THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
PRIME RETAIL, L.P.
Dated as of October 15, 1998
Effective as of June 15, 1998
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS; ETC...............................................................2
Accountants................................................................2
Act........................................................................3
Adjusted Capital Account Deficit...........................................3
Administrative Expenses....................................................3
Affiliate..................................................................4
Agreement..................................................................4
Antidilution Provisions....................................................4
Audited Financial Statements...............................................4
Bankruptcy.................................................................5
Capital Account............................................................6
Capital Contribution.......................................................8
Certificate................................................................8
Closing Price..............................................................8
Code.......................................................................9
Common Distribution........................................................9
Common Stock...............................................................9
Common Units...............................................................9
Consent of the Partners...................................................10
Contributed Partnership Interests.........................................10
Control...................................................................10
Convertible Preferred Distribution........................................11
Convertible Preferred Distribution Shortfall..............................11
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..............................................................12
Entity....................................................................12
ERISA.....................................................................12
GAAP......................................................................13
General Partner...........................................................13
Gross Asset Value.........................................................13
Xxxx Xxxxx Act............................................................14
Horizon Limited Partnership...............................................14
Horizon Properties........................................................14
PAGE
Immediate Family..........................................................14
Incentive Option..........................................................14
Incentive Option Agreement................................................15
Lien......................................................................15
Limited Partner...........................................................15
Liquidating Events........................................................15
Liquidating Trustee.......................................................15
Major Decisions...........................................................15
Majority-in-Interest of the Partners......................................15
Merger....................................................................16
Merger Agreement..........................................................16
Minimum Gain Capital Account..............................................16
Net Cash Flow.............................................................16
Net Income or Net Loss....................................................18
Nonrecourse Deductions....................................................19
Nonrecourse Liabilities...................................................19
Original Agreement........................................................19
Partner Minimum Gain......................................................19
Partner Nonrecourse Debt..................................................19
Partner Nonrecourse Deductions............................................20
Partners..................................................................20
Partnership...............................................................20
Partnership Interest......................................................20
Partnership Minimum Gain..................................................20
Partnership Payment Date..................................................20
Partnership Record Date...................................................20
Partnership Units.........................................................21
Permitted Transferee......................................................21
Person....................................................................21
Preferred Distribution....................................................21
Preferred Distribution Shortfall..........................................21
Preferred Stock...........................................................21
Preferred Unit Redemption Amount..........................................21
Preferred Units...........................................................21
Prime/Horizon Merger......................................................22
Property..................................................................22
Property Partnership Interests............................................22
Property Partnerships.....................................................22
Purchase Price............................................................22
Quarter...................................................................22
PAGE
Regulations...............................................................22
Regulatory Allocations....................................................23
REIT......................................................................23
REIT Expenses.............................................................23
REIT Requirements.........................................................24
Rights....................................................................24
SEC.......................................................................24
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.................................25
Series C Preferred Units..................................................25
Service...................................................................25
Shopping Center Project...................................................25
Special Distribution......................................................25
Stock Incentive Plan......................................................25
Substituted Limited Partner...............................................26
Tax Items.................................................................26
Trading Day...............................................................26
Transfer..................................................................26
1.2 Exhibits, Etc.............................................................26
ARTICLE II
ORGANIZATION..................................................................27
2.1 Formation and Continuation................................................27
2.2 Name......................................................................27
2.3 Character of the Business.................................................28
2.4 Location of the Principal Place of Business...............................29
2.5 Registered Agent and Registered Office....................................29
2.6 Power of Attorney.........................................................29
ARTICLE III
TERM; DISSOLUTION.............................................................31
3.1 Term......................................................................31
3.2 Dissolution...............................................................32
3.3 Bankruptcy of a Limited Partner...........................................32
PAGE
ARTICLE IV
CONTRIBUTIONS TO CAPITAL; FINANCING...........................................33
4.1 General Partner Capital Contribution......................................33
4.2 Limited Partner Capital Contributions.....................................33
4.3 Additional Funds; Restrictions on General Partner.........................34
4.5 Stock Incentive Plan......................................................38
4.6 No Third Party Beneficiary................................................38
4.7 No Interest; No Return....................................................39
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..................................................39
4.9 Redemption of Series C Preferred Units....................................41
4.10Redemption of Convertible Preferred Units.................................44
ARTICLE V
INTENTIONALLY OMITTED.........................................................46
ARTICLE VIALLOCATIONS, DISTRIBUTIONS AND OTHER TAX AND ACCOUNTING MATTERS.....46
6.1 Allocations...............................................................46
6.2 Distributions.............................................................46
6.3 Books of Account..........................................................51
6.4 Reports...................................................................51
6.5 Audits....................................................................52
6.6 Tax Elections and Returns.................................................52
6.7 Tax Matters Partner.......................................................53
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......................................54
7.3 Major Decisions...........................................................58
7.4 No Removal................................................................59
7.5 General Partner Participation.............................................59
7.6 Proscriptions.............................................................59
7.7 Additional Partners.......................................................60
7.8 Title Holder..............................................................60
7.9 Compensation of the General Partner.......................................60
PAGE
7.10Waiver and Indemnification................................................60
7.11Operation in Accordance with REIT Requirements............................65
ARTICLE VII
DISSOLUTION, LIQUIDATION AND WINDING-UP.......................................65
8.1 Winding Up................................................................66
8.2 Distribution on Dissolution and Liquidation...............................68
8.3 Timing Requirements.......................................................68
8.4 Deemed Distribution and Recontribution....................................69
8.5 Distributions in Kind.....................................................69
8.6 Documentation of Liquidation..............................................70
8.7 Deficit Capital Account Balance...........................................70
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................................79
10.1 No Participation in Management; No Personal Liability....................79
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..........................................................81
11.3 Reissuance or Reallocation of Common Units...............................81
11.1AGrant of Rights..........................................................81
11.2ATerms of Convertible Preferred Rights....................................82
11.3AReissuance or Reallocation of Convertible Preferred Units................82
PAGE
ARTICLE XIIGRANT OF RIGHTS TO LIMITED PARTNERS HOLDING SERIES C
PREFERRED UNITS; REDEMPTION OF SERIES C PREFERRED UNITS.......................83
12.1 Grant of Rights..........................................................83
12.2 Terms of Rights..........................................................84
12.3 Reissuance or Reallocation of Series C Preferred Unit....................84
ARTICLE XIII
PARTNER REPRESENTATIONS AND WARRANTIES........................................84
(a) Organization....................................................85
(b) Due Authorization; Binding Agreement............................85
(c) Consents and Approvals..........................................85
ARTICLE XIV
GENERAL PROVISIONS............................................................85
14.1 Notices..................................................................85
14.2 Successors...............................................................86
14.3 Effect and Interpretation................................................86
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
14.10Pronouns and Headings....................................................91
14.11Assurances...............................................................91
14.12Remedies Cumulative......................................................91
14.13Construction.............................................................91
14.14Incorporation by Reference...............................................92
14.15Waiver of Action for Partition...........................................92
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
SCHEDULES TO EXHIBIT C
1 Exchange Exercise Notice
2 Election Notice
3 Registration Rights Agreement
THIRD AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
PRIME RETAIL, L.P.
THIS THIRD AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP is made
and entered into as of the 15th day of October, 1998 and is effective as of the
15th day of June, 1998.
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 June 15, 1998;
WHEREAS, the Partners of the Partnership amended and restated the September
9, 1997 Agreement (the "Second Amended and Restated 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;
WHEREAS, pursuant to Section 14.7(d) of the Second Amended and Restated
Agreement, the General Partner of the Partnership desires to further amend and
restate the Second Amended and Restated Agreement to cure certain ambiguities
and correct certain provisions which are inconsistent with other provisions
therein;
WHEREAS, this Third Amended and Restated Agreement is effective as of June
15, 1998; 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.
I.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 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, 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 Third 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 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.
"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 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 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 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-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).
"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 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.
"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).
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.
"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 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 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 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 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, 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.
"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.
"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 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.
"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.
"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.
"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.
I.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 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 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 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
(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 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 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.
(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.
(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 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 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.
4.4 Issuance 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 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 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 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 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 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 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 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 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 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
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 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. (b) On June 9, 1998, the Partnership formally
declared 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 "Special Distribution"). The payment date with respect
to the Special Distribution shall be on June 15, 1998.
(c) On June 15, 1998 immediately after consummation of the Merger, the
Partnership formally declared the distribution of each issued and
outstanding common unit of Horizon Group Properties, L.P. (each, an "HGP
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) for every twenty (20) Convertible Preferred Units held
by a holder, such holder shall be entitled to receive 1.19617 HGP Common
Units, (ii) for every twenty (20) Series C Preferred Units held by a
holder, such holder shall be entitled to receive one (1) HGP Common Unit,
and (iii) for every twenty (20) Common Units held by a holder, such holder
shall be entitled to receive one (1) HGP Common Unit (the "Common
Distribution"). The payment date with respect to the Common Distribution
shall occur fifteen (15) days after June 15, 1998 or on such other date as
determined in the General Partner's sole discretion.
(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) 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 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 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 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.
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 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, 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 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 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 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. (20 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.
(b) 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, 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 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 (1) 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 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 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.
(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 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 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 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, 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;
(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 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 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 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 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 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.
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 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 (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.
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 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 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
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 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 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.
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 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 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
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.
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 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 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 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, 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 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.
IN WITNESS WHEREOF, the General Partner has executed this
Agreement or caused this Agreement to be executed as of the 15th of
October, 1998 and this Agreement is effective as of the 15th of June,
1998.
GENERAL PARTNER:
PRIME RETAIL, INC., a
Maryland corporation
000 Xxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
By: /s/ C. Xxxx Xxxxxxxxx
Its: Executive Vice President
EXHIBIT A
COMMON UNITS, PREFERRED UNITS,
CONVERTIBLE PREFERRED UNITS AND SERIES C PREFERRED UNITS
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 (including the
period for which the interim closing of the books is made pursuant to
the Merger) 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)
and (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 sum of the amount of Net Cash Flow distributed to
Partners holding Convertible Preferred Units pursuant to
subsections (a)(iii), (a)(iv) and (b) of Section 6.2 and the
aggregate Gross Asset Value of the Common Distribution
distributed pursuant to subsection (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 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 sum of the
amount of Net Cash Flow distributed to such Partners pursuant to
subsections (a)(v), (a)(vi) and (b) of Section 6.2 and the
aggregate Gross Asset Value of the Common Distribution
distributed pursuant to subsection (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.
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 sum of the aggregate amounts of Net Cash Flow
distributed in respect of the Partners' Common Units pursuant to
subsections (a)(vii) and (b) of Section 6.2 and the aggregate
Gross Asset Value of the Common Distribution distributed pursuant
to subsection (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 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.
(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 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).
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:
(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 "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 Horizon Group Properties, L.P. 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 method approved under 704(c) of the
Code and the applicable regulations as chosen by the General Partner.
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.
"Xxxxxx Companies" shall mean each of Xxxxxx Investors Life
Insurance Company, an Illinois insurance corporation, Kilico Realty
Corporation, an Illinois corporation, KR Gainsville, Inc., an Illinois
corporation, and KR Gulf Coast Factory Shops, Inc., a Delaware
corporation.
"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.
"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, the form of which is attached hereto as Schedule 3.
Such agreement supercedes in all respects the Registration Rights
Agreement dated March 22, 1994 among the Partnership, its general
partner and the other parties signatory thereto and the Registration
Rights Agreement dated July 14, 1995 entered into by Horizon Group,
Inc., as general partner of Horizon Limited Partnership.
"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 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 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
(i) the exercise by the sole remaining Limited Partner of the Exchange
Rights with respect to all of his or its Common Units or (ii) the
exercise by any of the Xxxxxx Companies or any of their Affiliates of
(A) all of the Xxxxxx Companies and their Affiliates (whether or not
they are beneficiaries of any pledge of Common Units by PGI) are
exercising Exchange Rights with respect to all Common Units then held
by them; (B) after the consummation of the proposed Exchange, all
Limited Partners beneficially and constructively own less than twenty
percent (20%) of the General Partner's outstanding shares of Common
Stock or (C) all of the Common Stock to be received by such Xxxxxx
Companies or their Affiliate as a result of such Exchange is
registered under the Securities Act for sale to the public and is sold
to the public contemporaneously with the Exchange.
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.
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. X.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 subsection (a)(vii) 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 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 "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 (b) of paragraph 11.1) 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).
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 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.
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:
____________________________
____________________________
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:___________________________
SCHEDULE 3
REGISTRATION RIGHTS AGREEMENT
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:
XVI 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 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.he 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 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.
XVII 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.
XVIII 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.
XIX 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 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.
XX 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.
XXI 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.
XXII 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.
XXIII 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:
23.1 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.
23.2 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.
23.3 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.
23.4 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.
XXIV 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 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(e) 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.
XXV 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.
XXVI 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 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.
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:
____________________________
____________________________
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.
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.
"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 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 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 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 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 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.
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.
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:
____________________________
____________________________
