than as specified in
SECTION 14.7.
(b) Take title to any personal or real property, other than in the
name of the Partnership, a Property Partnership or pursuant to SECTION 7.5
or 7.8 hereof or pursuant to the transactions contemplated by the Merger
Agreement.
(c) Dissolve the Partnership prior to the occurrence of any of the
Liquidating Events.
7.4 NO REMOVAL. In no event shall the Limited Partners or any other
Persons have the right to remove the General Partner as general partner of the
Partnership.
7.5 GENERAL PARTNER PARTICIPATION. The General Partner agrees that
all business activities of the General Partner,
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including activities pertaining to the acquisition, development and ownership of
properties, shall be conducted through the Partnership; PROVIDED that the
General Partner may own up to a one percent (1%) interest in any Property
Partnership. The General Partner agrees that all borrowings for the purpose of
making distributions to its stockholders will not be incurred by the General
Partner but will be incurred only by the Partnership or by one or more of the
Property Partnerships.
7.6 PROSCRIPTIONS. The General Partner shall not have the authority
to:
(a) Do any act in contravention of this Agreement or which would make
it impossible to carry on the ordinary business of the Partnership;
(b) Possess any Partnership property or assign rights in specific
Partnership property for other than Partnership purposes; or
(c) Do any act in contravention of applicable law.
Nothing herein contained shall impose any obligation on any Person or firm doing
business with the Partnership to inquire as to whether or not the General
Partner has properly exercised its authority in executing any contract, lease,
mortgage, deed or other instrument on behalf of the Partnership, and any such
third Person shall be fully protected in relying upon such authority.
7.7 ADDITIONAL PARTNERS. Additional Partners may be admitted to the
Partnership only as provided in SECTION 4.4 hereof.
7.8 TITLE HOLDER. To the extent allowable under applicable law,
title to all or any part of the properties of the Partnership may be held in the
name of the Partnership or in the
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name of any other Person, the beneficial interest in which shall at all times be
vested in the Partnership. Any such title holder shall perform any and all of
its respective functions to the extent and upon such terms and conditions as may
be determined from time to time by the General Partner, consistent with the
business and purposes of the Partnership.
7.9 COMPENSATION OF THE GENERAL PARTNER. The General Partner shall
not be entitled to any compensation for services rendered to the Partnership
solely in its capacity as General Partner. The foregoing shall not limit the
General Partner's right to reimbursement for those costs and expenses
constituting Administrative Expenses as provided elsewhere in this Agreement.
7.10 WAIVER AND INDEMNIFICATION.
(a) Neither any Partner nor any Person acting on behalf of any
Partner (including the Liquidating Trustee), pursuant hereto, shall be liable,
responsible or accountable in damages or otherwise to the Partnership or to any
Partner for any acts or omissions performed or omitted to be performed by them
or for their errors of judgment; PROVIDED that the Partner's or such other
Person's conduct or omission to act was taken in good faith. The Partnership
shall, and hereby does, indemnify and hold harmless each Partner and its
Affiliates and any individual acting on their behalf (including the Liquidating
Trustee) from any loss, damage, expense, claim or liability, including, but not
limited to, reasonable attorneys' fees and expenses, incurred by them by reason
of the operations of the Partnership as set forth in this Agreement
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in which such Partner or other Person may be involved or in enforcing the
provisions of this indemnity, unless it is established that: (i) the act or
omission of such Partner or other Person was material to the matter giving rise
to the loss, damage, expense, claim or liability and either was committed in bad
faith or was the result of active and deliberate dishonesty; (ii) such Partner
or other Person actually received an improper personal benefit in money,
property or services; or (iii) in the case of any criminal proceeding, such
Partner or other Person had reasonable cause to believe that the act or omission
was unlawful. Without limitation, the foregoing indemnity shall extend to any
liability of any Partner or other Person, pursuant to a loan guaranty or
otherwise, for any indebtedness of the Partnership or any Property Partnership
or other subsidiary of the Partnership (including, without limitation, any
indebtedness which the Partnership or any Property Partnership or other
subsidiary of the Partnership has assumed or taken subject to), and the General
Partner is hereby authorized and empowered, on behalf of the Partnership, to
enter into one or more indemnity agreements consistent with the provisions of
this SECTION 7.10 in favor of any Partner or other Person having or potentially
having liability for any such indebtedness. The termination of any proceeding
by judgment, order or settlement does not create a presumption that the Person
seeking indemnification did not meet the requisite standard of conduct set forth
in this SECTION 7.10. The termination of any proceeding by conviction of a
Person seeking indemnification or upon a plea of
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NOLO CONTENDERE or its equivalent by such Person, or any entry of any order or
probation against such Person prior to judgment, creates a rebuttable
presumption that such Person acted in a manner contrary to that specified in
this SECTION 7.10 with respect to the subject matter of such proceeding. No
Partner shall have any personal liability with respect to the foregoing
indemnification, any such indemnification to be satisfied solely out of the
assets of the Partnership.
(b) Any Person entitled to indemnification under this Agreement shall
be entitled to receive, upon application therefor, advances to cover the costs
of defending any proceeding against such Person; PROVIDED, HOWEVER, that such
advances shall be repaid to the Partnership, without interest, if such Person is
found by a court of competent jurisdiction upon entry of a final judgment not to
be entitled to such indemnification. All rights of the indemnitee hereunder
shall survive the dissolution of the Partnership; PROVIDED, HOWEVER, that a
claim for indemnification under this Agreement must be made by or on behalf of
the Person seeking indemnification prior to the time the liquidation of the
Partnership is completed. The indemnification rights contained in this
Agreement shall be cumulative of, and in addition to, any and all rights,
remedies and recourse to which the Person seeking indemnification shall be
entitled, whether at law or in equity. Indemnification pursuant to this
Agreement shall be made solely and entirely from the assets of the Partnership
and no Partner shall be liable therefor.
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(c) The Partnership shall, and hereby does, indemnify and hold
harmless the General Partner from any loss, damage, claim or liability,
including, but not limited to, reasonable attorneys' fees and expenses, incurred
by the General Partner by reason of (i) any indebtedness incurred by the General
Partner in compliance with SECTION 4.3 hereof or any indebtedness of the
Partnership or any subsidiary thereof that is guaranteed by the General Partner
or (ii) vicarious liability by reason of its status as General Partner of the
Partnership. The Partners agree that in the event the Partnership becomes a
debtor in a bankruptcy proceeding under a plan of reorganization, any funds
distributable to the General Partner and any funds distributable to the Limited
Partners under such plan of reorganization, after discharging claims against the
General Partner from such funds, will be distributed to the Limited Partners and
the stockholders of the General Partner among the various classes of Partnership
Units in accordance with the agreed priorities set forth in SECTION 6.2. Each
Partner agrees to turn over any such funds to the General Partners to be so
distributed.
(d) The Limited Partners expressly acknowledge that the General
Partner is acting on behalf of the Partnership and the General Partner's
shareholders, collectively, that the General Partner is under no obligation to
consider the separate interests of the Limited Partners (including, without
limitation, the tax consequences to the Limited Partners or their assignees) in
deciding whether to cause the Partnership to take (or decline to take) any
actions and that the General Partner shall not be liable
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for monetary damages for losses sustained, liabilities incurred or benefits not
derived by Limited Partners in connection with such decisions; PROVIDED that the
General Partner has acted in good faith.
(e) Subject to its obligations and duties as General Partner set
forth in SECTION 7.2 hereof, the General Partner may exercise any of the powers
granted to it by this Agreement and perform any of the duties imposed upon it
hereunder either directly or through its agents.
(f) The Partnership may, but shall not be obligated to, purchase and
maintain insurance, on behalf of any Person potentially entitled to
indemnification and such other Persons as the General Partner shall determine,
against any liability that may be asserted against or expenses that may be
incurred by such Person in connection with the Partnership's activities,
regardless of whether the Partnership would have the power to indemnify such
Person against such liability under the provisions of this Agreement.
7.11 OPERATION IN ACCORDANCE WITH REIT REQUIREMENTS. The General
Partner agrees and the Limited Partners acknowledge that the Partnership shall
be operated in a manner that will enable the General Partner to (a) satisfy the
REIT Requirements and (b) avoid the imposition of any federal income or excise
tax liability, unless the General Partner ceases to qualify as a REIT for
reasons other than the conduct of the business of the Partnership. In
connection with the foregoing, and without limiting the General
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Partner's rights in its sole discretion to cease qualifying as a REIT, the
Partners acknowledge that the General Partner's current status as a REIT inures
to the benefit of all Partners and not solely the General Partner. The
Partnership shall avoid taking any action, or permitting any Property
Partnership to take any action, which would result in the General Partner
ceasing to satisfy the REIT Requirements or would result in the imposition of
any federal income or excise tax liability on the General Partner.
ARTICLE VIII
DISSOLUTION, LIQUIDATION AND WINDING-UP
8.1 WINDING UP.
(a) Upon the occurrence of an event of dissolution described in
SECTION 3.2, the Partnership shall continue solely for the purposes of winding
up its affairs in an orderly manner, liquidating its assets and satisfying the
claims of its creditors and Partners. No Partner shall take any action that is
inconsistent with, or not necessary to or appropriate for, the winding up of the
Partnership's business and affairs. The Liquidating Trustee shall be
responsible for overseeing the winding up and liquidation of the Partnership's
assets and shall take full account of the Partnership's liabilities and property
and the Partnership's assets shall be liquidated as promptly as is consistent
with obtaining the fair value thereof, and the proceeds therefrom (which may, to
the extent determined by the Liquidating Trustee, include shares of stock in the
General Partner) shall be
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applied and distributed in accordance with the provisions of SECTION 8.2.
(b) In the discretion of the Liquidating Trustee, a PRO RATA
portion of the distributions that would otherwise be made to the General Partner
and Limited Partners pursuant to this ARTICLE VIII may be:
(i) distributed to a trust established for the benefit of
the General Partner and Limited Partners for the purposes of liquidating
Partnership assets, collecting amounts owed to the Partnership and paying
any contingent or unforeseen liabilities or obligations of the Partnership
or of the General Partner arising out of or in connection with the
Partnership. The assets of any such trust shall be distributed to the
General Partner and Limited Partners from time to time, in the reasonable
discretion of the Liquidating Trustee, in the same proportions as the
amount distributed to such trust by the Partnership would otherwise have
been distributed to the General Partner and the Limited Partners pursuant
to this Agreement; or
(ii) withheld or escrowed to provide a reasonable reserve
for Partnership liabilities (contingent or otherwise) and to reflect the
unrealized portion of any installment obligations owed to the Partnership;
PROVIDED that such withheld or escrowed amounts shall be distributed to the
General Partner and Limited Partners in the manner and order of priority
set forth in SECTION 8.2 as soon as possible.
(c) A reasonable time shall be allowed for the orderly
winding-up of the business and affairs of the Partnership and the liquidation of
its assets pursuant to SECTION 8.1 hereof, in order to minimize any losses
otherwise attendant upon such winding-up, and the provisions of this Agreement
shall remain in effect between the Partners during the period of liquidation.
(d) The liquidation of the Partnership shall not be deemed
finally completed until the Partnership shall have received cash payments in
full with respect to obligations such as notes,
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installment sale contracts or other similar receivables received by the
Partnership in connection with the sale of Partnership assets and all remaining
obligations of the Partnership have been satisfied or assumed by the Liquidating
Trustee. The Liquidating Trustee shall continue to act to enforce all of the
rights of the Partnership pursuant to any such obligations until such
obligations are paid in full or otherwise satisfied. The Liquidating Trustee
shall use reasonable efforts to liquidate the Partnership in the same year in
which substantially all of the assets of the Partnership being disposed of in
the liquidation are sold or exchanged.
(e) The Liquidating Trustee shall be empowered to give and
receive notices, reports and payments in connection with the dissolution,
liquidation and/or winding-up of the Partnership and shall hold and exercise
such other rights and powers as are necessary or required to permit all parties
to deal with the Liquidating Trustee in connection with the dissolution,
liquidation and/or winding-up of the Partnership.
8.2 DISTRIBUTION ON DISSOLUTION AND LIQUIDATION. In the event of the
dissolution and liquidation of the Partnership for any reason, the assets of the
Partnership shall be liquidated for distribution in the following rank and
order:
(a) Payment of creditors of the Partnership (other than Partners) in
the order of priority as provided by law;
(b) Establishment of reserves as determined by the Liquidating
Trustee to provide for contingent liabilities, if any;
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(c) Payment of debts of the Partnership to Partners, if any, in the
order of priority provided by law;
(d) To the Partners in accordance with the positive balances in their
respective Capital Accounts after giving effect to all contributions,
distributions and allocations for all periods, including the period in
which such distribution occurs (other than those adjustments made pursuant
to this SECTION 8.2(d)).
Whenever the Liquidating Trustee reasonably determines that any reserves
established pursuant to paragraph (b) above are in excess of the reasonable
requirements of the Partnership, the amount determined to be excess shall be
distributed to the Partners in accordance with paragraphs (c) and (d) above.
8.3 TIMING REQUIREMENTS. In the event that the Partnership is
"liquidated" within the meaning of Section 1.704-1(b)(2)(ii)(g) of the
Regulations, any and all distributions to the Partners pursuant to SECTION
8.2(D) hereof shall be made no later than the later to occur of (i) the last day
of the taxable year of the Partnership in which such liquidation occurs or (ii)
ninety (90) days after the date of such liquidation.
8.4 DEEMED DISTRIBUTION AND RECONTRIBUTION. Notwithstanding any
other provision of this ARTICLE VIII, in the event the Partnership is considered
liquidated within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) but no
dissolution and liquidation has occurred pursuant to this Agreement, including
pursuant the Prime/Horizon Merger, the Partnership's property shall not be
liquidated, the Partnership's liabilities shall not be paid or discharged, and
the Partnership's affairs shall not be wound up. Instead, for federal and
applicable state and local income tax
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purposes, the Partnership shall be deemed to have contributed the property in
kind to a new limited partnership, which shall be deemed to have assumed and
taken such property subject to all Partnership liabilities, in return for the
interests in such partnership. Immediately thereafter, the Partnership shall be
deemed to have distributed the interests in the new limited partnership to the
General Partner and the Limited Partners in proportion to their respective
interests in the Partnership in liquidation of the Partnership.
8.5 DISTRIBUTIONS IN KIND. In the event that it becomes necessary to
make a distribution of Partnership property in kind, the Liquidating Trustee
may, with the Consent of the Partners, transfer and convey such property to the
distributees as tenants in common, subject to any liabilities attached thereto,
so as to vest in the distributees undivided interests in the whole of such
property in proportion to their respective rights to share in the proceeds of
the sale of such property (other than as a creditor) in accordance with the
provisions of SECTION 8.2 hereof.
8.6 DOCUMENTATION OF LIQUIDATION. Upon the completion of the
dissolution and liquidation of the Partnership, the Partnership shall terminate
and the Liquidating Trustee shall have the authority to execute and record any
and all documents or instruments required to effect the dissolution, liquidation
and termination of the Partnership.
8.7 DEFICIT CAPITAL ACCOUNT BALANCE. If any Partner has a deficit
Capital Account (after giving effect to all
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contributions, distributions and allocations for all taxable years of the
Partnership, including the year during which a liquidation of the Partnership
occurs), such Partner shall have no obligation to make any contribution to the
capital of the Partnership with respect to such deficit, and such deficit shall
not be considered a debt owed to the Partnership or to any other Person for any
purpose whatsoever.
ARTICLE IX
TRANSFER OF PARTNERSHIP INTERESTS;
WITHDRAWAL; ADMISSION OF ADDITIONAL PARTNERS
9.1 GENERAL PARTNER TRANSFER; WITHDRAWAL; SUBSTITUTE GENERAL PARTNER.
(a) The General Partner shall not voluntarily withdraw (as
provided in Section 17-602(a) of the Act) as general partner of the Partnership
and shall not sell, assign, pledge, encumber or otherwise dispose of all or any
portion of its interest in the Partnership without the unanimous consent of all
of the Limited Partners which consent may be withheld in their sole and absolute
discretion.
(b) Upon any Transfer of a Partnership Interest in accordance with
the provisions of this SECTION 9.1, the transferee General Partner shall become
vested with the powers and rights of the transferor General Partner, and shall
be liable for all obligations and responsible for all duties of the General
Partner, once such transferee has executed such instruments as may be necessary
to effect such admission and to confirm the agreement of
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such transferee to be bound by all the terms and provisions of this Agreement
with respect to the Partnership Interest so acquired. It is a condition to any
Transfer otherwise permitted hereunder that the transferee assumes by operation
of law or express agreement all of the obligations of the transferor General
Partner under this Agreement with respect to such transferred Partnership
Interest and no such Transfer (other than pursuant to a statutory merger or
consolidation wherein all obligations and liabilities of the transferor General
Partner are assumed by a successor corporation or other Entity by operation of
law) shall relieve the transferor General Partner of its obligations under this
Agreement without the Consent of the Partners, in their reasonable discretion.
(c) In the event the General Partner withdraws from the Partnership,
in violation of this Agreement or otherwise, or dissolves or terminates or upon
the Bankruptcy of the General Partner, a Majority-in-Interest of the Limited
Partners may elect to continue the Partnership business by selecting a
substitute general partner. Upon any such event, the Partnership Interest of
the General Partner shall cease to be the interest of a general partner, and
shall be converted to the interest of a "Special Limited Partner." Upon such a
conversion, the Special Limited Partner shall retain all Partnership Units
allocated to the General Partner and shall have the right to (i) receive
distributions of Net Cash Flow pursuant to SECTION 6.2 and 8.2, (ii) inspect,
copy or review financial records of the Partnership and (iii) vote or exercise
consent rights with respect to the number of Common Units
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held by it from time to time for any matter for which the Consent of the
Partners is required or sought. Notwithstanding the conversion of the General
Partner's Partnership Interest into the Interest of a Special Limited Partner
pursuant to SECTION 9.1(c), the General Partner shall retain all management
powers and shall continue to manage the business and affairs of the Partnership
in accordance with the terms of this Agreement until such time as a successor
General Partner is so selected and thereafter admitted, or a Liquidating Trustee
other than the General Partner is selected.
9.2 TRANSFERS BY LIMITED PARTNERS. No Limited Partner may Transfer
any part of its Partnership Interest except in accordance with the provisions of
this SECTIONS 9.2 and 9.3. Any purported Transfer of any Partnership Interest
by a Limited Partner in violation of any provision of this Agreement shall be
void AB INITIO and shall not be given effect for any purpose by the Partnership.
(a) Subject to the provisions of SECTION 9.3, a Limited Partner shall
have the right to exchange all or a portion of its Common Units for
Convertible Preferred Units, or Convertible Preferred Units for Common
Units, pursuant to the terms of any exchange offer effected as contemplated
by the Merger Agreement.
(b) Each Limited Partner shall, subject to the provisions of SECTION
9.3, have the right to Transfer all or any portion of its Partnership Units
to any Person, whether or not in connection with the exercise of a Limited
Partner's Rights. It is a condition to any Transfer otherwise permitted
under this SECTION 9.2(b) that the transferee assumes by operation of law
or express agreement (which agreement, in the event of a pledge of
Partnership Units, may be entered into and become effective at the time of
foreclosure or other realization on such pledged Partnership Units) all of
the obligations of the transferor Limited Partner under this
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Agreement with respect to such transferred Partnership Units and no such
Transfer (other than pursuant to a statutory merger or consolidation
wherein all obligations and liabilities of the transferor Partner are
assumed by a successor corporation or other Entity by operation of law)
shall relieve the transferor Partner of its obligations under this
Agreement without the approval of the General Partner, in its reasonable
discretion.
(c) Upon any Transfer in accordance with the provisions of this
SECTION 9.2 and SECTION 9.3, the transferee shall be admitted as a
Substituted Limited Partner (as such term is defined in the Act) and shall
succeed to all of the rights and obligations (including, without
limitation, the Rights) of the transferor Limited Partner under this
Agreement with respect to the transferred Partnership Units, in the place
and stead of such transferor Limited Partner (which succession, in the
event of a pledge of Partnership Units, may be entered into and become
effective at the time of foreclosure or other realization on such pledged
Partnership Units). Any transferee, whether or not admitted as a
Substituted Limited Partner, shall take the transferred Partnership Units
subject to the obligations of the transferor hereunder. Unless admitted as
a Substituted Limited Partner, no transferee, whether by a voluntary
Transfer, by operation of law or otherwise, shall have any rights under
this Agreement or with respect to the Partnership Property, other than to
receive such portion of the distributions made by the Partnership as are
allocable to the Partnership Units transferred.
(d) Intentionally Omitted.
(e) Notwithstanding anything in this Agreement to the contrary, any
transferee of any transferred Partnership Units shall be subject to any and
all ownership limitations contained in the corporate charter of the General
Partner as may be amended from time to time applicable to Persons which may
limit or restrict such transferee's ability to exercise the Rights.
(f) No Limited Partner may withdraw from the Partnership without the
prior written consent of the General Partner, other than as a result of a
Transfer of all of such Limited Partner's Partnership Interest in
accordance with this Agreement or pursuant to the exercise of the Rights
with respect to all of such Limited Partner's Partnership Units. Except
pursuant to SECTION 6.2(e), no Limited Partner shall be entitled to any
distribution in respect of its Partnership Interest upon any such
withdrawal.
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9.3 RESTRICTIONS ON TRANSFER. In addition to any other restrictions
on Transfer contained in this Agreement, in no event may any Transfer of a
Partnership Interest by any Partner be made (i) to any person or entity who
lacks the legal right, power or capacity to own a Partnership Interest; (ii) in
violation of applicable securities or other law; (iii) of any component portion
of a Partnership Unit, such as the Capital Account, or rights to Net Cash Flow,
separate and apart from all other components of a Partnership Unit; (iv)if the
General Partner determines that such Transfer may reasonably cause the General
Partner to cease to comply with the REIT Requirements; (v) if such Transfer
would cause a termination of the Partnership for federal income tax purposes;
(vi) if the General Partner determines that such Transfer may reasonably cause
the Partnership to cease to be classified as a partnership for Federal income
tax purposes or to be treated as a publicly traded partnership as provided in
Code Section 7704; (vii) if such Transfer would cause the Partnership to become,
with respect to any employee benefit plan subject to Title 1 of ERISA, a
"party-in-interest" (as defined in Section 3(14) of ERISA) or a "disqualified
person" (as defined in Section 4975(c) of the Code); (viii) if such Transfer
would, in the opinion of counsel to the Partnership, cause any portion of the
assets of the Partnership to constitute assets of any employee benefit plan
pursuant to Department of Labor Section 2510.3-101 of the Regulations; and (ix)
to a lender to the Partnership or any Person who is related (within the meaning
of Section 1.752-4(b) of the Regulations) to any lender
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to the Partnership whose loan constitutes a "nonrecourse liability" (within the
meaning of Section 1.752-1(a)(2) of the Regulations) without the consent of the
General Partner, in its sole and absolute discretion, unless the Partnership's
basis in the Property Partnerships or applicable Property or any Partner's basis
in its Partnership Interest for tax purposes would not be reduced as a result of
such Transfer; PROVIDED, HOWEVER, that the restriction set forth in this clause
(ix) of SECTION 9.3 shall not apply to any Transfer to a lender or a related
Person to such lender if the interest (direct or indirect) of such lender or
related Person in each item of Partnership income, gain, loss, deduction or
credit for every taxable year that the partner is a partner in the Partnership
is ten percent (10%) or less and the loan constitutes qualified nonrecourse
financing within the meaning of Section 465(b)(6) of the Code and the
Regulations thereunder (without regard to the type of activity financed).
9.4 PRORATION IN EVENT OF TRANSFERS. If any Partnership Interest is
transferred or assigned in compliance with the provisions of this Article IX or
exchanged or transferred pursuant to Article XI, on any day other than the first
day of a Partnership taxable year, Net Income, Net Losses, each item thereof and
all other items attributable to such interest for such Partnership taxable year
shall be divided and allocated between the transferor Partner and the transferee
Partner by taking into account their varying interests during the Partnership
taxable year in accordance with Section 706(d) of the Code, using the pro ration
method
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(unless the General Partner, in its sole and absolute discretion, elects to
adopt another reasonable method permitted by law). Other than as provided in
SECTION 6.2(E), all distributions of Net Cash Flow attributable to such
Partnership Unit with respect to which the Partnership Payment Date is before
the date of such transfer, assignment or redemption shall be made to the
transferor Partner or the exchanging Partner, as the case may be, and, in the
case of a transfer or assignment other than a redemption, all distributions of
Net Cash Flow thereafter attributable to such Partnership Unit shall be made to
the transferee Partner.
9.5 ADMISSION OF SUCCESSOR GENERAL PARTNER. A successor to all of
the General Partner's Partnership Interest pursuant to SECTION 9.1 hereof who is
proposed to be admitted as a successor General Partner shall be admitted to the
Partnership as the General Partner, effective upon such transfer. The admission
of any such transferee shall not cause a dissolution of the Partnership, and
such successor shall carry on the business of the Partnership. In each case,
the admission of such successor shall be subject to the successor General
Partner executing and delivering to the Partnership an acceptance of all of the
terms and conditions of this Agreement and such other documents or instruments
as may be required to effect the admission. In the case of such admission on
any day other than the first day of a partnership year, all items attributable
to the General Partner's Partnership Interest for such Partnership taxable year
shall be allocated between the General Partner and its successor as provided in
SECTION 9.4 hereof.
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9.6 ADMISSION OF ADDITIONAL LIMITED PARTNERS.
(a) A Person who makes a Capital Contribution to the Partnership
in accordance with this Agreement or who exercises the right to receive
Partnership Units pursuant to the Merger Agreement or any other option to
receive any Partnership Units shall be admitted to the Partnership as an
additional Limited Partner only upon furnishing to the General Partner (i)
evidence of acceptance in form satisfactory to the General Partner of all of the
terms and conditions of this Agreement, including, without limitation, the power
of attorney granted in SECTION 2.6 hereof and (ii) such other documents or
instruments as may be required in the discretion of the General Partner in order
to effect such Person's admission as an additional Limited Partner.
(b) Notwithstanding anything to the contrary in this SECTION
9.6, no Person shall be admitted as an additional Limited Partner without the
consent of the General Partner, which consent may be given or withheld in the
General Partner's sole and absolute discretion. The admission of any Person as
an additional Limited Partner shall become effective on the date upon which the
name of such Person is recorded on the books and records of the Partnership,
following the consent of the General Partner to such admission.
(c) If any additional Limited Partner is admitted to the
Partnership on any day other than the first day of a Partnership taxable year,
Net Income, Net Losses, each item thereof and all other items allocable among
Partners and assignees of
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Partners for such Partnership Year shall be allocated among such additional
Limited Partner and all other Partners and assignees by taking into account
their varying interests during the Partnership taxable year in accordance with
Section 706(d) of the Code, using the pro ration method; provided, however, that
except in respect of the admission of Limited Partners pursuant to the Merger,
the General Partner shall use the interim closing of the books method. Solely
for purposes of making such allocations, each of such items for the calendar
month in which an admission of any additional Limited Partner occurs shall be
allocated among all the Partners and assignees including such additional Limited
Partner. All distributions of Net Cash Flow with respect to which the
Partnership Record Date is before the date of such admission shall be made
solely to Partners and assignees other than the additional Limited Partner, and
all distributions of Net Cash Flow thereafter shall be made to all the Partners
and assignees including such additional Limited Partner.
ARTICLE X
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS
10.1 NO PARTICIPATION IN MANAGEMENT; NO PERSONAL LIABILITY. Except as
expressly permitted hereunder, the Limited Partners shall not take part in the
management of the Partnership's business, transact any business in the
Partnership's name or have the power to sign documents for or otherwise bind the
Partnership. Except for any liability to the Partnership pursuant to
Section 17-607 of the Act for the amount of certain distributions and as
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otherwise specifically provided in this Agreement, no Limited Partner shall have
any personal liability, beyond the amount of such Limited Partner's Capital
Contributions, whether to the Partnership, to the General Partner or to the
creditors of the Partnership, including, without limitation, for the debts,
obligations, expenses or liabilities of the Partnership or any of its losses.
10.2 DUTIES AND CONFLICTS. The General Partner recognizes that the
Limited Partners and their Affiliates have or may have other business interests,
activities and investments, some of which may be in conflict or competition with
the business of the Partnership, and that, subject to the provisions of any
separate noncompete or similar restrictive agreement with the Partnership or the
General Partner, such persons are entitled to carry on such other business
interests, activities and investments and may engage in or possess an interest
in any other business or venture of any kind, independently or with others, on
their own behalf or on behalf of other entities with which they are affiliated
or associated, and such persons may engage in any activities, whether or not
competitive with the Partnership, without any obligation to offer any interest
in such activities to the Partnership or to any Partner. Except as otherwise
provided in any separate noncompete or similar restrictive agreement with the
Partnership or the General Partner, neither the Partnership nor any Partner
shall have any right, by virtue of this Agreement, in or to such activities, or
the income or profits derived therefrom, or any portion thereof
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or interest therein, and the pursuit of such activities, even if competitive
with the business of the Partnership, shall not be deemed wrongful, improper or
actionable.
ARTICLE XI
GRANT OF RIGHTS TO LIMITED PARTNERS
PART I.
11.1 GRANT OF RIGHTS. The General Partner does hereby grant to the
Limited Partners holding Common Units and such Limited Partners do hereby accept
the right, but not the obligations (hereinafter such right sometimes referred to
as the "Rights"), to exchange all or a portion of their Common Units on the
terms and subject to the conditions and restrictions contained in EXHIBIT C.
The Rights granted hereunder may be exercised by any one or more of the Limited
Partners, on the terms and subject to the conditions and restrictions contained
in EXHIBIT C, upon delivery to the General Partner of an Exchange Exercise
Notice in the form of Schedule 1 to EXHIBIT C, which notice shall specify the
Common Units to be exchanged by such Limited Partner. Once delivered, the
Exchange Exercise Notice shall be irrevocable, subject to payment by the General
Partner of the Purchase Price in respect of such Common Units in accordance with
the terms hereof.
11.2 TERMS OF RIGHTS. The terms and provisions applicable to the
Rights, including certain registration rights, shall be as set forth in EXHIBIT
C.
11.3 REISSUANCE OR REALLOCATION OF COMMON UNITS. Any Common Units
acquired by the General Partner pursuant to an
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exercise by any Limited Partner of the Rights shall be deemed to be acquired by
and reallocated or reissued to the General Partner. The General Partner shall
amend EXHIBIT A hereto to reflect each such exchange and reallocation or
reissuance of Common Units and each corresponding recalculation of the Common
Units of the Partners.
PART II.
11.1A GRANT OF RIGHTS. The General Partner does hereby grant to any
Limited Partner holding Convertible Preferred Units the right (hereinafter such
right sometimes referred to as the "Convertible Preferred Rights"), to exchange
all or a portion of its Convertible Preferred Units on the terms and subject to
the conditions and restrictions contained in EXHIBIT F. The Convertible
Preferred Rights granted hereunder may be exercised on the terms and subject to
the conditions and restrictions contained in EXHIBIT F upon delivery to the
General Partner of an Exchange Exercise Notice in the form of Schedule 1 to
EXHIBIT F, which notice shall specify the Convertible Preferred Units to be
exchanged by such Limited Partner. Once delivered, the Exchange Exercise Notice
shall be irrevocable, subject to payment by the General Partner of the
Convertible Preferred Purchase Price in respect of such Convertible Preferred
Units in accordance with the terms hereof.
11.2A TERMS OF CONVERTIBLE PREFERRED RIGHTS. The terms and
provisions applicable to the Convertible Preferred Rights shall be as set forth
in EXHIBIT F.
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11.3A REISSUANCE OR REALLOCATION OF CONVERTIBLE PREFERRED UNITS. Any
Convertible Preferred Units acquired by the General Partner pursuant to an
exercise by any Limited Partner of the Convertible Preferred Rights shall be
deemed to be acquired by and reallocated or reissued to the General Partner. In
the event that a Limited Partner exercising Convertible Preferred Rights elects
to receive the Common Stock Purchase Price and not the Convertible Preferred
Purchase Price (as such terms are defined in Exhibit F) with respect to any
Convertible Preferred Units, then the Convertible Preferred Units acquired by
the General Partner upon payment of the Common Stock Purchase Price shall be
reallocated to the General Partner and reissued as the number of Common Units
which is equal to the number of shares of the General Partner's Common Stock
paid to the exercising Limited Partner pursuant to the terms of Exhibit F hereto
as the Common Stock Purchase Price therefor. The General Partner shall amend
EXHIBIT A hereto to reflect each such exchange and reallocation or reissuance of
Convertible Preferred Units and each corresponding recalculation of the
Convertible Preferred Units or Common Units of the Partners.
ARTICLE XII
GRANT OF RIGHTS TO LIMITED PARTNERS HOLDING SERIES C
PREFERRED UNITS; REDEMPTION OF SERIES C PREFERRED UNITS
12.1 GRANT OF RIGHTS. The General Partner does hereby grant to any
Limited Partner holding Series C Preferred Units the right (hereinafter such
right sometimes referred to as the "Series
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C Preferred Rights"), to exchange all or a portion of their Series C Preferred
Units on the terms and subject to the conditions and restrictions contained in
EXHIBIT D. The Series C Preferred Rights granted hereunder may be exercised on
the terms and subject to the conditions and restrictions contained in EXHIBIT D
upon delivery to the General Partner of an Exchange Exercise Notice in the form
of Schedule 1 to EXHIBIT D, which notice shall specify the Series C Preferred
Units to be exchanged by such Limited Partner. Once delivered, the Exchange
Exercise Notice shall be irrevocable, subject to payment by the General Partner
of the Series C Purchase Price in respect of such Series C Preferred Units in
accordance with the terms hereof.
12.2 TERMS OF RIGHTS. The terms and provisions applicable to the
Series C Preferred Rights shall be as set forth in EXHIBIT D.
12.3 REISSUANCE OR REALLOCATION OF SERIES C PREFERRED UNITS. Any
Series C Preferred Units acquired by the General Partner pursuant to an exercise
by any Limited Partner of the Series C Preferred Rights shall be deemed to be
acquired by and reallocated or reissued to the General Partner. In the event
that a Limited Partner exercising Series C Preferred Rights elects to receive
the Common Stock Purchase Price and not the Series C Preferred Purchase Price
(as such terms are defined in Exhibit D) with respect to any Series C Preferred
Units, then the Series C Preferred Units acquired by the General Partner upon
payment of the
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Common Stock Purchase Price shall be reallocated to the General Partner and
reissued as the number of Common Units which is equal to the number of shares of
the General Partner's Common Stock paid to the exercising Limited Partner
pursuant to the terms of Exhibit D hereto as the Common Stock Purchase Price
therefor. The General Partner shall amend EXHIBIT A hereto to reflect each such
exchange and reallocation or reissuance of Series C Preferred Units and each
corresponding recalculation of the Series C Preferred Units or Common Units of
the Partners.
ARTICLE XIII
PARTNER REPRESENTATIONS AND WARRANTIES
Each Partner severally represents and warrants to the Partnership and
the other Partners as follows:
(a) ORGANIZATION. Such Partner (if such Partner is an Entity) is
duly organized, validly existing and in good standing under the laws of its
state of organization.
(b) DUE AUTHORIZATION; BINDING AGREEMENT. The execution, delivery
and performance of this Agreement by it has been duly and validly
authorized by all necessary action of such Partner. This Agreement has
been duly executed and delivered by it, or an authorized representative,
and constitutes its legal, valid and binding obligation, enforceable
against it in accordance with the terms hereof.
(c) CONSENTS AND APPROVALS. No consent, waiver, approval or
authorization of, or filing, registration or qualification with, or notice
to, any governmental unit or any other person is required to be made,
obtained or given by it in connection with the execution, delivery and
performance of this Agreement other than consents, waivers, approvals or
authorizations which have been obtained prior to the date hereof.
ARTICLE XIV
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GENERAL PROVISIONS
14.1 NOTICES. All notices, offers or other communications required or
permitted to be given pursuant to this Agreement shall be in writing and may be
personally served, telecopied or sent by United States mail and shall be deemed
to have been given when delivered in person, upon receipt of telecopy and oral
or written confirmation by the addressee of such receipt, or three business days
after deposit in United States mail, registered or certified, postage prepaid,
and properly addressed, by or to the appropriate party. For purposes of this
SECTION 14.1, the addresses of the parties hereto shall be as set forth below
their name on a signature page hereof. The address of any party hereto may be
changed by a notice in writing given in accordance with the provisions hereof.
14.2 SUCCESSORS. This Agreement and all the terms and provisions
hereof shall be binding upon and shall inure to the benefit of all Partners, and
their respective legal representatives, heirs, legatees, successors and
permitted assigns, except as expressly herein otherwise provided.
14.3 EFFECT AND INTERPRETATION. This Agreement shall be governed by
and construed in conformity with the laws of the State of Delaware.
14.4 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be an original, but all of which shall constitute one and
the same instrument.
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14.5 PARTNERS NOT AGENTS. Nothing contained herein shall be construed
to constitute any Partner the agent of another Partner, except as specifically
provided herein, or in any manner to limit the Partners in the carrying on of
their own respective businesses or activities.
14.6 ENTIRE UNDERSTANDING, ETC. This Agreement constitutes the entire
agreement and understanding among the Partners and supersedes any prior
understandings and/or written or oral agreements among them respecting the
subject matter hereof.
14.7 AMENDMENTS. (a) This Agreement may not be amended, except by a
written instrument signed by the General Partner (and approved on behalf of the
General Partner by at least a majority of its directors who are not Affiliates
of any of the Limited Partners) and by a Majority-in-Interest of the Partners;
PROVIDED, HOWEVER, that any amendment which materially and adversely alters the
rights, preferences and terms of the Common Units held by the Limited Partners
relative to those of the Common Units held by the General Partner shall require
the consent of Limited Partners holding a majority-in-interest of the Common
Units held by Limited Partners.
(b) Notwithstanding SECTION 14.7(a) above, so long as any Series C
Preferred Units are held by Limited Partners, the consent of Limited Partners
holding at least 66-2/3% of the Series C Preferred Units shall be necessary for
effecting: (a) any amendment that materially and adversely affects the voting
powers, rights or preferences of the holders of the Series C Preferred
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Units except that any amendment to authorize or create or to increase the
authorized amount of, any Partnership Interests that are not senior in any
respect to the Series C Preferred Units or are on a parity with the Series C
Preferred Units shall not be deemed to materially and adversely affect the
voting powers, rights or preferences of the holders of Series C Preferred Units;
or (b) the authorization, reclassification or creation of, or the increase in
the authorized amount of, any Partnership Interests of any class ranking prior
to the Series C Preferred Units in the distribution of assets on any
liquidation, dissolution or winding up of the Partnership or in the payment of
dividends; PROVIDED, HOWEVER, that no such consent of the holders of Series C
Preferred Units shall be required (1) for the issuance of additional Convertible
Preferred Units to the General Partner in connection with the General Partner's
issuance and sale of up to $57 million (before deducting underwriting discounts
or commissions) of its 8.5% Series B Cumulative Participating Convertible
Preferred Stock, $.01 par value $.01 per share, at a price equal to or greater
than $22 per share (before deducting underwriting discounts or commissions) as
long as no modification has been made to the General Partner's Articles of
Incorporation from the date hereof affecting the rights or privileges of such
Convertible Preferred Units, or (2) if, at or prior to the time when such
amendment, alteration or repeal is to take effect, or when the issuance of any
such prior units or convertible security is to be made, as the case may be,
provision is made for the redemption of all Series C Preferred Units at the
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time outstanding to the extent such redemption is authorized by this Agreement.
(c) Notwithstanding SECTION 14.7(A) OR (B) above, so long as any
Convertible Preferred Units are held by Limited Partners, the consent of Limited
Partners holding at least 66-2/3% of the Convertible Preferred Units shall be
necessary for effecting: (a) any amendment that materially and adversely affects
the voting powers, rights or preferences of the holders of the Convertible
Preferred Units except that any amendment to authorize or create or to increase
the authorized amount of, any Partnership Interests that are not senior in any
respect to the Convertible Preferred Units or are on a parity with the
Convertible Preferred Units shall not be deemed to materially and adversely
affect the voting powers, rights or preferences of the holders of Convertible
Preferred Units; or (b) the authorization, reclassification or creation of, or
the increase in the authorized amount of, any Partnership Interests of any class
ranking prior to the Convertible Preferred Units in the distribution of assets
on any liquidation, dissolution or winding up of the Partnership or in the
payment of dividends; PROVIDED, HOWEVER, that no such consent of the holders of
Convertible Preferred Units shall be required if, at or prior to the time when
such amendment, alteration or repeal is to take effect, or when the issuance of
any such prior units or convertible security is to be made, as the case may be,
provision is made for the redemption of all Convertible Preferred Units at the
time
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outstanding to the extent such redemption is authorized by this Agreement.
(d) Notwithstanding Sections 14.7(b) or (c) above, the General
Partner may amend this Agreement without the Consent of the Partners or the
consent of the holders of the Series C Preferred Units or the Convertible
Preferred Units (i) to add to the representations, duties or obligations of the
General Partner; (ii) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provisions herein, to
reflect a change that does not adversely affect any of the Limited Partners, or
to make any other provisions with respect to matters or questions arising under
this Agreement which will not be inconsistent with the provisions of this
Agreement; (iii) to effect or reflect a conversion or redemption of Preferred
Units, Convertible Preferred Units or Series C Preferred Units pursuant to
SECTION 4.8 OR 4.10 hereof; (iv) to reflect the admission, substitution,
termination or withdrawal of Partners in accordance with this Agreement; (v) to
reflect the Transfer of any Partnership Units; (vi) to set forth the
designations, rights, powers, duties and preferences of any holders of any
additional Partnership Interests issued pursuant to SECTION 4.3 or 4.4 hereof
and the modification of the provisions relating to distributions of Net Cash
Flow and allocations of income, loss, gain and deduction resulting therefrom;
and (vii) to satisfy any requirements, conditions or guidelines contained in any
order, directive,
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opinion, ruling or regulation of a federal or state agency or contained in
federal or state law.
14.8 SEVERABILITY. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid by a court of competent jurisdiction, the remainder of this
Agreement, or the application of such provision to persons or circumstances
other than those to which it is held invalid by such court, shall not be
affected thereby.
14.9 TRUST PROVISION. This Agreement, to the extent executed
by the trustee of a trust, is executed by such trustee solely as trustee and
not in a separate capacity. Nothing herein contained shall create any
liability on, or require the performance of any covenant by, any such trustee
individually, nor shall anything contained herein subject the individual
personal property of any trustee to any liability.
14.10 PRONOUNS AND HEADINGS. As used herein, all pronouns shall
include the masculine, feminine and neuter, and all defined terms shall include
the singular and plural thereof wherever the context and facts require such
construction. The headings, titles and subtitles herein are inserted for
convenience of reference only and are to be ignored in any construction of the
provisions hereof. Any references in this Agreement to "including" shall be
deemed to mean "including without limitation".
14.11 ASSURANCES. Each of the Partners shall hereafter execute
and deliver such further instruments and do such further acts and things as may
be required or useful to carry out
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the intent and purpose of this Agreement and as are not inconsistent with the
terms hereof.
14.12 REMEDIES CUMULATIVE. No remedy herein conferred upon any
party is intended to be exclusive of any other remedy and each and every such
remedy shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise. No single or partial exercise by any party of any right, power or
remedy hereunder shall preclude any other or further exercise thereof.
14.13 CONSTRUCTION. Every covenant, term and provision of this
Agreement shall be construed simply according to its fair meaning and not
strictly for or against any Partner.
14.14 INCORPORATION BY REFERENCE. Every exhibit, schedule and
other appendix attached to this Agreement and referred to herein is hereby
incorporated in this Agreement by reference.
14.15 WAIVER OF ACTION FOR PARTITION. Each of the Partners
irrevocably waives any right that it may have to maintain any action for
partition with respect to any of the Partnership's property.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused this Agreement to be executed as of the date and year first above
written.
GENERAL PARTNER:
PRIME RETAIL, INC., a
Maryland corporation
000 Xxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 000000
By: ______________________________
Its: ______________________________
EXHIBIT A
COMMON UNITS, PREFERRED UNITS,
CONVERTIBLE PREFERRED UNITS AND SERIES C PREFERRED UNITS
PRIME RETAIL, L.P.
OWNERSHIP SCHEDULE
as of [MERGER CLOSING DATE]
EXHIBIT B
ALLOCATIONS
I ALLOCATION OF NET INCOME AND NET LOSS. Except as otherwise provided
herein, Net Income and Net Loss for any Partnership taxable year or other
applicable period of the Partnership shall be allocated in the following order
and priority:
1.1 First, subject to subsection (f) of Section 1.8 of this EXHIBIT
B, Net Income (or, if necessary, Partnership items of income and gain)
shall be allocated to the General Partner in an amount equal to the excess
of (1) the amount of Net Cash Flow distributed to the General Partner
pursuant to subsections (a)(i), (a)(ii) of SECTION 6.2 for the current and
all prior Partnership taxable years over (2) the amount of Net Income (or
Partnership items of income and gain) previously allocated to the General
Partner pursuant to Section 1.1 of this EXHIBIT B (and Section 1.8 of this
EXHIBIT B to the extent that Section 1.8 operates to allocate an amount to
the General Partner in respect of an increase in the liquidation preference
for the Preferred Stock under the General Partner's Articles of
Incorporation due to accrued but unpaid dividends on the Preferred Stock).
1.2 Second, subject to Section 1.8 of this EXHIBIT B (and to the
extent not already allocated pursuant to Section 1.8 in respect of an
increase in the Preferred Unit Redemption Amount due to accrued but unpaid
dividends on the Preferred Stock), for any Partnership taxable year ending
on or after a date in which Preferred Units are redeemed, Net Income (or
Net Loss), or, if necessary, Partnership items of income, gain, loss and
deduction thereof, shall be allocated to the General Partner in an amount
equal to the excess (or deficit) of (1) the sum of the Preferred Unit
Redemption Amount for Preferred Units that have been or are being redeemed
during the Partnership Year over (2) the product of $25.00 times the number
of such Preferred Units.
1.3 Third, subject to Section 1.8 of this EXHIBIT B, Net Income (or,
if necessary, Partnership items of income and gain) shall be allocated to
Partners holding Convertible Preferred Units, pro rata, in proportion to
their relative Convertible Preferred Units, in an aggregate amount equal to
the excess of (1) the amount of Net Cash Flow distributed to Partners
holding Convertible Preferred Units pursuant to subsections (a)(iii),
(a)(iv) and (c) of SECTION 6.2 for the current and all prior Partnership
taxable years over (2) the amount of Net Income (or Partnership items of
income and gain) previously allocated to Partners pursuant to Section 1.3
of this EXHIBIT B (and Section 1.8 of this EXHIBIT B to the extent that
Section 1.8 operates to allocate an amount to Partners holding Convertible
Preferred
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Units in respect of an increase in the liquidation preference for the
Convertible Preferred Stock under the General Partner's Articles of
Incorporation due to accrued but unpaid dividends on the Convertible
Preferred Stock).
1.4 Fourth, subject to Section 1.8 of this EXHIBIT B (and to the
extent not already allocated pursuant to Section 1.8 in respect of an
increase in the Convertible Preferred Units Redemption Amount due to
accrued but unpaid dividends on the Convertible Preferred Stock), for any
Partnership taxable year ending on or after a date in which Convertible
Preferred Units are redeemed, Net Income (or Net Loss), or, if necessary,
Partnership items of income, gain, loss and deduction thereof, shall be
allocated to Partners holding Convertible Preferred Units, pro rata, in
proportion to their relative Convertible Preferred Units, in an aggregate
amount equal to the excess (or deficit) of (1) the sum of the Convertible
Preferred Unit Redemption Amount for Convertible Preferred Units that have
been or are being redeemed during the Partnership taxable year over (2) the
product of $25.00 times the number of such Convertible Preferred Units.
1.5 Fifth, subject to Section 1.8 of this EXHIBIT B, Net Income (or,
if necessary, Partnership items of income and gain) shall be allocated to
the Partners holding Series C Preferred Units in an amount equal to the
excess of (1) the amount of Net Cash Flow distributed to such Partners
pursuant to subsections (a)(v), (a)(vi) and (c) of SECTION 6.2 for the
current and all prior Partnership taxable years over (2) the amount of Net
Income (or Partnership items of income and gain) previously allocated to
such Partners pursuant to Section 1.5 of this EXHIBIT B (and Section 1.8 of
this EXHIBIT B to the extent that Section 1.8 operates to allocate an
amount to such Partners in respect of an increase in the liquidation
preference for the Series C Preferred Stock under the General Partner's
Articles of Incorporation due to accrued but unpaid dividends on the
Convertible Preferred Stock).
1.6 Sixth, subject to Section 1.8 of this EXHIBIT B (and to the
extent not already allocated pursuant to Section 1.8 in respect of an
increase in the Series C Preferred Unit Redemption Amount due to accrued
but unpaid dividends on the Series C Preferred Stock), for any Partnership
taxable year ending on or after a date in which Series C Preferred Units
are redeemed, Net Income (or Net Loss), or, if necessary, Partnership items
of income, gain, loss and deduction thereof, shall be allocated to the
General Partner in an amount equal to the excess (or deficit) of (1) the
sum of the Series C Preferred Unit Redemption Amount for Series C Preferred
Units that have been or are being redeemed during the Partnership taxable
year over (2) the product of $13.75 times the number of such Series C
Preferred Units.
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1.7 Seventh, subject to Sections 1.8 and 1.9 of this EXHIBIT B, the
remaining Net Income or Net Loss, if any, shall be allocated to each of the
Partners in the following order and priority:
(a) The remaining Net Income, if any, shall be allocated among
the Partners holding Common Units in proportion to, and to the extent
of, the aggregate amounts of Net Cash Flow distributed in respect of
the Partners' Common Units pursuant to subsections (a)(vii) and(c) of
SECTION 6.2 (including those amounts of Net Cash Flow distributed
within the Partnership taxable year or other applicable period under
SECTION 6.2(E) that are in respect of subsection (a)(vii) of SECTION
6.2, only if either (A) such Net Cash Flow is distributed on or prior
to the date on which the Cash Conversion Price is paid or (B) the
Limited Partner to whom such Net Cash Flow is distributed otherwise
continues to own one or more Common Units on the date such
distribution is made),
(b) In the event that assets of the Partnership are sold,
conveyed, transferred or disposed of in contemplation of or in
connection with the dissolution, liquidation and winding-up of the
Partnership under ARTICLE VIII (other than Section 8.4 thereof) (a
"Capital Event"), any remaining Net Income or Net Loss (or remaining
Partnership items of income, gain, loss and deduction thereof),
computed by including the Net Income or Net Loss resulting from such
Capital Event, shall be allocated among the Partners holding Common
Units to the extent possible, until each Limited Partner has a Capital
Account balance equal to (and the General Partner has a Capital
Account balance equal to the sum of the Preferred Sum (defined in
Section 1.8 of this EXHIBIT B) plus an additional amount equal to) the
pro rata portion, based on the number of Common Units held by each
Partner, of the net positive sum of the Capital Account balances for
all Partners (determined after taking into account the allocations
required under subsections (a) and (b) of Section 2 of this EXHIBIT B)
less the Preferred Sum.
(c) Any remaining Net Income or Net Loss shall be allocated to
the Partners holding Common Units pro rata in accordance with their
respective Common Units.
1.8 Notwithstanding Sections 1.1, 1.2, 1.3, 1.4, 1.5, 1.6 and 1.7 of
this EXHIBIT B, the General Partner shall allocate Net Income or Net Loss
(or Partnership items of income, gain, loss and deduction thereof) among
the Partners to the extent possible such that the Minimum Gain Capital
Account balance of each Partner, as of the end of the Partnership taxable
year or other applicable period for which such allocations are made, is not
less than the sum (the "Preferred Sum") of (i) the product of
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the number of Preferred Units held by such Partner multiplied by the
liquidation preference for a share of Preferred Stock pursuant to the
General Partner's Articles of Incorporation, (ii) the product of the number
of Convertible Preferred Units held by such Partner multiplied by the
liquidation preference for a share of Convertible Preferred Stock pursuant
to the General Partner's Articles of Incorporation, and (iii) the product
of the number of Series C Preferred Units held by such Partner multiplied
by the liquidation preference for a share of Series C Preferred Stock
pursuant to the General Partner's Articles of Incorporation.
1.9 In the event allocations are made pursuant to Section 1.8 of this
EXHIBIT B ("Reallocated Income" and "Reallocated Loss") in prior
Partnership taxable years or other applicable periods, any Net Income or
Net Loss (or Partnership items of income, gain, loss and deduction thereof)
that would otherwise have been allocated pursuant to subsection (c) of
Section 1.7 of this EXHIBIT B, shall be allocated among the Partners so
that, to the extent possible, the net amount of such allocations of Net
Income or Net Loss (or Partnership items of income, gain, loss or deduction
thereof) under subsection (c) of Section 1.7 of this EXHIBIT B and the
allocations of Reallocated Income and Reallocated Loss to each Partner
shall be equal to the net amount that would have been allocated to each
such Partner if the allocations of Reallocated Income and Reallocated Loss
had not occurred; PROVIDED, HOWEVER, that allocations under this Section
1.9 of this EXHIBIT B shall not be made to the extent such allocations
would cause the Minimum Gain Capital Account balance to be less than the
Preferred Sum.
II SPECIAL ALLOCATIONS. Notwithstanding any provisions of Section 1 of
this EXHIBIT B, the following special allocations shall be made:
2.1 MINIMUM GAIN CHARGEBACK (NONRECOURSE LIABILITIES).
(a) If there is a net decrease in Partnership Minimum Gain for
any Partnership taxable year, 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 Sections 1.704-2(f) and (i) of the
Regulations. This subsection (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
subsection (a) shall be made in proportion to the respective amounts
required to be allocated to each Partner pursuant hereto.
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(b) EXCEPTIONS TO SECTION 2.1(a). The allocation otherwise
required pursuant to Section 2.1(a) of this EXHIBIT B shall not apply to a
Partner to the extent that: (i) such Partner's share of the net decrease
in Minimum Gain is caused by a guarantee, refinancing or other change in
the instrument evidencing a nonrecourse debt of the Partnership which
causes such debt to become a partially or wholly recourse debt or a Partner
Nonrecourse Debt, and such Partner bears the economic risk of loss (within
the meaning of Section 1.752-2 of the Regulations) for such changed debt;
(ii) such Partner's share of the net decrease in Minimum Gain results from
the repayment of a nonrecourse liability of the Partnership, which
repayment is made using funds contributed by such Partner to the capital of
the Partnership; (iii) the IRS, pursuant to Section 1.704-2(f)(4) of the
Regulations, waives the requirement of such allocation in response to a
request for such waiver made by the General Partner on behalf of the
Partnership (which request the General Partner may or may not make, in its
sole discretion, if it determines that the Partnership would be eligible
therefor); or (iv) additional exceptions to the requirement of such
allocation are established by revenue rulings issued by the IRS pursuant to
Section 1.704-2(f)(5) of the Regulations, which exceptions apply to such
Partner, as determined by the General Partner in its sole discretion.
2.2 PARTNER MINIMUM GAIN CHARGEBACK. Except as otherwise provided in
Section 1.704-2(i)(4) of the Regulations, if there is a net decrease in Partner
Minimum Gain attributable to Partner Nonrecourse Debt during any Partnership
taxable year, each Partner who has a share of the Partner Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance with
Section 1.704-2(i)(5) of the Regulations, 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 Partner
Minimum Gain attributable to Partner Nonrecourse Debt. The items to be so
allocated shall be determined in accordance with Sections 1.704-2(i)(4) and
(j)(2) of the Regulations. This Section 2.2 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. Allocations pursuant to this subsection (b) shall be
made in proportion to the respective amounts required to be allocated to each
Partner pursuant hereto.
2.3 QUALIFIED INCOME OFFSET. In the event a Partner unexpectedly receives
any adjustments, allocations or distributions described in Sections
1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations, and such 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 of such Partner as
B-5
quickly as possible. This Section 2.3 is intended to constitute a "qualified
income offset" under Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall
be interpreted consistently therewith; PROVIDED that an allocation pursuant to
this Section 2.3 of this EXHIBIT E shall be made if and only to the extent that
such Partner would have an Adjusted Capital Account Deficit after all other
allocations provided for in this EXHIBIT B have been tentatively made as if
Section 2.3 and Section 2.4(ii) of this EXHIBIT B were not in this Agreement.
2.4 GROSS INCOME ALLOCATIONS.
(i) There shall be specially allocated to the General Partner an
amount of Partnership income and gain during each Partnership taxable year or
portion thereof, before any other allocations are made hereunder, which is equal
to the excess, if any, of the cumulative distributions of cash made to the
General Partner under SECTION 6.2(f) over the cumulative allocations of
Partnership income and gain to the General Partner pursuant to Section 2.4(i) of
this EXHIBIT B.
(ii) In the event any Partner has a deficit Capital Account balance at
the end of any Partnership taxable year in excess of the amount such Partner is
obligated or treated as obligated to restore pursuant to this Agreement or the
provisions of Section 1.704-1(b)(2(ii)(C) of the Regulations, or is deemed to be
obligated to restore pursuant to the penultimate sentences of Sections
1.704-2(g)(l) and 1.704-2(i)(5) of the Regulations, each such Partner shall be
specially allocated items of Partnership income and gain in an amount and manner
sufficient to eliminate the excess Capital Account deficit of such Partner as
quickly as possible; PROVIDED that an allocation pursuant to this Section 2.4 of
EXHIBIT B shall be made if and only to the extent that such Partner would have
such an excess Capital Account deficit after all other allocations provided for
in this EXHIBIT B have been tentatively made as if Section 2.3 and Section
2.4(ii) of this EXHIBIT B were not in this Agreement.
2.5 NONRECOURSE DEDUCTIONS. Any Nonrecourse Deductions for any
Partnership taxable year generally shall be allocated to the Partners in the
same proportion as the Partners are allocated items of loss and deduction not
attributable to either Partnership Nonrecourse Debt or Partner Nonrecourse Debt.
2.6 PARTNER NONRECOURSE DEDUCTIONS. Partner Nonrecourse Deductions
for any taxable 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 Sections 1.704-2(b)(4) and (i)(1) of the
Regulations).
B-6
2.7 INTENTIONALLY OMITTED.
2.8 CURATIVE ALLOCATIONS. The Regulatory Allocations shall be taken
into account in allocating other items of income, gain, loss, and deduction
among the Partners so that, to the extent possible, the cumulative net amount of
allocations of Partnership items under Section 2 of this EXHIBIT B shall be
equal to the net amount that would have been allocated to each Partner if the
Regulatory Allocations had not occurred. Notwithstanding the preceding
sentence, Regulatory Allocations relating to (A) Nonrecourse Deductions shall
not be taken into account except to the extent that there has been a decrease in
Partnership Minimum Gain and (B) Partner Nonrecourse Deductions shall not be
taken into account except to the extent that there has been a decrease in
Partner Minimum Gain attributable to Partner Nonrecourse Debt. This Section 2.8
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.
Allocations pursuant to this Section 2.8 of EXHIBIT B shall be deferred with
respect to allocations pursuant to clauses (A) and (B) hereof to the extent the
General Partner reasonably determines that such allocations are likely to be
offset by subsequent Regulatory Allocations. For purposes of this Section 2.8
of this EXHIBIT B, "Regulatory Allocations" shall mean the allocations provided
under Section 2 of this EXHIBIT B (other than under Sections 2.4(i), 2.5, 2.7
and 2.8.
2.9 SECTION 754 ADJUSTMENT. To the extent an adjustment to the
adjusted tax basis of any asset of the Partnership pursuant to Sections 734(b)
or 743(b) of the Code is required, pursuant to Section 1.704-1(b)(2)(iv)(m) of
the Regulations, to be taken into account in determining Capital Accounts or
adjustments thereto, the amount of such adjustment to the Capital Accounts shall
be treated as an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases such basis) and such gain or loss
shall be specially allocated among the Partners in a manner consistent with the
manner in which their Capital Accounts are required to be adjusted pursuant to
such section of the Regulations.
2.10 OTHER ALLOCATION RULES. To the extent permitted by Sections
1.704-2(h)(3) and 1.704-2(i)(6) of the Regulations, the Partners shall endeavor
to treat distributions of Net Cash Flow as having been made from the proceeds of
a Nonrecourse Liability or a Partner Nonrecourse Debt only to the extent that
such distribution would not cause or increase an Adjusted Capital Account
Deficit for any Partner.
2.11 SHARING OF NONRECOURSE LIABILITIES. The General Partner shall
allocate Nonrecourse Liabilities of the Partnership that are in excess of the
amount of Partnership Minimum Gain, in each Partnership taxable year as follows:
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(i) To the extent of the total amount of built-in gain (as defined in
Regulations Section 1.752-3(a)(2)) among the Partners in accordance with how the
Members would share taxable gain if the LLC, in a taxable transaction, disposed
of all its property in full satisfaction of its Nonrecourse Liabilities and for
no other consideration (taking into account the relative priorities of such
Nonrecourse Liabilities and rights in respect of specific Partnership
properties;
(ii) To the extent of any remaining excess Nonrecourse Liabilities, within
the meaning of Regulations Section 1.752-3(a)(3)among the Partners as follows:
(A) First, assuming that the assets of the Partnership are sold
for their relative fair market values, the General Partner shall determine for
each of its partners the sum of (i) the amount Code Section 704(c) gain
allocable to such Partner (taking into account the relative Code Section 704(c)
method elected by the Partnership in respect of each contributed asset under
Treasury Regulation Section 1.704-3, and less the amount already allocated to
such partner under Treasury Regulations Section 1.752-3(a)(2)), plus (ii) the
amount, if any, of remaining income and gain which would be further allocated to
such Partner under this Agreement, after all income and gain allocable to
Partners under Code Section 704(c) has been taken into account;
(B) Second, the General Partner shall determine a percentage (the
"Tier Three Percentage") for each Partner equal to the fraction of the sum
computed for such partner in paragraph (i) above, over the aggregate amount of
such sums for all Partners; and
(C) Third, the General Partner shall allocate the excess
nonrecourse liabilities of the Partnership to each Partner, pro rata, in
accordance with each Partner's Tier Three Percentage.
However, the General Partner may elect to use a different method to allocate
excess Nonrecourse Liabilities in a Partnership taxable year to the extent such
allocation does not cause a Limited Partner to recognize any greater amount of
taxable income that such Limited Partner would have recognized under the method
described in the previous sentence.
III TAX ALLOCATIONS.
3.1 GENERALLY. Subject to subsections (b) and (c) of Section 3 of
this EXHIBIT B, 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 they share Net Income and Net Loss.
3.2 RECAPTURE GAIN. If any portion of gain recognized from the
disposition of an asset by the Partnership represents the
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"recapture" of previously allocated deductions by virtue of the application of
Code Section 1245 or 1250 ("RECAPTURE GAIN"), such Recapture Gain, solely for
income tax purposes, shall be allocated as follows:
FIRST, to the Partners, PRO RATA, in proportion to the lesser of each
Partner's (i) allocable share of the total gain recognized from the
disposition of such asset and (ii) share of depreciation or amortization
with respect to such asset (under Regulations Sections 1.1245-1(e)(2) and
(3)), until each such Partner has been allocated Recapture Gain equal to
such lesser amount; and
SECOND, the balance of Recapture Gain will be allocated among the
Partners whose allocable shares of total gain exceed their shares of
depreciation or amortization with respect to such asset (under Regulations
Sections 1.1245-1(e)(2) and (3)), in proportion to their shares of total
gain (including Recapture Gain) from the disposition of such asset;
PROVIDED, however, that no Partner will be allocated Recapture Gain under this
Section 3.2 in excess of the total gain allocated to such Partner from such
disposition.
3.3 ALLOCATIONS RESPECTING SECTION 704(c) AND REVALUATIONS; CURATIVE
ALLOCATIONS RESULTING FROM THE CEILING RULE. Notwithstanding Sections 3(a) and
3(b) of this EXHIBIT B, Tax Items with respect to Partnership property that is
subject to Code Section 704(c) and/or Section 1.704-1(b)(2)(iv)(f) of the
Regulations (collectively "SECTION 704(c) TAX ITEMS") shall be allocated in
accordance with said Code section and/or Section 1.704-1(b)(4)(i) of the
Regulations, as the case may be. The General Partner is authorized to, and
shall, elect the "traditional method" in respect of all its Properties, except
that the General Partner is authorized to, and shall, elect the "traditional
method with curative allocations" under Regulations Section 1.704-3(c) in
respect of the Horizon Properties (other than the interest in RSLP acquired
through the Merger, for which the General Partner is authorized to, and shall,
elect the "traditional method"). With respect to properties subsequently
contributed to the Partnership, the Partnership shall account for such variation
under any method approved under Section 704(c) of the Code and the applicable
regulations as chosen by the General Partner. In the event the Gross Asset
Value of any Partnership asset is adjusted pursuant to subparagraph (b) of the
definition of Gross Asset Value (provided in ARTICLE 1 of this Agreement),
subsequent allocations of Section 704(c) Tax Items with respect to such asset
shall take account of the variation, if any, between the adjusted basis of such
asset and its Gross Asset Value in the same manner as under Section 704(c) of
the Code and the applicable regulations consistent with the requirements of
Regulations Section 1.704-1(b)(2)(iv)(g) using any
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method approved under 704(c) of the Code and the applicable regulations as
chosen by the General Partner.
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EXHIBIT C
RIGHTS TERMS
The Rights granted by the General Partner to the Limited Partners pursuant
to SECTION 11.1 of the Partnership Agreement shall be subject to the following
terms and conditions:
I DEFINITIONS. The following terms and phrases shall, for purposes of
this EXHIBIT C and the Agreement, have the meanings set forth below:
"BENEFICIALLY OWN" shall mean the ownership of Common Stock by a
Person who would be treated as an owner of such shares of Common Stock
either directly or constructively through the application of Section 544 of
the Code, as modified by Section 856(h)(1)(B) of the Code.
"CASH PURCHASE PRICE" shall have the meaning set forth in Paragraph IV
hereof.
"COMPUTATION DATE" shall mean the date on which an Exchange Exercise
Notice is delivered to the General Partner.
"ELECTION NOTICE" shall mean the written notice to be given by the
General Partner to the Exercising Partner(s) in response to the receipt by
the General Partner of an Exchange Exercise Notice from such Exercising
Partner(s), the form of which Election Notice is attached hereto as
Schedule 2.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, or any successor statute.
"EXCHANGE EXERCISE NOTICE" shall have the meaning set forth in
Paragraph II hereof.
"EXCHANGE FACTOR" shall mean 100%; PROVIDED that such factor shall be
adjusted in accordance with the Antidilution Provisions of Paragraph XI
hereof.
"EXCHANGE RIGHTS" shall have the meaning set forth in Paragraph II
hereof.
"EXERCISING PARTNERS" shall have the meaning set forth in Paragraph II
hereof.
"OFFERED COMMON UNITS" shall mean the Common Units of the Exercising
Partner(s) identified in an Exchange Exercise Notice which, pursuant to the
exercise of Exchange Rights, can be acquired by the General Partner under
the terms hereof.
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"OWNERSHIP LIMIT" shall have the meaning set forth in Paragraph III
hereof.
"PURCHASE PRICE" shall mean the Cash Purchase Price or the Stock
Purchase Price.
"REGISTRATION RIGHTS AGREEMENT" shall mean the agreement respecting
the registration rights attributable to shares of Common Stock, if any,
issued to Limited Partners in accordance with the provisions hereof.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or
any successor statute.
"STOCK PURCHASE PRICE" shall have the meaning set forth in Paragraph
IV hereof.
II DELIVERY OF EXCHANGE EXERCISE NOTICES. Any one or more Limited
Partners ("Exercising Partners") may, subject to the limitations set forth
herein, deliver to the General Partner written notice (the "Exchange Exercise
Notice") pursuant to which such Exercising Partners elect to exercise their
rights to convert (the "Exchange Rights") all or any portion of their Common
Units into shares of Common Stock subject to the limitations contained in
Paragraph III below.
III LIMITATION ON EXERCISE OF EXCHANGE RIGHTS. The Exchange Rights shall
expire with respect to any Common Units for which an Exchange Exercise Notice
has not been delivered to the General Partner on January 1, 2050. Exchange
Rights may be exercised at any time prior to January 1, 2050, subject to the
limitations contained herein and in the General Partner's Articles of
Incorporation (the "Ownership Limit"). For purposes of computing the Ownership
Limit as of any date, each Limited Partner and its Affiliates shall be deemed to
own all shares of Common Stock issuable to such Limited Partner and its
Affiliates upon the exercise of stock options granted on or before such date
under the Stock Incentive Plan. If an Exchange Exercise Notice is delivered to
the General Partner but, as a result of the Ownership Limit, the Exchange Rights
cannot be exercised in full, the Exchange Exercise Notice shall be deemed to be
modified such that the Exchange Rights shall be exercised only to the extent
permitted under the Ownership Limit; with the exercise of the remainder of such
Exchange Rights being deemed to have been withdrawn.
IV COMPUTATION OF PURCHASE PRICE/FORM OF PAYMENT. The Purchase Price
payable by the General Partner to each Exercising Partner for the Offered Common
Units shall be payable by the issuance by the General Partner of the number of
shares of its Common Stock equal to the product, expressed as a whole number, of
(i) the number of Common Units being converted, multiplied by (ii) the Exchange
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Factor (the "Stock Purchase Price"). At the election of the General Partner
exercisable by the independent directors of the General Partner in their sole
and absolute discretion, the Purchase Price may be paid in whole (but not in
part) in cash rather than in Common Stock (the "Cash Purchase Price"). The Cash
Purchase Price shall mean, with respect to the applicable number of Offered
Common Units which are being purchased for cash upon the exercise of any
Exchange Right, an amount of cash (in immediately available funds) equal to (i)
the number of shares of the General Partner's Common Stock that would be issued
to the Exercising Partner if the Stock Purchase Price were paid for such Offered
Common Units (taking into account the adjustments required pursuant to the
definition of "Exchange Factor") multiplied by (ii) the Current Per Share Market
Price computed as of the Computation Date. The Cash Purchase Price shall, in
the sole and absolute discretion of the General Partner, be paid in the form of
cash, or cashier's or certified check, or by wire transfer of immediately
available funds to the Exercising Partner's designated account.
V CLOSING; DELIVERY OF ELECTION NOTICE. The closing of the acquisition
of Offered Common Units shall, unless otherwise mutually agreed, be held at the
principal office of the General Partner, on the following date(s):
5.1 With respect to the exercise of Exchange Rights for which the
Stock Purchase Price is payable, the closing shall occur on the date agreed
to by the General Partner and the Exercising Partner(s), which date shall
in no event be on the date which is the later of (i) ten (10) days after
the delivery of the Election Notice; (ii) the expiration or termination of
the waiting period applicable to each Exercising Partner, if any, under the
Xxxx Xxxxx Act; and (iii) forty (40) days after receipt of the Exchange
Exercise Notice delivered in accordance with the requirements of Paragraph
3 hereof; and
5.2 With respect to the exercise of Exchange Rights for which the
General Partner elects to pay the Cash Purchase Price, the General Partner
shall, within thirty (30) days after delivery to the General Partner of the
Exchange Exercise Notice delivered in accordance with the requirements of
Paragraph 3 hereof, deliver to the Exercising Partner(s) an Election
Notice, which Election Notice shall (i) specify the General Partner's
election to pay the Cash Purchase Price for all of the Offered Common Units
and (ii) set forth the computation of the Cash Purchase Price to be paid by
the General Partner to such Exercising Partner(s) and the date, time and
location for completion of the purchase and sale of the Offered Common
Units, which date shall, to the extent required, in no event be more than
sixty (60) days after the Computation Date for such Exchange Exercise
Notice; PROVIDED, HOWEVER, that such sixty (60) day period may be extended
for an additional period to the extent required for the General Partner to
cause additional shares of its Common Stock
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to be issued to provide financing to be used to acquire the Offered Common
Units. Notwithstanding the foregoing, the General Partner agrees to use
its best efforts to cause the closing of the acquisition of Offered Common
Units hereunder to occur as quickly as possible.
VI FURTHER LIMITATIONS ON EXERCISE. The Exchange Rights may not be
exercised unless the Partnership receives an opinion of counsel, which counsel
and opinion shall be reasonably satisfactory to the General Partner, that the
proposed exercise of such Exchange Rights shall not cause the Partnership to
cease to qualify as a partnership for Federal income tax purposes. This
requirement may be waived by the independent directors of the General Partner,
and shall not apply to the exercise by the sole remaining Limited Partner of the
Exchange Rights with respect to all of his or its Common Units.
VII CLOSING DELIVERIES. At the closing, payment of the Purchase Price
shall be accompanied by proper instruments of transfer and assignment and by the
delivery of (i) representations and warranties of (A) the Exercising Partner
with respect to its due authority to sell all of the right, title and interest
in and to such Offered Common Units to the General Partner and with respect to
the status of the Offered Common Units being sold, free and clear of all Liens,
and (B) the General Partner with respect to due authority for the purchase of
such Offered Common Units, and (ii) to the extent that shares of Common Stock
are issued in payment of the Stock Purchase Price, (A) an opinion of counsel for
the General Partner, reasonably satisfactory to the Exercising Partner(s), to
the effect that such shares of Common Stock have been duly authorized, are
validly issued, fully-paid and non-assessable, and (B) a stock certificate or
certificates evidencing the Common Stock to be issued and registered in the name
of the Exercising Partner(s) or its (their) designee.
VIII TERM OF RIGHTS. Unless sooner terminated, the rights of the parties
to exercise the Rights shall lapse for all purposes and in all respects on
January 1, 2050; PROVIDED, HOWEVER, that the parties hereto shall continue to be
bound by an Exchange Exercise Notice delivered to the General Partner prior to
such date.
IX COVENANTS OF THE GENERAL PARTNER. To facilitate the General Partner's
ability to fully perform its obligations hereunder, the General Partner
covenants and agrees as follows:
9.1 At all times during the pendency of the Rights, the General
Partner shall reserve for issuance such number of shares of Common Stock as
may be necessary to enable the General Partner to issue such shares in full
payment of the Stock Purchase Price in regard to all Common Units held by
Limited Partners and which are from time to time outstanding.
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9.2 As long as the General Partner shall be obligated to file
periodic reports under the Exchange Act, the General Partner will timely
file such reports in such manner as shall enable any recipient of Common
Stock issued to Limited Partners hereunder in reliance upon an exemption
from registration under the Securities Act to continue to be eligible to
utilize Rule 144 promulgated by the SEC pursuant to the Securities Act, or
any successor rule or regulation or statute thereunder, for the resale
thereof.
9.3 During the pendency of the Rights, the Limited Partners shall
receive in a timely manner all reports filed by the General Partner with
the SEC and all other communications transmitted from time to time by the
General Partner to its stockholders generally.
9.4 The General Partner shall be required to pay the Cash Purchase
Price to the extent that payment of the Stock Purchase Price by issuance of
Common Stock would disqualify the General Partner from being characterized
as a REIT.
9.5 The General Partner shall cooperate with the Limited Partners
and provide by certificate of appropriate officers the factual information
reasonably requested by any Limited Partner in connection with delivery of
an opinion of counsel pursuant to SECTION 6 of this EXHIBIT C.
X LIMITED PARTNERS' COVENANTS. 10.1 Each Limited Partner covenants and
agrees with the General Partner that all Offered Common Units tendered to the
General Partner in accordance with the exercise of 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 Offered Common Units, the General
Partner shall be under no obligation to acquire the same unless, in connection
with such acquisition, the General Partner has elected to pay a portion of the
purchase price in the form of the Cash Purchase Price in circumstances where
such Cash Purchase Price will be sufficient to cause such existing Lien to be
discharged in full upon application of all or a part of the Cash Purchase Price
and the General Partner is expressly authorized to apply such portion of the
Cash Purchase Price as may be necessary to satisfy any indebtedness in full and
to discharge such Lien in full. Each Limited Partner further agrees that, in
the event any state or local property transfer tax is payable as a result of the
transfer of its Offered Common Units to the General Partner (or its designee),
such Limited Partner shall assume and pay such transfer tax. Finally, each
Limited Partner agrees that, to the extent it receives an amount of Net Cash
Flow under SECTION 6.2(e) in respect of subsections (a)(vii) or (a)(viii) of
SECTION 6.2 that is treated as a distribution to the General Partner for
purposes of determining the Capital Account of the General Partner, such Limited
Partner will treat such amount of Net Cash Flow for income
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tax purposes as an additional amount paid by the General Partner and realized by
it in exchange for the Offered Common Units.
XI ANTIDILUTION PROVISIONS.
11.1 The Exchange Factor shall be subject to adjustment from time to time
effective upon the occurrence of the following events and shall be expressed as
a percentage, calculated to the nearest one-thousandth of one percent (.001%):
(a) In case the General Partner shall pay or make a dividend or other
distribution in shares of Common Stock to all holders of the Common Stock,
the Exchange Factor in effect at the opening of business on the day
following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be increased in
proportion to the increase in outstanding shares of Common Stock resulting
from such dividend or other distribution, such increase to become effective
immediately after the opening of business on the day following the record
date fixed for such dividend or other distribution.
(b) In case outstanding shares of Common Stock shall be subdivided
into a greater number of shares, the Exchange Factor in effect at the
opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately increased, and,
conversely, in case the outstanding shares of Common Stock shall be
combined into a smaller number of shares, the Exchange Factor in effect at
the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately reduced, such
increase or reduction, as the case may be, to become effective immediately
after the opening of business on the day following the day upon which such
subdivision or combination becomes effective.
11.2 In case the General Partner shall issue rights, options or warrants to
all holders of its shares of Common Stock entitling them to subscribe for or
purchase Common Stock at a price per share less than the current market price
per share (as determined in the next sentence), each holder of a Common Unit
shall be entitled to receive such number of rights, options or warrants, as the
case may be, as he would have been entitled to receive had he converted his
Common Units immediately prior to the record date for such issuance by the
General Partner (except to the extent such receipt shall cause such holder to
exceed the Ownership Limit). For the purpose of any computation pursuant to the
preceding sentence, the current market price per share of Common Stock on any
date shall be deemed to be the average of the daily Closing Prices for the five
consecutive Trading Days selected by the General Partner commencing not more
than twenty (20) Trading Days before, and ending not later than, the earlier of
the day in question and the day before the
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"ex" date with respect to the issuance or distribution requiring such
computation. For purposes of this EXHIBIT C, the term "Trading Day" shall mean
each Monday, Tuesday, Wednesday, Thursday and Friday, other than any day which
securities are not traded on such exchange or in such market and the term "'ex'
date", when used in respect of any issuance or distribution, shall mean the
first date on which the shares trade regular way on such exchange or in such
market without the right to receive such issuance or distribution.
11.3 In case the shares of Common Stock shall be changed into the same or a
different number of shares of any class or classes of stock, whether by capital
reorganization, reclassification, or otherwise (other than subdivision or
combination of shares or a stock dividend described in subparagraph (a)(ii) of
this Paragraph) then and in each such event the Limited Partners shall have the
right thereafter to convert their Common Units into the kind and amount of
shares and other securities and property which would have been received upon
such reorganization, reclassification or other change by holders of the number
of shares into which the Common Units might have been converted immediately
prior to such reorganization, reclassification or change.
11.4 The General Partner may, but shall not be required to, make such
adjustments to the number of shares of Common Stock issuable upon conversion of
a Common Unit, in addition to those required by this Paragraph XI, as the
General Partner's board of directors considers to be advisable in order that any
event treated for federal income tax purposes as a dividend of stock or stock
rights shall not be taxable to the recipients. The General Partner's board of
directors shall have the power to resolve any ambiguity or correct any error in
the adjustments made pursuant to this Paragraph and its actions in so doing
shall be final and conclusive.
XII FRACTIONS OF SHARES. No fractional Shares shall be issued upon
conversion of Common Units. If more than one Common Unit shall be surrendered
for conversion at one time by the same Exercising Partner, the number of full
shares of Common Stock which shall be issuable upon conversion thereof (or the
cash equivalent amount thereof if the Cash Purchase Price is paid) shall be
computed on the basis of the aggregate amount of Common Units so surrendered.
Instead of any fractional share of Common Stock which would otherwise be
issuable upon conversion of any Common Unit or Common Units, the General Partner
shall pay a cash adjustment in respect of such fraction in an amount equal to
the same fraction of the current market price per share at the close of business
on the day of closing specified in Paragraph 5.2 of this EXHIBIT C (or, if such
day is not a Trading Day, on the Trading Day immediately preceding such day).
C-7
XIII NOTICE OF ADJUSTMENTS OF EXCHANGE FACTOR. Whenever the Exchange
Factor is adjusted as herein provided:
(a) the General Partner shall compute the adjusted Exchange Factor in
accordance with Paragraph XI hereof and shall prepare a certificate signed
by the chief financial officer or the Treasurer of the General Partner
setting forth the adjusted Exchange Factor and showing in reasonable detail
the facts upon which such adjustment is based; and
(b) a notice stating that the Exchange Factor has been adjusted and
setting forth the adjusted Exchange Factor shall forthwith be mailed by the
General Partner to all holders of Exchange Rights at their last addresses
on record under this Agreement.
XIV NOTICE OF CERTAIN CORPORATE ACTIONS. In case:
(a) the General Partner shall declare a dividend (or any other
distribution) on its Common Stock payable otherwise than in cash; or
(b) the General Partner shall authorize the granting to the holders
of its Common Stock of rights, options or warrants to subscribe for or
purchase any shares of stock of any class or of any other rights; or
(c) of any reclassification of the shares of Common Stock (other than
a subdivision or combination of its outstanding Common Stock, or of any
consolidation, merger or share exchange to which the General Partner is a
party and for which approval of any shareholders of the General Partner is
required), or of the sale or transfer of all or substantially all of the
assets of the General Partner; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the General Partner;
then the General Partner shall cause to be mailed to all holders of Exchange
Rights at their last addresses on record under this Agreement, at least 20 days
(or 12 days in any case specified in clause (a) or (b) above) prior to the
applicable record date hereinafter specified, a notice stating (i) the date on
which a record is to be taken for the purpose of such dividend, distribution,
rights, options or warrants, or, if a record is not to be taken, the date as of
which the holders of shares of Common Stock of record to be entitled to such
dividend, distribution, rights, options or warrants are to be determined, or
(ii) the date on which such reclassification, consolidation, merger, share
exchange, sale, transfer, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that holders of shares
of Common Stock of record shall be
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entitled to exchange their shares for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, share exchange,
sale, transfer, dissolution, liquidation or winding up.
XV PROVISIONS IN CASE OF CONSOLIDATION, MERGER OR SALE OF ASSETS. In case
of any consolidation of the General Partner with, or merger of the General
Partner into, any other Person, any merger or consolidation of another Person
into the General Partner (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock of the General Partner), or any sale or transfer of all or
substantially all of the assets of the General Partner, the Person formed by
such consolidation or resulting from such merger or which acquires such assets
of the General Partner, as the case may be, shall execute and deliver to each
holder of Exchange Rights an agreement providing that such holder shall have the
right thereafter, during the period such Exchange Rights shall be exercisable as
specified herein, to require the conversion of Common Units for the kind and
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by a holder of the number of shares of
Common Stock into which such Common Unit might have been converted immediately
prior to such consolidation, merger, sale or transfer, assuming such holder of
shares of Common Stock is not a Person with which the General Partner
consolidated or into which the General Partner merged or which merged into the
General Partner, or to which such sale or transfer, was made, as the case may be
(a "Constituent Person"), or an Affiliate of a Constituent Person, and failed to
exercise his right of election, if any, as to the kind or amount of securities,
cash or other property receivable upon such consolidation, merger, sale or
transfer (PROVIDED that if the kind or amount of securities, cash and other
property receivable upon such consolidation, merger, sale or transfer is not the
same for each share of Common Stock in respect of which such rights of election
shall not have been exercised ("non-electing Share"), then for the purpose of
this Paragraph XV the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, sale or transfer by each
non-electing Share shall be deemed to be the kind and amount so receivable per
Share by a plurality of the non-electing Shares). Such agreement shall provide
for adjustments which, for events subsequent to the effective date of such
agreement, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this EXHIBIT C. The above provisions of this
Paragraph XV shall similarly apply to successive consolidations, mergers, sales
or transfers.
C-9
SCHEDULE 1
EXCHANGE EXERCISE NOTICE
To: Prime Retail, Inc.
Reference is made to that certain Agreement of Limited Partnership of
Prime Retail, L.P. dated ___________, (the "Partnership Agreement"), pursuant to
which Prime Retail, Inc., a Maryland corporation, and certain other persons,
including the undersigned, formed a Delaware limited partnership known as Prime
Retail, L.P. (the "Partnership"). Capitalized terms used but not defined herein
shall have the meanings set forth in the Partnership Agreement. Pursuant to
ARTICLE XI and Paragraph II of EXHIBIT C of the Partnership Agreement, each of
the undersigned, being a limited partner of the Partnership (an "Exercising
Partner"), hereby elects to exercise its Exchange Rights as to the number of
Offered Common Units specified opposite its name below:
Dated: ___________________
Number of Offered
Exercising Partner Common Units
------------------ -----------------
Exercising Partners:
____________________________
____________________________
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SCHEDULE 2
ELECTION NOTICE
To: Exercising Partner(s)
Reference is made to that certain Agreement of Limited Partnership of
Prime Retail, L.P. dated _________, 1993 (the "Partnership Agreement"), pursuant
to which the undersigned and certain other persons, including the Exercising
Partners, formed a Delaware limited partnership known as Prime Retail, L.P. (the
"Partnership"). All capitalized terms used but not defined herein shall have
the meanings set forth in the Partnership Agreement. Pursuant to subsection (b)
of Paragraph V of EXHIBIT C to the Partnership Agreement, the undersigned, being
the general partner of the Partnership, hereby notifies the Exercising
Partner(s) that [(a) the Stock Purchase Price is payable by issuance of the
number of shares of Common Stock to the Existing Partner(s), as set forth
below,] [(b) it has elected to pay the Cash Purchase Price by payment of cash to
the Exercising Partner(s) for the number of Offered Common Units, as set forth
below,] (c) the computation of the [Stock Purchase Price and Cash Purchase
Price] as set forth on an attachment hereto, (d) the closing of the purchase and
sale of the Offered Common Units by payment of the [Stock Purchase Price shall
take place at the offices of ____________________ on [date]] and [(e) the
closing of the payment of the Cash Purchase Price shall take place at the
offices of ____________________ on [date].
NUMBER OF OFFERED STOCK CASH PURCHASE
EXERCISING PARTNER(S) COMMON UNITS PURCHASE PRICE PRICE
--------------------- ----------------- -------------- --------------
Dated: ___________________
PRIME RETAIL, INC., a Maryland corporation
By:___________________________
Its:__________________________
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EXHIBIT D
SERIES C PREFERRED RIGHTS TERMS
The Series C Preferred Rights granted by the General Partner to the Limited
Partners holding Series C Preferred Units pursuant to SECTION 12.1 of the
Partnership Agreement shall be subject to the following terms and conditions:
I DEFINITIONS. The following terms and phrases shall, for purposes of this
EXHIBIT D and the Agreement, have the meanings set forth below:
"BENEFICIALLY OWN" shall mean the ownership of Series C Preferred
Stock by a Person who would be treated as an owner of such shares of Series
C Preferred Stock either directly or constructively through the application
of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the
Code.
"CHANGE OF CONTROL" means each occurrence of any of the following:
(i) the acquisition, directly or indirectly, by any individual or entity or
group (as such term is used in Section 13(d)(3) of the Exchange Act) of
beneficial ownership (as defined in Rule 13d-3 under the Exchange Act,
except that such individual or entity shall be deemed to have beneficial
ownership of all shares that any such individual or entity has the right to
acquire, whether such right is exercisable immediately or only after
passage of time) of more than 25% of the General Partner's outstanding
capital stock with voting power, under ordinary circumstances, to elect
directors of the General Partner; (ii) other than with respect to the
election, resignation or replacement of any director designated, appointed
or elected by the holders of the Series C Preferred Stock (each a
"Preferred Director"), during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors of the General Partner (together with any new directors whose
election by such Board of Directors or whose nomination of or election by
the shareholders of the General Partner was approved by a vote of 66 2/3%
of the directors of the General Partner (excluding Preferred Directors)
then still in office who were either directors at the beginning of such
period, or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of the General Partner then in office; and (iii) (A) the General
Partner consolidating with or merging into another entity or conveying,
transferring or leasing all or substantially all of its assets (including,
but not limited to, real property investments) to any individual or entity,
or (B) any corporation consolidating with or merging into the General
Partner, which in either event (A) or (B) is pursuant
D-1
to a transaction in which the outstanding voting capital stock of the
General Partner is reclassified or changed into or exchanged for cash,
securities or other property; provided, however, that the events described
in clause (iii) shall not be deemed to be a Change of Control (a) if the
sole purpose of such event is that the General Partner is seeking to change
its domicile or to change its form of organization from a corporation to a
statutory business trust or (b) if the holders of the exchanged securities
of the General Partner immediately after such transaction beneficially own
at least a majority of the securities of the merged or consolidated entity
normally entitled to vote in elections of directors.
"COMMON STOCK PURCHASE PRICE" shall have the meaning set forth in
Paragraph IV hereof.
"COMPUTATION DATE" shall mean the date on which an Exchange Exercise
Notice is delivered to the General Partner.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, or any successor statute.
"EXCHANGE EXERCISE NOTICE" shall have the meaning set forth in
Paragraph II hereof.
"EXCHANGE RIGHTS" shall have the meaning set forth in Paragraph II
hereof.
"EXERCISING PARTNERS" shall have the meaning set forth in Paragraph II
hereof.
"OFFERED SERIES C PREFERRED UNITS" shall mean the Series C Preferred
Units of the Exercising Partner(s) identified in an Exchange Exercise
Notice which, pursuant to the exercise of Exchange Rights, can be acquired
by the General Partner under the terms hereof.
"OWNERSHIP LIMIT" shall have the meaning set forth in Paragraph III
hereof.
"PURCHASE PRICE" shall mean the Common Stock Purchase Price or the
Series C Preferred Stock Purchase Price.
"REIT TERMINATION EVENT" shall mean the earliest to occur of: (i) the
filing of a federal income tax return by the General Partner for any
taxable year on which the General Partner does not elect to be taxed as a
real estate investment trust; (ii) the approval by the stockholders of the
General Partner of a proposal for the General Partner to cease to qualify
as a real estate investment trust; (iii) a determination by the Board of
Directors of the General Partner, based on the advice of counsel, that the
General
D-2
Partner has ceased to qualify as a real estate investment trust; or (iv) a
"determination" within the meaning of Section 1313(a) of the Internal
Revenue Code of 1986, as amended, that the General Partner has ceased to
qualify as a real estate investment trust.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or
any successor statute.
"SERIES C PREFERRED STOCK PURCHASE PRICE" shall have the meaning set
forth in Paragraph IV hereof.
II DELIVERY OF EXCHANGE EXERCISE NOTICES. Any one or more Limited Partners
holding Series C Preferred Units ("Exercising Partners") may, subject to the
limitations set forth herein, deliver to the General Partner written notice (the
"Exchange Exercise Notice") pursuant to which such Exercising Partners elect to
exercise their rights to exchange (the "Exchange Rights") all or any portion of
their Series C Preferred Units for shares of Series C Preferred Stock or Common
Stock, subject to the limitations contained in Paragraph 3 below.
III LIMITATION ON EXERCISE OF EXCHANGE RIGHTS. Exchange Rights with respect to
an exchange into Series C Preferred Stock may be exercised at any time, and
Exchange Rights with respect to an exchange into Common Stock may be exercised
at any time on or after August 8, 1998 (or, if earlier, on the first day on
which a Change of Control occurs or a REIT Termination Event) and from time to
time thereafter. Any exercise of Exchange Rights shall be subject to the
limitations contained herein and in the General Partner's Articles of
Incorporation (the "Ownership Limit"). If an Exchange Exercise Notice is
delivered to the General Partner but, as a result of the Ownership Limit, the
Exchange Rights cannot be exercised in full, the Exchange Exercise Notice shall
be deemed to be modified such that the Exchange Rights shall be exercised only
to the extent permitted under the Ownership Limit; with the exercise of the
remainder of such Exchange Rights being deemed to have been withdrawn.
IV ELECTION AND COMPUTATION OF PURCHASE PRICE. The Purchase Price payable by
the General Partner to each Exercising Partner for the Offered Series C
Preferred Units shall be payable by the issuance by the General Partner of the
number of shares of its Series C Preferred Stock equal to the number of Series C
Preferred Units being converted (the "Series C Preferred Stock Purchase Price").
At the election of an Exercising Partner, the Purchase Price shall be paid by
the General Partner in shares of its Common Stock rather than in Series C
Preferred Stock (the "Common Stock Purchase Price"). The Common Stock Purchase
Price shall mean, with respect to the applicable number of Offered Series C
Preferred Units for which an Exercising Partner has elected to receive the
Common Stock Purchase Price rather than the Series C Preferred
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Stock Purchase Price, the number of shares of the General Partner's Common Stock
that would be issued to the Exercising Partner if the Exercising Partner held
the number of shares of the General Partner's Series C Preferred Stock equal to
the number of Offered Series C Preferred Units and converted such shares to
shares of the General Partner's Common Stock pursuant to the terms and
provisions of the General Partner's Articles of Incorporation.
V CLOSING; DELIVERY OF ELECTION NOTICE. The closing of the acquisition of
Offered Series C Preferred Units shall, unless otherwise mutually agreed, be
held at the principal office of the General Partner, on the date agreed to by
the General Partner and the Exercising Partner(s), which date shall in no event
be on the date which is the later of (i) the expiration or termination of the
waiting period applicable to each Exercising Partner, if any, under the Xxxx
Xxxxx Act; and (ii) ten (10) days after receipt of the Exchange Exercise Notice
delivered in accordance with the requirements of Paragraph II hereof.
VI FURTHER LIMITATION ON EXERCISE. The Exchange Rights may not be exercised
unless the Partnership receives an opinion of counsel, which counsel and opinion
shall be reasonably satisfactory to the General Partner, that the proposed
exercise of such Exchange Rights shall not cause the Partnership to cease to
qualify as a partnership for Federal income tax purposes. This requirement may
be waived by the General Partner, and shall not apply to the exercise by the
sole remaining Limited Partner of the Exchange Rights with respect to all of his
or its Series C Preferred Units.
VII CLOSING DELIVERIES. At the closing, payment of the Purchase Price shall be
accompanied by proper instruments of transfer and assignment and by the delivery
of (i) representations and warranties of (A) the Exercising Partner with respect
to its due authority to sell all of the right, title and interest in and to such
Offered Series C Preferred Units to the General Partner and with respect to the
status of the Offered Series C Preferred Units being sold, free and clear of all
Liens, and (B) the General Partner with respect to due authority for the
purchase of such Offered Series C Preferred Units, and (ii) (A) an opinion of
counsel for the General Partner, reasonably satisfactory to the Exercising
Partner(s), to the effect that the shares of Series C Preferred Stock (or Common
Stock, in the event the Electing Partner has elected to receive the Common Stock
Purchase Price) have been duly authorized, are validly issued, fully-paid and
non-assessable, and (B) a stock certificate or certificates evidencing the
Series C Preferred Stock (or Common Stock, in the event the Electing Partner has
elected to receive the Common Stock Purchase Price) to be issued and registered
in the name of the Exercising Partner(s) or its (their) designee.
D-4
VIII COVENANTS OF THE GENERAL PARTNER. To facilitate the General Partner's
ability to fully perform its obligations hereunder, the General Partner
covenants and agrees as follows:
8.1 At all times during the pendency of the Series C Preferred Rights, the
General Partner shall reserve for issuance such number of shares of Series C
Preferred Stock and Common Stock as may be necessary to enable the General
Partner to issue such shares in full payment of the Series C Preferred Stock
Purchase Price or Common Stock Purchase Price in regard to all Series C
Preferred Units held by Limited Partners and which are from time to time
outstanding.
8.2 As long as the General Partner shall be obligated to file periodic
reports under the Exchange Act, the General Partner will timely file such
reports in such manner as shall enable any recipient of Series C Preferred Stock
or Common Stock issued to Limited Partners hereunder in reliance upon an
exemption from registration under the Securities Act to continue to be eligible
to utilize Rule 144 promulgated by the SEC pursuant to the Securities Act, or
any successor rule or regulation or statute thereunder, for the resale thereof.
8.3 During the pendency of the Series C Preferred Rights, the Limited
Partners holding Series C Preferred Units shall receive in a timely manner all
reports filed by the General Partner with the SEC and all other communications
transmitted from time to time by the General Partner to its stockholders
generally.
8.4 The General Partner shall cooperate with the Limited Partners holding
Series C Preferred Units and provide by certificate of appropriate officers the
factual information reasonably requested by any Limited Partner in connection
with delivery of an opinion of counsel pursuant to SECTION VI of this EXHIBIT D.
IX LIMITED PARTNERS' COVENANTS. Each Limited Partner holding Series C
Preferred Units covenants and agrees with the General Partner that all
Offered Series C Preferred Units tendered to the General Partner in
accordance with the exercise of Series C Preferred 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 Offered Series C
Preferred Units, the General Partner shall be under no obligation to acquire
the same unless the Purchase Price will be sufficient to cause such existing
Lien to be discharged in full upon application of all or a part of the
Purchase Price and the General Partner is expressly authorized to apply such
portion of the Purchase Price as may be necessary to satisfy any indebtedness
in full and to discharge such Lien in full. Each Limited Partner holding
Series C Preferred Units further agrees that, in the event any state or local
property transfer tax is payable as a result of the transfer of its Offered
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Series C Preferred Units to the General Partner (or its designee), such Limited
Partner shall assume and pay such transfer tax. Finally, each Limited Partner
holding Series C Preferred Units agrees that, to the extent it receives an
amount of Net Cash Flow under SECTION 6.2(h) in respect of subsection (a)(vii)
of SECTION 6.2 of the Partnership Agreement that is treated as a distribution to
the General Partner for purposes of determining the Capital Account of the
General Partner, such Limited Partner will treat such amount of Net Cash Flow
for income tax purposes as an additional amount paid by the General Partner and
realized by it in exchange for the Offered Series C Preferred Units.
X FRACTIONS OF SHARES. No fractional Shares shall be issued upon conversion
of Series C Preferred Units. If more than one Series C Preferred Unit shall be
surrendered for conversion at one time by the same Exercising Partner, the
number of full shares of Series C Preferred Stock which shall be issuable upon
conversion thereof (or Series C Preferred Stock if the Common Stock Purchase
Price is paid) shall be computed on the basis of the aggregate amount of Series
C Preferred Units so surrendered. Instead of any fractional share of Series C
Preferred Stock or Common Stock which would otherwise be issuable upon
conversion of any Series C Preferred Unit or Series C Preferred Units, the
General Partner shall pay a cash adjustment in respect of such fraction in an
amount equal to the same fraction of the current market price per share at the
close of business on the day of closing specified in Paragraph V of this EXHIBIT
D (or, if such day is not a Trading Day, on the Trading Day immediately
preceding such day). For the purpose of any computation pursuant to the
preceding sentence, the current market price per share of Series C Preferred
Stock on any date shall be deemed to be the average of the daily Closing Prices
for the five consecutive Trading Days selected by the General Partner commencing
not more than twenty (20) Trading Days before, and ending not later than, the
earlier of the day in question and the day before the "ex" date with respect to
the issuance or distribution requiring such computation. For purposes of this
EXHIBIT D, the term "Trading Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday, other than any day which securities are not traded on such
exchange or in such market and the term "'ex' date", when used in respect of any
issuance or distribution, shall mean the first date on which the shares trade
regular way on such exchange or in such market without the right to receive such
issuance or distribution.
XI PROVISIONS IN CASE OF CONSOLIDATION, MERGER OR SALE OF ASSETS. In case of
any consolidation of the General Partner with, or merger +of the General Partner
into, any other Person, any merger or consolidation of another Person into the
General Partner (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
Series C Preferred Stock or Common Stock of the General Partner), or any sale or
transfer of all or substantially all of the assets
D-6
of the General Partner, the Person formed by such consolidation or resulting
from such merger or which acquires such assets of the General Partner, as the
case may be, shall execute and deliver to each holder of Exchange Rights an
agreement providing that such holder shall have the right thereafter, during the
period such Exchange Rights shall be exercisable as specified herein, to require
the conversion of Series C Preferred Units for the kind and amount of
securities, cash and other property receivable upon such consolidation, merger,
sale or transfer by a holder of the number of shares of Series C Preferred Stock
or Common Stock into which such Series C Preferred Unit might have been
converted immediately prior to such consolidation, merger, sale or transfer,
assuming such holder of shares of Series C Preferred Stock is not a Person with
which the General Partner consolidated or into which the General Partner merged
or which merged into the General Partner, or to which such sale or transfer, was
made, as the case may be (a "Constituent Person"), or an Affiliate of a
Constituent Person, and failed to exercise his right of election, if any, as to
the kind or amount of securities, cash or other property receivable upon such
consolidation, merger, sale or transfer (PROVIDED that if the kind or amount of
securities, cash and other property receivable upon such consolidation, merger,
sale or transfer is not the same for each share of Series C Preferred Stock in
respect of which such rights of election shall not have been exercised
("non-electing Share"), then for the purpose of this Paragraph XI the kind and
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by each non-electing Share shall be
deemed to be the kind and amount so receivable per Share by a plurality of the
non-electing Shares). Such agreement shall provide for adjustments which, for
events subsequent to the effective date of such agreement, shall be as nearly
equivalent as may be practicable to the adjustments provided for in this EXHIBIT
D. The above provisions of this Paragraph XI shall similarly apply to
successive consolidations, mergers, sales or transfers.
D-7
SCHEDULE 1
EXCHANGE EXERCISE NOTICE
To: Prime Retail, Inc.
Reference is made to that certain Amended and Restated Agreement of
Limited Partnership of Prime Retail, L.P. dated ____________, _____ (the
"Partnership Agreement"), pursuant to which Prime Retail, Inc., a Maryland
corporation, and certain other persons, including the undersigned, continued a
Delaware limited partnership known as Prime Retail, L.P. (the "Partnership").
Capitalized terms used but not defined herein shall have the meanings set forth
in the Partnership Agreement. Pursuant to ARTICLE XII of the Partnership
Agreement and Paragraph II of EXHIBIT D of the Partnership Agreement, each of
the undersigned, being a limited partner of the Partnership (an "Exercising
Partner"), hereby elects to exercise its Exchange Rights as to the number of
Offered Series C Preferred Units specified opposite its name below. Pursuant to
Paragraph IV of EXHIBIT D of the Partnership Agreement, the undersigned elect to
receive [the Series C Preferred Stock Purchase Price]/[the Common Stock Purchase
Price].
Dated: ___________________
Number of Offered
Exercising Partner Series C Preferred Units
----------------- ------------------------
Exercising Partners:
____________________________
____________________________
D-8
EXHIBIT E
SECTION 6.2(e) AGREEMENTS
1. Special Distribution and Allocation Agreement dated as of January 1, 1996
among Prime Retail, Inc., Prime Retail, L.P. and the Xxxxxxxxx Family
Associates LLC.
2. Combined Service and Special Distribution and Allocation Agreement dated as
of January 1, 1996 among Prime Retail, Inc., Prime Retail, L.P. and Xxxxxxx
X. Xxxxxxxxx, Xx.
3. Special Distribution and Allocation Agreement dated as of January 1, 1996
among Prime Retail, Inc., Prime Retail, L.P. and the Xxxxxxxxx Family LLC.
4. Combined Service and Special Distribution and Allocation Agreement dated as
of January 1, 1996 among Prime Retail, Inc., Prime Retail, L.P. and Xxxxxxx
Xxxxxxxxx.
E-1
EXHIBIT F
CONVERTIBLE PREFERRED RIGHTS TERMS
The Convertible Preferred Rights granted by the General Partner to the
Limited Partners holding Convertible Preferred Units pursuant to SECTION 11.1A
of the Partnership Agreement shall be subject to the following terms and
conditions:
1. DEFINITIONS. The following terms and phrases shall, for purposes of this
EXHIBIT F and the Agreement, have the meanings set forth below:
"BENEFICIALLY OWN" shall mean the ownership of Convertible Preferred
Stock by a Person who would be treated as an owner of such shares of
Convertible Preferred Stock either directly or constructively through the
application of Section 544 of the Code, as modified by Section 856(h)(1)(B)
of the Code.
"COMMON STOCK PURCHASE PRICE" shall have the meaning set forth in
Paragraph IV hereof.
"COMPUTATION DATE" shall mean the date on which an Exchange Exercise
Notice is delivered to the General Partner.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, or any successor statute.
"EXCHANGE EXERCISE NOTICE" shall have the meaning set forth in
Paragraph 2 hereof.
"EXCHANGE RIGHTS" shall have the meaning set forth in Paragraph 2
hereof.
"EXERCISING PARTNERS" shall have the meaning set forth in Paragraph 2
hereof.
"OFFERED CONVERTIBLE PREFERRED UNITS" shall mean the Convertible
Preferred Units of the Exercising Partner(s) identified in an Exchange
Exercise Notice which, pursuant to the exercise of Exchange Rights, can be
acquired by the General Partner under the terms hereof.
"OWNERSHIP LIMIT" shall have the meaning set forth in Paragraph 3
hereof.
"PURCHASE PRICE" shall mean the Common Stock Purchase Price or the
Convertible Preferred Stock Purchase Price.
F-2
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or
any successor statute.
"CONVERTIBLE PREFERRED STOCK PURCHASE PRICE" shall have the meaning
set forth in Paragraph 4 hereof.
2. DELIVERY OF EXCHANGE EXERCISE NOTICES. Any one or more Limited Partners
holding Convertible Preferred Units ("Exercising Partners") may, subject to the
limitations set forth herein, deliver to the General Partner written notice (the
"Exchange Exercise Notice") pursuant to which such Exercising Partners elect to
exercise their rights to convert (the "Exchange Rights") all or any portion of
their Convertible Preferred Units for shares of Convertible Preferred Stock or
Common Stock, subject to the limitations contained in Paragraph 3 below.
3. LIMITATION ON EXERCISE OF EXCHANGE RIGHTS. Exchange Rights with respect to
an exchange into Convertible Preferred Stock may be exercised at any time. Any
exercise of Exchange Rights shall be subject to the limitations contained herein
and in the General Partner's Articles of Incorporation (the "Ownership Limit").
If an Exchange Exercise Notice is delivered to the General Partner but, as a
result of the Ownership Limit, the Exchange Rights cannot be exercised in full,
the Exchange Exercise Notice shall be deemed to be modified such that the
Exchange Rights shall be exercised only to the extent permitted under the
Ownership Limit; with the exercise of the remainder of such Exchange Rights
being deemed to have been withdrawn.
4. ELECTION AND COMPUTATION OF PURCHASE PRICE. The Purchase Price payable by
the General Partner to each Exercising Partner for the Offered Convertible
Preferred Units shall be payable by the issuance by the General Partner of the
product, expressed as a whole number, of (i) the number of shares of its
Convertible Preferred Stock equal to the number of Convertible Preferred Units
being converted, multiplied by (ii) the Preferred Exchange Factor (the
"Convertible Preferred Stock Purchase Price"). At the election of an Exercising
Partner, the Purchase Price shall be paid by the General Partner in shares of
its Common Stock rather than in Convertible Preferred Stock (the "Common Stock
Purchase Price"). The Common Stock Purchase Price shall mean, with respect to
the applicable number of Offered Convertible Preferred Units for which an
Exercising Partner has elected to receive the Common Stock Purchase Price rather
than the Convertible Preferred Stock Purchase Price, the number of shares of the
General Partner's Common Stock that would be issued to the Exercising Partner if
the Exercising Partner held the number of shares of the General Partner's
Convertible Preferred Stock equal to the number of such shares that the
Exercising Partner would have received if he had converted his Offered
Convertible Preferred Units into such shares and then converted such shares to
shares of the General Partner's Common
F-3
Stock pursuant to the terms and provisions of the General Partner's Articles of
Incorporation.
5. CLOSING; DELIVERY OF ELECTION NOTICE. The closing of the acquisition of
Offered Convertible Preferred Units shall, unless otherwise mutually agreed, be
held at the principal office of the General Partner, on the date agreed to by
the General Partner and the Exercising Partner(s), which date shall in no event
be on the date which is the later of (i) the expiration or termination of the
waiting period applicable to each Exercising Partner, if any, under the Xxxx
Xxxxx Act; and (ii) ten (10) days after receipt of the Exchange Exercise Notice
delivered in accordance with the requirements of Paragraph II hereof.
6. FURTHER LIMITATION ON EXERCISE. The Exchange Rights may not be exercised
unless the Partnership receives an opinion of counsel, which counsel and opinion
shall be reasonably satisfactory to the General Partner, that the proposed
exercise of such Exchange Rights shall not cause the Partnership to cease to
qualify as a partnership for Federal income tax purposes. This requirement may
be waived by the General Partner, and shall not apply to the exercise by the
sole remaining Limited Partner of the Exchange Rights with respect to all of his
or its Convertible Preferred Units.
7. CLOSING DELIVERIES. At the closing, payment of the Purchase Price shall be
accompanied by proper instruments of transfer and assignment and by the delivery
of (i) representations and warranties of (A) the Exercising Partner with respect
to its due authority to sell all of the right, title and interest in and to such
Offered Convertible Preferred Units to the General Partner and with respect to
the status of the Offered Convertible Preferred Units being sold, free and clear
of all Liens, and (B) the General Partner with respect to due authority for the
purchase of such Offered Convertible Preferred Units, and (ii) (A) an opinion of
counsel for the General Partner, reasonably satisfactory to the Exercising
Partner(s), to the effect that the shares of Convertible Preferred Stock (or
Common Stock, in the event the Electing Partner has elected to receive the
Common Stock Purchase Price) have been duly authorized, are validly issued,
fully-paid and non-assessable, and (B) a stock certificate or certificates
evidencing the Convertible Preferred Stock (or Common Stock, in the event the
Electing Partner has elected to receive the Common Stock Purchase Price) to be
issued and registered in the name of the Exercising Partner(s) or its (their)
designee.
8. COVENANTS OF THE GENERAL PARTNER. To facilitate the General Partner's
ability to fully perform its obligations hereunder, the General Partner
covenants and agrees as follows:
8.1 At all times during the pendency of the Convertible Preferred Rights,
the General Partner shall reserve for issuance
F-4
such number of shares of Convertible Preferred Stock and Common Stock as may be
necessary to enable the General Partner to issue such shares in full payment of
the Convertible Preferred Stock Purchase Price or Common Stock Purchase Price in
regard to all Convertible Preferred Units held by Limited Partners and which are
from time to time outstanding.
8.2 As long as the General Partner shall be obligated to file periodic
reports under the Exchange Act, the General Partner will timely file such
reports in such manner as shall enable any recipient of Convertible Preferred
Stock or Common Stock issued to Limited Partners hereunder in reliance upon an
exemption from registration under the Securities Act to continue to be eligible
to utilize Rule 144 promulgated by the SEC pursuant to the Securities Act, or
any successor rule or regulation or statute thereunder, for the resale thereof.
8.3 During the pendency of the Convertible Preferred Rights, the Limited
Partners holding Convertible Preferred Units shall receive in a timely manner
all reports filed by the General Partner with the SEC and all other
communications transmitted from time to time by the General Partner to its
stockholders generally.
8.4 The General Partner shall cooperate with the Limited Partners holding
Convertible Preferred Units and provide by certificate of appropriate officers
the factual information reasonably requested by any Limited Partner in
connection with delivery of an opinion of counsel pursuant to SECTION VI of this
EXHIBIT F.
9. LIMITED PARTNERS' COVENANTS. Each Limited Partner holding Convertible
Preferred Units covenants and agrees with the General Partner that all Offered
Convertible Preferred Units tendered to the General Partner in accordance with
the exercise of Convertible Preferred 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 Offered Convertible Preferred Units, the General
Partner shall be under no obligation to acquire the same unless the Purchase
Price will be sufficient to cause such existing Lien to be discharged in full
upon application of all or a part of the Purchase Price and the General Partner
is expressly authorized to apply such portion of the Purchase Price as may be
necessary to satisfy any indebtedness in full and to discharge such Lien in
full. Each Limited Partner holding Convertible Preferred Units further agrees
that, in the event any state or local property transfer tax is payable as a
result of the transfer of its Offered Convertible Preferred Units to the General
Partner (or its designee), such Limited Partner shall assume and pay such
transfer tax. Finally, each Limited Partner holding Convertible Preferred Units
agrees that, to the extent it receives an amount of Net Cash Flow under SECTION
6.2(e) in respect of subsection (a)(vii) of SECTION 6.2 of the Partnership
Agreement that is treated as a
F-5
distribution to the General Partner for purposes of determining the Capital
Account of the General Partner, such Limited Partner will treat such amount of
Net Cash Flow for income tax purposes as an additional amount paid by the
General Partner and realized by it in exchange for the Offered Convertible
Preferred Units.
10. FRACTIONS OF SHARES. No fractional Shares shall be issued upon conversion
of Convertible Preferred Units. If more than one Convertible Preferred Unit
shall be surrendered for conversion at one time by the same Exercising Partner,
the number of full shares of Convertible Preferred Stock which shall be issuable
upon conversion thereof (or Common Stock if the Common Stock Purchase Price is
paid) shall be computed on the basis of the aggregate amount of Convertible
Preferred Units so surrendered. Instead of any fractional share of Convertible
Preferred Stock or Common Stock which would otherwise be issuable upon
conversion of any Convertible Preferred Unit or Convertible Preferred Units, the
General Partner shall pay a cash adjustment in respect of such fraction in an
amount equal to the same fraction of the current market price per share at the
close of business on the day of closing specified in Paragraph V of this EXHIBIT
F (or, if such day is not a Trading Day, on the Trading Day immediately
preceding such day). For the purpose of any computation pursuant to the
preceding sentence, the current market price per share of Convertible Preferred
Stock on any date shall be deemed to be the average of the daily Closing Prices
for the five consecutive Trading Days selected by the General Partner commencing
not more than twenty (20) Trading Days before, and ending not later than, the
earlier of the day in question and the day before the "ex" date with respect to
the issuance or distribution requiring such computation. For purposes of this
EXHIBIT F, the term "Trading Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday, other than any day which securities are not traded on such
exchange or in such market and the term "'ex' date", when used in respect of any
issuance or distribution, shall mean the first date on which the shares trade
regular way on such exchange or in such market without the right to receive such
issuance or distribution.
11. PROVISIONS IN CASE OF CONSOLIDATION, MERGER OR SALE OF ASSETS. In case of
any consolidation of the General Partner with, or merger of the General Partner
into, any other Person, any merger or consolidation of another Person into the
General Partner (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
Convertible Preferred Stock or Common Stock of the General Partner), or any sale
or transfer of all or substantially all of the assets of the General Partner,
the Person formed by such consolidation or resulting from such merger or which
acquires such assets of the General Partner, as the case may be, shall execute
and deliver to each holder of Exchange Rights an agreement providing that such
holder shall have the right thereafter, during the period such Exchange Rights
shall be exercisable as specified
F-6
herein, to require the conversion of Convertible Preferred Units for the kind
and amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by a holder of the number of shares of
Convertible Preferred Stock or Common Stock into which such Convertible
Preferred Unit might have been converted immediately prior to such
consolidation, merger, sale or transfer, assuming such holder of shares of
Convertible Preferred Stock is not a Person with which the General Partner
consolidated or into which the General Partner merged or which merged into the
General Partner, or to which such sale or transfer, was made, as the case may be
(a "Constituent Person"), or an Affiliate of a Constituent Person, and failed to
exercise his right of election, if any, as to the kind or amount of securities,
cash or other property receivable upon such consolidation, merger, sale or
transfer (PROVIDED that if the kind or amount of securities, cash and other
property receivable upon such consolidation, merger, sale or transfer is not the
same for each share of Convertible Preferred Stock in respect of which such
rights of election shall not have been exercised ("non-electing Share"), then
for the purpose of this Paragraph XI the kind and amount of securities, cash and
other property receivable upon such consolidation, merger, sale or transfer by
each non-electing Share shall be deemed to be the kind and amount so receivable
per Share by a plurality of the non-electing Shares). Such agreement shall
provide for adjustments which, for events subsequent to the effective date of
such agreement, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this EXHIBIT F. The above provisions of this
Paragraph XI shall similarly apply to successive consolidations, mergers, sales
or transfers.
12. ANTIDILUTION PROVISIONS.
12.1 The Preferred Exchange Factor shall be subject to adjustment from time
to time effective upon the occurrence of the following events and shall be
expressed as a percentage, calculated to the nearest one-thousandth of one
percent (.001%):
(a) In case the General Partner shall pay or make a dividend or other
distribution in shares of Convertible Preferred Stock to all holders of the
Convertible Preferred Stock, the Exchange Factor in effect at the opening
of business on the day following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution shall
be increased in proportion to the increase in outstanding shares of
Convertible Preferred Stock resulting from such dividend or other
distribution, such increase to become effective immediately after the
opening of business on the day following the record date fixed for such
dividend or other distribution.
(b) In case outstanding shares of Convertible Preferred Stock shall
be subdivided into a greater number of shares, the
F-7
Exchange Factor in effect at the opening of business on the day following
the day upon which such subdivision becomes effective shall be
proportionately increased, and, conversely, in case the outstanding shares
of Convertible Preferred Stock shall be combined into a smaller number of
shares, the Exchange Factor in effect at the opening of business on the day
following the day upon which such combination becomes effective shall be
proportionately reduced, such increase or reduction, as the case may be, to
become effective immediately after the opening of business on the day
following the day upon which such subdivision or combination becomes
effective.
12.2 In case the General Partner shall issue rights, options or warrants
to all holders of its shares of Convertible Preferred Stock entitling them to
subscribe for or purchase Convertible Preferred Stock at a price per share less
than the current market price per share (as determined in the next sentence),
each holder of a Convertible Preferred Unit shall be entitled to receive such
number of rights, options or warrants, as the case may be, as he would have been
entitled to receive had he converted his Convertible Preferred Units immediately
prior to the record date for such issuance by the General Partner (except to the
extent such receipt shall cause such holder to exceed the Ownership Limit). For
the purpose of any computation pursuant to the preceding sentence, the current
market price per share of Convertible Preferred Stock on any date shall be
deemed to be the average of the daily Closing Prices for the five consecutive
Trading Days selected by the General Partner commencing not more than twenty
(20) Trading Days before, and ending not later than, the earlier of the day in
question and the day before the "ex" date with respect to the issuance or
distribution requiring such computation. For purposes of this EXHIBIT C, the
term "Trading Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday, other than any day which securities are not traded on such exchange or
in such market and the term "'ex' date", when used in respect of any issuance or
distribution, shall mean the first date on which the shares trade regular way on
such exchange or in such market without the right to receive such issuance or
distribution.
12.3 In case the shares of Convertible Preferred Stock shall be changed
into the same or a different number of shares of any class or classes of stock,
whether by capital reorganization, reclassification, or otherwise (other than
subdivision or combination of shares or a stock dividend described in
subparagraph (a)(ii) of this Paragraph) then and in each such event the Limited
Partners shall have the right thereafter to convert their Convertible Preferred
Units into the kind and amount of shares and other securities and property which
would have been received upon such reorganization, reclassification or other
change by holders of the number of shares into which the Convertible Preferred
Units might have been converted immediately prior to such reorganization,
reclassification or change.
F-8
12.4 The General Partner may, but shall not be required to, make such
adjustments to the number of shares of Convertible Preferred Stock issuable upon
conversion of a Convertible Preferred Unit, in addition to those required by
this Paragraph 12, as the General Partner's board of directors considers to be
advisable in order that any event treated for federal income tax purposes as a
dividend of stock or stock rights shall not be taxable to the recipients. The
General Partner's board of directors shall have the power to resolve any
ambiguity or correct any error in the adjustments made pursuant to this
Paragraph and its actions in so doing shall be final and conclusive.
F-9
SCHEDULE 1
EXCHANGE EXERCISE NOTICE
To: Prime Retail, Inc.
Reference is made to that certain Amended and Restated Agreement of
Limited Partnership of Prime Retail, L.P. dated ____________, _____ (the
"Partnership Agreement"), pursuant to which Prime Retail, Inc., a Maryland
corporation, and certain other persons, including the undersigned, continued a
Delaware limited partnership known as Prime Retail, L.P. (the "Partnership").
Capitalized terms used but not defined herein shall have the meanings set forth
in the Partnership Agreement. Pursuant to Part B, ARTICLE XI of the Partnership
Agreement and Paragraph II of EXHIBIT F of the Partnership Agreement, each of
the undersigned, being a limited partner of the Partnership (an "Exercising
Partner"), hereby elects to exercise its Exchange Rights as to the number of
Offered Convertible Preferred Units specified opposite its name below. Pursuant
to Paragraph IV of EXHIBIT F of the Partnership Agreement, the undersigned elect
to receive [the Convertible Preferred Stock Purchase Price]/[the Common Stock
Purchase Price].
Dated: ___________________
Number of Offered
Exercising Partner Convertible Preferred Units
------------------ ---------------------------
Exercising Partners:
____________________________
____________________________
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