1
Exhibit 10.23
SECOND AMENDMENT
TO
SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
URBAN SHOPPING CENTERS, L.P.
This Second Amendment (this "Amendment") to the Second
Amended and Restated Agreement of Limited Partnership, dated as
of October 14, 1993 (as amended through the date hereof, the
"Partnership Agreement"), of Urban Shopping Centers, L.P., an
Illinois limited partnership (the "Partnership"), is entered into
as of the 18th day of December, 1996 between Urban Shopping
Centers, Inc., a Maryland corporation, as general partner (the
"General Partner"), with the consent of the Persons whose names
are set forth on Exhibit A to the Partnership Agreement, as limited
partners (the "Limited Partners"), and the undersigned Limited Partner
which is being admitted to the Partnership on the date hereof.
WHEREAS, the General Partner and the Limited Partners desire
to amend the Partnership Agreement to create a class of 7%
Cumulative Convertible Redeemable Preferred Partnership Units
(the "Preferred Units") and a new class of common Partnership
Units (the "Class B Units") and to set forth the rights, powers,
duties and preferences of the Preferred Units and the Class B Units;
NOW, THEREFORE, pursuant to Section 14.1.3 of the Partnership
Agreement, the General Partner and the Limited Partners hereby amend the
Partnership Agreement as follows:
1. The definitions of "Net Income" and "Net Loss" in
Article I of the Partnership Agreement are hereby amended by
adding "and Section 6.4" after the words "Sections 6.2 and 6.3"
in such definitions.
2. The definition of "Partnership Unit" or "Unit" in
Article I of the Partnership Agreement is hereby amended by
adding the following language at the end of the first sentence
thereof: ", and, except where the context indicates otherwise,
includes Preferred Units and Class B Units".
3. The definition of "Percentage Interest" in Article I of
the Partnership Agreement is hereby amended by adding the following
sentence as the second sentence thereof: "For purposes of determining
Percentage Interests, Class B Units shall be considered Partnership Units,
but Preferred Units shall not be considered Partnership Units."
4. Section 4.2 of the Partnership Agreement is hereby
amended by adding the following new subsection 4.2.6 at the end
of such Section:
"4.2.6 Issuance of Preferred Units and Class B Units.
---------------------------------------------
4.2.6.1 The General Partner shall have authority to
cause the Partnership to issue up to 1,018,182 7% Cumulative
Convertible Redeemable Preferred Partnership Units (the "Preferred
Units") in connection with the acquisition by the Partnership of
the Old Orchard shopping mall. The Preferred Units shall have the
rights, powers, duties and preferences set forth below. The General
Partner shall have authority to cause the Partnership to issue up to
1,018,182 Class B Partnership Units (the "Class B Units") upon
conversion of the Preferred Units. The Class B Units shall have
the same rights, powers, duties and preferences as ordinary
Partnership Units, except as set forth below. Upon execution of
an agreement to be bound by all of the terms and conditions of the
Partnership Agreement, the purchaser of the Preferred Units shall
be admitted as a Limited Partner of the Partnership.
2
4.2.6.2 The holders of Preferred Units shall be
entitled to receive, when, as and if declared by the General
Partner's Board of Directors out of funds legally available
therefor, cumulative preferential distributions payable in
cash in an amount per Preferred Unit equal to $1.925 per annum.
Such distributions shall begin to accrue and shall be fully
cumulative from the date of issuance of the Preferred Units (the
"Issue Date"), whether or not in any period or periods there shall
be funds legally available therefor, and shall be payable quarterly
in arrears on the last day of March, June, September and December
of each year (each, a "Distribution Payment Date"), commencing on
the first Distribution Payment Date after the Issue Date, when, as
and if declared by the General Partner's Board of Directors, to the
holders of record of Preferred Units as they appear on the records
of the Partnership at the close of business on each Distribution
Payment Date. The distributions payable for each full period for
the Preferred Units shall be computed by dividing the annual
distribution rate by four. The distributions payable for the
initial period and for any other period shorter than a full period
shall be computed based on the number of days the Preferred Units
were outstanding during the period versus the number of days in
the full period. The distributions on the Preferred Units shall
be payable as a preference to any other distributions by the
Partnership solely out of Available Cash which is derived from
or attributable to the Old Orchard shopping mall unless and
until such time, if any, as the Partnership sells all or any
substantial part of the Old Orchard shopping mall and will
be payable as a preference to any other distributions by the
Partnership from the Partnership's entire Available Cash from
and after such time. To the extent any distributions on the
Preferred Units are not made, whether or not because of insufficient
funds, the unpaid amount will be cumulative without interest and will
be payable prior to any future distributions on the Preferred Units.
Accrued and unpaid distributions for any past periods may be declared
and paid at any time and for such interim periods, without reference
to any regular Distribution Payment Date, to the holders of Preferred
Units entitled thereto. Any distribution payment made on the Preferred
Units shall first be credited against the earliest accrued but unpaid
distribution due with respect to the Preferred Units which remains
payable. No interest, or sum of money in lieu of interest, shall be
payable in respect of any distributions on the Preferred Units which
may be in arrears. Holders of Preferred Units shall not be entitled
to any distributions, whether payable in cash, property or stock, in
excess of cumulative distributions, as herein provided, on the
Preferred Units.
4.2.6.3 So long as any Preferred Units are outstanding,
no distributions (other than distributions paid solely in, or
options, warrants or rights to subscribe for or purchase, securities
which are junior to the Preferred Units in both the payment of
distributions and the distribution of assets upon liquidation,
dissolution or winding up ("Fully Junior Securities")) shall be
declared or paid or set apart for payment on Fully Junior
Securities or on securities which are junior to the Preferred
Units in either the payment of distributions or the distribution
of assets upon liquidation, dissolution or winding up ("Junior
Securities"), nor shall any Junior Securities or Fully Junior
Securities be redeemed, purchased or otherwise acquired (other than
a redemption, purchase or other acquisition of Common Stock or
Partnership Units made pursuant to any plan providing for the
acquisition, whether directly or pursuant to options or other
securities, of Common Stock or Partnership Units by Directors,
officers or employees of the General Partner or of any entity
in which the General Partner, either directly or indirectly, owns
more than a 50% economic interest) for any consideration (or any
moneys be paid to or made available for a sinking fund for the
redemption of any Junior Securities or Fully Junior Securities)
by the General Partner or the Partnership, directly or indirectly
(except by conversion into or exchange for Fully Junior Securities),
3
unless in each case (i) the full cumulative distributions on all
outstanding Preferred Units shall have been paid or declared and
set apart for payment for all past periods with respect to the
Preferred Units and (ii) sufficient funds shall have been set apart
for payment of the distribution for the current period with respect
to the Preferred Units.
4.2.6.4 Upon the occurrence of an Event of Dissolution,
before any payment or distribution of the assets of the Partnership
shall be made to or set apart for the holders of Junior Securities
or Fully Junior Securities, the holders of the Preferred Units shall
be entitled to receive $27.50 per Preferred Unit plus an amount equal
to all distributions (whether or not earned or declared) accrued
and unpaid thereon to the date of final distribution to such
holders (the "Liquidation Preference"); but such holders shall not
be entitled to any further payment. The Liquidation Preference
shall be payable only to the extent of the Capital Account balance
of each such holder of Preferred Units, after giving effect to all
contributions, distributions and allocations for all periods, and
solely out of proceeds which are derived from or attributable to
the liquidation of the Old Orchard shopping mall upon an Event of
Dissolution unless the Partnership shall have sold all or any
substantial part of the Old Orchard shopping mall prior to such
Event of Dissolution, in which case the Liquidation Preference
shall be payable out of the general liquidation proceeds of the
Partnership. If, upon the occurrence of an Event of Dissolution,
the assets of the Partnership, or proceeds thereof, distributable
among the holders of the Preferred Units shall be insufficient to pay
in full the Liquidation Preference, then such assets, or the proceeds
thereof, shall be distributed among the holders of the Preferred
Units pro rata in accordance with the respective amounts that would
be payable to each holder if all amounts payable were paid in full.
Subject to the rights of the holders of any other class of
securities, upon an Event of Dissolution, after payment shall have
been made in full to the holders of the Preferred Units as provided
above, any other class or classes of Junior Securities or Fully Junior
Securities shall, subject to the respective terms and provisions (if
any) applying thereto, be entitled to receive any and all assets of
the Partnership remaining to be paid or distributed, and the holders
of the Preferred Units shall not be entitled to share therein.
4.2.6.5 The Preferred Units shall be convertible, in
whole or in part, at the option of each holder on not less
than 90 days' notice by such holder to the Partnership at
any time after the seventh anniversary of the Issue Date,
unless previously redeemed, into Class B Units at a
conversion rate of one Class B Unit for each Preferred Unit.
Holders of Preferred Units may give notice of conversion of
Preferred Units after notice of redemption of such Preferred
Units is given by the Partnership pursuant to Section
4.2.6.7 so long as such conversion may and does occur prior
to the redemption date set by the Partnership. Upon the
date of any such conversion for which the converting holder
gave notice of conversion after the Partnership gave notice
of redemption pursuant to Section 4.2.6.7 (but not
otherwise), the Partnership shall pay the converting holder
an amount equal to all distributions (whether or not earned
or declared) accrued and unpaid on the Preferred Units being
converted to such conversion date on the Preferred Units
which were called for redemption and are being converted.
Holders of Preferred Units shall not be entitled to a pro
rata distribution on the Preferred Units for the period
during which any Preferred Units are converted into Class B
Units if such holders do not hold such Preferred Units on
the Distribution Payment Date for such period, but such
holders shall be entitled to distributions on the Class B
Units as provided in Section 4.2.6.6.
4
4.2.6.6 The Class B Units shall have the same rights,
powers, duties and preferences as ordinary Partnership
Units, except as provided in Section 4.2.6.8 and Section
6.4, and shall be convertible into Common Stock pursuant to
Section 4.2.5 in the same manner and on the same basis as
are ordinary Partnership Units.
4.2.6.7 The Preferred Units shall not be redeemable
by the Partnership prior to the seventh anniversary of the
Issue Date. On and after the seventh anniversary of the
Issue Date, the Preferred Units shall be redeemable on not
less than 100 days' notice by the Partnership to the holders
thereof for cash, in whole or in part, at the option of the
Partnership, for $27.50 per Preferred Unit, plus accrued and
unpaid distributions, if any, thereon to the date of redemption,
including a pro rata distribution for the period from the
immediately preceding Distribution Payment Date to the redemption
date. If fewer than all the outstanding Preferred Units are to
be redeemed, the redemption shall be pro rata among all holders
of Preferred Units.
4.2.6.8 The holders of the Preferred Units shall not have
any right to vote or consent to Partnership matters or amendments
to the Partnership Agreement or to receive notice of Partnership
action, except as set forth in Section 14.1.3 and except as follows:
(a) No amendment to this Section 4.2.6 shall be made
without the consent of the holders of at least two-thirds of the
Preferred Units then outstanding;
(b) No amendment to Section 6.4 shall be made without
the consent of the holders of at least two-thirds of the
Preferred Units and the Class B Units then outstanding, voting
together as a single class;
(c) The holders of the Preferred Units and
the Class B Units shall receive at least six months' prior
written notice of sales of the Old Orchard shopping mall and
at least three months' prior written notice of any refinancing
of the debt which is secured by the Old Orchard shopping mall
which significantly changes the maturity of such debt or converts
the note evidencing such debt into a term note."
5. Article VI of the Partnership Agreement is hereby amended
by adding the following new Section 6.4 at the end of such Article:
"Section 6.4 Special Allocations With Respect to Preferred Units,
----------------------------------------------------
Class B Units and Old Orchard Shopping Mall.
-------------------------------------------
Notwithstanding the provisions of Section 6.1 (but
subject to the other provisions of this Article VI and this
Agreement), the profits and losses of the Partnership shall
be allocated as follows to reflect the investment and terms
of the Preferred Units and Class B Units. Such allocations
shall be made for purposes of maintaining the Capital Accounts
and in determining the rights of the Partners among themselves.
The Partnership's items of income, gain, loss and deduction computed
in accordance with Section 4.4 shall be allocated among the Partners
for each taxable year (or portion thereof) ending on or after the
date of this amendment as provided below with respect to Old Orchard
and other assets acquired in connection therewith.
Section 6.4.1 NET INCOME. After giving effect to the
special allocations set forth in Sections 6.2 and 6.3 and
excepting all items of depreciation of, and gain or loss
from the sale or disposition of, Old Orchard, Net Income
with respect to Old Orchard shall be allocated:
5
(a) first, to the General Partner to the
extent that, on a cumulative basis, Net Losses
previously allocated to the General Partner
pursuant to clause (c) of the first sentence
of Section 6.4.2 exceed Net Income
previously allocated to the General Partner
pursuant to this clause (a) of the first sentence
of Section 6.4.1;
(b) second, to the holders of Preferred
Units to the extent of the excess of the sum of
(i) the cumulative amount of all preferred
distributions which theretofore have been paid, or
which have been accrued under Section 4.2.6.2 but
not paid, and (ii) all previous allocations of Net
Loss under Section 6.4.2 to the holders of
Preferred Units, over the previous allocations
under this clause (b); and
(c) third, to the Partners other than
the holders of Preferred Units in accordance with
their respective Percentage Interests.
After giving effect to the special allocations set
forth in Sections 6.2 and 6.3, any gain from the sale or
disposition of Old Orchard shall be allocated 1% to the
General Partner and the remaining 99% as follows:
(a) first, to the holders of Preferred
Units to the extent equal to the sum of (i) the
excess, if any, of the Liquidation Preference for
such Units over the Adjusted Capital Account for
such Units and (ii) the excess of the cumulative
amount of all preferred distributions which
theretofore have been paid, or which have been
accrued under Section 4.2.6.2 but not paid, over
the previous net positive allocations under the
first sentence of each of Sections 6.4.1 and
6.4.2, provided that to the extent such a holder
converts his Preferred Units for Class B Units,
such holder shall be treated as continuing to be a
holder of Preferred Units under this clause (a) to
the extent necessary to permit allocations of gain
to restore parity between such holder's adjusted
Capital Account existing at such conversion and
such holder's Liquidation Preference; and
(b) second, to the Partners other than
the holders of Preferred Units in accordance with
their respective Percentage Interests.
Section 6.4.2 NET LOSSES AND LOSSES ATTRIBUTABLE TO
DEPRECIATION. After giving effect to the special
allocations set forth in Sections 6.2 and 6.3 and excepting
all items of depreciation of Old Orchard and gains or losses
from any sale or disposition of Old Orchard, Net Losses with
respect to Old Orchard shall be allocated:
(a) first, to the Partners other than
the holders of Preferred Units in accordance with
their respective Percentage Interests, provided
that Net Losses shall not be allocated to any
Limited Partner pursuant to this Section 6.4.2 to
the extent that such allocation would cause such
Limited Partner to have an Adjusted Capital
Account Deficit at the end of such taxable year
(or increase any existing Adjusted Capital Account
Deficit) with Adjusted Capital Accounts and
Adjusted Capital Account Deficits being determined
solely for this purpose as if Old Orchard were the
sole asset in the Partnership and the Partner's
capital contribution made with respect to the
Partnership's acquisition of Old Orchard were the
only contribution and the allocations under
Section 6.4 were exclusive of any allocations made
under Section 6.1 (hereafter referred to as the
"Old Orchard Segregation Basis");
6
(b) second, to the holders of Preferred
Units (to the extent of such interests) provided
that Net Losses shall not be allocated to any such
holder pursuant to this Section 6.4.2 to the
extent that such allocation would cause such
holder to have an Adjusted Capital Account Deficit
at the end of such taxable year (or increase any
existing Adjusted Capital Account Deficit), as
computed using the Old Orchard Segregation Basis,
and
(c) to the General Partner to the extent
in excess of all limitations set forth in
clauses (a) and (b) immediately above.
All items of depreciation with respect to Old
Orchard for any taxable year and any loss from the sale
or disposition of Old Orchard shall be allocated 1% to
the General Partner and the remaining 99% as follows:
(a) first, to the Partners other than
the holders of Preferred Units in accordance with
their Percentage Interests until the cumulative
amount of such depreciation or loss so allocated
shall equal the capital contribution of such
Partner made in connection with the Partnership's
acquisition of Old Orchard;
(b) second, to the holders of Preferred
Units until the cumulative amount of such
depreciation or loss so allocated shall equal the
capital contribution of such Limited Partner made
in connection with the Partnership's acquisition
of Old Orchard; and
(c) thereafter to the holders of
Preferred Units.
Notwithstanding any other provision herein,
it is the intent of the Partners that no items of
depreciation will be allocated to any Limited Partner
other than a holder of Preferred Units or Class B
Units.
Section 6.4.3 NONRECOURSE LIABILITIES. For purposes
of Regulations under Section 1.752-3(a), the Partners agree
that with respect to Nonrecourse Liabilities of the
Partnership secured by a mortgage on Old Orchard in excess
of the sum of (a) the amount of Partnership Minimum Gain
(computed under the Old Orchard Segregation Basis) and
(b) the total amount of Nonrecourse Built-in Gain (computed
under the Old Orchard Segregation Basis), such Nonrecourse
Liabilities shall be allocated 1% to the General Partner and
99% to the holders of Preferred Units and Class B Units, if
any.
Section 6.4.4 GAINS. Any gain allocated to the
Partners upon the sale or other taxable disposition of any
Partnership asset shall to the extent possible, after taking
into account other required allocations of gain pursuant to
Section 6.2, be characterized as Recapture Income in the
same proportions and to the same extent as such Partners
have been allocated any deductions directly or indirectly
giving rise to the treatment of such gains as Recapture
Income.
Section 6.4.5 ALLOCATIONS FOLLOWING A SALE OR
DISPOSITION OF OLD ORCHARD. Following any sale or
disposition of Old Orchard (other than a sale or disposition
occurring in connection with or following an Event of
Dissolution), if the Preferred Units of any Partner are not
redeemed by the Partnership and remain outstanding, the
General Partner shall make such allocations of Net Income or
Net Losses with respect to all assets of the Partnership to
cause the Adjusted Capital Accounts of such holders to equal
the Liquidation Preference and to permit the distributions
contemplated by Section 4.2.6.2.
7
Section 6.4.6 CAPITAL ACCOUNTS. The Capital Accounts
of the General Partner and the holder of the Preferred Units
shall each be increased by the amount of the Capital
Contribution contributed by such Partner with respect to Old
Orchard. The Capital Accounts of all other Limited Partners
shall not be affected by such Capital Contributions."
6. As herein amended, the Partnership Agreement shall
remain in full force and effect and is hereby ratified and
confirmed in all respects.
7. This Amendment shall be governed by the internal laws
of the State of Illinois.
8. Capitalized terms used and not defined herein shall
have the respective meanings assigned to such terms in the
Partnership Agreement.
8
IN WITNESS WHEREOF, the undersigned, the General Partner of
the Partnership, has executed this Amendment to the Partnership
Agreement as of the date written above.
URBAN SHOPPING CENTERS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Senior Vice President
IN WITNESS WHEREOF, the undersigned, which is hereby being
admitted as a Limited Partner of the Partnership, agrees to be bound
by all of the terms and conditions of the Partnership Agreement as of
the date written above.
H. ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, NOT PERSONALLY BUT AS OWNER
TRUSTEES UNDER THE TRUST AGREEMENT DATED
AS OF NOVEMBER 22, 1996 AND KNOWN AS THE
OLD ORCHARD TRUST
By: /s/ H. ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
H. ▇▇▇▇▇ ▇▇▇▇▇▇
Owner Trustee
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Owner Trustee
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Owner Trustee
