ANNEX I
AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF
SHOPCO REGIONAL MALLS, L.P.
Dated as of October 6, 1988
TABLE OF CONTENTS
Page
SECTION I General Provisions . . . . . . . . . . . . . . . . . . I-5
1.01. Continuation of the Partnership . . . . . . . . . . . I-5
1.02. Name and Office of the Partnership . . . . . . . . . I-6
1.03. Purpose of the Partnership . . . . . . . . . . . . . I-6
1.04. Term of the Partnership . . . . . . . . . . . . . . . I-6
1.05. Partners . . . . . . . . . . . . . . . . . . . . . . I-6
SECTION II Capital. . . . . . . . . . . . . . . . . . . . . . . . I-7
2.01. General Partner and Assignor Limited Partner. . . . . I-7
2.02. Contributions of the Assignor Limited Partner. . . . I-7
2.03. Partnership Capital . . . . . . . . . . . . . . . . . I-8
2.04. Execution of the Depositary Agreement . . . . . . . . I-9
2.05. No Fractional Interests and Units . . . . . . . . . . I-9
2.06. Splits and Combinations . . . . . . . . . . . . . . . I-9
2.07. Additional Issuances of Interests or Units . . . . . I-11
SECTION III Capital Accounts . . . . . . . . . . . . . . . . . . . I-11
3.01. Capital Account Calculation . . . . . . . . . . . . . I-11
3.02. Special Provisions . . . . . . . . . . . . . . . . . I-12
3.03. Transfers . . . . . . . . . . . . . . . . . . . . . . I-13
3.04. Timing . . . . . . . . . . . . . . . . . . . . . . . I-13
3.05. Allocations and Distributions Among Unit Holders;
Status of Unit Holders . . . . . . . . . . . . . . . I-13
3.06. Admissions and Transfers; Allocations and
Distributions . . . . . . . . . . . . . . . . . . . I-13
SECTION IV Allocation of Income and Losses, Gains and Losses. . . I-15
4.01. Operations . . . . . . . . . . . . . . . . . . . . . I-15
4.02. Capital Transactions. . . . . . . . . . . . . . . . . I-15
4.03. Dissolution . . . . . . . . . . . . . . . . . . . . . I-16
4.04. Minimum Gain Limitation . . . . . . . . . . . . . . . I-18
4.05. Amendments to Allocations . . . . . . . . . . . . . . I-18
4.06. General Partner Deficit Restoration . . . . . . . . . I-19
4.07. Allocations on Account of Optional Loans . . . . . . I-19
4.08. Minimum Gain Chargeback . . . . . . . . . . . . . . . I-19
4.09. Qualified Income Offset . . . . . . . . . . . . . . . I-20
4.10. Termination . . . . . . . . . . . . . . . . . . . . . I-20
SECTION V Distributions . . . . . . . . . . . . . . . . . . . . I-20
5.01. Operations . . . . . . . . . . . . . . . . . . . . . . I-20
5.02. Capital Transactions . . . . . . . . . . . . . . . . I-21
5.03. Dissolution . . . . . . . . . . . . . . . . . . . . . I-21
5.04. Working Capital Reserve . . . . . . . . . . . . . . . I-21
5.05. Miscellaneous . . . . . . . . . . . . . . . . . . . . I-22
5.06. Rules Governing Distributions Generally . . . . . . . I-22
5.07. Special Distribution to Unit Holders . . . . . . . . I-22
SECTION VI Management . . . . . . . . . . . . . . . . . . . . . . I-23
6.01. Management of the Partnership . . . . . . . . . . . . I-23
I-1
6.02. Loans by the General Partner to the Partnership. . . I-29
6.03. Services of the General Partner; Other Interests of
Partners and Unit Holders; Fiduciary Duty. . . . . I-30
6.04. Liability of the General Partner; Indemnification. . I-30
6.05. Limitations on and Voting Rights of Limited Partners
and Unit Holders . . . . . . . . . . . . . . . . . I-32
6.06. Liability of Limited Partners and Unit Holders. . . . I-32
6.07. Withdrawal or Removal of the General Partner. . . . . I-33
6.08. Certain Fees and Expenses . . . . . . . . . . . . . . I-36
6.09. Code Elections . . . . . . . . . . . . . . . . . . . I-37
6.10. Net Worth of the General Partner . . . . . . . . . . I-37
6.11. Sale or Lease of Malls . . . . . . . . . . . . . . . I-38
6.12. Meetings . . . . . . . . . . . . . . . . . . . . . . I-38
6.13. Notice . . . . . . . . . . . . . . . . . . . . . . . I-39
6.14. Record Date . . . . . . . . . . . . . . . . . . . . . I-39
6.15. Front-end Fees . . . . . . . . . . . . . . . . . . . I-40
SECTION VII Assignment of Assignor's Limited Partnership
Interests to Unit Holders and Rights
of Unit Holders . . . . . . . . . . . . . . . . . . I-40
7.01. Assignment of Interests: Timing, Procedures, Rights,
Liabilities, and Fiduciary Duty . . . . . . . . . . I-40
7.02. Rights and Obligations of Unit Holders to Become
Limited Partners . . . . . . . . . . . . . . . . . I-42
7.03. Transfer of Units . . . . . . . . . . . . . . . . . . I-43
7.04. Deferral of Registration of Transfers of Interests
or Units to Avoid Termination of the Partnership. . I-44
7.05. Transfer Fee. . . . . . . . . . . . . . . . . . . . . I-44
7.06. Replacement of the Assignor Limited Partner. . . . . I-44
SECTION VIII Books, Records and Bank Accounts . . . . . . . . . . . I-45
8.01. Fiscal Year . . . . . . . . . . . . . . . . . . . . . I-45
8.02. Records of Partnership Transactions . . . . . . . . . I-45
8.03. Access to Partnership Records . . . . . . . . . . . . I-45
8.04. Method of Accounting; Preparation of Tax Returns . . I-46
8.05. Reports on Partnership's Business . . . . . . . . . . I-46
8.06. Report on Form 10-Q . . . . . . . . . . . . . . . . . I-46
8.07. Annual Financial Reports . . . . . . . . . . . . . . I-46
8.08. Bank Accounts; Temporary Investments . . . . . . . . I-47
8.09. Tax Matters Partner . . . . . . . . . . . . . . . . . I-47
8.10. Reports to Administrators . . . . . . . . . . . . . . I-48
8.11. Modifications to Reporting Requirements . . . . . . . I-48
SECTION IX Transfers of Interests . . . . . . . . . . . . . . . . I-48
9.01. Restrictions on Transfer or Assignment of Interests . I-48
9.02. Substituted Limited Partners . . . . . . . . . . . . I-50
9.03. Recognition of Transfer . . . . . . . . . . . . . . . I-50
9.04. Treatment of a Substituted Limited Partner as a
Limited Partner . . . . . . . . . . . . . . . . . . I-51
9.05. Withdrawal, Bankruptcy or Incapacity of a Limited
Partner . . . . . . . . . . . . . . . . . . . . . . I-51
9.06. Assignment of Units . . . . . . . . . . . . . . . . I-52
9.07. Transfers in Violation of Section . . . . . . . . . . I-52
I-2
SECTION X Dissolution and Termination . . . . . . . . . . . . . I-52
10.01. No Dissolution . . . . . . . . . . . . . . . . . . . I-52
10.02. Events of Dissolution . . . . . . . . . . . . . . . . I-52
10.03. Distributions Upon Dissolution and Liquidation . . . I-54
SECTION XI Certain Definitions. . . . . . . . . . . . . . . . . . I-54
SECTION XII Miscellaneous . . . . . . . . . . . . . . . . . . . . I-61
12.01. Notices . . . . . . . . . . . . . . . . . . . . . . . I-61
12.02. Successors and Assigns . . . . . . . . . . . . . . . I-61
12.03. Power of Attorney . . . . . . . . . . . . . . . . . . I-62
12.04. Amendments . . . . . . . . . . . . . . . . . . . . . I-63
12.05. No Waiver . . . . . . . . . . . . . . . . . . . . . . I-64
12.06. Entire Agreement . . . . . . . . . . . . . . . . . . I-64
12.07. Captions . . . . . . . . . . . . . . . . . . . . . . I-64
12.08. Counterparts . . . . . . . . . . . . . . . . . . . . I-65
12.09. Foreign Limited Partners or Unit Holders . . . . . . I-65
12.10. Applicable Law . . . . . . . . . . . . . . . . . . . I-65
12.11. Severability . . . . . . . . . . . . . . . . . . . . I-65
Schedule A - Names, Address and Capital Contributions
of the General Partner, the Assignor
Limited Partner and the Limited Partners
I-3
AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF
SHOPCO REGIONAL MALLS, L.P.
This Amended And Restated Agreement Of Limited
Partnership, dated as of the 6th day of October, 1988 (the "Agreement"),
by and among Shearson Regional Malls, Inc., a Delaware corporation having
an address at c/o Shearson Xxxxxx Xxxxxx Inc., American Express Tower,
12th Floor, World Financial Center, New York, New York 10285, as the
general partner (the "General Partner") and Shearson Regional Malls
Depositary Corp., a Delaware corporation, having an address at c/o
Shearson Xxxxxx Xxxxxx Inc., American Express Tower, 12th Floor, World
Financial Center, New York, New York 10285, as the assignor limited
partner (the "Assignor Limited Partner") (the Assignor Limited Partner,
the General Partner and those Persons Admitted to the Partnership as
additional or substitute Limited Partners pursuant to Section 2.07, 7.02
or 9 are hereinafter sometimes collectively referred to as the
"Partners").
R E C I T A L S
Whereas, on March 11, 1988, the General Partner and the
Assignor Limited Partner entered into an Agreement of Limited Partnership
forming Shopco Regional Malls, L.P., a Delaware limited partnership (the
"Partnership" and such agreement, the "Partnership Agreement"), and on
such date the General Partner caused a Certificate of Limited Partnership
(the "Certificate") to be filed in the Office of the Secretary of the
State of Delaware, all in accordance with the provisions of the Delaware
Revised Uniform Limited Partnership Act (the "Delaware Act").
Whereas, the Partnership was formed for the purpose of
acting as general partner of Shearson Shopco Malls, L.P., a Delaware
limited partnership (the "Owner Partnership"), which intends to acquire,
own, lease and eventually sell two enclosed regional shopping malls, The
Mall at Assembly Square located in Somerville, Massachusetts ("Assembly
Square") and Cranberry Mall, located in Westminster, Maryland
("Cranberry") and, possibly, one or more as-yet unspecified enclosed
shopping malls (the "Additional Malls", combinations of Assembly Square,
Cranberry and the Additional Malls are referred to as the "Malls") and
any Additional Property (as hereinafter defined), all in accordance with
the terms of the Owner Partnership Agreement (as hereinafter defined);
and
Whereas, the General Partner desires to cause the offer
and sale of depositary units representing assignments of the economic,
voting and certain other rights attributable to the limited partnership
interests in the Partnership ("Units") and the parties hereto desire to
amend and restate their entire agreement in full;
Now, Therefore, in consideration of the covenants and
agreements made herein, the parties hereto, intending to be legally
I-4
bound, hereby certify and agree as follows (certain capitalized terms
used herein to have the respective meanings set forth in SECTION XI--
CERTAIN DEFINITIONS):
SECTION I
General Provisions
1.01. Continuation of the Partnership.
(a) The parties hereby continue Shopco Regional
Malls, L.P. as a limited partnership pursuant to the provisions
of the Delaware Act. The General Partner shall, from time to
time, file and record any amendments to the Certificate,
fictitious name certificates and/or other instruments or
documents required or desirable to comply with the laws of the
State of Delaware and any other jurisdictions in which the
Partnership shall carry on its business, and shall do all other
acts and things requisite for the reconstitution, protection and
continuation of the Partnership as a limited partnership
pursuant to the laws of the State of Delaware and any other
jurisdiction in which the Partnership shall carry on its
business.
(b) A Partner's and Unit Holder's interest in the
Partnership shall be personal property for all purposes. All
property owned by the Partnership shall be deemed owned by the
Partnership as an entity, and no Partner or Unit Holder,
individually, shall have any ownership of such property.
(c) Notwithstanding anything to the contrary
contained herein, if the General Partner obtains an appropriate
opinion of tax counsel ("Counsel") to the Partnership, if
changes in the tax laws or other developments are likely to
alter the Partnership's providing of "flow through" tax
consequences to Unit Holders and Limited Partners then the
General Partner may, and is hereby authorized to, take any
action or adopt any procedure deemed necessary or appropriate by
Counsel to preserve the Partnership's providing of such "flow
through" tax consequences, including, without limitation,
converting and reconstituting the Partnership as a real estate
investment trust or any other type of legal entity (a "New
Entity") in the manner and on the terms so recommended, or
distributing notes representing current taxable income to the
Partners and Unit Holders in the event the Partnership shall be
unable to distribute cash or property representing such taxable
income. The General Partner will obtain approval of a Majority
in Interest if time permits. In the event of conversion into a
New Entity, the business of the Partnership shall be continued
by the New Entity and the Interests and Units shall be converted
into equity interests of the New Entity in the manner and on the
terms so recommended and approved. The term "flow through" tax
I-5
consequences shall have the same meaning in the context of this
Agreement as such term has in the National Association of
Securities Dealers, Inc.'s definition of "direct participation
program."
1.02. Name and Office of the Partnership.
The Partnership shall be conducted under the name of Shopco
Regional Malls, L.P. and its principal office shall be located at c/o
Shearson Xxxxxx Xxxxxx Inc., American Express Tower, 12th Floor, World
Financial Center, New York, New York 10285, or at such other place or
places as the General Partner may from time to time designate.
Notification of any such change in the Partnership's place of business
and principal office shall be given to all Partners and Unit Holders.
The registered office of the Partnership in the State of Delaware is
located at Corporation Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000. The Partnership's registered agent for service of
process at such address in the State of Delaware is The Corporation Trust
Company.
1.03. Purpose of the Partnership.
The sole purpose and business of the Partnership shall be to act
and serve as the general partner of the Owner Partnership in accordance
with the terms of the Owner Partnership Agreement and to do all things
necessary or incidental thereto or necessary or incidental to the
performance of the terms of this Agreement and, in connection therewith
and, as applicable, acting through the Owner Partnership, to accept,
collect, hold, sell, exchange, mortgage, pledge or otherwise dispose of
the Malls and/or evidences of indebtedness or other property received by
the Owner Partnership or this Partnership pursuant to the terms of the
Owner Partnership Agreement or this Agreement. In carrying out the
foregoing purposes, the Partnership or the Owner Partnership may act in
conjunction with others, through joint ventures, partnerships or
otherwise. The Partnership shall engage in such other activities and
enter into such agreements as may be necessary or appropriate in
connection with the promotion or conduct of the business of the
Partnership as described in this Section 1.03 and as necessary or
appropriate to carry out the other provisions of this Agreement. The
Partnership shall not engage in any other business or activity without
the consent of a Majority in Interest of the Limited Partners.
1.04. Term of the Partnership.
The Partnership shall continue in full force and effect until
December 31, 2038, unless sooner terminated as hereinafter provided.
1.05. Partners.
(a) The General Partner of the Partnership is
Shearson Regional Malls Inc., a Delaware corporation. Except as
expressly provided in this Agreement, no other Person shall be
I-6
admitted as an additional or substitute general partner of the
Partnership.
(b) The Assignor Limited Partner of the Partnership
is Shearson Regional Malls Depositary Corp., a Delaware
corporation. Except as expressly provided in this Agreement, no
other Person shall be admitted as an additional or substitute
Limited Partner of the Partnership.
SECTION II
Capital
2.01. General Partner and Assignor Limited Partner. The
names, business addresses and Capital Contributions of the General
Partner and the Assignor Limited Partner, as the case may be, are set
forth in Schedule A hereto. The General Partner, as such, shall not make
any additional Capital Contributions to the Partnership other than as
provided in Section 4.06. The initial contribution of the Assignor
Limited Partner shall be refunded, simultaneously with the release of the
Capital Contribution to the Partnership by the Assignor Limited Partner
attributable to purchasers of Units on the first Closing Date.
2.02. Contributions of the Assignor Limited Partner.
(a) The Partnership has made or will make a public
offering of up to 110,000 Units, the proceeds of which are to be
contributed to the Partnership by the Assignor Limited Partner
on behalf of the purchasers of Units in accordance with the
provisions of Section VII hereof. The Partnership shall require
a minimum purchase of 2 Units by Xxxxx Plans, Individual
Retirement Accounts ("IRAs") and employee benefit plans, and 5
Units by other investors, at a purchase price of $1,000 per
Unit, with additional purchases in increments of one Unit.
There shall be discounts available for investors purchasing more
than 250 Units, as set forth in the Prospectus. The General
Partner shall have sole and complete discretion in determining
the terms and conditions of the public offering and sale of
Units (including the length of the offering period) and the
General Partner is authorized to do all things which it deems to
be necessary, convenient, appropriate or advisable in connection
therewith, including but not limited to the preparation and
filing on behalf of the Partnership of a registration statement
with the Securities and Exchange Commission and the securities
commissions (or similar agencies or officers) of such
jurisdictions as the General Partner shall determine, and the
execution or performance of agreements with underwriters and
others concerning the marketing of Units on such basis and upon
such terms as the General Partner shall determine. It is
expressly agreed that Shearson Xxxxxx Xxxxxx Inc. ("Shearson"),
an Affiliate of the General Partner, shall be selling agent and
that The Xxxxxxxx-Xxxxxxxx Company Inc., Xxxxxx & Xxxxxxxx Inc.
I-7
and IDS Financial Services Inc., which are Affiliates of the
General Partner, and any other securities brokerage firms that
are or may become affiliated with the General Partner and its
Affiliates during the offering period, may participate in such
offering as dealers and that Shearson may select such
unaffiliated securities firms as it may choose to act as dealers
and that each of the foregoing may receive selling commissions.
(b) The public offering of Units shall be effected
in accordance with the provisions set forth in the Prospectus,
including, without limitation, the provisions set forth under
the caption "Terms of the Offering." Prior to the Termination
Date (as defined in the Prospectus), Certificates of Limited
Partnership Interest may be issued by the Partnership only to
the Assignor Limited Partner (on behalf of subscribers for
Units) and prior to that date no person other than the Assignor
Limited Partner shall be entitled to acquire Limited Partnership
Interests from the Partnership. After the Termination Date, no
additional Units or Limited Partnership Interests may be sold by
the Partnership (provided that following the Termination Date,
Units may be converted to Limited Partnership Interests as
provided in Section 7.02(b)).
(c) Units and Partnership Interests, when sold and
issued on the terms and in the manner set forth in this
Partnership Agreement and the Prospectus, shall be fully paid
and nonassessable.
2.03. Partnership Capital.
(a) No Partner shall be paid interest on any
Capital Contribution.
(b) The Partnership shall not redeem any
Partnership Interest and no Partner shall have the right to
withdraw, or receive any return of, his Capital Contribution,
except as specifically provided herein. No Limited Partner or
Unit Holder shall have priority over any other Limited Partner
or Unit Holder, either as to the return of his Capital
Contribution or as to profits, losses or distributions, except
as otherwise specifically provided herein.
(c) Under circumstances requiring a return of any
Capital Contribution, no Partner shall have the right to receive
property other than cash.
(d) The General Partner shall have no personal
liability for the repayment of the Capital Contribution of any
Limited Partner or Unit Holder nor any obligation to make
Capital Contributions (except as provided in Schedule A and
Section 4.06), loans or advances to the Partnership subject to
the provisions of Section 6.04.
I-8
2.04. Execution of the Depositary Agreement.
On or before the first Closing Date, the Partnership, the
General Partner and the Assignor Limited Partner shall execute the
Depositary Agreement in favor of the Unit Holders.
2.05. No Fractional Interests and Units.
No fractional Interests or Units may be issued by the
Partnership or assigned by Partners or Unit Holders except as provided in
Section 2.06.
2.06. Splits and Combinations.
(a) The General Partner may (i) make a distribution
in Units (or any other instrument evidencing ownership or
assignment of Interests) to all Unit Holders or (ii) effect a
subdivision or combination of Units (or any other instrument
evidencing ownership or assignment of Interests) but in each
case only on a pro rata basis so that, after such distribution,
subdivision or combination, each Partner and Unit Holder shall
have the same Percentage Interest in the Partnership as before
such distribution, subdivision or combination. The Partnership
may, but shall not be required to, issue fractional Units (or
any other instrument evidencing ownership or assignment of
Interests) upon any such distribution, subdivision, or
combination of Units (or any other instrument evidencing
ownership or assignment of Interests). In the event any
distribution, subdivision or combination of Units (or any other
instrument evidencing ownership or assignment of Interests)
would result in the issuance of fractional Units (or other
instrument evidencing ownership or assignment of Interests) but
for the provisions of this Section 2.06(a), in the sole
discretion of the General Partner, the final fraction of a Unit
(or any other instrument evidencing ownership or assignment of
Interests) issuable to each Unit Holder may be rounded to the
nearest whole Unit (or any other instrument evidencing ownership
or assignment of Interests).
(b) Whenever such distribution, subdivision or
combination is declared, the General Partner shall select a
record date (the "Record Date") as of which the distribution or
combination shall be effective and shall send notice of the
distribution, subdivision or combination at least 20 days prior
to such Record Date to each Unit Holder of record ("Record
Holder") as of the date 10 days prior to the date of such
notice. The General Partner also may cause the Partnership's
accounting firm or another firm of independent public
accountants selected by it to calculate the number of Units (or
any other instrument evidencing ownership or assignment of
Interests) to be held by each Record Holder after giving effect
to such distribution, subdivision or combination. The General
Partner shall be entitled to rely on any certificate provided by
I-9
such firm as conclusive evidence of the correctness of such a
calculation.
(c) Promptly following any such distribution,
subdivision or combination, the General Partner may cause
Depositary Receipts to be issued to the Record Holders of Units
(or any other instrument evidencing ownership or assignment of
Interests) as of the applicable Record Date representing the new
number of Units (or any other instrument evidencing ownership or
assignment of Interests) held by such Record Holder, or the
General Partner may adopt such other procedures or instruments
as it may deem appropriate to reflect such distribution,
subdivision or combination; provided, however, that in the event
any such distribution, subdivision or combination results in a
smaller total number of Units (or any other instrument
evidencing ownership or assignment of Partnership Interests)
outstanding the General Partner may require, as a condition to
the delivery to a Record Holder of such new Depositary Receipt,
the surrender of any Depositary Receipt owned by such Record
Holder immediately prior to such Record Date.
(d) Notwithstanding any provision in this Section
2.06 to the contrary, no distribution or subdivision or
combination of Units (or other instrument evidencing ownership
or assignment of Interests) shall be made unless:
(i) the Partnership shall have received an
opinion of legal counsel to the effect that such action
will not have any material adverse effect on the
taxation of the Limited Partners or Unit Holders as a
class or any group of Limited Partners or Unit Holders;
and
(ii) such action shall not result in any
change in the rights of any Limited Partner or Unit
Holder to cash distributions by the Partnership or the
allocable share of such Limited Partner or Unit Holder
in the income, gain or losses of the Partnership (except
any immaterial change resulting from any issuance or
elimination of fractional Units (or other instrument
evidencing ownership or assignment of Interests))
permitted hereunder.
(e) In connection with any distribution,
subdivision or combination of Units under this Section 2.06, the
General Partner shall make a corresponding distribution,
subdivision or combination of Interests the legal title to which
is held of record by the Assignor Limited Partner and as to
which corresponding Units have been assigned to Unit Holders
under the provisions of Section VII hereof, as well as in the
number of Interests held of record by Limited Partners who have
exchanged their Units for Interests in accordance with the
provisions of Section 7.02(a), and the foregoing provisions of
I-10
this Section 2.06 shall be equally applicable to such Interests
(it being the intent that the Percentage Interest of all Unit
Holders and Limited Partners shall be affected on a pro rata
basis).
2.07. Additional Issuances of Interests or Units.
No Interests or Units (either of the same class or of a
different class as the Units sold pursuant to the terms of the
Prospectus) or any rights, warrants or options to acquire Interests or
Units, except those Interests and Units issued by the Partnership
pursuant to Section 2.02 or 2.06, shall be offered for sale or issued by
the Partnership unless: (i) such issuance is for the purpose of financing
capital improvements to the Malls or the acquisition or development of
Additional Property by the Owner Partnership, (ii) such issuance is
approved by the General Partner and a Majority in Interest of the Limited
Partners and (iii) the Partnership is furnished with an opinion of
counsel to the effect that such issuance will not have any material
adverse effect on the federal income tax consequences to the Limited
Partners or the Unit Holders from their investment in the Units.
SECTION III
Capital Accounts
3.01. Capital Account Calculation.
Each Partner shall have a capital account which will consist of
the initial cash contributed by such Partner to the capital of the
Partnership as described in Section II.
The Capital Account of the Assignor Limited Partner shall be
subdivided into "Unit Holder Capital Accounts." One Unit Holder Capital
Account shall be established for each Unit Holder for whom a Depositary
Receipt is issued by the Assignor Limited Partner and shall be treated as
the Capital Account of the Unit Holder (or his predecessor in interest)
on whose behalf the Assignor Limited Partner received the purchase price
for corresponding Interests held of record by the Assignor Limited
Partner. The capital account of each Partner shall be increased by:
(a) the amount of income from operations allocated
to it pursuant to Section 4.01, 4.07, 4.08 and 4.09; and
(b) the amount of gains allocated to it pursuant to
Sections 4.02, 4.03, 4.07, 4.08 and 4.09; and shall be decreased
by:
(c) the amount of losses allocated to it pursuant
to Sections 4.01, 4.02, 4.03, 4.07 and 4.09;
(d) all amounts distributed to it pursuant to
Section V hereof;
I-11
(e) such Person's distributive share of
expenditures of the Partnership described in Code section
705(a)(2)(B) (relating to expenditures which are neither
deductible nor properly chargeable to capital) and expenditures
which pursuant to the Regulation promulgated under Code section
704(b) are characterized as Code section 705(a)(2)(B)
expenditures; and
(f) the amount of any commission paid with respect
to such Person's acquisition of Units.
3.02. Special Provisions.
For purposes of computing the amount of any item of income,
gain, deduction, or loss to be reflected in Capital Accounts, the
determination, recognition and classification of each such item shall be
the same as its determination, recognition and classification for federal
income tax purposes, provided that:
(a) Any deductions for depreciation, cost recovery,
amortization, or expense in lieu of depreciation, attributable
to property contributed (or deemed contributed) to the
Partnership (a "Partnership Asset") shall be determined as if
the adjusted basis for federal income tax purposes (the
"Adjusted Basis") of such Partnership Asset on the date it was
acquired by the Partnership was equal to the fair market value
of such Partnership asset as of such date (the "Carrying
Value");
(b) Any income, gain, deduction or loss
attributable to the taxable disposition of any Partnership asset
shall be determined by the Partnership as if the Adjusted Basis
of such Partnership Asset as of such date of disposition was
equal to the Carrying Value of such Partnership Asset as of such
date as adjusted by deductions for depreciation, cost recovery,
amortization or expense in lieu of depreciation;
(c) Immediately prior to the distribution of any
Partnership Asset any unrealized gain or unrealized loss
attributable to such Partnership Asset shall, for purposes
hereof, be deemed to be a gain or loss recognized by the
Partnership and shall be allocated among the Partners and the
Unit Holders in accordance with the provisions of Sections 4.02
or 4.03. In determining such unrealized gain or unrealized
loss, the fair market value of such Partnership Asset shall be
determined pursuant to an appraisal report; and
(d) The computations of all items of income, gain,
loss and deduction shall be made without regard to any election
which may be made by the Partnership under Code section 754.
I-12
3.03. Transfers.
Any transferee of Units shall succeed to the Unit Holder Capital
Account of the transferor relating to the Units transferred.
3.04. Timing.
Except as otherwise provided in this Agreement, whenever it is
necessary to determine the Unit Holder Capital Account of any Unit Holder
for purposes of Section IV or V, the Unit Holder Capital Account of such
Unit Holder shall be determined after giving effect to all Capital
Contributions theretofore made to the Partnership and all allocations for
transactions effected prior to the time as of which such determination is
made, of income, gains, deductions and losses pursuant to Section IV, and
to all distributions theretofore made for such year pursuant to Section
V.
3.05. Allocations and Distributions Among Unit Holders; Status
of Unit Holders.
Except as otherwise provided in this Agreement, all amounts
allocated or distributed to the Unit Holders shall be further allocated
or distributed among the Unit Holders in accordance with their respective
Percentage Interests. For purposes of Section III, IV and V, the term
Unit Holders shall mean and include Unit Holders who, pursuant to Section
7.02(a) or 7.02(b), have been admitted to the Partnership as Limited
Partners, in which case each such Person shall be deemed to own a number
of Units equal to the number of Interests then owned by such Person.
3.06. Admissions and Transfers; Allocations and Distributions.
(a) After the first Closing Date and during the
Offering Period, income and losses from operations shall be
determined and allocated to the Unit Holders on a monthly basis,
using the interim-closing method. For purposes of allocating
income or loss from operations and for purposes of distributing
Net Cash Flow:
(i) If a Closing Date occurs within the
first fifteen days of a month, the Unit Holder shall be
treated as being a Record Holder on the first day of
such month;
(ii) If a Closing Date occurs after the
fifteenth day of the month, the Unit Holder shall be
treated as being a Record Holder on the first day of the
next month; and
(iii) Any transferee of a Unit shall be
treated as a Record Holder on the first day of the month
succeeding the month in which such transfer has been
effected on the books of the transfer agent pursuant to
Section 7.03. Income or loss from operations for a
I-13
month shall be allocated to the Unit Holders who are
Record Holders on the first day of such month or who are
deemed to be of record pursuant to (a)(i) above.
(b) After the first Closing Date and during the
Offering Period, Net Cash Flow for each fiscal quarter (or part
thereof) shall be prorated over the fiscal quarter (or part
thereof). If there is one or more Closing Dates (other than the
Closing Date which represents the first closing of Units) in the
fiscal quarter (or part thereof), the following rules shall be
applied:
(i) Net Cash Flow prorated to the period
prior to the Closing Date (which for this purpose is
determined by applying the rules of (a)(i) and (ii)
above) shall be distributed to the Record Holders (or
are deemed Record Holders under (a)(i) above) as of the
first day of the month preceding such deemed Closing
Date. Net Cash Flow prorated for the period from the
Closing Date (as determined) to the end of the fiscal
quarter (or the last day of the month immediately before
the next Closing Date (as determined) if an additional
Closing Date in such fiscal quarter occurs), shall be
distributed to the Record Holders as of the first day of
the last month of the quarter (or the first day of the
month immediately before the next Closing Date (as
determined)).
(ii) If the final Closing does not occur on
the last day of a fiscal quarter, Net Cash Flow for that
fiscal quarter shall be allocated in accordance with the
principles of (b)(i) above.
(c) After the Offering Period, for purposes of
allocating income and loss from operations and distributions of
Net Cash Flow, any transferee of a Unit shall be treated as
being a Unit Holder on the first day of the month succeeding the
month in which such transfer has been effected on the books of
the transfer agent pursuant to Section 7.03. In addition,
income and loss from operations shall be divided on the
proration method, using the monthly convention as described
above. Net Cash Flow for a fiscal quarter (or part thereof)
shall be distributed to the Record Holders on the first day of
the last month in such quarter (or part thereof).
(d) Notwithstanding the above, but subject to
applicable Regulations, gain or loss realized in connection with
a Capital Transaction shall be allocated to those Unit Holders
who are Record Holders as of the last day of the month in which
the Capital Transaction occurs. Net Proceeds to be distributed
from a Capital Transaction shall be distributed to the Record
Holders on the last day of the month in which the Capital
Transaction occurs. The same rules shall be applied for gain
I-14
and loss upon dissolution and Net Proceeds from dissolution and
for distributions pursuant to Section 5.07.
(e) The General Partner is authorized to apply tax
allocation rules other than those contained in this Section 3.06
to the extent that the General Partner determines that the
application of the tax allocation rules contained in this
Section 3.06 would result in a substantial mismatching of the
allocation of income or loss attributable to a period and the
distribution of cash attributable to the same period as between
the transferor and transferee of the Partnership Interest or
Unit transferred that could be minimized by the application of
an alternative tax allocation rule, or (ii) to the extent
necessary to conform the Partnership's tax allocations to the
requirements of any Regulations.
(f) Subject to the provisions of Section 6.04
hereof, the General Partner shall not incur any liability for
making allocations and distributions in accordance with the
provisions of this Section 3.06, whether or not the General
Partner has knowledge or notice of any transfer or purported
transfer of ownership of any Unit or Partnership Interest, other
than as shown on the records of the Partnership or the Transfer
Agent.
(g) Offering Period means the period from the first
Closing Date until the final Closing Date.
SECTION IV
Allocation of Income and Losses, Gains and Losses
4.01. Operations.
Subject to the provisions of Sections 4.04, 4.06, 4.07, 4.08 and
4.09, all income and losses of the Partnership from operations (as
distinguished from transactions described in Sections 4.02 and 4.03) of
the Partnership for each fiscal year shall be allocated 99% to the Unit
Holders and 1% to the General Partner.
4.02. Capital Transactions.
All gains and losses of the Partnership in connection with a
Capital Transaction shall be allocated, after adjustment of the capital
accounts of the Unit Holders and the General Partner to reflect the
distributions and amounts available for distribution pursuant to Section
5.02 in connection with such Capital Transaction, such gains, and losses,
shall be allocated in the following order of priority:
(a) in the event there are gains to be allocated;
I-15
(i) first, if any one or more Unit Holders
or the General Partner has a negative balance in its
capital account, then an amount of gains up to the
aggregate of such negative balances shall be allocated
among such Unit Holders and General Partner in the
proportion that the negative balance of each such Unit
Holder's and General Partner's capital account bears to
the aggregate of such negative balances; and
(ii) then, after such allocation has been
made (or in the event that each Unit Holder and the
General Partner has a zero or positive balance in its
capital account), 99% to the Unit Holders and 1% to the
General Partner until the capital account of each Unit
Holder is equal to his unpaid Preferred Return and
Unrecovered Capital and the remainder of the gains shall
be allocated to the extent possible so that the positive
balances in the aggregate capital accounts of the Unit
Holders (in excess of their aggregate unpaid Preferred
Return and Unrecovered Capital) and the capital account
of the General Partner are in the proportions of 88.25%
and 11.75%, respectively; or
(b) in the event there are losses to be allocated;
(i) first, if any one or more Unit Holders
or the General Partner has a positive balance in its
capital account, an amount of losses up to the aggregate
of such positive balances shall be allocated among such
Unit Holders and the General Partner in the proportion
that the positive balance of each such Unit Holder's and
the General Partner's capital account bears to the
aggregate of such positive balances; and
(ii) then, after such allocation has been
made (or in the event that each Unit Holder and the
General Partner has a zero or negative balance in his
capital account), the remainder of the losses shall be
allocated to the extent possible so that the negative
balances in the aggregate capital accounts of the Unit
Holders and the capital account of the General Partner
are in the proportions of 88.25% and 11.75%,
respectively.
4.03. Dissolution.
All gains and losses of the Partnership in connection with a
sale of all or substantially all of the assets of the Partnership or any
other event causing a dissolution and termination of the Partnership,
shall be allocated in the following order of priority:
(a) in the event there are gains to be allocated,
I-16
(i) first, if any one or more Unit Holders
or the General Partner has a negative balance in its
capital account, then an amount of gains up to the
aggregate of such negative balances shall be allocated
among such Unit Holders and the General Partner in the
proportion that the negative balance of each such Unit
Holder's and General Partner's capital account bears to
the aggregate of such negative balances;
(ii) then, after such allocation has been
made (or, in the event that each Unit Holder and the
General Partner has a zero or positive balance in its
capital account), there shall be determined the amount
by which the amount of proceeds distributed or available
for distribution to the General Partner and each Unit
Holder pursuant to Section 5.03(a) (without regard to
the proviso contained in such Section) exceeds the
capital account of such Person (such excess for each
person being referred to as its "Amount"), and an amount
of gains equal to the aggregate of the Amounts shall be
allocated among the General Partner and the Unit Holders
in the proportion that each such Person's Amount bears
to the aggregate of the Amounts;
(iii) then, after adjustment of the capital
accounts of the Unit Holders to reflect the allocations
of gains under subclauses (i) and (ii) above and
distributions and amounts available for distribution to
the General Partner and the Unit Holders pursuant to
Section 5.03(a), the remainder of the gains shall be
allocated to the extent possible so that the positive
balances in the aggregate capital accounts of the Unit
Holders and in the capital account of the General
Partner are in the proportions of 88.25% and 11.75%,
respectively; or
(b) in the event there are losses to be allocated,
(i) first, if any one or more Unit Holders
or the General Partner has a positive balance in its
capital account, an amount of losses equal to the
aggregate of such positive balances shall be allocated
among such Unit Holder and General Partner in the
proportion that the positive balance of each such Unit
Holder's and General Partner's capital account bears to
the aggregate of such positive balances; and
(ii) then, after such allocation has been
made (or in the event that each Unit Holder and the
General Partner has a zero or negative balance in his
capital account), the remainder of the losses shall be
allocated to the extent possible so that the negative
balances in the aggregate capital accounts of the Unit
I-17
Holders and in the capital account of the General
Partner are in the proportions of 88.25% and 11.75%,
respectively.
4.04. Minimum Gain Limitation.
Anything contained in this Section IV to the contrary
notwithstanding, cumulative allocations of Partnership losses or
deductions to any Unit Holder pursuant to this Section IV shall not
exceed the sum of the following amounts, determined as of the end of each
taxable year of the Partnership: (i) such Unit Holder's Capital
Contribution theretofore made pursuant to Section II, (ii) any further
increases to such Unit Holder's capital account less any further
decreases to such Unit Holder's capital account (other than for
allocations of loss), and (iii) such Unit Holder's Pro Rata Share of
Minimum Gain (as hereinafter defined). To the extent that the foregoing
limitation results in a non-allocation of Partnership losses or
deductions to a Unit Holder, such Partnership losses or deductions shall
be allocated or reallocated to the General Partner. For the purposes of
this Section IV, (A) the term "Minimum Gain" shall mean that portion of
the excess, if any, of (x) the outstanding aggregate principal balance,
or any part thereof, of any non-recourse debt of the Partnership or the
Owner Partnership that is secured by an interest in the Partnership's or
the Owner Partnership's property or any part thereof, over (y) the
adjusted basis of such property to the Partnership for federal income tax
purposes, (B) the term "non-recourse debt" shall mean a liability (or
that portion of a liability) of the Partnership or the Owner Partnership
with respect to which no partner or Unit Holder (or Affiliate thereof) of
the Partnership or the Owner Partnership has any personal liability, as
determined under section 1.752-1(e) of the Regulations, or any successor
provision, and (C) a Unit Holder's "Pro Rata Share of Minimum Gain" shall
mean, with respect to each Unit Holder, 99% of its Percentage Interest.
4.05. Amendments to Allocations.
It is the intent of the Unit Holders and the General Partner
that each Unit Holder's and the General Partner's distributive share of
income, gain, loss or deduction (or items thereof) shall be determined
and allocated in each year of the Partnership in accordance with this
Section IV to the fullest extent permitted by Code section 704(b) and the
Regulations. In order to preserve and protect the determinations and
allocations provided for in this Section IV, the General Partner shall
be, and hereby is, authorized and directed to allocate income, gain, loss
or deduction (or items thereof) arising in any year differently than
otherwise provided for in this Section IV, or to otherwise amend the
provisions of this Section IV, if, and to the extent that, allocating
income, gain, loss or deduction (or items thereof) in the manner provided
for in this Section IV would cause the determination and allocation of
each Unit Holder's or the General Partner's distributive share of income,
gain, loss or deduction (or items thereof) not to be permitted by Code
section 704(b) or the Regulations. Any allocation, or amendment, as the
case may be, made pursuant to this Section 4.05 shall be deemed to be a
complete substitute for any allocation otherwise provided for in this
I-18
Section IV and no other amendment of this Agreement or approval of any
Unit Holder shall be required.
In making any allocation or amendment (the "new allocation") as
set forth above, the General Partner is authorized to act only after
having been advised by Xxxxxxx Xxxx & Xxxxxxxxx or other tax counsel to
the Partnership that in its opinion, after examining Code section 704(b)
and the Regulations, (i) the new allocation is necessary, and (ii) the
new allocation is the minimum modification of the allocations otherwise
provided for in this Section IV necessary in order to insure that, either
in the current year or in any preceding year, each Unit Holder's and the
General Partner's distributive share of income, gain, loss or deduction
(or items thereof) is determined and allocated in accordance with this
Section IV to the fullest extent permitted by Code section 704(b) and the
Regulations. New allocations made by the General Partner in reliance
upon the advice of Xxxxxxx Xxxx & Xxxxxxxxx or such other tax counsel
shall be deemed to be made pursuant to the fiduciary obligation of the
General Partner to the Partnership and the Unit Holders, and no such new
allocation shall give rise to any claim or cause of action by any Unit
Holder.
4.06. General Partner Deficit Restoration. If upon the
dissolution and termination of the Partnership the capital account of the
General Partner is less than zero (after allocation of net income and net
gains and tax losses recognized upon the disposition of Partnership
assets in connection with the liquidation of the Partnership), the
General Partner shall contribute to the Partnership an amount equal to
the lesser of (a) the deficit balance in its capital account or (b) the
excess of 1.01% of the aggregate Capital Contributions of the Unit
Holders over the aggregate capital contributions previously made to the
Partnership by the General Partner.
4.07. Allocations on Account of Optional Loans. Anything
contained in Sections 4.01 and 4.03 to the contrary notwithstanding, in
each taxable year of the Partnership, (i) an amount of Partnership losses
equal to the principal amount of any Optional Loans made to the
Partnership by the General Partner or its Affiliates in such year (or in
any prior year to the extent losses have not heretofore been allocated on
account of such loans) shall be allocated to the General Partner, and
(ii) an amount of Partnership income shall be allocated to the General
Partner to the extent all or any portion of the principal amount of any
Optional Loan made to the Partnership by the General Partner or its
Affiliates has been repaid in such year of the Partnership, but in no
event greater than the amount of Partnership losses theretofore allocated
to the General Partner pursuant to clause (i) of this Section 4.07;
provided, however, that all other items of Partnership income, gain,
deductions and loss for each year of the Partnership shall be allocated
in accordance with the provisions of Sections 4.01, 4.02 and 4.03.
4.08. Minimum Gain Chargeback.
Anything contained in Section IV to the contrary
notwithstanding, if after the allocation of any income and gain under
I-19
this Section IV the aggregate deficit capital account balances of the
Unit Holders and/or the General Partner with deficit capital account
balances exceeds the Minimum Gain, an amount of income or gain for such
year sufficient to eliminate such excess shall be reallocated among the
Unit Holders and the General Partner with deficit capital account
balances (in accordance with such deficits) so as to eliminate such
excess.
4.09. Qualified Income Offset.
For purposes of this Agreement, each Unit Holder's capital
account balance as of the end of any taxable year of the Partnership
shall be reduced by the amount (whether made or reasonably expected to be
made) of any adjustments, allocations and distributions described in
sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations. In the
event that during any fiscal year any Unit Holder unexpectedly receives
such an adjustment, allocation or distribution, such Unit Holder will be
allocated items of income and gain in an amount and manner sufficient to
eliminate as quickly as possible any deficit balance in its capital
account in excess of such Unit Holder's Pro Rata Share of Minimum Gain
resulting from such unexpected adjustment, allocation or distribution.
4.10. Termination.
In the event a "technical termination" of the Partnership occurs
under Code section 708, it is intended that the allocations provided in
Section 4.03 be applied to take into account the variation, if any,
between the Carrying Value of each Partnership Asset and its adjusted
basis for federal income tax purposes, as determined under Code section
732, in accordance with the provisions of Code section 704(c) and the
Regulations thereunder, following the deemed distribution and
recontribution of Partnership Assets which occurs as a result of such
termination.
SECTION V
Distributions
5.01. Operations.
Net Cash Flow for each fiscal year (or part thereof) of the
Partnership, after making provision for the liabilities and obligations
of the Partnership, shall be distributed 99% to the Unit Holders and 1%
to the General Partner; provided, however, that during each fiscal year
commencing on the first Closing Date and ending on December 31, 1992, the
General Partner's 1% interest shall be subordinated for each fiscal year
(or part thereof), such that if distributions to each Unit Holder equal
less than an 8.5% return (in such fiscal year or part thereof) on such
Unit Holder's Unrecovered Capital, the General Partner will contribute to
such Unit Holder any or all of its 1% distribution to reduce the
shortfall to each Unit Holder.
I-20
5.02. Capital Transactions.
Net Proceeds from any Capital Transaction, after making
provision for the liabilities and obligations of the Partnership, shall
be distributed in the following order of priority:
(a) first, until each Unit Holder has received its
Preferred Return, all such proceeds shall be distributed 99% to
the Unit Holders and 1% to the General Partner;
(b) then, until each Unit Holder has received its
Unrecovered Capital, all such proceeds shall be distributed 99%
to the Unit Holders and 1% to the General Partner; and
(c) then, the balance of such proceeds shall be
distributed 88.25% to the Unit Holders and 11.75% to the General
Partner.
5.03. Dissolution.
Upon dissolution and termination of the Partnership, after
making payment of or provision for the liabilities and obligations of the
Partnership, Net Proceeds shall be distributed in the following order of
priority:
(a) first, until each Unit Holder has received its
Unrecovered Capital and Preferred Return, all such proceeds
shall be distributed 99% to the Unit Holders and 1% to the
General Partner; provided, however, that the amount so
distributed to each Unit Holder pursuant to this clause (a)
shall not exceed the amount of any positive balance in the
capital account of such Unit Holder, as adjusted to reflect the
allocations of gains or losses under Section 4.03;
(b) then, an amount of such proceeds up to the
aggregate positive balance of the General Partner's and each
Unit Holder's capital accounts (as adjusted to reflect the
allocations of gains or losses under Section 4.03 and
distributions and amounts available for distribution under
clause (a) above), shall be distributed to the General Partner
and each Unit Holder in the proportion that each such positive
balance bears to the aggregate of such positive balances; and
(c) then, the remaining proceeds shall be
distributed 88.25% to the Unit Holders and 11.75% to the General
Partner.
5.04. Working Capital Reserve.
The General Partner shall have the right to establish and
maintain a Working Capital Reserve for operating expenses, contingencies
and such additional funding requirements for the Partnership, the Owner
Partnership and the Malls as deemed necessary in the discretion of the
I-21
General Partner. The initial Working Capital Reserve shall be an amount
equal to not less than 2.5% of the Limited Partners' Capital
Contributions. The General Partner may establish such reserve in the
Owner Partnership. The General Partner shall invest the Working Capital
Reserve in such investments as the General Partner shall deem prudent in
accordance with the provisions of Section 8.08. The General Partner may,
in its discretion, distribute from time to time as a component of Net
Cash Flow any portion of such reserve which the General Partner
determines to be in excess of the amounts required for the purposes
enumerated above. In addition, to the extent that offering and
organizational expenses exceed budgeted amounts as set forth in the
Prospectus, the General Partner may utilize a portion of the working
capital reserve (not to exceed $500,000) to pay such excess amounts.
5.05. Miscellaneous.
(a) No Unit Holder shall be entitled to demand and
receive property other than cash in return for its Capital
Contribution.
(b) Except as otherwise expressly provided in this
Agreement to the contrary, no salary or other compensation shall
be paid to any Partner or Unit Holder by the Partnership.
5.06. Rules Governing Distributions Generally.
(a) Whenever any distribution is to be made with
respect to Interests held by the Assignor Limited Partner, such
distribution shall be made directly to the Record Holders and
not to the Assignor Limited Partner.
(b) The General Partner may withhold taxes from
distributions to any Partner or Unit Holder to the extent
permitted by Section 12.09. For purposes of this Agreement, any
taxes so withheld by the Partnership with respect to any amount
distributed by the Partnership to any Partner or Unit Holder
shall be deemed to be a distribution or payment to such Partner
or Unit Holder and shall reduce the amount otherwise
distributable to such Partner or Unit Holder pursuant to this
Agreement.
5.07. Special Distribution to Unit Holders.
If the Partnership receives a distribution from the Owner
Partnership of the principal balances of the Assembly Square Holdback
Reserve Account or the Additional Mall Reserve Account (as defined in the
Owner Partnership Agreement) pursuant to Sections 6.13 or 6.14 of the
Owner Partnership Agreement, such proceeds shall be distributed to the
Unit Holders pro rata. Such distribution shall reduce a Unit Holder's
Unrecovered Capital and shall reduce aggregate Unrecovered Capital in an
amount equal to the aggregate distribution. In addition, the General
Partner may be obligated, as described in the Prospectus, to add to such
distribution amounts on account of selling commissions attributable
I-22
thereto and certain Front-end Fees (but not including investigatory
expenses incurred for the purpose of locating suitable Malls for
investment). This additional amount also shall be treated as a return of
Unrecovered Capital to the Unit Holders.
SECTION VI
Management
6.01. Management of the Partnership.
(a) Except as specifically provided in this
Agreement to the contrary, the business and affairs of the
Partnership shall be carried on and managed by the General
Partner, who shall have full, exclusive and complete discretion
with respect thereto. The General Partner shall use its best
efforts to carry out the purposes and business of the
Partnership and shall devote such time as it shall, in its sole
discretion, determine to be required for the management and
administration of the business and affairs of the Partnership.
(b) The General Partner shall have all necessary
and appropriate powers to carry out the purposes of the
Partnership set forth in Section 1.03, and except as otherwise
provided by Delaware law or by this Agreement, shall possess and
enjoy all the rights and powers and shall be subject to all the
restrictions of a general partner of a partnership without
limited partners under the laws of the State of Delaware.
(c) Without limiting the generality of Sections
6.01(a) and 6.01(b), the General Partner shall conduct and
control the business and affairs of the Partnership and, except
as otherwise provided in Section 6.01(d), shall be empowered,
without the consent of the Limited Partners or the Unit Holders,
to make all decisions and take all actions with respect thereto,
including without limitation:
(i) to carry out the purposes of the Owner
Partnership and the Partnership and to execute all
agreements, contracts, instruments and related
documents, and perform all acts in the name, and at the
expense of the Partnership, necessary or appropriate for
the acquisition, financing, development operation,
management, maintenance and disposition of the Malls and
any Additional Property;
(ii) to borrow money from Persons affiliated
or not affiliated with the General Partner provided that
if a lender to the Partnership is an Affiliate the
interest charged by such lender shall not be in excess
of the amount which would be charged by unrelated
lending institutions for comparable loans for the same
I-23
purpose, and, as security therefor, to mortgage, pledge
or otherwise encumber the assets of the Partnership or
the Owner Partnership or to enter into contracts of
guaranty or suretyship;
(iii) to cause to be paid on or before the
due date thereof all amounts due and payable by the
Partnership to any Person;
(iv) to employ such agents, employees,
managers, accountants, attorneys, consultants and other
Persons, necessary or appropriate to carry out the
business and affairs of the Partnership, and to pay such
fees, expenses, salaries, wages and other compensation
to such Persons as it shall in its sole discretion
determine;
(v) to pay, extend, renew, modify, adjust,
settle, submit to arbitration, prosecute, defend or
compromise, upon such terms as it may determine and upon
such evidence as it may deem sufficient, any obligation,
suit, liability, cause of action or claim, including
taxes, either in favor of or against the Partnership;
(vi) to pay any and all fees and to make any
and all expenditures which it, in its sole discretion,
deems necessary or appropriate in connection with the
organization of the Partnership, the offer and sale of
the Units, the management of the affairs of the
Partnership, and the carrying out of its obligations and
responsibilities under this Agreement;
(vii) to cause to be obtained and continued
in force all policies of insurance or self-insurance
arrangements required by any mortgage, security
agreement, lease or other similar instrument relating to
the property of the Partnership;
(viii) to cause to be paid any and all taxes,
charges and assessments that may be levied, assessed or
imposed upon any of the assets of the Partnership,
unless the same are contested by the General Partner;
(ix) to enter into, modify, cancel, enforce
and otherwise deal with the agreements relating to the
business and affairs of the Partnership, including the
Owner Partnership Agreement, and to engage in the
transactions, with Affiliates or otherwise, discussed in
this Agreement, the Owner Partnership Agreement and the
Prospectus pursuant to which the Units were offered;
I-24
(x) to take any other action necessary or
advisable in connection with the business of the
Partnership;
(xi) to invest funds of the Partnership in
interest-bearing accounts and short-term investments
including without limitation obligations of the federal,
state and local governments and their agencies, mutual
funds (including money market funds), time deposits,
commercial paper and certificates of deposit of
commercial banks, savings banks or savings and loan
associations;
(xii) to list the Units for trading on any
securities exchange or cause the Units to be authorized
for quotation on an interdealer quotation system
established by a national securities association if such
listing would not, in the opinion of Counsel, result in
the loss (in whole or in part) of the Partnership's
ability to provide of "flow through" tax consequences to
Partners and Unit Holders, and to modify this Agreement
to comply with the requirements of any such exchange or
quotation system, or to remove the Units from listing or
from authorization or quotation;
(xiii) to take the actions described in
Section 1.01(c); and
(xiv) to cause the Partnership to cause the
Owner Partnership to sell any of the Malls or to sell
any or all of the Partnership's interest in the Owner
Partnership.
(d) Notwithstanding the generality of the
foregoing, the General Partner may not (except to the extent
necessary to accomplish matters permitted by Section
6.01(c)(xiii)):
(A) do any act in contravention of this
Agreement;
(B) do any act which would make it
impossible to carry on the ordinary business of the
Partnership (except in connection with a dissolution of
the Partnership in accordance with the provisions of
Section XII of this Agreement);
(C) confess a judgment against the
Partnership;
(D) admit a person as a General Partner,
except as provided in this Agreement;
I-25
(E) execute or deliver any general
assignment for the benefit of the creditors of the
Partnership;
(F) subject to Sections 2.06, 2.07, 7.02
and 9, issue any Partnership Interests (x) after the
Termination date or (y) in exchange for Capital
Contributions in a form other than cash;
(G) cause or permit the Partnership to
purchase, lease or sublease any real property from, or
sell, lease or sublease any real property to the General
Partner, its Affiliates or affiliated programs
(provided, however, that the Owner Partnership may
purchase Assembly Square from an Affiliate of the
General Partner under the terms and conditions specified
in the Prospectus under "Terms of the Offering");
(H) cause the Partnership to make loans or
investments in real estate mortgages other than in
connection with the sale or disposition of the
Partnership's property;
(I) cause or permit the Partnership to make
loans to the General Partner or to its Affiliates;
(J) invest in or underwrite the securities
of other issuers (provided, however, that the General
Partners may temporarily invest Partnership funds in
money market funds other than funds organized as limited
partnerships, including funds sponsored by Shearson or
its Affiliates, but in no event may the amount invested
in any money market funds sponsored by Shearson or its
Affiliates exceed 5% of the net asset value of such
money market funds, and in any event the General Partner
shall reimburse the Partnership for commissions,
advisory fees or the other fees, if any, paid to such
affiliated funds in connection with the investment of
Partnership funds);
(K) invest in junior trust deeds unless
received in connection with a sale of any of the Malls;
(L) commingle funds of the Partnership with
funds of any other limited partnership (except that the
General Partner may establish a master fiduciary account
pursuant to which separate subtrust accounts are
established for limited partnerships of which the
General Partner or an Affiliate thereof is General
Partner so long as the Partnership's funds are protected
from claims of such other partnerships and/or
creditors);
I-26
(M) receive any rebates or give-ups or
participate in reciprocal business arrangements
prohibited by any applicable state law or in violation
of the terms of this Agreement;
(N) operate in such a manner as to be
classified as an "investment company" for purposes of
the Investment Company Act of 1940, as amended;
(O) allow reinvestment of Net Cash Flow or
Net Proceeds in any property or investment except as a
temporary investment for working capital;
(P) admit a person as a Limited Partner,
except as provided in this Agreement;
(Q) employ, or permit the employment of,
the funds or assets of the Partnership in any manner
except for the exclusive benefit of the Partnership;
(R) engage in the purchase or sale of
investments other than (i) the short-term investment of
available funds as described in the Prospectus or (ii)
its direct or indirect interest in the Malls;
(S) repurchase or reacquire its own
securities;
(T) invest in limited partnership interests
of any other limited partnership other than the Owner
Partnership;
(U) give to itself or its Affiliates an
exclusive right to sell or exclusive employment to sell
any of the Malls;
(V) pay to itself or an Affiliate a real
estate brokerage commission upon disposition of the
Malls which (1) is greater than the lesser of 3% or that
which is competitive at that time and (2) when
aggregated with amounts payable to parties that are not
Affiliates of the General Partner exceeds the lesser of
6% or that which is competitive at that time and (3) is
not subordinated to a return of 100% of Capital
Contributions plus an amount equal to 12% of Capital
Contributions per annum cumulative to investors, and
only if substantial real estate brokerage services have
been provided by itself or its Affiliates;
(W) pay a commission to itself or an
Affiliate in connection with the distribution of Net
Cash Flow or in connection with the reinvestment or
I-27
distribution of the proceeds of the resale, exchange or
refinancing of the Malls;
(X) enter into any financing for any Mall
which would cause the total amount of indebtedness on
all Malls to exceed the sum of 85% of the aggregate
purchase price of all Malls that have not been
refinanced and 85% of the aggregate fair market value of
all refinanced properties, as determined by the lender
as of the date of refinancing, where "indebtedness" is
defined to include the principal of any loan together
with any deferred interest which exceeds 5% per annum of
the principal balance of such indebtedness (excluding
contingent participations in income and/or appreciation
in the value of the property) and to exclude any
indebtedness incurred by the Partnership for necessary
working capital;
(Y) cause the Partnership to participate in
a joint venture with another program formed by the
General Partner or an Affiliate; however, the General
Partner may cause the Partnership to enter into such a
joint venture with an affiliated program only if the two
programs have substantially identical investment
objectives, there are no duplicate property management
or other fees, the sponsor compensation is substantially
identical in each program, the Partnership has a right
of first refusal to buy if the other program wishes to
sell property held in the joint venture and the
investment of the Partnership and the other program is
on substantially the same terms and conditions;
(Z) allow the Partnership or an Affiliate
thereof to construct or develop Additional Malls;
(AA) require the completion of property
acquired under construction to be guaranteed at the
contracted price without an adequate completion bond or
other satisfactory arrangements;
(BB) cause the Partnership to acquire any
Additional Mall without first obtaining an independent
appraisal of the value thereof;
(CC) pay or award direct or indirectly, any
commissions or other compensation to any person engaged
by a potential investor for investment advice as an
inducement to such advisor to advise the purchase of
Interests or Units other than normal sales commissions
payable to a registered broker-dealer or other person
properly licensed for selling Interests or Units; or
I-28
(DD) cause the Partnership to accept
financing where "financing" is defined to include loans
as well as any disposition, renegotiation or other
subsequent transaction involving loans, from the General
Partner, Shopco or any Affiliate of either, except that
programs affiliated with the General Partner or Shopco
may provide financing if the Partnership and such
affiliated program each have an independent advisor who
issues a letter of opinion that the loan is fair and at
least as favorable to the Partnership as a loan to an
unaffiliated borrower in similar circumstances, which
advisor shall be a long-established, nationally
recognized investment banking firm, accounting firm,
mortgage banking firm, bank, real estate financial
consulting firm or advisory firm and which advisor to
the Partnership shall be compensated by the General
Partner or Shopco, with no reimbursement for such
compensation expense to be either sought from the
Partnership or paid by the Partnership to the General
Partner or Shopco.
(e) With respect to all of its obligations, powers
and responsibilities under this Agreement (including the power
to cause the Partnership to cause the Owner Partnership to
finance or refinance the Malls), the General Partner is
authorized to execute and deliver, for and on behalf of the
Partnership, such notes and other evidences of indebtedness,
contracts, agreements, assignments, deeds, leases, loan
agreements, mortgages and other security instruments and
agreements as it deems proper, all on such terms and conditions
as it deems proper.
6.02. Loans by the General Partner to the Partnership.
(a) In the event the Partnership's or the Owner
Partnership's funds are insufficient to meet their respective
current operating needs and additional funds cannot be borrowed
on commercially reasonable terms pursuant to the provisions of
Section 6.01(c)(ii) in connection therewith, the General Partner
or its Affiliates have the right, but not the obligation, to
make loans to the Partnership or to advance monies on its behalf
(collectively, "Optional Loans") (which, in turn, may be loaned
or contributed to the capital of the Owner Partnership).
Optional Loans shall bear interest at the rate which would be
charged by unrelated lending institutions as comparable loans
for the same purpose in the same locality of each of the Malls.
Optional Loans and interest thereon shall be repaid prior to any
distributions to the Partners pursuant to Section V. Payments
made in respect of Optional Loans shall be deemed first to be
repayment of interest accrued on such Optional Loans and then to
be repayment of the principal amount thereof. No prepayment or
other penalty charges in connection with Optional Loans shall be
permitted. The General Partner shall have no right to force a
I-29
sale of Partnership (or Owner Partnership) assets so as to repay
Optional Loans. No Optional Loans shall consist of indebtedness
with a term in excess of 48 months.
6.03. Services of the General Partner; Other Interests of
Partners and Unit Holders; Fiduciary Duty.
(a) During the existence of the Partnership, the
General Partner shall devote such time and effort to the
Partnership and Owner Partnership business as may, in the good
faith business judgment of the General Partner, be necessary
adequately to promote the interests of the Partnership and its
Owner Partnership and the mutual interests of the Partners and
Unit Holders. It is specifically understood and agreed,
however, that the General Partner shall not be required to
devote its full time to Partnership or Owner Partnership
business. Any Partner or Unit Holder may at any time and from
time to time engage in and possess interests in other business
ventures of any and every type and description, including,
without limitation, the ownership, operation, financing and
management of real estate, independently or with others
(including such activities as may compete with the Partnership
or the Owner Partnership, so long as such activities do not
result in material adverse economic consequences to the
Partnership or the Owner Partnership), and neither the
Partnership, the Owner Partnership nor any Partner or Unit
Holder shall by virtue of this Agreement have any right, title
or interest in or to such independent ventures.
(b) The General Partner shall have the fiduciary
responsibility towards the Limited Partners and Unit Holders
alike for the safekeeping and use of all funds and assets of the
Partnership, whether or not in the possession or control of the
General Partner, and shall not employ, or permit another to
employ, such funds or assets in any manner except for the
exclusive benefit of the Partnership. Furthermore, the
Partnership shall not permit any Limited Partner or Unit Holder
to contract away the fiduciary duty owed to such Limited Partner
or Unit Holder by the General Partner under applicable law.
(c) The General Partner shall fulfill the same
fiduciary obligations to Unit Holders as that owed to Limited
Partners under this Partnership Agreement and applicable law of
the State of Delaware.
6.04. Liability of the General Partner; Indemnification.
Neither the General Partner nor any Affiliate of the General
Partner which performs services for the Partnership (individually, an
"Indemnitee") shall be liable, responsible or accountable in damages or
otherwise to the Partnership or any of the Limited Partners or Unit
Holders for any loss which arises out of any act or omission performed or
omitted by such Indemnitee, if such Indemnitee, in good faith, determined
I-30
such course of conduct was in the best interests of the Partnership, and
such course of conduct did not constitute negligence, misconduct or fraud
of the Indemnitee. In no event, however, shall an Affiliate who is an
Indemnitee be indemnified under the provisions of this section unless the
damages or loss for which indemnification is provided either arose out of
a situation in which such Affiliate was acting within the scope of the
General Partner's fiduciary obligations.
The Partnership shall indemnify and hold harmless each
Indemnitee from and against any and all losses, liabilities, expenses and
judgments and amounts paid in settlement of any claims sustained by such
Indemnitee in connection with the Partnership provided that the same were
not the result of negligence or misconduct on the part of the Indemnitee
and the Indemnitee has determined in good faith that the course if
conduct was in the best interest of the Partnership. Notwithstanding the
foregoing, no such person, or any person acting as a broker-dealer, shall
be indemnified for any loss, liability or expense arising out of or from
an alleged violation of federal or state securities laws unless both
(a)(i) there has been a successful adjudication on the merits of the
particular Indemnitee and the court-approved indemnification of the
litigation cost, (ii) such claims have been dismissed with prejudice on
the merits by a court of competent jurisdiction as to the particular
Indemnitee, and the court-approved indemnification of the litigation
cost, or (iii) a court of competent jurisdiction approves a settlement of
the claims against a particular Indemnitee and (b) the court finds that
indemnification of the settlement and related costs should be made. In
any claim for indemnification for federal or state securities laws
violations, the party seeking indemnification shall place before the
court the positions of the Securities and Exchange Commission, the
Massachusetts Securities Division, the California Commissioner of
Corporations, the Missouri Commissioner of Securities, the Pennsylvania
Securities Commission and any other applicable regulatory authority with
respect to the issue of indemnification for securities laws violations.
The Partnership shall not indemnify the Assignor Limited Partner for any
losses, liabilities or expenses arising from any actions taken by the
Assignor Limited Partner on behalf of the Unit Holders.
Advances from Partnership funds to an Indemnitee for legal
expenses and other costs incurred as a result of any legal action
initiated against the Indemnitee are permitted only if (i) the legal
action relates to the performance of duties or services by the General
Partner or its Affiliates on behalf of the Partnership, (ii) the legal
action is initiated by a third party who is not a Limited Partner or a
Unit Holder, and (iii) the General Partner or its Affiliates undertake to
repay the advanced funds to the Partnership in cases which they would not
be entitled to indemnification. The satisfaction of any indemnification
and holding harmless shall be from and limited to Partnership assets, and
no Limited Partner or Unit Holder shall have any personal liability on
account thereof. The Partnership shall not incur the cost of that
portion of any insurance which insures any party against any liability
the indemnification of which is herein prohibited.
I-31
6.05. Limitations on and Voting Rights of Limited Partners and
Unit Holders.
(a) No Limited Partner or Unit Holder shall take
part in the management or control of the business or affairs of
the Partnership, have any voice in the management or operation
of any Partnership property or business, or have the authority
or power in its capacity as a Limited Partner or Unit Holder to
act as agent for or on behalf of the Partnership, any other
Partner or any other Unit Holder, to do any act which would be
binding on the Partnership, any other Partner or any other Unit
Holder, or to incur any expenses on behalf of or with respect to
the Partnership.
(b) The Limited Partners may by vote of a Majority
in Interests of the Limited Partners propose or approve or
disapprove the amendment of this Agreement, provided, however,
that any amendment that (i) converts a Limited Partner into a
General Partner; (ii) modifies the limited liability of a
Limited Partner in any way; (iii) changes the allocation of
income and loss or the cash distributions of the General Partner
or Limited Partners, or the powers, rights and duties of the
General Partner; or (iv) adversely affects the ability of the
Partnership to provide "flow through" tax consequences, shall
require the consent of the General Partner and the Limited
Partners so affected. A Majority in Interests of the Limited
Partners may vote to dissolve the Partnership. Limited Partners
may otherwise vote only as provided in, and in accordance with,
the other provisions of this Agreement. Unit Holders shall not
vote but the Assignor Limited Partner shall vote in accordance
with the written instructions provided to it by the Unit
Holders.
6.06. Liability of Limited Partners and Unit Holders.
(a) No Limited Partner or Unit Holder, in such
capacity, shall have any personal liability whatever, whether to
the Partnership, to any of the Partners or to the creditors of
the Partnership, for the debts of the Partnership or any of its
losses beyond (i) the amount of his Capital Contribution, (ii)
his share of any undistributed assets of the Partnership and
(iii) to the extent and for the period required by applicable
law, the amount of his capital in the Partnership returned to
him or the amount of any distribution which is made in violation
of this Agreement or the Delaware Act. Each Unit and Limited
Partnership Interest on issuance shall be fully paid and not
subject to assessment for additional Capital Contributions. No
Limited Partner or Unit Holder shall be required to lend any
funds to the Partnership or, after his Capital Contribution has
been paid, to make any further contribution to the capital of
Partnership. Under the Delaware Act, a limited partner of a
partnership may, under certain circumstances, be required to
return to the partnership, for the benefit of the partnership or
I-32
partnership creditors, amounts previously distributed to such
limited partner as a return of his contribution and amounts
previously distributed to him if, at the time of, and after
giving effect to, such distribution, the liabilities of the
partnership, other than liabilities to partners on account of
their partnership interests, exceed the fair value of its
assets. It is the intention and agreement of the Partners and
Unit Holders that if any Unit Holder or Limited Partner (other
than the Assignor Limited Partner) has received a distribution
from the Partnership that is required to be returned to, or for
the account of, the Partnership or Partnership creditors, such
obligations shall be the obligation of the Unit Holder of
Limited Partner who receives such distribution, and not the
obligation of any General Partner or the Assignor Limited
Partner; provided, however, that nothing contained in this
Agreement shall be deemed to impose upon the transferee of a
Unit any obligation to return to the Partnership or any
Partnership creditor any distribution made to a prior holder of
such Unit.
(b) Except as otherwise provided in Section 4.06
with respect to the General Partner, no Partner or Unit Holder
with a negative balance in his capital account shall have any
obligation to the Partnership, the other Partners or the Unit
Holders to restore said negative balance.
6.07. Withdrawal or Removal of the General Partner.
(a) Except with the consent of a Majority in
Interest, and except as provided otherwise in this Section 6.07,
the General Partner shall not retire or voluntarily dissolve or
withdraw voluntarily from the Partnership or sell, transfer or
assign all or any portion of its Partnership Interest, provided,
however, that the General Partner may sell, transfer or assign
all or any portion of its right to receive income or any other
compensation provided for hereunder without any consent of
Limited Partners being required, and no assignee or transferee
of all or any portion of the Partnership Interest of the General
Partner shall have any right to become a general partner. Upon
a voluntary retirement or withdrawal of the General Partner, the
method of payment shall be fair and reasonable and shall consist
of a non-interest bearing unsecured promissory note with
principal payable, if at all, from distributions which the
General Partner otherwise would have received.
(b) With the consent of any other General Partner,
if any, and a Majority in Interest, the General Partner may at
any time designate one or more Persons to be successors to such
General Partner or to be an additional General Partner, in each
case with such participation in the General Partner's Interest,
as such General Partner and such successor or additional General
Partners may agree upon, and the General Partner may withdraw
I-33
after the admission of any such successor as a General Partner
hereunder.
(c) Without the consent of any other Partner, the
General Partner may substitute an Affiliate as general partner
upon satisfying the conditions of Section 6.10 provided that
such Affiliate accepts an assignment of all rights and assumes
all liabilities and responsibilities of the General Partner as
General Partner of the Partnership, including, without
limitation, all duties and obligations of the General Partner
under this Partnership Agreement and the Delaware Act.
(d) Each of the Limited Partners by execution of
this Partnership Agreement and each of the Unit Holders by
execution of his Subscription Agreement or acquisition of a Unit
or by acceptance of a transfer of a Depositary Receipt, consents
to the admission of any Person as a successor or additional
General Partner in accordance with the terms of this Agreement
which has received the consent in writing of a Majority in
Interest of the Limited Partners or which is admitted pursuant
to Section 6.07(c). If the admission is so consented to (or if
a successor General Partner is admitted pursuant to Section
6.07(c)), such admission shall, without any further consent or
approval of the Limited Partners, be deemed an act of all the
Limited Partners and Unit Holders. The Partnership may issue to
the General Partner a certificate or certificates representing
all or any portion of its Interest, or the economic rights and
benefits attributable thereto, which certificate(s) may be
transferred as permitted under Sections 6.07(b), (c) or (d).
(e) The General Partner may not be removed as
general partner of the Partnership except as set forth below:
(i) The General Partner may be removed as
general partner by the affirmative vote of a Majority in
Interest of the Limited Partners (including the Assignor
Limited Partner acting on behalf of the Unit Holders).
(ii) Any action by the Limited Partners to
remove the General Partner also must provide for the
election of a successor general partner and the election
to continue the business of the Partnership pursuant to
Section 10.02(b). The General Partner removed as a
general partner pursuant to this Section 6.07(e) shall
not have any right to participate in the management or
control of the business of the Partnership upon the
effective date of such removal.
(iii) Notwithstanding the provisions of
Section 6.07(e), the rights of the Limited Partners
thereunder shall be void ab initio if prior to or within
15 days of such vote the Partnership receives an opinion
of counsel that the action in question (i) is not in
I-34
accordance with the terms of this Agreement and
applicable law, (ii) may cause the loss of limited
liability of the Limited Partners or Unit Holders under
this Agreement or (iii) may cause the Partnership to
lose its ability (in whole or in part) to provide "flow
through" tax consequences.
If the General Partner is removed pursuant to Section 6.07(e)
and a successor general partner is elected pursuant to Section 10.02(b),
the former General Partner shall have no right to participate in the
management or control of the affairs of the Partnership nor shall it have
any right to vote in any vote requiring the consent of the Limited
Partners or Unit Holders. A General Partner that has been removed shall
not be entitled to any allocation of income, gain or loss of the
Partnership or any distributions, allocable or payable in either case to
the Unit Holders, but shall instead retain the share of the profits,
gains, losses, and distributions which it held in its capacity as General
Partner hereunder, until such time, if at all, as the General Partner's
interest is acquired as hereinafter described. The Partnership or any
successor General Partner elected by the Limited Partners shall have the
option, but not the obligation, to acquire the interest in the
Partnership of any General Partner so removed upon payment to the former
General Partner of the fair market value of such interest, such value to
be determined by agreement between the General Partner so removed and the
Partnership, or, in the absence of such agreement, by arbitration in
accordance with the rules of the American Arbitration Association. The
expense of arbitration shall be borne equally by the General Partner so
removed and the Partnership. Fair market value of the interest of the
General Partner so removed shall be the amount the General Partner would
receive upon dissolution and termination of the Partnership assuming that
such dissolution or termination occurred on the date the General Partner
was removed and the assets of the Partnership were sold for their then
fair market value without any requirement on the part of the Partnership
to sell such assets. The method of payment to the General Partner shall
be fair and reasonable and shall consist of an interest bearing
promissory note coming due in no less than 5 years with equal
installments payable each year.
(f) In connection with any transfer by a General
Partner of all or any part of its interest pursuant to this
Section 6.07 and the admission of a successor or additional
General Partner, any such successor or additional General
Partner, shall, together with any then remaining General
Partners, continue the business of the Partnership without
dissolution. In the event of the removal of a General Partner
under Section 6.07(e) or a transfer by the General Partner of
its entire Partnership Interest as a General Partner, the
successor General Partner designated by the withdrawing General
Partner (or the successor elected by the Limited Partners in the
case of a removal), shall be admitted to the Partnership as a
General Partner immediately prior to the effective date of
withdrawal of the withdrawing General Partner and shall continue
the business of Partnership without dissolution.
I-35
6.08. Certain Fees and Expenses.
(a) The General Partner or its Affiliates shall
receive Acquisition Fees, Acquisition Expenses and other Front-
end Fees described in the Prospectus for services rendered in
connection with (i) the acquisition and financing of the Malls,
(ii) the organization of the Partnership and the Owner
Partnership and (iii) the negotiation of the terms of the
management and leasing agreement for the Malls.
(b) For services rendered in connection with the
offering of Units, Shearson will receive (i) selling commissions
of 8% of Limited Partners' Capital Contributions and (ii)
reimbursement of certain Organization and Offering Expenses not
to exceed in the aggregate, including the amount of selling
commissions, 15% of Limited Partners' Capital Contributions.
(c) All expenses of the Partnership will be billed
directly to and paid by the Partnership. The General Partner
may be reimbursed for the actual cost of goods and materials
used for or by the Partnership and obtained from unaffiliated
entities. The General Partner may be reimbursed for the
administrative services necessary to the prudent operation of
the Partnership provided that the reimbursement shall be at the
lower of actual cost to the General Partner or the amount the
Partnership would be required to pay to independent parties for
comparable administrative services in the same geographic
location. However, no reimbursement may be had for services for
which the General Partner is entitled to compensation by way of
a separate fee. The following items shall be excluded from
allowable reimbursement (except to the extent permissible as
front-end fees): rent or depreciation; utilities; capital
equipment; other administrative items: salaries, fringe
benefits, travel expenses, and other administrative items
incurred by or allocated to any controlling persons of the
General Partner, Shopco or affiliates. "Controlling person,"
for purposes hereof, includes but is not limited to, any person,
whatever their title, who performs functions for the General
Partner or Shopco similar to those of chairman or member of the
board of directors; executive management, such as the president,
vice president or senior vice president, corporate secretary,
treasurer, senior management, such as the vice president of an
operating division who reports directly to executive management;
or those holding 5% or more equity interest in the General
Partner or Shopco or a person having the power to direct or
cause the direction of the General Partner or Shopco, whether
through the ownership of voting securities, by contract, or
otherwise. Except as specifically set forth in the Partnership
Agreement or Prospectus, no other services may be performed by
the General Partner, Shopco or an Affiliate thereof except in
extraordinary circumstances and provided the following criteria
are met:
I-36
(i) the compensation, price or fee therefor
must be comparable and competitive with the
compensation, price or fee of any other person rendering
comparable services or selling or leasing comparable
goods which could reasonably be made available to the
Partnership and shall be on competitive terms;
(ii) the fees and other terms of the
contract shall be fully disclosed;
(iii) the General Partner, Shopco or its
Affiliate, as the case may be, must have previously been
engaged in the business of rendering such services or
selling or leasing such goods, independently of the
Partnership and as an ordinary and ongoing business; and
(iv) all goods or services for which the
General Partner, Shopco or an Affiliate is to receive
compensation shall be embodied in a written contract
which precisely describes the services to be rendered
and all compensation to be paid, which contract may only
be modified by a vote of the majority of the limited
partners, and which contract shall contain a clause
allowing termination without penalty on 60 days' notice.
6.09. Code Elections.
Except as otherwise specifically provided herein, the General
Partner shall, in its sole discretion, determine whether to make any
available election including, without limitation, the elections provided
for in Code sections 168 and 754 on behalf of the Partnership. The
General Partner shall have the right to seek to revoke any such election
upon the General Partner's determination that such revocation is in the
interests of the Limited Partners and Unit Holders; provided that the
General Partner shall not seek to revoke any such election unless the
General Partner has received an opinion of counsel to the effect that
such revocation would not cause the Partnership to be treated as an
association taxable as a corporation for federal income tax purposes.
6.10. Net Worth of the General Partner.
Each Partner and Unit Holder hereby acknowledges and agrees that
the General Partner's net worth will be funded by a demand promissory
note executed and delivered by Shearson Xxxxxx Xxxxxx Group Inc., the
sole shareholder of the General Partner, to the General Partner. Such
demand promissory note will be for $2,900,000 if a Closing occurs in
respect to the sale of the Minimum and shall be raised to $3,400,000 if a
Closing occurs such that 70,250 Units in the aggregate will have been
sold and $4,100,000 if Closings occur such that an aggregate of more than
70,250 Units will have been sold.
I-37
6.11. Sale or Lease of Malls.
The following activities with regard to the sale or lease of the
Malls shall be prohibited: the sale or lease of property to the General
Partner, Shopco or an Affiliate thereof (except the Master Rental Income
Guaranty); the purchase or lease of Additional Malls from a program in
which the General Partner, Shopco or an Affiliate thereof has an
interest; and the purchase or lease of Additional Malls in which the
General Partner, Shopco or an Affiliate thereof has an interest except if
purchased temporarily for the purpose of facilitating (i) the acquisition
thereof or (ii) the borrowing of money or (iii) the obtaining of
financing or (iv) the completion of construction or (v) any other purpose
related to the business of the Partnership, provided (x) the price for
which such property is purchased by the Owner Partnership may not be
greater than the cost to the General Partner, Shopco or an Affiliate
thereof except to the extent a profit is permissible as a Front-end Fee,
and provided (y) there is no increase in interest rates of the loans
secured by the property from the time acquired by the General Partner,
Shopco or an Affiliate thereof to the time acquired by the Owner
Partnership (except as disclosed in the Prospectus in respect to the
possible acquisition of Assembly Square by an Affiliate of the General
Partner prior to its transfer to the Partnership).
Additionally, a Majority in Interest of Limited Partners may
vote to approve or disapprove the sale of substantially all of the assets
of the Partnership.
6.12. Meetings.
Meetings of the Limited Partners for any purpose as to which
Limited Partners may act as provided in this Agreement may be called by
the General Partner at any time and shall be called by the General
Partner at a time and place convenient to Unit Holders and Limited
Partners within 10 days following receipt of a written request for such a
meeting signed by 10% or more of the holders of outstanding Limited
Partnership Interests. The General Partner shall provide all Limited
Partners and Unit Holders written notice, either in person or by
certified mail, of a meeting and the purpose of such meeting, the same to
be held on a date not less than 15 days nor more than 60 days after
receipt of said request. Any request by Unit Holders for a meeting shall
be directed to the Assignor Limited Partner who, for this purpose, shall
act to the extent, and only to the extent, of written directions received
from Unit Holders. Any such request shall state the purpose of the
proposed meeting and the matters proposed to be acted upon at such
meeting. Meetings shall be held at the principal office of the
Partnership or at such other place as may be designated by the General
Partner. At any meeting of Limited Partners, the Assignor Limited
Partner shall vote (whether by proxy, ballot, consent or otherwise) so
many of the assigned Limited Partnership Interests held by it in favor of
or in opposition to any matter upon which the instructions received by it
from Unit Holders as of the applicable record date. Other than their
rights as herein provided to give written instructions to the Assignor
Limited Partner, the Unit Holder shall have no other voting or consent
I-38
rights. Notwithstanding the foregoing, Unit Holders of record as of the
applicable record date shall be entitled to all notices of, and to be
present and be heard at, all meetings of Limited Partners.
6.13. Notice.
Notice of any meeting to be held pursuant to Section 6.12 shall
be delivered to each Limited Partner and Unit Holder at his record
address, or at such other address which he may have furnished in writing
to the General Partner. Such notice shall be in writing and shall state
the place, date and hour of the meeting, the purpose or purposes of the
meeting, and shall indicate that it is being issued at or by the
direction of the General Partner or Limited Partners calling the meeting.
Such notice shall contain a verbatim statement of any resolution proposed
by the Limited Partners and of any proposed amendment to this Agreement.
If a meeting is adjourned to another time or place, and if any
announcement of the adjournment of time or place is made at the meeting,
it shall not be necessary to give notice of the adjourned meeting. The
presence in person or by proxy of Limited Partners holding more than 50%
of the outstanding Partnership Interests (including those held by the
Assignor Limited Partner for the Unit Holders) shall constitute a quorum
at all meetings of the Limited Partners; provided, however, that if no
such quorum is present, holders of more than 50% of such Partnership
Interest so present or so represented may adjourn the meeting form time
to time without further notice, until a quorum shall have been obtained.
No notice of the time, place or purpose of any meeting of Limited
Partners or Unit Holders need be given to any Limited Partner or Unit
Holder who attends in person or is represented by proxy (except when a
Limited Partner or Unit Holder attends a meeting for the express purpose
of objecting at the beginning of the meeting to the transaction of any
business on the ground that the meeting is not lawfully called or
convened), or to any Limited Part or Unit Holder entitled to such notice
who waives such notice in a writing executed and filed with the records
of the meeting, either before or after the time thereof.
6.14. Record Date.
For the purpose of determining the Limited Partners entitled to
vote and the Unit Holders entitled to direct the voting of the Assignor
Limited Partner at any meeting of the Limited Partners, or any
adjournment thereof, the General Partner or the Limited Partners and Unit
Holders requesting such meeting or vote may designate, in advance, a date
as the record date of any such determination of Limited Partners. Such
date shall not be more than 60 days nor less than 15 days before any such
meeting. A list of the names and addresses of all Limited Partners and
Unit Holders shall be maintained as a part of the books and records of
the Partnership and shall be made available upon reasonable request of
any Limited Partner or Unit Holder of his representative at his cost. At
each meeting of Limited Partners and Unit Holders, the Limited Partners
and the Assignor Limited Partner on behalf of the Unit Holders either
present or represented by proxy shall elect such officers and adopt such
rules for the conduct of such meeting as they shall deem appropriate.
I-39
6.15. Front-end Fees.
An amount not less than the greater of (a) 85% of the Limited
Partners' Capital Contributions, reduced by .1625% for each 1% of
financing of the Malls, or (b) 77% of the Limited Partners' Capital
Contributions, will be committed to Investment in Properties. Front-end
Fees shall be limited to 15% of the Limited Partners' Capital
Contributions, increased by .1625% for each 1% of financing of the Malls.
SECTION VII
Assignment of Assignor's Limited Partnership
Interests to Unit Holders and Rights of Unit Holders
7.01. Assignment of Interests: Timing, Procedures, Rights,
Liabilities, and Fiduciary Duty.
(a) At each Closing, the Assignor Limited Partner
shall contribute to the Partnership on behalf of the purchaser
of Units the proceeds of the sale of Units received and accepted
by the General Partner. The Assignor Limited Partner shall hold
such Interests (and shall keep and simultaneously supply the
Partnership with a list containing the name, address and number
of Units purchased by each Unit Holder, which list shall be
available for inspection by any Unit Holder on written request)
and the purchaser of such Units shall be entered on the books
and records of the Partnership. The Partnership shall, on or
about each Closing Date, issue to the order of the respective
Unit Holders Depositary Receipts registered in the names of such
Unit Holders (or their nominees) in respect of the Units held.
By subscribing for the purchase of Units or tendering payment
for Units, as well as by requesting or holding a Depositary
Receipt of a confirmation of purchase of Units, or by requesting
that a Unit be registered in his name, each Unit Holder will be
deemed to have consented to and to be bound by all of the terms,
conditions, rights and obligations set forth in this Agreement
and, without limitation, to have granted the power of attorney
set forth in Section 12.03.
(b) The Assignor Limited Partner, by the execution
of this Agreement, irrevocably transfers and assigns to the Unit
Holders as of the applicable Closing Date all of the Assignor
Limited Partner's rights and interest in and to the Interests,
except as otherwise provided herein, as of the time of release
by the Escrow Agent to the Assignor Limited Partner or to the
Partnership on behalf of the Assignor Limited Partner of any
payment for Units. The rights and interest so transferred and
assigned shall include the following:
(i) all rights to receive distributions
pursuant to Section V;
I-40
(ii) all rights to receive allocations of
items of taxable income and losses and net gains and
losses pursuant to Section IV;
(iii) all rights to inspect books and records
and to receive reports pursuant to Section VIII;
(iv) all rights which Limited Partners have
under the Delaware Act, including the right to xxx to
enforce obligations of the Partnership, except as
otherwise provided herein;
(v) the right to instruct the Assignor
Limited Partner with respect to the voting of the
Interests related to the Units (the Assignor Limited
Partner having no right to vote with respect to any Unit
or Interest without instructions from the record owners
of the applicable Units) and rights to call meetings;
and
(vi) the right to bring derivative actions
pursuant to Sections 17-1001 et seq. of the Delaware (or
any successor provision thereof), and all rights to
maintain actions under Sections 17-205, 17-802 and 17-
803 of the Delaware Act (or any successor provision
thereof) (and, in the event any such action must be
brought in the name of the Assignor Limited Partner, the
Assignor Limited Partner agrees to cooperate, at the
expense of the concerned Unit Holders, in all respects
with the maintenance of any such action).
(c) The General Partner, by the execution of this
Agreement, irrevocably consents to and acknowledges that (i) the
foregoing transfer and assignment by the Assignor Limited
Partner to the Unit Holders are intended to be assignees of all
the foregoing rights and privileges of the Assignor Limited
Partner with respect to the Interests. The General Partner
covenants and agrees that in accordance with the foregoing
transfer and assignment, the Assignor Limited Partner's rights
and privileges with respect to Interests may be exercised by the
Unit Holders including, without limitation, clauses (i)-(vi) in
paragraph (b) above.
(d) The Assignor Limited Partner shall not be
liable to any Unit Holder for any action or nonaction by it in
reliance upon advice, written notice, request or direction from
a Unit Holder believed by the Assignor Limited Partner to be
genuine and to have been signed or presented by the proper
Person(s), however, the Assignor Limited Partner shall have
fiduciary responsibility for the safekeeping and use of all
funds and assets of the Unit Holders or assignees, whether or
not in the Assignor Limited Partner's possession and control,
and the Assignor Limited Partner is prohibited from employing or
I-41
permitting another to employ such funds or assets in any manner
except for the exclusive benefit of the Unit Holders or the
assignees. Furthermore, the Unit Holders or assignees shall not
be permitted to contract away the fiduciary duty owed to them by
the Assignor Limited Partner under the common law of agency.
(e) Each Unit Holder shall be liable for and to
the extent of any liability imposed upon the Assignor Limited
Partner in its capacity as a Limited Partner of the Partnership
with respect to such Unit Holder's Units for returns of
Partnership distributions and Capital Contributions.
(f) Notwithstanding the assignment of Interests
referred to in this Section 7.01, the Assignor Limited Partner,
subject to the right of a Unit Holder to become a substituted
Limited Partner as provided in Section 7.02(a) shall retain
legal title to such Interests and shall be and remain a Limited
Partner of the Partnership.
(g) The Partnership shall make all distributions to
Unit Holders pursuant to Section V and shall distribute all
reports and other communications directly to Record Holders
entitled to receive such distributions, reports and
communications and not to the Assignor Limited Partner.
Delivery of a distribution, report or other communication to the
Assignor Limited Partner shall not relieve the Partnership or
the General Partner from responsibility and liability for
delivery of such distribution, report or other communication to
the Record Holder entitled to receive such distribution, report
or communication.
7.02. Rights and Obligations of Unit Holders to Become Limited
Partners.
(a) Any Unit Holder may exchange any or all of its
Units for corresponding Interests by (i) delivering the General
Partner and the Assignor Limited Partner such documents as may
be reasonably required by the General Partner and the Assignor
Limited Partner and (ii) paying such reasonable fees and
expenses for actual legal and administrative costs not to exceed
$150 per Transfer, provided, however, that the holder of any
such Interest received in exchange for a Unit shall not be
admitted to the Partnership as Limited Partner unless and until
the General Partner shall have consented to such admission,
which consent shall not be unreasonably withheld or delayed. If
such holder of an Interest is admitted to the Partnership,
sales, assignments, transfers, encumbrances or other
dispositions ("Transfers") of such Interests shall be governed
by the provisions of Section IX. A Person making a Transfer
shall hereinafter be referred to as a "Transferor" and a Person
receiving such Transfer a "Transferee." If the General Partner
does not so consent, the Person requesting such exchange shall
remain a Unit Holder. If the General Partner does so consent to
I-42
the admission of a Unit Holder as a Limited Partner, no consent
of any other Limited Partner or Unit Holder shall be required to
effect such admission. Holders of Interests, other than the
Assignor Limited Partner, may not convert such Interests into
Units. Conversions of Units into Interests shall be
accomplished at such times as the General Partner shall
determine, but not less frequently than quarterly. The number
of Interests held by the Assignor Limited Partner shall be
reduced by the number of Interests issued to Unit Holders
pursuant to this Section 7.02(a).
(b) The General Partner may at any time require the
Unit Holders to become Limited Partners, and may take such other
action with respect to the manner in which Units or Interests
are being or may be transferred or traded, as it may deem
necessary or appropriate in order to preserve the ability of the
Partnership to provide "flow through" tax consequences, to
prevent termination of the Partnership for federal income tax
purposes or to insure that Unit Holders will be treated as
limited partners for federal income tax purposes, consistent
with the procedures set forth in Sections 7.04 and 7.03(e).
7.03. Transfer of Units.
(a) A Unit Holder may Transfer its Units, or any
part thereof, by a Transfer of the Depositary Receipt
representing the Units in accordance with the terms of, and
subject to the conditions specified in, the Depositary
Agreement.
(b) Each distribution in respect of a Unit shall be
paid by the Partnership, directly or through the transfer agent
or through any other person or agent, only to the Record Holder
of such Unit as of the Record Dates set for such distribution.
Such payment shall constitute full payment and satisfaction of
the Partnership's liability in respect of such payment,
regardless of any claim of any Person who may have an interest
in or with respect to such payment by reason of any assignment
or otherwise. The expense of any action taken pursuant to this
Section 7.03(b) will be a Partnership expense.
(c) Notwithstanding anything to the contrary
herein, the Partnership shall not recognize for any purpose any
purported transfer by a Unit Holder of all or any part of a Unit
held by such Unit Holder until such transfer has been effected
on the books of the Transfer Agent.
(d) By payment of its subscriptions and acceptance
of the confirmation of its purchase of a Unit to Units, any
holder of a Unit conclusively shall be deemed to have agreed to
comply with and be bound by all terms and conditions of this
Agreement and the Depositary receipt evidencing such Unit.
I-43
(e) In order to prevent the Partnership from being
treated as a "publicly traded partnership" for federal tax
purposes, when the General Partner determines, in its sole
discretion, that there is a risk that a proposed Transfer of
Units may occur on a secondary market (or a substantial
equivalent thereof) and the General Partner receives an opinion
of Counsel that the exercise of the following powers would not
cause the assets of the Partnership to become plan assets for
purposes of ERISA, then the Partnership and the General Partner
have the right (i) to refuse to recognize any such attempted
Transfer which would constitute a Transfer in a secondary market
(or a substantial equivalent thereof) as defined under Code
section 7704 and any Regulations promulgated thereunder, (ii) to
require the Unit Holders not to Transfer their Units on a
secondary market (or a substantial equivalent thereof), (iii) to
require the Unit Holders to provide all the information
respecting transfers which the General Partner deems necessary
in order to determine whether the Transfer may occur on a
secondary market (or a substantial equivalent thereof), and (iv)
to take any actions they deem necessary or appropriate in their
reasonable discretion so that such Transfer is not in fact
recognized.
7.04. Deferral of Registration of Transfers of Interests or
Units to Avoid Termination of the Partnership.
The registration of any Transfer (other than a Transfer by will
or intestacy upon death of the Transferor) of an Interest or Unit may be
deferred in the discretion of the General Partner if such Transfer, when
added to the total of all other Interests and Units for which Transfers
are made within the period of 12 consecutive months prior to the proposed
date of Transfer, would, in the opinion of Counsel, result in a
termination of the Partnership under Code section 708. The General
Partner will give written notice to all Limited Partners and Unit Holders
in the event that registrations of transfer should be suspended for such
reason. Any deferred registrations of transfers will be made (in
chronological order to the extent practicable) as of the first day of a
fiscal semi-annual period after the end of any such 12-month period.
7.05. Transfer Fee. The Partnership will charge a transfer
fee of its actual costs not to exceed $200.00 on the first Closing Date
(such $200.00 to be adjusted annually to adjust for increases or
decreases in the Consumer Price Index), in connection with the purchase
or sale of Units and Partnership Interests to cover reasonable expenses
of Transfer in an amount to be determined by the General Partner from
time to time. Such fee may be waived in the discretion of the General
Partner. Each Transfer must comply with applicable state "Blue Sky" laws
and requirements of the National Association of Securities Dealers, Inc.
The Partnership may require evidence that any such applicable laws and
standards have been met before agreeing to any Transfer of Units.
7.06. Replacement of the Assignor Limited Partner.
Notwithstanding any other provision hereof, if for any reason the
I-44
Assignor Limited Partner should dissolve or become subject to any
voluntary or involuntary bankruptcy or insolvency proceedings, or in the
event of the failure of the Assignor Limited Partner to perform any
obligation under this Agreement in accordance with the terms hereof with
respect to Limited Partnership Interests for which the Assignor Limited
Partner is the assignor limited partner, the General Partner may remove
the Assignor Limited Partner as the assignor limited partner and
substitute in its place such Person as the General Partner determines in
its sole discretion. Thereafter (of after any withdrawal and replacement
of the Assignor Limited Partner as described below), the Assignor Limited
Partner shall have no right of any nature whatsoever in or with respect
to the Limited Partnership Interests (other than any owned in its
individual capacity). If the Assignor Limited Partner withdraws as a
Limited Partner (whether or not such withdrawal constitutes a breach of
any provision of this Agreement), the General Partner may substitute such
Person as the assignor limited partner as the General Partner deems
appropriate in its sole discretion. Upon such removal and/or replacement
of the Assignor Limited Partner as the assignor limited partner, the
successor selected by the General Partner shall succeed automatically and
without the requirement of further action, to the legal title to the
Limited Partnership Interests previously held of record by the Assignor
Limited Partner (other than any owned in its individual capacity), and
thereafter such successor shall be a Limited Partner of the Partnership
and shall have all of the rights and obligations of the Assignor Limited
Partner hereunder. This Section 7.06 shall be equally applicable to any
successor in interest to the Assignor Limited Partner.
SECTION VIII
Books, Records and Bank Accounts
8.01. Fiscal Year. The fiscal year of the Partnership shall
end on December 31 of each year.
8.02. Records of Partnership Transactions. The General
Partner shall keep, or cause to be kept, full and accurate records of all
transactions of the Partnership. The General Partner shall also be
responsible to maintain throughout the existence of this Partnership all
the documentation relating to the suitability of investors in the
Partnership. In addition, the Partnership shall keep copies of the
appraisals of the Malls by Xxxxxxx & Xxxxxxxxx of Pennsylvania, Inc. or
by any other independent appraiser for 5 years from the date hereof and
shall make such appraisals available to a Unit Holder upon request.
Appraisals will be obtained for any Additional Malls purchased.
8.03. Access to Partnership Records. Upon reasonable demand
for any purpose related to the Limited Partners' and Unit Holders'
interests as a Limited Partner or Unit Holder (including but not limited
to litigation to protect such Limited Partners' and Unit Holders'
interests as Limited Partners or Unit Holders), and subject to payment of
a reasonable fee for the copying of such records only, Limited Partners
and Unit Holders and their designated representatives shall be permitted
I-45
access to all records of the Partnership and the Owner Partnership at the
principal office of the Partnership and the Owner Partnership during
reasonable business hours and shall have the right to make copies
thereof, including a copy of this Agreement or any amendments thereto or
restatements hereof containing the most recent listing of Partners' and
Unit Holders' names, addresses and capital contributions and, upon
request, a list of the names and addresses of all the Limited Partners
and Unit Holders will be mailed to any Limited Partner.
8.04. Method of Accounting; Preparation of Tax Returns. The
Partnership will prepare its tax filings based on the accrual method of
accounting. Within 75 days after the end of each fiscal year of the
Partnership, the General Partner shall prepare, or cause to be prepared,
all federal, state and local partnership returns of income for the
Partnership; and, in connection therewith, shall, in its sole discretion,
make any available or necessary tax elections. Within such 75 day
period, the Partnership will furnish to each person who was a Limited
Partner or Unit Holder on the first day of a month or other record date
during the preceding fiscal year all information required to be set forth
in such Partner's or Unit Holder's individual federal income tax return.
8.05. Reports on Partnership's Business. Within 60 days after
the close of each calendar quarter other than the last calendar quarter
of the fiscal year, commencing with the first full calendar quarter after
the Closing Date, the General Partner shall furnish to each person who
was a Limited Partner or Unit Holder of record at any time during the
calendar quarter then ended a report setting forth details with respect
to the progress of the Partnership's business and unaudited financial
statements and other relevant information regarding the Partnership and
its activities during the preceding calendar quarter, including a
statement of any transactions between the Partnership and the General
Partner or its Affiliates and of any fees, commissions, compensation,
reimbursements and other benefits paid or accrued to the General Partner
or its Affiliates during such calendar quarter, showing the amount paid
or accrued to each recipient and the services performed, and including a
statement setting forth in detail the source of any distributions paid to
the Limited Partners and Unit Holders for or during the quarter including
the amount of distributions made from reserves, from funds generated
through operations of the Property or the sale or other disposition of
Partnership assets.
8.06. Report on Form 10-Q. The Partnership shall also furnish
to the Limited Partners and Unit Holders, within 60 days after the close
of each calendar quarter, the quarterly report on Form 10-Q filed by the
Partnership with the Securities and Exchange Commission (or a quarterly
report containing at least as much information as the Form 10-Q).
8.07. Annual Financial Reports. Within 120 days after the end
of each fiscal year, the General Partner will furnish to Limited Partners
and Unit Holders (i) an annual report containing an audited financial
statement of the Partnership, including a balance sheet and statements of
income, partner's equity and changes in financial position and a cash
flow statement, for the year then ended, all of which, except the cash
I-46
flow statement, shall be prepared in accordance with generally accepted
accounting principles, together with the report of the independent
certified public accountants thereon, (ii) a report of the activities of
the Partnership during the fiscal year, (iii) a statement of any
transactions with the General Partner or its Affiliates and of fees,
commissions, compensation, reimbursements and other benefits paid or
accrued to the General partner or its Affiliates for the last quarter and
for such year, showing the amount paid or accrued to each recipient and
the services performed and (iv) a statement setting forth in detail the
source of any distributions paid to the Limited Partners and Unit Holders
for or during the last quarter and such fiscal year, including the amount
of distributions made from reserves, from funds generated through
operations or from funds derived from the sale, refinancing or other
disposition of Partnership assets. Such report shall also include a
report of the activities of the Partnership during such fiscal year. The
audited financial statements referenced in (ii) shall include
verification by such accountants of the allocation of costs reimbursed to
the General Partner and its Affiliates. The method of verification shall
be in accordance with generally accepted auditing standards, and the
method of verification shall at minimum provide: (i) A review of the
time records of individual employees, the costs of whose services were
reimbursed; (ii) A review of the specific nature of the work performed by
each such employee.
8.08. Bank Accounts; Temporary Investments. All receipts,
funds and income of the Partnership shall be deposited in the name of the
Partnership in such bank account or accounts of a savings and loan
association, commercial bank or other financial institution as the
General Partner from time to time shall determine. Withdrawals from said
banks shall be made on the signature of the General Partner or other
person designated by the General Partner. Notwithstanding the foregoing,
the General Partner on behalf of the Partnership shall be authorized to
invest Partnership funds temporarily not needed or Partnership purposes
in United States Treasury obligations, money market funds, certificates
of deposit, bankers' acceptances or any other similar money market
instruments or funds.
8.09. Tax Matters Partner.
(a) The General Partner shall be designated on the
Partnership's annual federal income tax return, and have full
powers and responsibilities, as the Tax Matters Partner of the
Partnership for purposes of Code Section 6231(a)(7)(A) (or any
successor provision thereof). Each Person (the "Pass-Through
Partner") that holds or controls an interest as a Limited
Partner or Unit Holder on behalf of, or for the benefit of,
another Person or Persons, or which Pass-Through Partner is
beneficially owned (directly or indirectly) by another Person or
Persons shall, within 30 days following receipt from the General
Partner of any notice, demand, request for information or
similar document, convey such notice, demand or request in
writing to such holders of beneficial interests in the
Partnership holding such interests through such Pass-Through
I-47
Partner as shall be necessary to obtain information so as to
fully respond to such notice, demand or request from the General
Partner.
(b) In the event the Partnership shall be the
subject of an income tax audit by any federal, state or local
authority to the extent the Partnership is treated as an entity
for purposes of such audit, including administrative settlement
and judicial review, the General Partner shall be authorized to
act for, and its decision shall be final and binding upon, the
Partnership and each Partner and Unit Holder thereof. All
expenses incurred in connection with any such audit,
investigation, settlement or review shall be borne by the
Partnership.
8.10. Reports to Administrators. The General Partner shall
furnish to each state securities or "Blue Sky" commissioner any report or
statement required to be distributed to the Limited Partners and Unit
Holders and requested by such state commissioner.
8.11. Modifications to Reporting Requirements.
In the event that the Securities and Exchange Commission
promulgates rules which allow a reduction in the Partnership's reporting
requirements, the Partnership may cease to prepare and file certain
reports mentioned in this Section VIII if the General Partner determines
such action to be not adverse to the interest of the Partnership.
SECTION IX
Transfers of Interests
9.01. Restrictions on Transfer or Assignment of Interests.
(a) No Limited Partner (other than the Assignor
Limited Partner) may Transfer, all or any portion of its
Interests without giving written notice of such Transfer to the
General Partner. No Transfer shall be effective against the
Partnership or the General Partner until the first day of the
month next succeeding the month in which the General Partner
receives (i) the written notice described below and (ii) a duly
executed written instrument of Transfer. If a Transfer, occurs
by reason of the death of a Limited Partner or a Transferee
thereof, such written notice may be given by the duly authorized
representative of the estate of the Limited Partner or such
Transferee and shall be supported by such proof of legal
authority and valid assignment as may reasonably be requested by
the General Partner.
(b) The written notice required by this Section
9.01 shall specify the name and residence address of the
Transferee and the date of Transfer, shall include a statement
by the Transferee that it agrees to give the above-described
I-48
written notice to the General Partner upon any subsequent
assignment and shall be signed by both the Transferor and
Transferee. The General Partner may, in it sole discretion,
waive receipt of the above-described notice or waive any defect
therein. The Partnership shall recognize the Transferee as the
holder of the Interests assigned (but not as a Substituted
Limited Partner except pursuant to the provisions of Section
9.02), only in the event that such assignment is made in
accordance with the provisions of this Article IX.
(c) No Transfer of Interests may be made:
(1) if the General Partner or counsel to
the Partnership shall be of the opinion that such
Transfer
(i) would be in violation of any
applicable state securities or "Blue Sky" laws
or any investor suitability standards
established by the Partnership;
(ii) would result in the
Partnership losing its ability to provide
"flow-through" tax consequences;
(iii) would result in the
termination of the Partnership pursuant to the
provisions of Code Section 7.08; and
(2) unless each of the following conditions
are satisfied:
(i) the Transferor and Transferee
shall execute and acknowledge such other
instruments as the General Partner reasonably
deems necessary or desirable to effect such
assignment including, but not limited to,
evidence of the assignee's compliance with
suitability standards imposed by the
Partnership and applicable "Blue Sky" laws and
(ii) the Partnership shall have
received from the assignor or assignee a
transfer fee as set forth in Section 7.05 to
cover all reasonable expenses of the Transfer,
including without limitation, all legal
expenses, but such transfer fee may be waived
by the General Partner in its sole discretion.
(d) The General Partner may impose further
restrictions on Transfer described in Sections 7.03(e), but
subject to the conditions of that section.
I-49
9.02. Substituted Limited Partners.
In addition to the restrictions on Transfers as set forth in
Section 9.01, no Transferee shall be admitted to the Partnership as a
Substituted Limited Partner unless all of the following conditions are
satisfied:
(a) A duly executed written instrument of Transfer
setting forth the intention of a Transferor seeking to Transfer
all or a portion of its Interests, that the Transferee shall
become a Substituted Limited Partner in its place, which is in
form and substance satisfactory to the General Partner, shall
have been filed with the General Partner.
(b) The Transferor and Transferee shall execute and
acknowledge such other instruments as the General Partner
reasonably deems necessary or desirable to effect such
assignment and admission, including, but not limited to, the
written acceptance and adoption by the recipient of the
provisions of the Agreement and its execution, acknowledgment
and delivery to the General Partner of a power of attorney, the
form and consent of which are more fully described in Section
12.03.
(c) The Partnership shall have received from the
Transferor or Transferee a transfer fee in such amount as the
General Partner may from time to time determine to cover all
reasonable expenses of the Transfer, including, without
limitation, all legal expenses and all expenses related to the
amendment of this Agreement and/or the Certificate, if such
amendment is required by law, but such transfer fee may be
waived by the General Partner, in its sole discretion; and
(d) The General Partner has consented in writing to
the Transferee becoming a Substituted Limited Partner, which
consent the General Partner may grant or withhold in its sole
discretion.
9.03. Recognition of Transfer.
(a) Any Transfer of an Interest in contravention of
any of the provisions of this Section IX shall be void and
ineffective and shall not be binding upon or recognized by the
Partnership.
(b) A Transferee of a beneficial interest in the
Interest who is not admitted as a Substituted Limited Partner,
shall have no right to require any information or account of the
Partnership's transactions or to inspect the Partnership's books
or to vote on any matter, and it shall only be entitled to
receive distributions from the Partnership and allocations of
income, gain, loss and deduction attributable to the beneficial
interest in the Interests acquired by reason of such Transfer
I-50
from the first day of the month following the month in which the
written instrument of Transfer, executed by the assignor and in
form and substance as set forth in Section 9.01, and other
documents requested by the General Partner pursuant to the
provisions of Section 9.01 shall have been received by the
Partnership.
(c) Anything contained herein to the contrary
notwithstanding, both the Partnership and the General Partner
shall be entitled to treat the Transferor of such Units as the
absolute owner thereof in all respects, and shall incur no
liability for allocations of income, gain, loss or deduction or
for distributions to the assignor until the first day of the
calendar month following the month in which the Partnership
shall have received all of the documents provided for in Section
9.01.
9.04. Treatment of a Substituted Limited Partner as a Limited
Partner.
Within a reasonable period of time after the date when the
General Partner shall have consented to the substitution of a Transferee
as a Substituted Limited Partner, and the Transferor and Transferee shall
have satisfied all of the conditions of Section 9.02, the General Partner
shall amend the records of the Partnership and, if such amendment is
required by law, the Certificate of the Partnership shall be amended at
least quarterly to admit the recipient as a Substituted Limited Partner.
The admission of any person as a Substituted Limited Partner shall become
effective as of the first day of the calendar month following the
satisfaction of all of the conditions set forth in Section 9.02. Any
person admitted to the Partnership as a Substituted Limited Partner shall
be subject to all of the provisions of this Agreement as if an original
party hereto.
9.05. Withdrawal, Bankruptcy or Incapacity of a Limited
Partner.
(a) No Limited Partner at any time shall withdraw
from the Partnership. However, such restriction shall not
prevent the substitution of a Limited Partner in the place and
stead of another Limited Partner if the applicable terms and
conditions of Section 9.02 are complied with.
(b) In the event of bankruptcy or incapacity of a
Limited Partner (the "Withdrawing Limited Partner") the legal
representative of the Withdrawing Limited Partner shall have
such power as the Withdrawing Limited Partner possessed to
constitute a successor as an assignee of its Interests in the
Partnership and to join with such assignee in making application
to substitute such assignee as a Limited Partner. Such legal
representative shall succeed to the rights of the Withdrawing
Limited Partner to receive distributions from the Partnership
and to join with such assignee in making application to
I-51
substitute such assignee as a Limited Partner. Such legal
representative shall succeed to the rights of the Withdrawing
Limited Partner to receive distributions from the Partnership
and allocations of income, gain, loss and deduction; provided,
however, that such legal representative shall not have the right
to become a Substituted Limited Partner in the place of the
Withdrawing Limited Partner unless the conditions of Section
9.02 (other than the requirement that the assignor execute and
acknowledge instruments) are first satisfied.
9.06. Assignment of Units.
The provisions of this Section IX shall not apply to the
transfer and assignment of Units by the Assignor Limited Partner in
accordance with the provisions of Section VII.
9.07. Transfers in Violation of Section. Any Transfer in
contravention of any of the provisions of this Section IX shall be void
and ineffectual, and shall not bind or be recognized by the Partnership.
SECTION X
Dissolution and Termination
10.01. No Dissolution.
The Partnership shall not be dissolved by the admission of
additional Limited Partners or Substituted Limited Partners nor by the
admission of Substituted General Partners in accordance with the terms of
this Agreement.
10.02. Events of Dissolution.
(a) The Partnership shall be dissolved on the
earliest to occur of the following events:
(i) on a date designated by the General
Partner and a Majority in Interest of the Limited
Partners (including the Assignor Limited Partner acting
on behalf of Unit Holders);
(ii) the Bankruptcy or withdrawal of the
General Partner;
(iii) upon the sale of all or substantially
all of the Partnership's equity interest in the Owner
Partnership or of the Malls by the Owner Partnership
(unless the General Partner elects to continue the
existence of the Partnership pending collection of the
deferred balance of any purchase money obligation held
by the Partnership or the Owner Partnership);
I-52
(iv) on December 31, 2038;
(v) a conversion or reconstitution pursuant
to Section 1.01(c);
(vi) the entry of a decree of judicial
dissolution of the Partnership by a court of competent
jurisdiction; or
(vii) the occurrence of any other event that
would cause the dissolution of the Partnership or make
it unlawful for the business of the Partnership to be
continued under the Delaware Act.
(b) Upon the occurrence of an event specified in
Section 10.02(a)(ii), the Partnership shall not be terminated
and its affairs wound up if a Majority in Interest of the
Limited Partners (including the Assignor Limited Partner acting
on behalf of the Unit Holders) (or such greater number as may be
required by law) elect within ninety days after such occurrence
to continue the Partnership and the Partnership business and
shall designate one or more Persons to be a successor General
Partner(s), effective as of the date of such event. In the
event that a Majority in Interest of the Limited Partners
(including the Assignor Limited Partner acting on behalf of the
Unit Holders) so elect to continue the Partnership with a
successor General Partner(s), the business of the Partnership
shall be continued, in a reconstituted form as a successor
limited partnership if necessary, in accordance with the terms
of this Agreement, and the successor General Partner(s) shall
succeed to all of the powers and privileges of the General
Partner hereunder. The Partnership will pay to the terminated
General Partner all amounts then accrued and owing thereto and
may acquire the General Partner's interest by paying an amount
equal to the present fair market value thereof determined by
agreement or, if no agreement is reached, by arbitration in
accordance with the then current rules of the American
Arbitration Association with the expense of arbitration to be
borne equally by the terminated General Partner and the
Partnership. The method of payment will be: (i) for a
voluntary payment, a non-interest bearing unsecured promissory
note with principal payable, if at all, from distributions which
the terminated General Partner would otherwise have received
under the Partnership Agreement had the General Partner not been
terminated, and (ii) for an involuntary termination, an interest
bearing promissory note coming due in no less than 5 years with
equal installments payable each year.
(c) Dissolution of the Partnership shall be
effective on the day on which the event occurs giving rise to
the dissolution, but the assets of the Partnership and the
affairs of the Partners and Unit Holders, as such, shall
continue to be governed by this Agreement. Upon dissolution,
I-53
the General Partner or, if there be none, a liquidator appointed
by a Majority in Interest of the Limited Partners (including the
Assignor Limited Partner acting on behalf of the Unit Holders),
shall liquidate the assets of the Partnership, apply and
distribute the proceeds thereof as contemplated by this
Agreement and cause the execution and filing of a Certificate of
Cancellation of the Partnership, as well as any and all other
documents required by law to effectuate the dissolution and
termination of the Partnership.
10.03. Distributions Upon Dissolution and Liquidation.
(a) After payment of all obligations, debts and
liabilities of the Partnership owing to creditors (including
Partners who are creditors to the extent otherwise permitted by
law but excluding liabilities for distributions to Partners
under Section 17-601 or 17-604 of the Delaware Act), and the
expenses of dissolution or liquidation of the Partnership, the
General Partner or liquidator shall set up such reserves as it
deems reasonably necessary for any contingent or unforeseen
liabilities or obligations of the Partnership. Said reserves
may be paid over by the General Partner or liquidator to a bank,
to be held in escrow for the purpose of paying any such
contingent or unforeseen liabilities or obligations and, at the
expiration of such period as the General Partner or liquidator
may deem advisable, such reserves shall be distributed to the
Limited Partners, Unit Holders and the General Partner (or their
respective assigns) in the manner set forth in subsection (b)
below.
(b) After paying such obligations, debts and
liabilities, the expenses of dissolution or liquidation and
providing for such reserves, the General Partner or liquidator
shall cause the remaining net assets of the Partnership to be
distributed to and among the Partners in the manner set forth in
Section 5.03. In the event that any part of such net assets
consist of notes or accounts receivable or other non-cash
assets, the General Partner or liquidator shall take whatever
steps it deems appropriate to convert such assets into cash or
into any other form which would facilitate the distribution
thereof.
SECTION XI
Certain Definitions
For purposes of this Agreement, the following terms shall have
the following meanings:
"Acquisition Expenses" shall include but not be limited to legal
fees and expenses, travel and communications expenses, costs of
appraisals, non-refundable option payments on property not acquired,
I-54
accounting fees and expenses, title insurance, and miscellaneous expenses
related to selection and acquisition of properties, whether or not
acquired.
"Acquisition Fees" means the total of all fees and commissions
paid by any party in connection with the purchase or development of
property by the Partnership, including any real estate commission,
selection fee, development fee, nonrecurring management fee, or any fee
of similar nature, however designated.
"Additional Malls" means any all of the additional, as-yet
unspecified enclosed regional shopping malls that the Owner Partnership
may acquire.
"Additional Property" means any improved real property in the
immediate vicinity of any of the Malls which may be acquired by the Owner
Partnership to be operated in connection with any of the Malls.
"Affiliate" means, with reference to a Person, (i) any Person
directly or indirectly controlling, controlled by or under common control
with such Person, (ii) any Person owing or controlling ten percent or
more of the outstanding voting securities or beneficial interests of such
Person, (iii) any officer, director, partner, general trustee or anyone
acting in a substantially similar capacity as to such Person; and (iv) if
such other Person is an officer, director or partner, any company for
which such Person acts in any such capacity.
"Agreement" means this Amended and Restated Agreement of Limited
Partnership, as amended, modified or supplemented from time to time.
"Assembly Loan" means that first mortgage loan secured by
Assembly Square in the principal amount of $28,000,000.
"Assembly Square" means The Mall at Assembly Square, a regional
shopping center located in Somerville, Massachusetts.
"Assignor Limited Partner" means Shearson Regional Malls
Depositary Corp., a Delaware corporation, in its capacity as the Assignor
Limited Partner of the Partnership under the terms of this Agreement.
"Bankruptcy" means (i) the entry of a decree or order for relief
by a court of competent jurisdiction in any involuntary case under any
bankruptcy, insolvency, or other similar law now or hereafter in effect;
(ii) the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator or other similar agent for a Person or for any
substantial part of a Person's assets or property; (iii) the ordering of
the agent for a Person or for any substantial part of a Person's assets
or property; (iv) the ordering of the winding up or liquidation of a
Person's affairs; (v) the filing with respect to a Person of a petition
in any such involuntary bankruptcy case, which petition remains
undismissed for a period of 90 days or which is dismissed or suspended
pursuant to section 305 of the Federal Bankruptcy Code (or any
corresponding provision of any future United States bankruptcy law); (vi)
I-55
the commencement by a Person of a voluntary case under any bankruptcy,
insolvency or other similar law now or hereafter in effect; (vii) the
consent by a Person to the entry of an order for relief in an involuntary
case under any such law or to the appointment of or taking possession by
a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar agent for a Person or for any substantial part of a
Person's assets or property; or (viii) the making by a Person of any
general assignment for the benefit of creditors.
"Capital Contribution" means (i) as to any Partner, the capital
contribution paid by such Partner to the Partnership in accordance with
the terms of this Agreement and (ii) as to any Unit Holder, the capital
contribution deemed to have been paid to the Partnership on behalf of
such Unit Holder (or his predecessor in interest) by the Assignor Limited
Partner in the amount of $1,000 per Unit.
"Capital Transaction" means a financing, refinancing (other than
the refinancing of any pre-existing mortgage with the proceeds of the
First Mortgage Loans), insurance award (other than for substantially
complete destruction of a Mall without restoration thereof),
condemnation, easement sale, sale or partial sale of a Mall or similar
transaction which, in accordance with generally accepted accounting
principles, is attributable to capital, but which does not result in the
dissolution and termination of the Owner Partnership or the Partnership.
"Closing" means any closing as described in the Prospectus, as
the Prospectus may be amended or supplemented from time to time.
"Closing Date" means the date of any Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission.
"Cranberry" means the Cranberry Mall, a regional shopping center
located in Westminster, Maryland.
"Cranberry Loan" means the first mortgage loan secured by
Cranberry in the principal amount of $27,250,000.
"Delaware Act" means the Delaware Revised Uniform Limited
Partnership Act as amended to date and as it may be amended from time to
time hereafter, and any successor of such Act.
"Depositary Receipt" means a certificate issued by the
Partnership evidencing ownership of one or more Units, such certificate
to be in such form or forms as may be adopted by the General Partner.
"First Mortgage Loans" means the Assembly Loan and the Cranberry
Loan in the aggregate amount of $55,250,000.
"Front-end Fees" shall mean fees and expenses paid by any party
for any services rendered during the Partnership's and the Owner
I-56
Partnership's organizational or acquisition phase including Organization
and Offering Expenses, Acquisition Fees, loan placement fees, Acquisition
Expenses, and any other similar fees, however designated.
"General Partner" means Shearson Regional Malls Inc., a Delaware
corporation, or any other Person who becomes an additional or successor
general partner to the Partnership in accordance with this Agreement.
"Guidelines" means the guidelines for real estate and mortgage
loan programs as adopted by the North American Securities Administrators
Association as they exist on the date the Partnership's Registration
Statement is declared effective by the SEC.
"Interest" or "Limited Partnership Interest" means the
Partnership Interest of a Limited Partner in the Partnership, each such
Interest or Limited Partnership Interest corresponding to an original
Capital Contribution to the Partnership in the amount of $1,000.
"Investment in Properties" shall mean the amount of the Limited
Partners' Capital Contributions, including the amount of Gap Loans,
actually paid or allocated to the purchase, development, construction or
improvement of properties acquired by the Partnership and the Owner
Partnership (including the purchase of properties, working capital
reserves allocable thereto (except that working capital reserves in
excess of 5% shall not be included), and other cash payments such as
interest and taxes but excluding Front-end Fees).
"Limited Partners" means the Assignor Limited Partner (with the
respect to all Interests legal title to which is held by the Assignor
Limited Partner for the benefit of Unit Holders) and all other Persons
who are admitted as limited partners pursuant to the provisions of this
Agreement and who are so identified in the books and records of the
Partnership.
"Majority in Interest" or "Majority in Interest of the Limited
Partners" means, as to any matter upon which the Limited Partners may act
hereunder, the affirmative vote or written consent of Limited Partners
who are the record holders of more than 50% of the issued and outstanding
Limited Partnership Interests (subject, however, to Section 1.05(c)) (the
Assignor Limited Partner voting assigned Limited Partnership Interests
only if and to the extent that written directions on the voting thereof
are received from record holders of the associated Units).
"Malls" means any of Assembly Square, Cranberry or the
Additional Malls.
"Management and Leasing Fee" means the fee paid for day-to-day
professional property management services in connection with the Malls.
"Maximum Closing" means a closing after which at least an
aggregate of 70,250 Units are subscribed for.
I-57
"Maximum Closing Date" means the date on which a Maximum Closing
occurs.
"Minimum Closing" means the closing in which the minimum number
of Units (20,000 Units) are subscribed for.
"Minimum Closing Date" means the date on which the Minimum
Closing occurs.
"National Securities Exchange" means an exchange registered with
the Commission under Section 6(a) of the Securities Exchange Act of 1934,
as amended.
"Net Cash Flow" means, for any given period, the excess of (a)
amounts distributed to the Partnership from the operations of the Owner
Partnership (including distributions pursuant to section 5.06 of the
Owner Partnership Agreement) plus income from any other sources, over
(2) all expenses of the Partnership (other than cash expenditures that
are paid out of the proceeds of a Capital Transaction and other than
expenses attributable to depreciation accelerated cost recovery system
deductions, or other deductions that do not require cash expenditures),
and (3) reserves established from time to time in such amounts and for
such purposes as the General Partner shall determine.
"Net Proceeds" means the net proceeds of a Capital Transaction
or the sale or other disposition of the Malls and other assets of the
Partnership or the Owner Partnership upon a dissolution and termination
of the Partnership remaining after payment of (i) the debts and
liabilities of the Partnership or the Owner Partnership to the extent
required to be paid or satisfied in connection with such transaction
including, without limitation, property management fees, outstanding
loans and any accrued interest thereon, (ii) if appropriate, the
application of such proceeds to their intended use (i.e., capital or
leasehold improvements, restoration of the Malls, payment of an
outstanding loan), (iii) the payment of any and all costs and expenses
incurred in connection with the transaction including, if appropriate,
the costs and expenses incurred in connection with the dissolution and
liquidation of the Partnership or the Owner Partnership, and
(iv) reserves established from time to time in such amounts and for such
purposes as the General Partner shall reasonably determine.
"Organization and Offering Expenses" means those expenses
incurred in connection with and in preparation of the depositary units of
limited partnership interest for registration and subsequently offering
and distributing them to the public, including sales commissions paid to
broker-dealers in connection with the distribution of the depositary
units and all advertising expenses.
"Optional Loans" means the loans described in Section 6.02(a) of
this Agreement.
"Owner Partnership" means Shearson Shopco Malls, L.P., a
Delaware limited partnership, as it may from time to time be constituted.
I-58
"Owner Partnership Agreement" means the limited partnership
agreement between the Partnership, as general partner, and Shopco Limited
Partnership, as limited partner.
"Partner" or "Partners" means any or all General or Limited
Partners of the Partnership.
"Partnership" means Shopco Regional Malls, L.P., a Delaware
limited partnership, as it may from time to time be constituted.
"Partnership Interest" means, as to any Partner, all of the
interest of that Partner in the Partnership under this Agreement and the
Delaware Act, including, but not limited to, such Partner's right to a
distributive share of income and losses of the Partnership and the right,
if a General Partner, to participate in the management of the affairs of
the Partnership.
"Percentage Interest(s)" means, with respect to each Limited
Partner (other than the Assignor Limited Partner) and Unit Holder, a
percentage equal to a fraction the numerator of which shall be the number
of Interests or Units owned by such Person, and the denominator of which
shall be the aggregate number of Interests and Units owned by all the
Limited Partners and Unit Holders.
"Person" means a corporation, an association, a partnership, a
joint venture, an estate, a trust, any other legal entity, or an
individual.
"Preferred Return" means, at any given time, with respect to
each Unit Holder, the excess of (a) an amount equal to 12% per annum of
the average daily Unrecovered Capital of the Unit Holder for the period
commencing on the Closing Date for such Unit Holder and ending on the
date of determination, over (b) the sum of all amounts theretofore
distributed to such Unit Holder (or its predecessor in interest) pursuant
to Sections 5.01, 5.02(a) (but only on account of the Preferred Return)
and 5.03(a) (but only on account of the Preferred Return).
Notwithstanding the foregoing, for purposes of computing the Preferred
Return with respect to a Unit Holder, the Unrecovered Capital of the Unit
Holder shall be reduced and/or increased consistent with the adjustments
to Unrecovered Capital of the Partnership in the Owner Partnership
Agreement, as particularly described in the definition of Preferred
Return in the Owner Partnership Agreement but in making such adjustment,
the increase described in (ii)(B) and (ii)(C) of the definition of
Preferred Return in the Owner Partnership Agreement shall only be made if
the General Partner is not obligated to fund such costs under Section
5.07 hereof.
"Prospectus" means the prospectus filed with the Commission as
part of the Registration Statement relating to the offering of the Units,
dated the date the Registration Statement is declared effective by the
Commission.
I-59
"Purchase Price" means the price paid upon the purchase of a
particular property, including the amount of Acquisition Fees and all
liens and mortgages on the property, but excluding points and prepaid
interest.
"Record Date" means the date established by the General Partner,
in its sole discretion, for determining (i) the identity of Limited
Partners entitled to notice of or to vote at any meeting of Limited
Partners or entitled to exercise rights in respect of any other lawful
action of Limited Partners, (ii) the identity of the Unit Holders
entitled to notice of any meeting of Limited Partners, to give written
instructions with respect to the voting of their Units in accordance with
Section 6.15 or to exercise rights in respect of any other lawful action
of the Unit Holders or (iii) the identity of Partners and Unit Holders
entitled to receive any report pursuant to Section VIII, distributions
pursuant to Section V, or allocations pursuant to Section IV.
"Record Holder" means, as applied to a Limited Partner, the
Person shown as a Limited Partner on the records of the Partnership or
the transfer agent as of the close of business on a particular day; as
applied to a Unit Holder, the Person shown as the owner of such Unit on
the records of the Partnership or transfer agent as of the close of
business on a particular day.
"Registration Statement" means the Registration Statement on
Form S-11 (Registration No. 33-20614) filed by the Partnership with the
SEC under the Securities Act of 1933 as it may be amended from time to
time.
"Regulations" means regulations, proposed regulations, and
temporary regulations promulgated under the Code from time to time.
"Securities Act" means the Securities Act of 1933, as amended,
and the regulations of the Commission promulgated thereunder.
"Service" means the Internal Revenue Service.
"Shearson Shopco Interests" means the partnership interests in
Shearson Shopco Malls, L.P. acquired by the Partnership.
"Shopco" means Shopco Limited Partnership, the limited partner
of the Owner Partnership.
"Underwriter" means Shearson Xxxxxx Xxxxxx Inc. in its capacity
as the underwriter of the offering of the Units.
"Unit" means each of the 110,000 depositary units of limited
partnership interest in the Partnership being offered pursuant to the
Prospectus at a price of $1,000 per Unit.
"Unit Holder" means, as of any moment in time, the Persons
holding Units according to the books and records of the Partnership.
I-60
"Unrecovered Capital" means as at any moment in time, with
respect to the Unit Holders as a group, an amount equal to gross offering
proceeds less all amounts theretofore distributed to the Unit Holders
pursuant to Sections 5.02(b), 5.03(a) (but only on account of Unrecovered
Capital), and 5.07 and, with respect to each Unit Holder, an amount equal
to $1,000 for each Unit owned by it, less all amounts theretofore
distributed to such Unit Holder (or its predecessor in interest) pursuant
to Sections 5.02(b), 5.03(a) (but only on account of Unrecovered Capital)
and 5.07.
"Working Capital Reserve" means the working capital reserve to
be established and maintained by the General Partner or the Owner
Partnership out of the Capital Contributions of the Unit Holders for
operating expenses, capital improvements, contingencies, such additional
funding requirements for the Malls as deemed necessary in the discretion
of the General Partner, and other unanticipated costs relating to
Partnership and Owner Partnership affairs and operations.
SECTION XII
Miscellaneous
12.01. Notices.
Any and all notices, elections or demands permitted or required
to be made under this Agreement shall be in writing, signed by the Person
giving such notice, election or demand and shall be delivered personally,
or sent by registered or certified mail, return receipt requested, to the
person required to receive such notice. Notices directed to a Limited
Partner or Unit Holder shall be delivered to its address set forth on the
books and records of the Partnership and the Assignor Limited Partner, or
at such other address as may be supplied by written notice given in
conformity with the terms of this Section 12.01 to the General Partner at
c/o Shearson Xxxxxx Xxxxxx Inc., American Express Tower, 12th Floor,
World Financial Center, New York, New York 10285, Attention: President,
and a copy of such notice shall be delivered in conformity with the terms
of this Section 12.01 to Xxxxxxx Xxxx & Xxxxxxxxx, One Citicorp Center,
000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X.
DeSherer, Esq. The date of personal delivery or the date of mailing, as
the case may be, shall be the date of such notice.
12.02. Successors and Assigns.
Subject to the restrictions on transfer set forth herein, this
Agreement shall be binding upon and shall inure to the benefit of the
Partners, Unit Holders, their respective successors, successors-in-title,
heirs and assigns, and each and every successor-in-interest to any
Partner or Unit Holder, whether such successor acquires such interest by
way of gift, purchase, foreclosure, or by any other method, shall hold
such interest subject to all of the terms and provisions of this
Agreement. Unit Holders by their purchase of Units and their acceptance
of confirmation of purchase, if any, shall be deemed to have consented to
all the terms and conditions of this Agreement.
I-61
12.03. Power of Attorney.
(a) Each of the Limited Partners (including the
Assignor Limited Partner) and Unit Holders irrevocably makes,
constitutes and appoints, individually and jointly the General
Partner and each officer thereof, with full power of
substitution, its true and lawful attorney(s) in fact, for it
and in its name, place and stead and for its use and benefit, to
make, execute, sign, acknowledge, swear to, deliver, record and
file:
(i) this Agreement of and all amendments
hereto and restatements hereof as may be required by
applicable law or pursuant to the terms of this
Agreement or which the General Partner, in its sole
discretion, deems advisable;
(ii) all papers which may be deemed
necessary or desirable to effect the dissolution and
termination of the Partnership (including but not
limited to a Certificate of Cancellation of the
Certificate);
(iii) any and all amendments to the
Certificate, including those necessary to admit
additional or substitute General Partners or Limited
Partners or to reflect adjustments in Interests,
provided such substitutions, additions or adjustments
are in accordance with the terms of this Agreement;
(iv) any business certificate, fictitious
name certificate, amendment thereto, or other instrument
or document of any kind necessary to accomplish the
business, purposes and objectives of the Partnership
and/or the Owner Partnership, or required by applicable
federal, state or local law; and
(v) any other document or instrument which
the General Partner deems necessary or desirable to
carry out the purposes of the Partnership and/or the
Owner Partnership.
(b) The foregoing grant of authority:
(i) is a Special Power of Attorney coupled
with an interest, is irrevocable and shall survive the
death or legal incapacity of the grantor;
(ii) may be exercised by the General Partner
or any officer or director of the General Partner for
each Limited Partner and Unit Holder or by listing all
the Limited Partners or Unit Holders executing any
instrument with a single signature of the General
I-62
Partner or any officer or director thereof acting as
attorney(s)-in-fact for all of the Limited Partners or
Unit Holders, as the case may be; and
(iii) shall survive the delivery of any
assignment by the Limited Partner or Unit Holder of the
whole or any portion of the Limited Partner's or Unit
Holder's interest in the Partnership, except that where
the assignee thereof has been admitted to the
Partnership as a substituted Limited Partner, this Power
of Attorney shall survive the delivery of such
assignment for the sole purpose of enabling the General
Partner or any officer or director of the General
Partner to execute, acknowledge and file any instrument
necessary to effect such substitution.
12.04. Amendments.
In addition to any amendments otherwise authorized herein,
amendments may be made to this Agreement from time to time in either of
the following manners:
(a) By the General Partner, without the consent or
approval of any Limited Partner or Unit Holder, (i) to add to
the duties or obligations of the General Partner or surrender
any right or power granted to the General Partner herein;
(ii) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with law or with any
other provision herein or to make any other provisions with
respect to matters or questions arising under this Agreement
which will not be inconsistent with law or with the provisions
of this Agreement; (iii) to delete or add any provision of this
Agreement required to be so deleted or added by any federal
agency or such similar agency, which addition or deletion is
deemed by such agency to be for the benefit or protection of the
Limited Partners or Unit Holders; and (iv) to make any amendment
to this Agreement contemplated by Section 6.01(c)(xii);
provided, however, that no amendment shall be adopted pursuant
to this Section 12.04 unless the adoption thereof (1) is not
materially adverse to the interests of the Limited Partners or
Unit Holders; (2) is consistent with Sections 6.01 and 6.05 of
this Agreement; (3) subject to the provisions of Section 4.05,
does not affect the method of allocation of income and losses,
and gains and losses provided in Section IV of this Agreement
among the Unit Holders or between the Unit Holders and the
General Partner; and (4) does not affect the limited liability
of the Limited Partners or Unit Holders contemplated by Section
6.06 of this Agreement or the status of the Partnership as a
partnership for federal income tax purposes. The power of
attorney granted pursuant to Section 12.03 of this Agreement may
be used by the General Partner to execute on behalf of a Limited
Partner or Unit Holder any document evidencing or effecting an
I-63
amendment adopted in accordance with the terms of this Section
12.04.
(b) Any other amendment to this Agreement shall be
proposed in writing by the General Partner or by Limited
Partners (including the Assignor Limited Partner on behalf of
the Unit Holders) holding not less than 10% of the Interests
then outstanding. Following any such proposal, the General
Partner shall call a meeting in accordance with the provisions
of Sections 6.13 through 6.15, which notice shall include a
statement of the proposed amendment and a statement of the
General Partner's recommendation as to whether the proposed
amendment should be adopted. A proposed amendment under this
Section 12.04(b) shall become effective when it has received due
approval of a Majority in Interest of the Limited Partners
(including the Assignor Limited Partner acting on behalf of the
Unit Holders); provided, however, that any amendment pursuant to
this Section 12.04(b) affecting Sections 2.02, III, IV, V (other
than Section 5.04), VI (other than Sections 6.12, 6.13, 6.14 and
6.15, 10.03, 12.04(b) or 12.09 in any manner shall also require
the approval of the General Partner; provided further, that any
provision hereof which sets forth a requirement for voting which
is greater than a majority shall require the same voting
percentage as is set forth in such provision in order to approve
any amendment thereof. No amendment to this Agreement which
requires an amendment to the Certificate shall become effective
until such amendment to the Certificate is duly filed in
accordance with the Act.
12.05. No Waiver.
The failure of any Partner or Unit Holder to insist upon strict
performance of a covenant hereunder or of any obligation hereunder,
irrespective of the length of time for which such failure continues,
shall not be a waiver of such Partner's or Unit Holder's right to demand
strict compliance in the future. No consent or waiver, express or
implied, to or of any breach or default in the performance of any
obligation hereunder, shall constitute a consent or waiver to or of any
other breach or default in the performance of the same or any other
obligation hereunder.
12.06. Entire Agreement.
This Agreement constitutes the full and complete agreement of
the parties hereto with respect to the subject matter hereof.
12.07. Captions.
Titles or captions of Sections contained in this Agreement are
inserted only as a matter of convenience and for reference, and in no way
define, limit, extend or describe the scope of this Agreement or the
intent of any provision hereof.
I-64
12.08. Counterparts.
This Agreement may be executed in several counterparts, all of
which together shall for all purposes constitute one Agreement, binding
on all the Partners and Unit Holders notwithstanding that all the
Partners or Unit Holders have not signed the same counterpart.
12.09. Foreign Limited Partners or Unit Holders.
Notwithstanding any other provision of this Agreement to the
contrary, the General Partner is authorized to take any action necessary
to comply with any withholding requirements established under the Code,
or any successor provision thereto, with regard to (a) the sale of
United States real property interests, or (b) the distributions of cash
or property to any Partner or Unit Holder which is a foreign person as
defined in the Code and Regulations. Furthermore, the General Partner
may elect (i) to withhold a portion of the distributions made to Unit
Holders who are foreign persons and (ii) to apply the withholding
provisions with respect to any Person who fails to certify in accordance
with the applicable requirement. The General Partner is also authorized
to take any action necessary to comply with any other withholding
requirement with respect to any Unit Holder or Limited Partner as may be
in effect.
12.10. Applicable Law.
This Agreement and the rights and obligations of the parties
hereunder shall be governed by and interpreted, construed and enforced in
accordance with the laws of the State of Delaware.
12.11. Severability.
If any provisions of this Agreement or the application thereof
to any party or circumstances shall be determined by any court of
competent jurisdiction to be invalid or unenforceable to any extent, the
remainder of this Agreement or the application of such provision to such
Person or circumstance, other than those as to which it is so determined
to be invalid, shall be enforced to the fullest extent permitted by law.
In Witness Whereof, the parties hereto hereby execute this
Amended and Restated Agreement of Limited Partnership as of the day and
year first above written.
General Partner:
Shearson Regional Malls, Inc.
By: _________________________________
Its: _________________________________
I-65
Assignor Limited Partner:
Shearson Regional Malls Depositary Corp.
By: _________________________________
Its: _________________________________
I-66
SCHEDULE A
General Partner
Name: Shearson Regional Malls, L.P.
Address: c/o Shearson Xxxxxx Xxxxxx Inc.
American Express Tower, 00xx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: President
Capital Contribution: $1,000.00
Assignor Limited Partner
Name: Shearson Regional Malls Depository Corp.
Address: c/o Shearson Xxxxxx Xxxxxx Inc.
American Express Tower, 00xx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: President
Capital Contribution: $1,000.00
Limited Partners
The attached computer generated list represents the
names and addresses of all limited partners of Shopco Regional Malls,
L.P.
