Exhibit 10.1.2
FIRST
AMENDMENT
TO
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
CBL & ASSOCIATES LIMITED PARTNERSHIP
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Dated as of January 31, 2001
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THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF CBL & ASSOCIATES LIMITED PARTNERSHIP (this
"Amendment") is hereby adopted by CBL Holdings I, Inc., a Delaware corporation
(the "General Partner"), as the general partner of CBL & Associates Limited
Partnership, a Delaware limited partnership (the "Partnership"), and by CBL
Holdings II, Inc., a Delaware corporation, a limited partner of the Partnership
representing a Majority-In-Interest of the Limited Partners of the Partnership
(the "Limited Partner"). For ease of reference, capitalized terms used herein
and not otherwise defined have the meanings assigned to them in the Second
Amended and Restated Agreement of Limited Partnership of CBL & Associates
Limited Partnership as the same may be amended, the "Agreement").
WHEREAS, the General Partner desires to establish and set
forth the terms of a new series of Partnership Units designated as Series J
Special Common Units (the "SCUs").
WHEREAS, Section 4.4(a) of the Agreement grants the General
Partner authority to cause the Partnership to issue Partnership Units in the
Partnership to any Person in one or more classes or series, with such
designations, preferences and relative, participating, optional or other special
rights, powers and duties as may be determined by the General Partner in its
sole and absolute discretion so long as the issuance does not violate Section
9.3 of the Agreement.
WHEREAS, the General Partner desires to amend the Agreement
to, among other things, set forth the terms of the SCUs.
WHEREAS, Sections 4.4(a) and 14.7(b) of the Agreement grant
the General Partner power and authority to amend the Agreement (including,
without limitation, the distribution and allocation provisions thereof) without
the consent of any of the Partnership's Limited Partners to evidence any action
taken by the General Partner pursuant to Section 4.4(a) and to set forth the
rights, powers and duties of the holders of any Additional Units issued pursuant
to Section 4.4(a).
WHEREAS, Section 14.7(a) of the Agreement provides for the
amendment of the Agreement with the approval of the General Partner and the
Consent of the Limited Partners, subject to the limitations set forth therein.
NOW, THEREFORE, the General Partner, with the Consent of the
Limited Partners, hereby amends the Agreement as follows:
1. Section 1.1 of the Agreement is hereby amended and
supplemented as set forth below:
(a) The following definitions are hereby added to
Section 1.1 of the Agreement:
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"Basic Distribution Amount" shall mean $0.725625; provided,
however, that such amount will be adjusted appropriately to
account for any unit splits, combinations or other similar
events with respect to the SCUs.
"Beneficial Ownership" shall have the meaning set forth in the
certificate of incorporation of the Company.
"Constructive Ownership" shall have the meaning set forth in
the certificate of incorporation of the Company.
"Common Unit Conversion Factor" shall mean 1.0, provided,
that, in the event that the Partnership (i) makes a
distribution to all holders of its Common Units in Common
Units (other than a distribution of Common Units pursuant to
an offer to all holders of Common Units and SCUs permitting
each to elect to receive a distribution in Common Units in
lieu of a cash distribution (such a distribution of Common
Units is referred to herein as a "Distribution of Common Units
in Lieu of Cash")), (ii) subdivides or splits its outstanding
Common Units (which shall expressly exclude any Distribution
of Common Units in Lieu of Cash), or (iii) combines or reverse
splits its outstanding Common Units into a smaller number of
Common Units (in each case, without making a comparable
distribution, subdivision, split, combination or reverse split
with respect to the SCUs), the Common Unit Conversion Factor
in effect immediately preceding such event shall be adjusted
by multiplying the Common Unit Conversion Factor by a
fraction, the numerator of which shall be the number of Common
Units issued and outstanding on the record date for such
distribution, subdivision, split, combination or reverse split
(assuming for such purposes that such distribution,
subdivision, split, combination or reverse split occurred as
of such time), and the denominator of which shall be the
actual number of Common Units (determined without the above
assumption) issued and outstanding on the record date for such
distribution, subdivision, split, combination or reverse
split. Any adjustment to the Common Unit Conversion Factor
shall become effective immediately after the record date for
such event in the case of a distribution or the effective date
in the case of a subdivision, split, combination or reverse
split.
"Common Unit Distribution Amount" shall mean the product of
(i) the quarterly distribution paid with respect to one Common
Unit for that quarter pursuant to Section 6.2(a)(v) hereof
multiplied by (ii) the Common Unit Conversion Factor.
"Distribution of Common Units in Lieu of Cash" shall have the
meaning set forth in the definition of Common Unit Conversion
Factor above.
"Floor Distribution" shall mean, with respect to any quarter,
$0.4375.
"▇▇▇▇▇▇ Limited Partner Representative" shall have the meaning
set forth in Section 7.12 hereof.
"▇▇▇▇▇▇ Property" shall have the meaning set forth in Section
6.2(b) hereof.
"JRI" shall mean ▇▇▇▇▇▇ Realty Investors Limited Partnership,
a Delaware limited partnership.
"Gross Income" shall mean, for each fiscal year or other
applicable period, an amount equal to the Partnership's gross
income for such year or period as determined for federal
income tax purposes, with the following adjustments: (a) by
including as an item of gross income any tax-exempt income
received by the Partnership; (b) gain resulting from any
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disposition of Partnership property with respect to which gain
is recognized for federal income tax purposes shall be
computed by reference to the Gross Asset Value of such
property rather than its adjusted tax basis; (c) in the event
of an adjustment of the Gross Asset Value of any Partnership
asset which requires that the Capital Accounts of the
Partnership be adjusted pursuant to Regulation Section
1.704-1(b)(2)(iv)(e), (f) or (m), the amount of such positive
adjustment is to be taken into account as additional Gross
Income pursuant to Exhibit C; and (d) excluding any items
specially allocated pursuant to Section 2 of Exhibit C.
"Master Contribution Agreement" shall mean the Master
Contribution Agreement, dated as of September 25, 2000, among
the Company, the Partnership, JRI and certain other persons
named therein, as amended by the Letter Agreement, dated
November 13, 2000, and the Amendment to the Master
Contribution Agreement, dated as of December 19, 2000, and as
the same may be further amended, modified or supplemented.
"Net Capital Gain" shall mean, for any taxable year, the
excess of recognized gains with respect to dispositions of
Property over recognized losses with respect to dispositions
of Property, in each case as determined by reference to Gross
Asset Value.
"Reduction Factor" shall mean the lesser of (i) the quotient
of the Common Unit Distribution Amount for such quarter
divided by the Floor Distribution and (ii) one.
"Safe Harbor Rate" shall have the meaning set forth in Section
6.2(e) hereof.
"SCUs" shall have the meaning set forth in Exhibit E.
"Series J Exchange Notice" shall have the meaning set forth in
Exhibit E.
"Series J Exchange Rights" shall have the meaning set forth in
Exhibit E.
"Series J Offered Units" shall have the meaning set forth in
Exhibit E.
(b) The following sentence is hereby added to the end
of the definition of "Capital Account" in the Agreement:
"For the avoidance of doubt, distributions pursuant to an
exercise of an option set forth in a JRI Option Agreement
entered into in connection with the Master Contribution
Agreement shall not result in any reduction in Capital
Accounts. "
(c) The definition of "Common Stock Amount" is hereby
deleted and replaced in its entirety with the following:
"Common Stock Amount" shall mean, with respect to any number
of Common Units or SCUs, the number of shares of Common Stock
equal to such number of Common Units or SCUs, as the case may
be, multiplied by the Conversion Factor; provided, however,
that in the event that the Company issues to all holders of
Common Stock rights, options, warrants or convertible or
exchangeable securities entitling the shareholders to
subscribe for or purchase additional Common Stock, or any
other securities or property of the Company, the value of
which is not included in the first sentence of the definition
of Closing Price of the shares of Common Stock (collectively,
"additional rights"), other than a right to receive a dividend
or other distribution of Common Stock that corresponds to
Common Units issued to the Company pursuant to a Distribution
of Common Units in Lieu of Cash, then the Common Stock Amount
shall also include, other than with respect to any Common
Units or SCUs "beneficially owned" by an "Acquiring Person"
(as such terms are defined in the Company's Rights Agreement,
dated as of April 30, 1999, as amended as of the Principal
Closing Date (as defined in the Master Contribution Agreement)
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and as it may be further amended from time to time, and any
successor agreement thereto), such additional rights that a
holder of that number of shares of Common Stock would be
entitled to receive.
(d) The definition of "Consent of the Limited Partners"
is hereby deleted and replaced in its entirety with the following:
"Consent of the Limited Partners" shall mean the written
consent of a Majority-In-Interest of the Limited Partners,
which consent shall be obtained prior to the taking of any
action for which it is required by this Agreement and may be
given or withheld by a Majority-In-Interest of the Limited
Partners, unless otherwise expressly provided herein, in their
sole and absolute discretion.
(e) The definition of "Conversion Factor" is hereby
deleted and replaced in its entirety with the following:
"Conversion Factor" shall mean 1.0, provided that in the event
that the Company (i) pays a dividend on its outstanding shares
of Common Stock in shares of Common Stock or makes a
distribution to all holders of its outstanding Common Stock in
shares of Common Stock (in either case other than a dividend
or other distribution of shares of Common Stock that
corresponds to Common Units issued to the Company pursuant to
a Dividend of Common Units in Lieu of Cash), (ii) subdivides
or splits its outstanding shares of Common Stock, or (iii)
combines or reverse splits its outstanding shares of Common
Stock into a smaller number of shares of Common Stock (in each
case, without making a comparable dividend, distribution,
subdivision, split, combination or reverse split with respect
to the Common Units and the SCUs), the Conversion Factor in
effect immediately preceding such event shall be adjusted by
multiplying the Conversion Factor by a fraction, the numerator
of which shall be the number of shares of Common Stock issued
and outstanding on the record date for such dividend,
distribution, subdivision, split, combination or reverse split
(assuming for such purposes that such dividend, distribution,
subdivision, split, combination or reverse split occurred as
of such time), and the denominator of which shall be the
actual number of shares of Common Stock (determined without
the above assumption) issued and outstanding on the record
date for such dividend, distribution, subdivision, split,
combination or reverse split. Any adjustment to the Conversion
Factor shall become effective immediately after the record
date for such event in the case of a dividend or distribution
or the effective date in the case of a subdivision, split,
combination or reverse split.
(f) The definition of "Limited Partner Representatives"
is hereby deleted and replaced in its entirety with the following:
"Limited Partner Representative" shall mean, with respect to
any Limited Partner, the representative appointed by such
Limited Partner pursuant to the first sentence of Section 7.12
or, if none, such Limited Partner.
(g) The definition of "Limited Partners" is hereby
deleted and replaced in its entirety with the following:
"Limited Partners" shall mean (i) those Persons listed under
the heading "Limited Partners" on Exhibit A hereto in their
respective capacities as limited partners of the Partnership,
their permitted successors and assigns and (ii) all Additional
Partners and Substituted Limited Partners.
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(h) The definition of "Ownership Limit" is hereby
deleted and replaced in its entirety with the following:
"Ownership Limit" shall have the meaning set forth in the
certificate of incorporation of the Company, as the same may
be modified by the Board of Directors of the Company as
permitted therein.
(i) The definition of "Partnership Units" is hereby
deleted and replaced in its entirety with the following:
"Partnership Units" shall mean the Common Units, the Preferred
Units and the SCUs.
(j) The definition of "Substituted Limited Partner" is
hereby deleted and replaced in its entirety with the following:
"Substituted Limited Partner" shall mean any Person admitted
to the Partnership as a limited partner pursuant to the terms
of Section 9.2.
(k) The definition of "Transfer" is hereby deleted and
replaced in its entirety with the following:
"Transfer" as a noun, shall mean any sale, assignment,
conveyance, pledge hypothecation, gift, encumbrance or other
transfer, including, without limitation, a transfer by
operation of law or through the laws of inheritance and
succession, and as a verb, shall mean to sell, assign, convey,
pledge, hypothecate, give, encumber or otherwise transfer,
including, without limitation, by operation of law or through
the laws of inheritance and succession.
2. Pursuant to Sections 4.5 and 7.8 of the Agreement, upon
execution of a Limited Partner Acceptance of the Partnership Agreement in the
form attached hereto as Attachment 1 (a "Limited Partner Acceptance") or by
causing a Limited Partner Acceptance to be executed on its behalf, each initial
holder of SCUs automatically will be admitted as an Additional Partner of the
Partnership, without any further action or approval and the General Partner
hereby agrees to cause the names of such recipients to be recorded on the books
and records of the Partnership on the date of such admission. In addition, upon
the transfer by an initial recipient of SCUs to its designated holding entity as
contemplated by the Master Contribution Agreement, and upon execution of a
Limited Partner Acceptance by or on behalf of such designated holding entity,
such designated holding entity automatically will be admitted as a Substituted
Limited Partner of the Partnership with respect to the transferred SCUs (and all
of the conditions set forth in Section 9.2 of the Agreement for such admission
will be deemed satisfied), without any further action or approval, and the
General Partner hereby agrees to cause the name of such designated holding
entity to be recorded on the books and records of the Partnership on the date of
such admission.
3. The second sentence of Section 6.2(a) is hereby
deleted and replaced in its entirety with the following:
"All such distributions shall be made in accordance with the
following order of priority:"
4. Section 6.2(a)(iii) of the Agreement is hereby
deleted and replaced in its entirety with the following:
"(iii) Third, to the extent that the amount of Net Cash Flow
distributed to the holders of SCUs for any prior quarter was
(for any reason, including as a result of Section 6.2(e), a
lack of legally available funds or a decision by the General
Partner not to make distributions for such quarter) less than
the amount required to be distributed for such quarter on
account of the SCUs pursuant to subparagraph (a)(iv) below,
and such shortfall has not been subsequently distributed
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pursuant to this Section 6.2(a)(iii), Net Cash Flow shall be
distributed to the holders of SCUs ratably until they have
received an amount per SCU necessary to satisfy such shortfall
for all prior quarters of the current and all prior
Partnership taxable years;"
5. The following paragraphs are hereby added to the end
of Section 6.2(a):
"(iv) Fourth, Net Cash Flow shall be distributed to the
holders of SCUs ratably until they have received for the
quarter to which the distribution relates an amount for each
outstanding SCU equal to the Basic Distribution Amount,
provided, however, that in the event that the Common Unit
Distribution Amount with respect to each of the four
consecutive calendar quarters immediately preceding the
calendar quarter to which the distribution under this
subparagraph (a)(iv) relates is not equal to or greater than
the Floor Distribution, then the amount required to be
distributed under this subparagraph (a)(iv) for each
outstanding SCU shall be equal to the product of the Reduction
Factor and the Basic Distribution Amount; and
(v) Fifth, the balance of the Net Cash Flow to be distributed,
if any, shall be distributed to holders of SCUs and Common
Units, pro rata in accordance with their proportionate
ownership of the aggregate number of SCUs and Common Units
outstanding (counting each SCU as the number of Common Units
into which it is convertible pursuant to the terms of Exhibit
E), provided, however, that such distribution to the holders
of SCUs shall be reduced by the amount of the distribution
made to them on account of their SCUs with respect to such
quarter pursuant to subparagraph (a)(iv) above and the
reduction will be allocated among the holders of SCUs pro rata
in accordance with their respective percentage interests in
the total number of SCUs then outstanding.
For the avoidance of doubt, set forth below are illustrations
of the distributions payable to the holders of SCUs and Common
Units pursuant to subparagraphs (a)(iv) and (a)(v) above: (I)
if the Common Unit Distribution Amount is $0.8750, then the
amount payable with respect to each outstanding SCU for that
quarter is $0.8750; (II) if the Common Unit Distribution
Amount is $0.725625, then the amount payable with respect to
each outstanding SCU for that quarter is $0.725625; (III) if
the Common Unit Distribution Amount is $0.5875, then the
amount payable with respect to each outstanding SCU for that
quarter is $0.725625; (IV) if the Common Unit Distribution
Amount is $0.4375, then the amount payable with respect to
each outstanding SCU for that quarter is $.725625; (V) if the
Common Unit Distribution Amount is $0.21875, then the amount
payable with respect to each outstanding SCU for that quarter
is $0.725625 (unless the Common Unit Distribution Amount with
respect to each of the four consecutive quarters immediately
preceding such quarter was less than the Floor Distribution,
in which case the amount payable with respect to each
outstanding SCU for that quarter would be $0.3628125); and
(VI) if the Common Unit Distribution Amount is $0.00, then the
amount payable with respect to each outstanding SCU for that
quarter is $0.725625 (unless the Common Unit Distribution
Amount with respect to each of the four consecutive quarters
immediately preceding such quarter was less than the Floor
Distribution, in which case the amount payable with respect to
each outstanding SCU for that quarter would be $0.00).
6. The second sentence of Section 6.2(b) of the
Agreement is hereby deleted.
7. Clause (b) of the third sentence of Section 6.2(b)
of the Agreement is hereby deleted and replaced in its entirety with the
following:
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"(b) in the event of a sale of a Property or an interest in a
Property Partnership (other than a direct or indirect interest
in a Property set forth in Exhibit A of the Master
Contribution Agreement (a "▇▇▇▇▇▇ Property"), and other than a
Property constituting "substituted basis property" (as defined
in Section 7701(a)(42) of the Code) with respect to a ▇▇▇▇▇▇
Property) giving rise to a special allocation of taxable
income or gain to a Limited Partner or Partners pursuant to
Section 3(c) of Exhibit C, the General Partner shall cause the
Partnership to distribute the Net Sale Proceeds therefrom up
to an amount sufficient to enable such Limited Partner or
Partners to pay any income tax liability with respect to the
income or gain so specially allocated (or, if any such Limited
Partner is a partnership or S corporation, to enable such
Limited Partner to distribute sufficient amounts to its equity
owners to enable such owners to pay any income tax liability
with respect to their share of such taxable income or gain)."
8. The last sentence of Section 6.2(b) of the Agreement
is hereby deleted.
9. Section 6.2(d) of the Agreement is hereby deleted
and replaced in its entirety with the following:
"(d) Notwithstanding the foregoing, all distributions pursuant
to this Section 6.2 shall remain subject to the provisions of
(i) the Certificate of Designation for each class or series of
Preferred Units set forth in Exhibit B hereto and (ii) Exhibit
E hereto with respect to the SCUs."
10. The following paragraph is hereby added as Section
6.2(e) of the Agreement:
"(e) Notwithstanding the provisions of Section 6.2(a) above,
if the distributions with respect to the SCUs made on or prior
to the second anniversary of the issuance of the SCUs would
result in any holder of a SCU receiving an annual return on
such holder's "unreturned capital" (as defined for purposes of
Treasury Regulation Section 1.707-4(a)) for a Partnership tax
year (treating the Partnership tax year in which such second
anniversary occurs as ending on such date) in excess of the
Safe Harbor Rate (as defined below), then the distributions to
such holder in excess of such Safe Harbor Rate will be
deferred, will continue to cumulate and will be payable on the
earlier to occur of (i) the disposition of the SCUs to which
such deferred distributions relate in a transaction in which
the disposing holder recognizes taxable gain thereon or (ii)
the first distribution payment date with respect to the SCUs
following the second anniversary of the issuance of the SCUs.
For purposes of the foregoing, the "Safe Harbor Rate" shall
equal 150% of the highest applicable Federal rate, based on
quarterly compounding, in effect for purposes of Section
1274(d) of the Code at any time between the date of the
issuance of the SCUs and the date on which the relevant
distribution payment is made."
11. The following paragraph is hereby added as Section
6.2(f) of the Agreement:
"(f) Distributions to Common Units and SCUs may be made by
offering the holders of Common Units and SCUs the opportunity
to make an election to take a portion of such distribution in
cash or additional Common Units; provided that such an offer
may not be made unless (i) holders of SCUs and holders of
Common Units received on a conversion or redemption of SCUs
will receive the full amount of the distribution in cash to
the extent that such holders elect to receive cash, including
an election to receive 100% of the distribution in cash, (ii)
with respect to distributions made within two years of the
final Closing provided for in the Master Contribution
Agreement, such distributions will not cause the aggregate
distributions to a holder of SCUs or a holder of Common Units
received on a conversion or redemption of SCUs, other than
distributions to such holder in respect of the Basic
Distribution Amount, to exceed the product of (x) the lesser
of such holder's percentage interest in Partnership profits
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for the year in which the distribution is made or such
holder's percentage interest in Partnership profits for the
life of the Partnership (as determined for purposes of
Treasury Regulations Section 1.707-4(b)) and (y) the
Partnership's net cash flow from operations for the year in
which the distribution is made (as determined for purposes of
Treasury Regulations Section 1.707-4(b)) and (iii) holders of
SCUs that elect to receive 100% of the distribution in cash
will have received in respect of the quarter to which such
distribution relates an amount per SCU, in cash, pursuant to
Section 6.2(a)(iv), equal to the Basic Distribution Amount.
Any such election will be made pro rata between the Common
Units and SCUs, i.e., the same amount of cash or Common Units
shall be offered with respect to each Common Unit and SCU.
Holders of Common Units or SCUs shall in no event be required
to elect to receive additional Common Units."
12. Section 6.6 of the Agreement is hereby deleted and
replaced in its entirety with the following:
"All elections required or permitted to be made by the
Partnership under any applicable tax law shall be made by the
General Partner in its sole discretion; provided, however, the
General Partner shall, if requested by a transferee, file an
election on behalf of the Partnership pursuant to Section 754
of the Code to adjust the basis of the Partnership property in
the case of a Transfer of a Partnership Unit, including
Transfers made in connection with the exercise of Rights (or
Series J Exchange Rights), made in accordance with the
provisions of this Agreement. The General Partner shall cause
the Accountants to prepare and file all state and federal tax
returns on a timely basis."
13. Section 7.12 of the Agreement is hereby deleted and
replaced in its entirety with the following:
"Upon written notice to the General Partner, any Limited
Partner or group of Limited Partners may appoint a
representative to act on its or their behalf with respect to
all Partnership matters, including exercising all voting
rights of the Partnership Units owned by such Limited Partner.
Whenever, under the terms of this Agreement, matters require
the Consent of the Limited Partners, the same shall mean the
consent of Limited Partner Representatives entitled to
exercise voting rights with respect to a majority of the
Partnership Units entitled to vote thereon, and any action
taken by the Limited Partner Representatives shall be fully
binding on the Limited Partners; it being the intention of the
Limited Partners that the Limited Partner Representatives
shall have full power and authority, to take all action, or to
authorize all action, which the Limited Partners are entitled
to take or authorize under the provisions of this Agreement.
Any appointments of Limited Partner Representatives made
pursuant to this Section 7.12 shall remain effective until
rescinded in a written notice to the General Partner, and the
General Partner shall have the right and authority to rely
(and shall be fully protected in so doing) on the actions
taken and directions given by such Limited Partner
Representatives without any further evidence of their
authority or further action by the Limited Partners that
appointed them. Each of the Limited Partners (identified on
Exhibit G hereto) hereby appoints JRI (or any person or entity
appointed by JRI upon written notice to the General Partner;
JRI, or such person or entity appointed by JRI upon written
notice to the General Partner, is referred to herein as the
"▇▇▇▇▇▇ Limited Partner Representative") as his, her or its
Limited Partner Representative with respect to all of the
Partnership Units now or hereafter owned by such Limited
Partner and such appointment shall remain effective with
respect to each such Limited Partner and each transferee of
the Partnership Units of each such Limited Partner until
rescinded with respect to such Limited Partner or transferee
in a written notice from that Limited Partner or transferee to
the General Partner."
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14. The last sentence of Section 8.2 of the Agreement
is hereby deleted and replaced in its entirety with the following:
"Notwithstanding the foregoing, all distributions pursuant to
this Section 8.2 shall remain subject to the provisions of (i)
the Certificate of Designation for each class or series of
Preferred Units set forth in Exhibit B hereto and (ii) Exhibit
E hereto with respect to the SCUs."
15. Section 9.2(a) of the Agreement is hereby deleted
and replaced in its entirety with the following:
"Subject to the provisions of Section 9.3 hereof, each Limited
Partner shall have the right to Transfer all or a portion of
its Partnership Units to any Person that is the Immediate
Family of such Limited Partner, an Affiliate of such Limited
Partner, another Limited Partner, an institutional lender as
security for a bona fide obligation of such Limited Partner, a
bona fide pledgee after a default in the obligation secured by
the pledge (or to a bona fide purchaser for value from such
pledgee), provided in each such case that prior written notice
of the proposed Transfer is delivered to the General Partner.
Any transfer of Partnership Units permitted by the first
sentence of this Section 9.2(a) or by any other provision of
this Agreement (including, for example, Section 9.2(c) and
Paragraph 8 of Exhibit E) automatically will be admitted as a
Substituted Limited Partner upon the filing with the
Partnership of (A) a duly executed and acknowledged instrument
of assignment between the transferor and the transferee
specifying the Partnership Units being assigned, setting forth
the intention of the transferor that such transferee succeed
to the transferor's interest as a Limited Partner with respect
to the Partnership Units being assigned and agreement of the
transferee assuming all of the obligations of a Limited
Partner under this Agreement with respect to such transferred
Partnership Units accruing from and after the date of
transfer, (B) a duly executed and acknowledged instrument by
which the transferee confirms to the Partnership that it
accepts and adopts the provisions of this Agreement applicable
to a Limited Partner and (C) any other instruments reasonably
required by the General Partner and payment by the transferor
of a transfer fee to the Partnership sufficient to cover the
reasonable expenses of the transfer, if any."
16. Section 9.2(b) of the Agreement is hereby deleted
and replaced in its entirety with the following:
"Except as set forth in Section 9.2(a) above, or elsewhere in
this Agreement (including Section 9.2(c) and Paragraph 8 of
Exhibit E), no Transfer of a Limited Partner's Partnership
Units may be effected without the consent of the General
Partner, which consent may be given, withheld or conditioned
in the General Partner's sole and absolute discretion. A
transferee of Partnership Units shall be deemed to be an
Assignee with respect to such Partnership Units, but shall not
become or be admitted to the Partnership as a Substituted
Limited Partner without the consent of the General Partner,
which consent may be given or withheld in the General
Partner's sole and absolute discretion. An Assignee shall be
entitled as a result of such Transfer only to receive the
economic benefits of the Partnership Units to which the
transferor Limited Partner would otherwise be entitled, along
with such transferor Limited Partner's rights with respect to
the Rights or such other exchange rights as are applicable to
the Transferred Partnership Units (although any transferee of
any Transferred Partnership Units shall be subject to any and
all ownership limitations contained in the corporate charter
of the Company as may be amended from time to time), and such
Assignee shall have no right (i) to participate in the
management of the Partnership or to vote on any matter
requiring the consent or approval of the Limited Partners,
(ii) to demand or receive any account of the Partnership's
business, or (iii) to inspect the Partnership's books and
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records, unless and until such Assignee is admitted to the
Partnership as a Substituted Limited Partner. In addition,
unless and until a transferee is admitted to the Partnership
as a Substituted Limited Partner, the transferor Limited
Partner shall not be relieved of its obligations under this
Agreement (except in the case of a Transfer pursuant to a
statutory merger or consolidation wherein all obligations and
liabilities of the transferor Limited Partner are assumed by a
successor corporation or other Entity by operation of law). A
transferee of Partnership Units may become a Substituted
Limited Partner only upon the satisfaction of the following
conditions: (A) the filing with the Partnership of a duly
executed and acknowledged written instrument of assignment
between the transferor and the transferee in a form approved
by the General Partner specifying the Partnership Units being
assigned, setting forth the intention of the transferor that
such transferee succeed to the transferor's interest as a
Limited Partner with respect to the Partnership Units being
assigned and agreement of the transferee assuming all of the
obligations of a Limited Partner under this Agreement with
respect to such transferred Partnership Units accruing from
and after the date of transfer, (B) execution and
acknowledgment by the transferor Limited Partner and such
transferee of any other instruments required in the sole and
absolute discretion of the General Partner, including the
acceptance and adoption by such transferee of the provisions
of this Agreement; (C) obtaining the written consent of the
General Partner as provided in the second sentence of this
Section 9.2(b); and (D) payment of a transfer fee to the
Partnership, sufficient to cover the reasonable expenses of
the substitution, if any. Any transferee, whether or not
admitted as a Substituted Limited Partner, shall take its
rights to the transferred Partnership Units subject to the
obligations of the transferor Limited Partner hereunder."
17. The following paragraph is added as Section 9.2(c)
of the Agreement:
"(c) The Approved Transfers permitted in Paragraph 8 of
Exhibit E hereto shall also be available, mutatis mutandis, to
holders of any Common Units issued in exchange for or upon the
redemption of SCUs."
18. Clause (x) of Section 9.3 of the Agreement is hereby
deleted and replaced in its entirety with the following:
"(x) if such Transfer would result in (i) the transferor or
the transferee owning Common Units having a value (computed as
of the date of such proposed Transfer by multiplying the
Common Stock Amount with respect to such Common Units by the
Current Per Share Market Price) less than $250,000, unless
either the transferee is an existing Limited Partner or the
General Partner has consented to such issuance or transfer, or
(ii) the transferee owning Common Units having a value
(computed as of the date of such proposed Transfer by
multiplying the Common Stock Amount with respect to such
Common Units by the Current Per Share Market Price) less than
$250,000, unless such Common Units constitute all of the
Common Units then owned by such transferor or the General
Partner has consented to such issuance or transfer;"
19. Clause (xiv) of Section 9.3 of the Agreement is
hereby deleted and replaced in its entirety with the following:
"(xiv) except with the express written consent of the General
Partner, if such Transfer, in the opinion of counsel to the
General Partner, would result in either the Partnership having
more than one hundred Partners or in the Partnership being
classified as a "publicly traded partnership" within the
meaning of the Code and the Regulations;"
143
20. In Section 9.3 of the Agreement the word "or" before
clause (xv) thereof is hereby deleted and the following additional clause is
hereby added prior to the period at the end of Section 9.3 of the Agreement:
"or (xvi) except with respect to (A) Transfers qualifying as
"private Transfers" for purposes of Treasury Regulations
Section 1.7704-1(e) or any successor provision or (B) up to
two Transfers (excluding for this purpose, transfers
qualifying as "private transfers") of interests directly or
indirectly held by the estate of, or other successor to, a
person that has died within the preceding twelve (12) months,
if the General Partner determines in its reasonable discretion
that if it permitted such transfer the Partnership would be
unable to obtain an opinion of counsel of recognized standing
to the effect that the Partnership should not be treated as a
"publicly traded partnership" within the meaning of Section
7704(b) of the Code."
21. The following sentence is hereby added to the end of
Section 11.1 of the Agreement:
"Notwithstanding the foregoing, the Rights in respect of the
Common Units issued upon the redemption or exchange of SCUs
shall be subject to the terms, conditions and restrictions set
forth in Exhibit F hereto."
22. The following sentence is hereby added to the end of
Section 11.2 of the Agreement:
"Notwithstanding the foregoing, the terms and provisions
applicable to the Rights in respect of the Common Units issued
upon the redemption or exchange of SCUs shall be as set forth
in Exhibit F hereto."
23. Exhibit A of the Agreement is hereby deleted and is
replaced in its entirety by new Exhibit A attached hereto as Attachment 2.
24. Exhibit C of the Agreement is hereby deleted and is
replaced in its entirety by new Exhibit C attached hereto as Attachment 3.
25. The exhibit attached to this Amendment as
Attachment 4 is hereby added to the Agreement as Exhibit E thereof.
26. The exhibit attached to this Amendment as
Attachment 5 is hereby added to the Agreement as Exhibit F thereof.
27. The exhibit attached to this Amendment as
Attachment 6 is hereby added to the Agreement as Exhibit G thereof.
28. Except as expressly amended hereby, the Agreement
shall remain in full force and effect.
IN WITNESS WHEREOF, the General Partner has executed this
Amendment as of the date first written above.
CBL HOLDINGS I, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇
--------------------------
Name: ▇▇▇▇ ▇. ▇▇▇
Title: Chief Financial Officer
144
Accepted and Agreed:
CBL & ASSOCIATES PROPERTIES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇
---------------------------
Name: ▇▇▇▇ ▇. ▇▇▇
Title: Chief Financial Officer
Consented to:
CBL HOLDINGS II, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇
---------------------------
Name: ▇▇▇▇ ▇. ▇▇▇
Title: Chief Financial Officer
145
Attachment 1
LIMITED PARTNER ACCEPTANCE OF
PARTNERSHIP AGREEMENT
This Limited Partner Acceptance of Partnership Agreement (this
"Acceptance") is made as of ______, 2001, by _________, [a ________ organized
under the laws of the State of ____] (the "Limited Partner"), to and for the
benefit of CBL & Associates Limited Partnership, a Delaware limited partnership
(the "Partnership").
Capitalized terms used and not defined herein shall have the
meaning set forth in the Second Amended and Restated Agreement of Limited
Partnership of the Partnership, dated as of June 30, 1998, as amended through
the date hereof (the "Partnership Agreement").
WHEREAS, on the date hereof, [the Partnership has agreed to
issue to the Limited Partner [_______] SCUs (the "Units") in connection with the
closing of the transactions contemplated by the Master Contribution Agreement,
dated as of September 25, 2000, among the Partnership, CBL & Associates
Properties, Inc., ▇▇▇▇▇▇ Realty Investors Limited Partnership and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, solely as Trustee of the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Revocable Living Trust and
the ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Marital Trust, as amended] [______ received [______] SCUs
(the "Units") in connection with the closing of the transactions contemplated by
the Master Contribution Agreement, dated as of September 25, 2000 (as amended,
the "Master Contribution Agreement"), among the Partnership, CBL & Associates
Properties, Inc., ▇▇▇▇▇▇ Realty Investors Limited Partnership and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, solely as Trustee of the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Revocable Living Trust and
the ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Marital Trust and transferred all of such Units to the
Limited Partner, its designated holding entity, as contemplated in the Master
Contribution Agreement]; and
WHEREAS, in connection with the acceptance of the Units by the
Limited Partner, the Limited Partner has agreed to affirm its obligations as a
limited partner under the Partnership Agreement with respect to the Units and to
confirm the additional agreements set forth herein;
NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Limited Partner
hereby confirms that it has been given the opportunity to review the terms of
the Partnership Agreement and affirms and agrees that it is bound by each of the
terms and conditions of the Partnership Agreement applicable to a holder of
SCUs, including, without limitation, the provisions thereof relating to
limitations and restrictions on the transfer of SCUs.
IN WITNESS WHEREOF, the Limited Partner has caused this
Acceptance to be duly executed and delivered as of the date first written above.
[Insert Name of Limited Partner]
By:_________________________________
Name:
Acknowledged and accepted:
CBL & Associates Limited Partnership
By: CBL Holdings I, Inc.,
General Partner
By:___________________________
Name:
Title:
146
Attachment 3
EXHIBIT C
Allocations
1. Allocations of Gross Income, Net Income and Net Loss.
(a) Except as otherwise provided herein, in each tax year in
which there is sufficient Gross Income and Net Income to make all of the
allocations described in clauses (i) through (iii) below, Gross Income, Net
Income and Net Loss of the Partnership for such tax year shall be allocated
among the Partners in the following order and priority:
(i) First, Net Income shall be allocated to the relevant
Partner, on account of the Preferred Units, in an amount equal to the
excess of (A) the amount of Net Cash Flow distributed to such Partner
pursuant to Sections 6.2(a)(i) and (ii) and Section 6.2(c) (but only to
the extent of the Preferred Distribution Requirement and Preferred
Distribution Shortfalls) for the current and all prior Partnership tax
years over (B) the amount of Net Income previously allocated to such
Partner pursuant to this paragraph (a)(i) or pursuant to paragraph
(b)(i);
(ii) Second, for any Partnership tax year ending on or after a
date on which Preferred Units are redeemed, Net Income (or Net Losses)
shall be allocated to the relevant Partner, on account of the Preferred
Units, in an amount equal to the excess (or deficit) of the sum of the
applicable Preferred Redemption Amounts for the Preferred Units that
have been or are being redeemed during such Partnership tax year over
the Preferred Unit Issue Price of such Preferred Units;
(iii) Third, Gross Income shall be allocated to the relevant
Partner, on account of SCUs or Common Units received on a conversion or
redemption of SCUs in an amount equal to the amount of cash distributed
to such Partner in respect of such SCUs or Common Units pursuant to
Sections 6.2(a)(iii), (iv) and (v) (the "Target Amount"). The character
of the items of Gross Income allocated to the relevant Partners
pursuant to this clause (iii) shall proportionately reflect the
relative amounts of the Partnership's Gross Income having such
character for such year, excluding from such Gross Income Net Capital
Gain allocated pursuant to Section 1(c) below; provided, however, that
such items shall not include items described in section (e) of the
definition of Net Income or Net Loss, it being the intention of the
parties that the tax items allocated under Section 3(a) corresponding
to the items of Gross Income allocated pursuant to this Section
1(a)(iii) will equal the Target Amount. If the amount of such items
differs from the Target Amount, the items of Gross Income allocated
pursuant to this Section 1(a)(iii) shall be adjusted to cause the
amount of such tax items to equal the Target Amount. For purposes of
determining the amount of cash distributed to such Partners, Special
Tax Distributions shall not be taken into account, and Extraordinary
Return of Capital Distributions shall be taken into account only to the
extent that the amount of such Extraordinary Return of Capital
Distributions exceed the aggregate of the Excess Allocations made to
such Partners. For this purpose, "Excess Allocations" mean the excess
of the Tax Net Capital Gain allocated under Section 3(a) to holders of
SCUs and holders of Common Units received on a conversion or redemption
of SCUs in connection with allocations of Net Capital Gain under
Section 1(c) over the Special Tax Distribution made to such Partners. A
distribution shall be treated as an Extraordinary Return of Capital
Distribution to the extent that such distribution is reasonably
attributable to (x) Net Financing Proceeds or (y) proceeds allocable to
a transaction generating Net Capital Gain allocated pursuant to Section
1(c); in either case limited to the excess of the Tax Net Capital Gain
allocated under Section 3(a) to holders of SCUs and holders of Common
Units received on a conversion or redemption of SCUs in connection with
allocations of Net Capital Gain under Section 1(c) over the Special Tax
Distributions made to such Partners.
147
(iv) Fourth, any remaining Net Income and Net Losses, taking
into account in determining such Net Income or Net Losses the
allocation of Gross Income provided for in paragraph (a)(iii) above,
shall be allocated among the Partners, on account of their Common Units
other than Common Units received on a conversion or redemption of SCUs,
in accordance with their proportionate ownership of Common Units other
than Common Units received on a conversion or redemption of SCUs
(except as otherwise required by the Regulations).
(b) Except as otherwise provided herein, in each tax year in
which there is not sufficient Gross Income and Net Income to make all of the
allocations described in clauses (a)(i) through (a)(iii) above, Gross Income,
Net Income and Net Loss of the Partnership for such tax year shall be allocated
among the Partners in the following order and priority:
(i) First, Net Income shall be allocated to the relevant
Partner, on account of the Preferred Units, in an amount equal to the
excess of (A) the amount of Net Cash Flow distributed to such Partner
pursuant to Sections 6.2(a)(i) and (ii) and Section 6.2(c) (but only to
the extent of the Preferred Distribution Requirement and Preferred
Distribution Shortfalls) for the current and all prior Partnership tax
years over (B) the amount of Net Income previously allocated to such
Partner pursuant to this paragraph (b)(i) or pursuant to paragraph
(a)(i)
(ii) Second, for any Partnership tax year ending on or after a
date on which Preferred Units are redeemed, Net Income (or Net Losses)
shall be allocated to the relevant Partner, on account of the Preferred
Units, in an amount equal to the excess (or deficit) of the sum of the
applicable Preferred Redemption Amounts for the Preferred Units that
have been or are being redeemed during such Partnership tax year over
the Preferred Unit Issue Price of such Preferred Units;
(iii) Third, Gross Income, to the extent not previously taken
into account in making the allocations required under paragraph (a)(i)
and (a)(ii), shall be allocated to the relevant Partner, on account of
SCUs or Common Units received on a conversion or redemption of SCUs in
an amount equal to the amount of cash distributed to such Partner in
respect of such SCUs or Common Units pursuant to Sections 6.2(a)(iii),
(iv) and (v) (the "Target Amount"). The character of the items of Gross
Income allocated to the relevant Partners pursuant to this clause (iii)
shall proportionately reflect the relative amounts of the Partnership's
Gross Income having such character for such year, excluding from such
Gross Income Net Capital Gain allocated pursuant to Section 1(c) below;
provided, however, that such items shall not include items described in
section (e) of the definition of Net Income or Net Loss, it being the
intention of the parties that the tax items allocated under Section
3(a) corresponding to the items of Gross Income allocated pursuant to
this Section 1(b)(iii) will equal the Target Amount. If the amount of
such items differs from the Target Amount, the items of Gross Income
allocated pursuant to this Section 1(b)(iii) shall be adjusted to cause
the amount of such tax items to equal the Target Amount. For purposes
of determining the amount of cash distributed to such Partners, Special
Tax Distributions shall not be taken into account, and Extraordinary
Return of Capital Distributions shall be taken into account only to the
extent that the amount of such Extraordinary Return of Capital
Distributions exceed the aggregate of the Excess Allocations made to
such Partners. For this purpose, "Excess Allocations" mean the excess
of the Tax Net Capital Gain allocated under Section 3(a) to holders of
SCUs and holders of Common Units received on a conversion or redemption
of SCUs in connection with allocations of Net Capital Gain under
Section 1(c) over the Special Tax Distribution made to such Partners. A
distribution shall be treated as an Extraordinary Return of Capital
Distribution to the extent that such distribution is reasonably
attributable to (x) Net Financing Proceeds or (y) proceeds allocable to
a transaction generating Net Capital Gain allocated pursuant to Section
1(c); in either case limited to the excess of the Tax Net Capital Gain
allocated under Section 3(a) to holders of SCUs and holders of Common
Units received on a conversion or redemption of SCUs in connection with
allocations of Net Capital Gain under Section 1(c) over the Special Tax
Distributions made to such Partners.
148
(iv) Fourth, any remaining Net Income and Net Losses, taking
into account in determining such Net Income or Net Losses the
allocation of Gross Income provided for in paragraph (b)(iii) above,
shall be allocated among the Partners, on account of their Common Units
other than Common Units received on a conversion or redemption of SCUs,
in accordance with their proportionate ownership of Common Units other
than Common Units received on a conversion or redemption of SCUs
(except as otherwise required by the Regulations).
(c) Notwithstanding clauses (a)(iii) and (a)(iv), and clauses
(b)(iii) and (b)(iv), above, holders of SCUs and holders of Common Units
received upon a conversion or redemption of SCUs may be allocated their
proportionate share of Net Capital Gain recognized by the Partnership in a
taxable year (in accordance with their proportionate ownership of the aggregate
number of SCUs and Common Units, counting each SCU as the number of Common Units
into which it is convertible in accordance with Exhibit E), in addition to the
amount specified in clause (a)(iii) above and clause (b)(iii) above, if each of
the following requirements is satisfied:
(i) the Partnership shall have distributed to each holder of
SCUs in cash pursuant to Section 6.2(a)(iv) for the last quarter of such taxable
year an amount equal to the Basic Distribution Amount (determined without taking
into account any Special Tax Distribution);
(ii) during such taxable year, the Partnership has recognized
Net Capital Gain in connection with a sale of, condemnation of, or disposition
of one or more Properties;
(iii) the Partnership has made or will make prior to January
30, of the following tax year a cash distribution (a "Special Tax Distribution")
to the Partners, and the portion of such Special Tax Distribution made to the
holders of SCUs and holders of Common Units received upon a conversion or
redemption of SCUs equals or exceeds the product of the maximum combined
federal, Ohio and Cleveland rates imposed on net capital gains of the applicable
holding period (taking into account recapture, if applicable, and the
deductibility of state and local taxes) multiplied by the amount of Tax Net
Capital Gain allocated under Section 3(a) to holders of SCUs and holders of
Common Units received upon a conversion or redemption of SCUs in connection with
the allocation under this Section 1(c) of Net Capital Gain to such holders. For
these purposes, Tax Net Capital Gain means net capital gain, as determined for
federal income tax purposes, which is governed by Section 3(a) and not Section
3(c) hereof. For the avoidance of doubt, no portion of any Special Tax
Distribution will be taken into account when determining whether the Partnership
has satisfied the distribution requirement of Section 6.2(a)(iii) or 6.2(a)(iv);
(iv) with respect to Special Tax Distributions to be made
within two years of the final Closing provided for in the Master Contribution
Agreement, the Special Tax Distribution will not cause the aggregate
distributions to a holder of SCUs or a holder of Common Units received on a
conversion or redemption of SCUs, other than distributions to such holder in
respect of the Basic Distribution Amount, to exceed the product of (x) the
lesser of such holder's percentage interest in Partnership profits for the year
in which the Special Tax Distribution is made or such holder's percentage
interest in Partnership profits for the life of the Partnership (as determined
for purposes of Treasury Regulations Section 1.707-4(b)) and (y) the
Partnership's net cash flow from operations for the year in which the Special
Tax Distribution is made (as determined for purposes of Treasury Regulations
Section 1.707-4(b)).
(d) Notwithstanding paragraphs (a), (b) and (c), Net Income
and Net Losses from a Liquidation Transaction shall be allocated as follows:
(i) First, Net Income (or Net Losses) from the Liquidation
Transaction shall be allocated to the relevant Partner, in connection
with the Preferred Units, in an amount equal to the excess (or deficit)
of the sum of the applicable Preferred Redemption Amounts of the
Preferred Units which have been or will be redeemed with the proceeds
of the Liquidation Transaction over the Preferred Unit Issue Price of
such Preferred Units;
149
(ii) Second, Net Income (or Net Losses) from the Liquidation
Transaction shall be allocated among the Partners owning SCUs or Common
Units so that the Capital Accounts of the Partners (excluding from the
Capital Account of any Partner the amount attributable to such
Partner's Preferred Units) are proportional to the number of Common
Units held by each Partner. For purposes of this clause (ii), each SCU
shall be treated as the number of Common Units into which the SCU is
convertible pursuant to the terms of Exhibit E to the Agreement.
(iii) Third, any remaining Net Income or Net Losses from the
Liquidation Transaction shall be allocated among the Partners owning
SCUs or Common Units in accordance with their proportionate ownership
of Common Units. For purposes of this clause (iii), each SCU shall be
treated as the number of Common Units into which the SCU is convertible
pursuant to the terms of Exhibit E to the Agreement.
2. Special Allocations.
Notwithstanding any provisions of paragraph 1 of this Exhibit
C, the following special allocations shall be made in the following order:
(a) Minimum Gain Chargeback (Nonrecourse Liabilities). If
there is a net decrease in Partnership Minimum Gain for any Partnership
fiscal year (except as a result of conversion or refinancing of
Partnership indebtedness, certain capital contributions or revaluation
of the Partnership property as further outlined in Regulation Sections
1.704-2(d)(4), (f)(2) or (f)(3) , each Partner shall be specially
allocated items of Partnership income and gain for such year (and, if
necessary, subsequent years) in an amount equal to that Partner's share
of the net decrease in Partnership Minimum Gain. The items to be so
allocated shall be determined in accordance with Regulation Section
1.704-2(f). This paragraph (a) is intended to comply with the minimum
gain chargeback requirement in said section of the Regulations and
shall be interpreted consistently therewith. Allocations pursuant to
this paragraph (a) shall be made in proportion to the respective
amounts required to be allocated to each Partner pursuant thereto.
(b) Minimum Gain Attributable to Partner Nonrecourse Debt. If
there is a net decrease in Minimum Gain Attributable to Partner
Nonrecourse Debt during any fiscal year (other than due to the
conversion, refinancing or other change in the debt instrument causing
it to become partially or wholly nonrecourse, certain capital
contributions, or certain revaluations of Partnership property as
further outlined in Regulation Section 1.704-2(i)(4), each Partner
shall be specially allocated items of Partnership income and gain for
such year (and, if necessary, subsequent years) in an amount equal to
that Partner's share of the net decrease in the Minimum Gain
Attributable to Partner Nonrecourse Debt. The items to be so allocated
shall be determined in accordance with Regulation Sections
1.704-2(i)(4) and (j)(2). This paragraph (b) is intended to comply with
the minimum gain chargeback requirement with respect to Partner
Nonrecourse Debt contained in said sections of the Regulations and
shall be interpreted consistently therewith. Allocations pursuant to
this paragraph (b) shall be made in proportion to the respective
amounts required to be allocated to each Partner pursuant thereto.
(c) Qualified Income Offset. In the event a Limited Partner
unexpectedly receives any adjustments, allocations or distributions
described in Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5), or (6),
and such Limited Partner has an Adjusted Capital Account Deficit, items
of Partnership income and gain shall be specially allocated to such
Partner in an amount and manner sufficient to eliminate the Adjusted
Capital Account Deficit as quickly as possible. This paragraph (c) is
intended to constitute a "qualified income offset" under Regulation
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith.
(d) Nonrecourse Deductions. Nonrecourse Deductions for any
fiscal year or other applicable period shall be allocated to the
Partners in accordance with their proportionate ownership of Common
Units other than Common Units issued on a redemption or conversion of
SCUs.
150
(e) Partner Nonrecourse Deductions. Partner Nonrecourse
Deductions for any fiscal year or other applicable period shall be
specially allocated to the Partner that bears the economic risk of loss
for the debt (i.e., the Partner Nonrecourse Debt) in respect of which
such Partner Nonrecourse Deductions are attributable (as determined
under Regulation Sections 1.704-2(b)(4) and (i)(1).
(f) Curative Allocations. The Regulatory Allocations (as
defined below) shall be taken into account in allocating other items of
income (including Gross Income), gain, loss, and deduction among the
Partners so that, to the extent possible, the cumulative net amount of
allocations of Partnership Items under paragraphs 1 and 2 of this
Exhibit C shall be equal to the net amount that would have been
allocated to each Partner if the Regulatory Allocations had not
occurred. To the extent that there is an allocation under Section 2(a)
or (b) hereof of Partnership income or gain to a holder of SCUs or
Common Units issued on a redemption or conversion of SCUs, there will
be a correspondingly smaller allocation of Gross Income to such holder
under Section 1(a)(ii) or 1(b)(ii) hereof. This subparagraph (f) is
intended to minimize to the extent possible and to the extent necessary
any economic distortions which may result from application of the
Regulatory Allocations and shall be interpreted in a manner consistent
therewith. For purposes hereof, "Regulatory Allocations" shall mean the
allocations provided under this paragraph 2.
3. Tax Allocations.
(a) Generally. Subject to paragraphs (b) and (c) hereof, items
of income, gain, loss, deduction and credit to be allocated for income
tax purposes (collectively, "Tax Items") shall be allocated among the
Partners on the same basis as their respective book items.
(b) Sections 1245/1250 Recapture. If any portion of gain from
the sale of property is treated as gain which is ordinary income by
virtue of the application of Code Section 1245 or 1250 ("Affected
Gain"), then (A) such Affected Gain shall be allocated among the
Partners in the same proportion that the depreciation and amortization
deductions giving rise to the Affected Gain were allocated and (B)
other Tax Items of gain of the same character that would have been
recognized, but for the application of Code Section 1245 and/or 1250,
shall be allocated away from those Partners who are allocated Affected
Gain pursuant to Clause (A) so that, to the extent possible, the other
Partners are allocated the same amount, and type, of capital gain that
would have been allocated to them had Code Section 1245 and/or 1250 not
applied. For purposes hereof, in order to determine the proportionate
allocations of depreciation and amortization deductions for each fiscal
year or other applicable period, such deductions shall be deemed
allocated on the same basis as Net Income and Net Loss for such
respective period.
(c) Allocations Respecting Section 704(c) and
Revaluations:
Curative Allocations Resulting from the Ceiling Rule.
Notwithstanding paragraph (b) hereof, Tax Items with respect to
Partnership property that is subject to Code Section 704(c) and/or
Regulation Section 1.704-1(b)(2)(iv)(f) (collectively, "Section 704(c)
Tax Items") shall be allocated in accordance with said Code section
and/or Regulation Section 1.704-1(b)(4)(i), as the case may be. The
allocation of Tax Items shall be subject to the ceiling rule stated in
Regulation Section 1.704-1(c) and Regulation Section 1.704-3. The
General Partner will not specially allocate Tax Items (other than the
Section 704(c) Tax Items) to cure for the effect of the ceiling rule,
except that with respect to the properties contributed to the
Partnership (the "▇▇▇▇▇▇ Properties") pursuant to the Master
Contribution Agreement dated September 25, 2000 among ▇▇▇▇▇▇ Realty
Investors Limited Partnership, CBL & Associates Properties, Inc., CBL &
Associates Limited Partnership and others (as amended, the "Master
Contribution Agreement"), curative allocations of gain recognized on a
151
disposition of a direct or indirect interest in a ▇▇▇▇▇▇ Property may
be made to the extent permitted in Regulation Section 1.704-3(c). The
Partnership shall allocate items of income, gain, loss and deduction
allocated to it by a Property Partnership to the Partner or Partners
contributing the interest or interests in such Property Partnership, so
that, to the greatest extent possible, such contributing Partner or
Partners are allocated the same amount and character of items of
income, gain, loss and deduction with respect to such Property
Partnership that they would have been allocated had they contributed
undivided interests in the assets owned by such Property Partnership to
the Partnership in lieu of contributing the interest or interests in
the Property Partnership to the Partnership. Notwithstanding the above,
with respect to property contributed to the Partnership after the date
hereof, such Section 704(c) Tax Items may be allocated under such
method selected by the General Partner that is consistent with the
Section 704(c) Regulations.
4. Certain Allocations of Depreciation and Loss.
Notwithstanding anything in this Exhibit C to the contrary, depreciation,
amortization, gain and loss attributable to an adjustment under Section 743 or
Section 734 of the Code of the federal income tax basis of Partnership assets
(including adjustments made prior to or after the contribution of the relevant
assets or indirect interests therein to the Partnership) shall be allocated to
the direct or indirect partner, or such partner's successor or assign, whose
death or acquisition of a direct or indirect interest gave rise to the
adjustments, except to the extent such allocations would not be valid as a
result of a change in tax law occurring after the date of the Master
Contribution Agreement.
152
Attachment 5
EXHIBIT F
Exchange Rights of Common Units
Issued In Exchange For or Upon Redemption of SCUs
1 At any time, subject to the remainder of this Exhibit F, a
holder of Common Units issued in exchange for or upon the redemption of SCUs
(such Common Units are referred to herein as "JCUs") shall have the right to
exchange all or any portion of such holder's JCUs (the "JCU Offered Units") for
JCU Exchange Consideration (as defined below), subject to the limitations
contained in Paragraphs 3 and 4 below. Any such JCU Exchange Right shall be
exercised pursuant to an exchange notice comparable to the Exchange Notice
required under Exhibit D to the Partnership Agreement (such notice, a "JCU
Exchange Notice") delivered by the holder exercising the JCU Exchange Right (the
"JCU Exercising Holder") to the Company.
2 The exchange consideration (the "JCU Exchange Consideration")
payable by the Company to each JCU Exercising Holder shall be equal to the
product of (x) the Common Stock Amount with respect to the JCU Offered Units
multiplied by (y) the Current Per Share Market Price, each computed as of the
date on which the JCU Exchange Notice was delivered to the Company. The JCU
Exchange Consideration shall, in the sole and absolute discretion of the
Company, be paid in the form of (A) cash, or cashier's or certified check, or by
wire transfer of immediately available funds to the JCU Exercising Holder's
designated account or (B) subject to the applicable Ownership Limit, by the
issuance by the Company of a number of shares of its Common Stock equal to the
Common Stock Amount with respect to the JCU Offered Units or (C) subject to the
applicable Ownership Limit, any combination of cash and Common Stock (valued at
the Current Per Share Market Price).
3 Notwithstanding anything herein to the contrary, any JCU
Exchange Right may only be exercised to the extent that, upon exercise of the
JCU Exchange Right, assuming payment by the Company of the JCU Exchange
Consideration in shares of Common Stock, the JCU Exercising Holder will not, on
a cumulative basis, Beneficially Own or Constructively Own shares of Common
Stock, including shares of Common Stock to be issued upon exercise of the JCU
Exchange Right, in excess of the applicable Ownership Limit. If a JCU Exchange
Notice is delivered to the Company but, as a result of the applicable Ownership
Limit or as a result of restrictions contained in the certificate of
incorporation of the Company, the JCU Exchange Right cannot be exercised in full
as aforesaid, the JCU Exchange Notice shall be deemed to be modified to provide
that the JCU Exchange Right shall be exercised only to the extent permitted
under the applicable Ownership Limit under the certificate of incorporation of
the Company, and the JCU Exchange Notice with respect to the remainder of such
JCU Exchange Right shall be deemed to have been withdrawn.
4 JCU Exchange Rights may be exercised at any time and from time
to time, provided, however, that, except as set forth below in Paragraph 6 or
with the prior written consent of the General Partner, (x) only two (2) JCU
Exchange Notices may be delivered to the Company by each holder of JCUs during
any consecutive twelve (12) month period; and (y) no JCU Exchange Notice may be
delivered with respect to JCUs either (i) having a value of less than $250,000
calculated by multiplying the Common Stock Amount with respect to such JCUs by
the Current Per Share Market Price or (ii) if a holder does not own JCUs having
a value of $250,000 or more, constituting less than all of the JCUs owned by
such holder.
5 Within thirty (30) days after receipt by the Company of any
JCU Exchange Notice delivered in accordance with the requirements of Paragraph 1
hereof, the Company shall deliver to the JCU Exercising Holder a notice (a "JCU
Election Notice"), which JCU Election Notice shall set forth the computation of
the JCU Exchange Consideration and shall specify the form of the JCU Exchange
Consideration (which shall be in accordance with Paragraph 2 hereof), to be paid
by the Company to such JCU Exercising Holder and the date, time and location for
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completion of the purchase and sale of the JCU Offered Units, which date shall,
to the extent required, in no event be more than (A) in the case of JCU Offered
Units with respect to which the Company has elected to pay the JCU Exchange
Consideration by issuance of shares of Common Stock, ten (10) days after the
delivery by the Company of the JCU Election Notice for the JCU Offered Units or
(B) in the case of JCU Offered Units with respect to which the Company has
elected to pay the JCU Exchange Consideration in cash, sixty (60) days after the
initial date of receipt by the Company of the JCU Exchange Notice for such JCU
Offered Units; provided, however, that such sixty (60) day period may be
extended for an additional sixty (60) day period to the extent required for the
Company to cause additional shares of its Common Stock to be issued to provide
financing to be used to acquire the JCU Offered Units. Notwithstanding the
foregoing, the Company agrees to use its reasonable efforts to cause the closing
of the exchange hereunder to occur as quickly as possible. If the Company has
delivered a JCU Election Notice to the JCU Exercising Holder with respect to a
JCU Exchange Notice, the JCU Exchange Notice may not be withdrawn or modified by
the JCU Exercising Holder without the consent of the General Partner. Similarly,
if the Company delivers a JCU Election Notice to a JCU Exercising Holder, the
Company may not modify the JCU Election Notice without the consent of the JCU
Exercising Holder.
6 Notwithstanding the limitation set forth in clause (x) of
Paragraph 4, in the event that the Company provides notice to the holders of
JCUs, pursuant to Paragraph 8(v) hereof, the JCU Exchange Rights shall be
exercisable by each holder of JCUs at any time that is during the period
commencing on the date on which the Company provides such notice and ending on
the earlier to occur of thirty (30) days from receipt of the Company's aforesaid
notice and the record date, if any, to determine shareholders eligible to
receive such distribution or to vote upon the approval of such merger, sale or
other extraordinary transaction (or, if no such record date is applicable, the
date that is thirty (30) days after the date the Company provides the notice
pursuant to Paragraph 8(v) hereof). In the event that a JCU Exercising Holder
delivers to the Company a JCU Exchange Notice pursuant to this Paragraph 6, the
Company shall be required to deliver a JCU Election Notice before the earlier of
(1) the tenth (10th) Business Day after the Company receives the JCU Exchange
Notice or (2) one (1) Business Day before the record date to determine
shareholders eligible to receive a distribution or vote on approval and such JCU
Election Notice shall, among other things, set the date for the purchase and
sale of the JCU Offered Units, which date shall, to the extent required, in no
event be more than (A) in the case of JCU Offered Units with respect to which
the Company has elected to pay the JCU Exchange Consideration by issuance of
shares of Common Stock, one (1) Business Day prior to the record date, if any,
to determine shareholders eligible to receive such distribution or to vote upon
the approval of such merger, sale or other extraordinary transaction or (B) in
the case of JCU Offered Units with respect to which the Company has elected to
pay the JCU Exchange Consideration in cash, sixty (60) days after the initial
date of receipt by the Company of the JCU Exchange Notice for such JCU Offered
Units; provided, however, that such sixty (60) day period may be extended for an
additional sixty (60) day period to the extent required for the Company to cause
additional shares of its Common Stock to be issued to provide financing to be
used to acquire the JCU Offered Units. Notwithstanding the foregoing, the
Company shall use its reasonable efforts to cause the closing of the exchange
hereunder to occur as quickly as possible.
7 At the closing of the purchase and sale of JCU Offered Units,
payment of the JCU Exchange Consideration shall be accompanied by proper
instruments of transfer and assignment and by the delivery of (i)
representations and warranties of (A) the JCU Exercising Holder with respect to
(x) its due authority to sell all of the right, title and interest in and to
such JCU Offered Units to the Company, (y) the status of the JCU Offered Units
being sold, free and clear of all Liens and (z) its intent to acquire the Common
Stock for investment purposes and not for distribution, and (B) the Company with
respect to due authority for the purchase of such JCU Offered Units, and (ii) to
the extent that any shares of Common Stock are issued in payment of the JCU
Exchange Consideration or any portion thereof, (A) an opinion of counsel for the
Company reasonably satisfactory to the JCU Exercising Holder, to the effect that
(I) such shares of Common Stock have been duly authorized, are validly issued,
fully-paid and non-assessable and (II) that the issuance of such shares will not
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violate the applicable Ownership Limit, and (B) a stock certificate or
certificates evidencing the shares of Common Stock to be issued and registered
in the name of the JCU Exercising Holder or its designee, with an appropriate
legend reflecting that such shares or units are not registered under the
Securities Act of 1933, as amended, and may not be offered or sold unless
registered pursuant to the provisions of such act or an exemption therefrom is
available as confirmed by an opinion of counsel satisfactory to the Company.
8 To facilitate the Company's ability to fully perform its
obligations hereunder, the Company covenants and agrees, for the benefit of the
holders from time to time of JCUs, as follows:
(i) At all times during the pendency of the JCU Exchange Rights,
the Company shall reserve for issuance such number of shares of Common
Stock as may be necessary to enable the Company to issue such shares in
full payment of the JCU Exchange Consideration in regard to all JCUs
which are from time to time outstanding.
(ii) As long as the Company shall be obligated to file periodic
reports under the Exchange Act, the Company will timely file such
reports in such manner as shall enable any recipient of Common Stock
issued to holders of JCUs hereunder in reliance upon an exemption from
registration under the Securities Act to continue to be eligible to
utilize Rule 144 promulgated by the SEC pursuant to the Securities Act,
or any successor rule or regulation or statute thereunder, for the
resale thereof.
(iii) Each holder of JCUs, upon request, shall be entitled to
receive from the Operating Partnership in a timely manner all reports
filed by the Company with the SEC and all other communications
transmitted from time to time by the Company to its shareholders
generally.
(iv) Other than as contemplated under the terms of the Rights
Agreement, dated April 30, 1999, as amended from time to time, and any
successor agreement thereof, issuances of stock pursuant to the
Company's dividend reinvestment plan (as described in the Company's
prospectus dated August 15, 1995) or any customary dividend
reinvestment plan adopted by the Company after that date and other than
the issuance of deferred stock awards or the grant of stock options to
officers, directors and employees of the Company, the Company shall not
issue or sell any shares of Common Stock or other equity securities or
any instrument convertible into any equity security for a consideration
less than the fair value of such Common Stock or other equity security,
as determined in each case by the Board of Directors of the Company, in
consultation with the Company's professional advisors, and under no
circumstances shall the Company declare any stock dividend, stock
split, stock distribution or the like, unless fair and equitable
arrangements are provided, to the extent necessary, to fully adjust,
and to avoid any dilution in, the rights of holders of the JCUs under
this Exhibit F and the Agreement.
(v) The Company shall notify the holders of JCUs of its intention
to make any extraordinary distributions of cash or property to its
shareholders or effect a merger (including, without limitation, a
triangular merger), a sale of all or substantially all of its assets or
any other similar transaction outside of the ordinary course of
business at least thirty (30) days prior to the record date, if any, to
determine shareholders eligible to receive such distribution or to vote
upon the approval of such merger, sale or other transaction (or, if no
such record date is applicable, at least thirty (30) days before
consummation of such merger, sale or other transaction). This provision
for such notice shall not be deemed (i) to permit any transaction that
otherwise is prohibited by the Agreement or requires the approval of
the holders of JCUs or (ii) to require a vote of the holders of JCUs to
a transaction that does not otherwise require such a vote under the
Agreement or (iii) to effect the validity of any transaction if such
notice is not given. Each holder of JCUs, as a condition to the receipt
of the notice pursuant hereto, shall be obligated to keep confidential
the information set forth therein until such time as the Company has
made public disclosure thereof and to use such information during such
period of confidentiality solely for purposes of determining whether or
not to exercise its JCU Exchange Rights; provided, however, that a
holder of JCUs may disclose such information to its attorney,
155
accountant and/or financial advisor for purposes of obtaining advice
with respect to such exercise so long as such attorney, accountant
and/or financial advisor agrees to receive and hold such information
subject to this confidentiality requirement.
9 All JCU Offered Units tendered to the Company in accordance
with the exercise of JCU Exchange Rights shall be delivered to the Company free
and clear of all Liens and should any Liens exist or arise with respect to such
Units, the Company shall be under no obligation to acquire the same unless, in
connection with such acquisition, the Company has elected to pay such portion of
the JCU Exchange Consideration in the form of cash consideration in
circumstances where such consideration will be sufficient to cause such existing
Lien to be discharged in full upon application of all or a part of such
consideration, and the Company is expressly authorized to apply such portion of
the JCU Exchange Consideration as may be necessary to satisfy any indebtedness
in full and to discharge such Lien in full. In the event any state or local
property transfer tax is payable as a result of the transfer of JCU Offered
Units to the Company, the transferring holder thereof shall assume and pay such
transfer tax.
10 Subject to the restrictions of transfer set forth in the
Agreement, the Assignee of any holder of JCUs may exercise the rights of such
holder of JCUs pursuant to this Exhibit F, and such holder of JCUs shall be
deemed to have assigned such rights to such Assignee and shall be bound by the
exercise of such rights by such holder's Assignee. In connection with any
exercise of such rights by such Assignee on behalf of such holder, the JCU
Exchange Consideration shall be paid by the Company directly to such Assignee
and not to such holder.
11 In the event that the Company shall be a party to any
transaction (including, without limitation, a merger, consolidation or statutory
share exchange with respect to the Common Stock), in each case as a result of
which shares of Common Stock are converted into the right to receive shares of
capital stock, other securities or other property (including cash or any
combination thereof), the JCU Exchange Consideration payable thereafter by the
Company pursuant to clauses (B) and (C) of Paragraph 2 in lieu of a share of
Common Stock shall be the kind and amount of shares of capital stock and other
securities and property (including cash or any combination thereof) that was
received upon consummation of such transaction in return for one share of Common
Stock; and the Company may not become a party to any such transaction unless the
terms thereof are consistent with the foregoing.
12 The provisions of Article XI and Exhibit D of the
Agreement shall not apply to the JCUs.
13 Capitalized terms used herein and not otherwise defined have
the meanings assigned to them in the Agreement.
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Attachment 6
EXHIBIT G
▇▇▇▇▇▇ Limited Partner Representative
For the following entities:
CB Brookfield Square Mall LLC
CB ▇▇▇▇ ▇▇▇▇▇ Center LLC
C.V. Investments
CB Citadel Mall LLC
CB Columbia Mall LLC
CB Eastgate Mall LLC
▇▇ ▇▇▇▇▇▇▇ Mall LLC
CB Fashion Square Mall LLC
▇▇ ▇▇▇▇▇▇▇ Mall LLC
▇▇ ▇▇▇▇▇ Mall LLC
▇▇ ▇▇▇▇▇▇▇▇▇ Mall LLC
CB Kentucky Oaks Mall LLC
CB Midland Mall LLC
CB Northwoods Mall LLC
CB Old Hickory Mall LLC
CB Parkdale Mall LLC
▇▇ ▇▇▇▇▇▇▇▇ Mall LLC
CB Regency Mall LLC
▇▇ ▇▇▇▇▇ Mall LLC
CB Wausau Center LLC
CB Wausau Penney LLC
157
