AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF
SHOPCO REGIONAL MALLS, L.P.
Dated as of October 6, 1988
TABLE OF CONTENTS
Page
SECTION I General Provisions . . . . . . . . . . . . . . . . . . I-5
1.01. Continuation of the Partnership . . . . . . . . . . . I-5
1.02. Name and Office of the Partnership . . . . . . . . . I-6
1.03. Purpose of the Partnership . . . . . . . . . . . . . I-6
1.04. Term of the Partnership . . . . . . . . . . . . . . . I-6
1.05. Partners . . . . . . . . . . . . . . . . . . . . . . I-6
SECTION II Capital. . . . . . . . . . . . . . . . . . . . . . . . I-7
2.01. General Partner and Assignor Limited Partner. . . . . I-7
2.02. Contributions of the Assignor Limited Partner. . . . I-7
2.03. Partnership Capital . . . . . . . . . . . . . . . . . I-8
2.04. Execution of the Depositary Agreement . . . . . . . . I-9
2.05. No Fractional Interests and Units . . . . . . . . . . I-9
2.06. Splits and Combinations . . . . . . . . . . . . . . . I-9
2.07. Additional Issuances of Interests or Units . . . . . I-11
SECTION III Capital Accounts . . . . . . . . . . . . . . . . . . . I-11
3.01. Capital Account Calculation . . . . . . . . . . . . . I-11
3.02. Special Provisions . . . . . . . . . . . . . . . . . I-12
3.03. Transfers . . . . . . . . . . . . . . . . . . . . . . I-13
3.04. Timing . . . . . . . . . . . . . . . . . . . . . . . I-13
3.05. Allocations and Distributions Among Unit Holders;
Status of Unit Holders . . . . . . . . . . . . . . . I-13
3.06. Admissions and Transfers; Allocations and
Distributions . . . . . . . . . . . . . . . . . . . I-13
SECTION IV Allocation of Income and Losses, Gains and Losses. . . I-15
4.01. Operations . . . . . . . . . . . . . . . . . . . . . I-15
4.02. Capital Transactions. . . . . . . . . . . . . . . . . I-15
4.03. Dissolution . . . . . . . . . . . . . . . . . . . . . I-16
4.04. Minimum Gain Limitation . . . . . . . . . . . . . . . I-18
4.05. Amendments to Allocations . . . . . . . . . . . . . . I-18
4.06. General Partner Deficit Restoration . . . . . . . . . I-19
4.07. Allocations on Account of Optional Loans . . . . . . I-19
4.08. Minimum Gain Chargeback . . . . . . . . . . . . . . . I-19
4.09. Qualified Income Offset . . . . . . . . . . . . . . . I-20
4.10. Termination . . . . . . . . . . . . . . . . . . . . . I-20
SECTION V Distributions . . . . . . . . . . . . . . . . . . . . I-20
5.01. Operations . . . . . . . . . . . . . . . . . . . . . . I-20
5.02. Capital Transactions . . . . . . . . . . . . . . . . I-21
5.03. Dissolution . . . . . . . . . . . . . . . . . . . . . I-21
5.04. Working Capital Reserve . . . . . . . . . . . . . . . I-21
5.05. Miscellaneous . . . . . . . . . . . . . . . . . . . . I-22
5.06. Rules Governing Distributions Generally . . . . . . . I-22
5.07. Special Distribution to Unit Holders . . . . . . . . I-22
SECTION VI Management . . . . . . . . . . . . . . . . . . . . . . I-23
6.01. Management of the Partnership . . . . . . . . . . . . I-23
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6.02. Loans by the General Partner to the Partnership. . . I-29
6.03. Services of the General Partner; Other Interests of
Partners and Unit Holders; Fiduciary Duty. . . . . I-30
6.04. Liability of the General Partner; Indemnification. . I-30
6.05. Limitations on and Voting Rights of Limited Partners
and Unit Holders . . . . . . . . . . . . . . . . . I-32
6.06. Liability of Limited Partners and Unit Holders. . . . I-32
6.07. Withdrawal or Removal of the General Partner. . . . . I-33
6.08. Certain Fees and Expenses . . . . . . . . . . . . . . I-36
6.09. Code Elections . . . . . . . . . . . . . . . . . . . I-37
6.10. Net Worth of the General Partner . . . . . . . . . . I-37
6.11. Sale or Lease of Malls . . . . . . . . . . . . . . . I-38
6.12. Meetings . . . . . . . . . . . . . . . . . . . . . . I-38
6.13. Notice . . . . . . . . . . . . . . . . . . . . . . . I-39
6.14. Record Date . . . . . . . . . . . . . . . . . . . . . I-39
6.15. Front-end Fees . . . . . . . . . . . . . . . . . . . I-40
SECTION VII Assignment of Assignor's Limited Partnership
Interests to Unit Holders and Rights
of Unit Holders . . . . . . . . . . . . . . . . . . I-40
7.01. Assignment of Interests: Timing, Procedures, Rights,
Liabilities, and Fiduciary Duty . . . . . . . . . . I-40
7.02. Rights and Obligations of Unit Holders to Become
Limited Partners . . . . . . . . . . . . . . . . . I-42
7.03. Transfer of Units . . . . . . . . . . . . . . . . . . I-43
7.04. Deferral of Registration of Transfers of Interests
or Units to Avoid Termination of the Partnership. . I-44
7.05. Transfer Fee. . . . . . . . . . . . . . . . . . . . . I-44
7.06. Replacement of the Assignor Limited Partner. . . . . I-44
SECTION VIII Books, Records and Bank Accounts . . . . . . . . . . . I-45
8.01. Fiscal Year . . . . . . . . . . . . . . . . . . . . . I-45
8.02. Records of Partnership Transactions . . . . . . . . . I-45
8.03. Access to Partnership Records . . . . . . . . . . . . I-45
8.04. Method of Accounting; Preparation of Tax Returns . . I-46
8.05. Reports on Partnership's Business . . . . . . . . . . I-46
8.06. Report on Form 10-Q . . . . . . . . . . . . . . . . . I-46
8.07. Annual Financial Reports . . . . . . . . . . . . . . I-46
8.08. Bank Accounts; Temporary Investments . . . . . . . . I-47
8.09. Tax Matters Partner . . . . . . . . . . . . . . . . . I-47
8.10. Reports to Administrators . . . . . . . . . . . . . . I-48
8.11. Modifications to Reporting Requirements . . . . . . . I-48
SECTION IX Transfers of Interests . . . . . . . . . . . . . . . . I-48
9.01. Restrictions on Transfer or Assignment of Interests . I-48
9.02. Substituted Limited Partners . . . . . . . . . . . . I-50
9.03. Recognition of Transfer . . . . . . . . . . . . . . . I-50
9.04. Treatment of a Substituted Limited Partner as a
Limited Partner . . . . . . . . . . . . . . . . . . I-51
9.05. Withdrawal, Bankruptcy or Incapacity of a Limited
Partner . . . . . . . . . . . . . . . . . . . . . . I-51
9.06. Assignment of Units . . . . . . . . . . . . . . . . I-52
9.07. Transfers in Violation of Section . . . . . . . . . . I-52
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SECTION X Dissolution and Termination . . . . . . . . . . . . . I-52
10.01. No Dissolution . . . . . . . . . . . . . . . . . . . I-52
10.02. Events of Dissolution . . . . . . . . . . . . . . . . I-52
10.03. Distributions Upon Dissolution and Liquidation . . . I-54
SECTION XI Certain Definitions. . . . . . . . . . . . . . . . . . I-54
SECTION XII Miscellaneous . . . . . . . . . . . . . . . . . . . . I-61
12.01. Notices . . . . . . . . . . . . . . . . . . . . . . . I-61
12.02. Successors and Assigns . . . . . . . . . . . . . . . I-61
12.03. Power of Attorney . . . . . . . . . . . . . . . . . . I-62
12.04. Amendments . . . . . . . . . . . . . . . . . . . . . I-63
12.05. No Waiver . . . . . . . . . . . . . . . . . . . . . . I-64
12.06. Entire Agreement . . . . . . . . . . . . . . . . . . I-64
12.07. Captions . . . . . . . . . . . . . . . . . . . . . . I-64
12.08. Counterparts . . . . . . . . . . . . . . . . . . . . I-65
12.09. Foreign Limited Partners or Unit Holders . . . . . . I-65
12.10. Applicable Law . . . . . . . . . . . . . . . . . . . I-65
12.11. Severability . . . . . . . . . . . . . . . . . . . . I-65
Schedule A - Names, Address and Capital Contributions
of the General Partner, the Assignor
Limited Partner and the Limited Partners
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AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF
SHOPCO REGIONAL MALLS, L.P.
This Amended And Restated Agreement Of Limited
Partnership, dated as of the 6th day of October, 1988 (the "Agreement"),
by and among Shearson Regional Malls, Inc., a Delaware corporation having
an address at c/o Shearson Lehman Hutton Inc., American Express Tower,
12th Floor, World Financial Center, New York, New York 10285, as the
general partner (the "General Partner") and Shearson Regional Malls
Depositary Corp., a Delaware corporation, having an address at c/o
Shearson Lehman Hutton Inc., American Express Tower, 12th Floor, World
Financial Center, New York, New York 10285, as the assignor limited
partner (the "Assignor Limited Partner") (the Assignor Limited Partner,
the General Partner and those Persons Admitted to the Partnership as
additional or substitute Limited Partners pursuant to Section 2.07, 7.02
or 9 are hereinafter sometimes collectively referred to as the
"Partners").
R E C I T A L S
Whereas, on March 11, 1988, the General Partner and the
Assignor Limited Partner entered into an Agreement of Limited Partnership
forming Shopco Regional Malls, L.P., a Delaware limited partnership (the
"Partnership" and such agreement, the "Partnership Agreement"), and on
such date the General Partner caused a Certificate of Limited Partnership
(the "Certificate") to be filed in the Office of the Secretary of the
State of Delaware, all in accordance with the provisions of the Delaware
Revised Uniform Limited Partnership Act (the "Delaware Act").
Whereas, the Partnership was formed for the purpose of
acting as general partner of Shearson Shopco Malls, L.P., a Delaware
limited partnership (the "Owner Partnership"), which intends to acquire,
own, lease and eventually sell two enclosed regional shopping malls, The
Mall at Assembly Square located in Somerville, Massachusetts ("Assembly
Square") and Cranberry Mall, located in Westminster, Maryland
("Cranberry") and, possibly, one or more as-yet unspecified enclosed
shopping malls (the "Additional Malls", combinations of Assembly Square,
Cranberry and the Additional Malls are referred to as the "Malls") and
any Additional Property (as hereinafter defined), all in accordance with
the terms of the Owner Partnership Agreement (as hereinafter defined);
and
Whereas, the General Partner desires to cause the offer
and sale of depositary units representing assignments of the economic,
voting and certain other rights attributable to the limited partnership
interests in the Partnership ("Units") and the parties hereto desire to
amend and restate their entire agreement in full;
Now, Therefore, in consideration of the covenants and
agreements made herein, the parties hereto, intending to be legally
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bound, hereby certify and agree as follows (certain capitalized terms
used herein to have the respective meanings set forth in SECTION XI--
CERTAIN DEFINITIONS):
SECTION I
General Provisions
1.01. Continuation of the Partnership.
(a) The parties hereby continue Shopco Regional
Malls, L.P. as a limited partnership pursuant to the provisions
of the Delaware Act. The General Partner shall, from time to
time, file and record any amendments to the Certificate,
fictitious name certificates and/or other instruments or
documents required or desirable to comply with the laws of the
State of Delaware and any other jurisdictions in which the
Partnership shall carry on its business, and shall do all other
acts and things requisite for the reconstitution, protection and
continuation of the Partnership as a limited partnership
pursuant to the laws of the State of Delaware and any other
jurisdiction in which the Partnership shall carry on its
business.
(b) A Partner's and Unit Holder's interest in the
Partnership shall be personal property for all purposes. All
property owned by the Partnership shall be deemed owned by the
Partnership as an entity, and no Partner or Unit Holder,
individually, shall have any ownership of such property.
(c) Notwithstanding anything to the contrary
contained herein, if the General Partner obtains an appropriate
opinion of tax counsel ("Counsel") to the Partnership, if
changes in the tax laws or other developments are likely to
alter the Partnership's providing of "flow through" tax
consequences to Unit Holders and Limited Partners then the
General Partner may, and is hereby authorized to, take any
action or adopt any procedure deemed necessary or appropriate by
Counsel to preserve the Partnership's providing of such "flow
through" tax consequences, including, without limitation,
converting and reconstituting the Partnership as a real estate
investment trust or any other type of legal entity (a "New
Entity") in the manner and on the terms so recommended, or
distributing notes representing current taxable income to the
Partners and Unit Holders in the event the Partnership shall be
unable to distribute cash or property representing such taxable
income. The General Partner will obtain approval of a Majority
in Interest if time permits. In the event of conversion into a
New Entity, the business of the Partnership shall be continued
by the New Entity and the Interests and Units shall be converted
into equity interests of the New Entity in the manner and on the
terms so recommended and approved. The term "flow through" tax
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consequences shall have the same meaning in the context of this
Agreement as such term has in the National Association of
Securities Dealers, Inc.'s definition of "direct participation
program."
1.02. Name and Office of the Partnership.
The Partnership shall be conducted under the name of Shopco
Regional Malls, L.P. and its principal office shall be located at c/o
Shearson Lehman Hutton Inc., American Express Tower, 12th Floor, World
Financial Center, New York, New York 10285, or at such other place or
places as the General Partner may from time to time designate.
Notification of any such change in the Partnership's place of business
and principal office shall be given to all Partners and Unit Holders.
The registered office of the Partnership in the State of Delaware is
located at Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware 19801. The Partnership's registered agent for service of
process at such address in the State of Delaware is The Corporation Trust
Company.
1.03. Purpose of the Partnership.
The sole purpose and business of the Partnership shall be to act
and serve as the general partner of the Owner Partnership in accordance
with the terms of the Owner Partnership Agreement and to do all things
necessary or incidental thereto or necessary or incidental to the
performance of the terms of this Agreement and, in connection therewith
and, as applicable, acting through the Owner Partnership, to accept,
collect, hold, sell, exchange, mortgage, pledge or otherwise dispose of
the Malls and/or evidences of indebtedness or other property received by
the Owner Partnership or this Partnership pursuant to the terms of the
Owner Partnership Agreement or this Agreement. In carrying out the
foregoing purposes, the Partnership or the Owner Partnership may act in
conjunction with others, through joint ventures, partnerships or
otherwise. The Partnership shall engage in such other activities and
enter into such agreements as may be necessary or appropriate in
connection with the promotion or conduct of the business of the
Partnership as described in this Section 1.03 and as necessary or
appropriate to carry out the other provisions of this Agreement. The
Partnership shall not engage in any other business or activity without
the consent of a Majority in Interest of the Limited Partners.
1.04. Term of the Partnership.
The Partnership shall continue in full force and effect until
December 31, 2038, unless sooner terminated as hereinafter provided.
1.05. Partners.
(a) The General Partner of the Partnership is
Shearson Regional Malls Inc., a Delaware corporation. Except as
expressly provided in this Agreement, no other Person shall be
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admitted as an additional or substitute general partner of the
Partnership.
(b) The Assignor Limited Partner of the Partnership
is Shearson Regional Malls Depositary Corp., a Delaware
corporation. Except as expressly provided in this Agreement, no
other Person shall be admitted as an additional or substitute
Limited Partner of the Partnership.
SECTION II
Capital
2.01. General Partner and Assignor Limited Partner. The
names, business addresses and Capital Contributions of the General
Partner and the Assignor Limited Partner, as the case may be, are set
forth in Schedule A hereto. The General Partner, as such, shall not make
any additional Capital Contributions to the Partnership other than as
provided in Section 4.06. The initial contribution of the Assignor
Limited Partner shall be refunded, simultaneously with the release of the
Capital Contribution to the Partnership by the Assignor Limited Partner
attributable to purchasers of Units on the first Closing Date.
2.02. Contributions of the Assignor Limited Partner.
(a) The Partnership has made or will make a public
offering of up to 110,000 Units, the proceeds of which are to be
contributed to the Partnership by the Assignor Limited Partner
on behalf of the purchasers of Units in accordance with the
provisions of Section VII hereof. The Partnership shall require
a minimum purchase of 2 Units by Keogh Plans, Individual
Retirement Accounts ("IRAs") and employee benefit plans, and 5
Units by other investors, at a purchase price of $1,000 per
Unit, with additional purchases in increments of one Unit.
There shall be discounts available for investors purchasing more
than 250 Units, as set forth in the Prospectus. The General
Partner shall have sole and complete discretion in determining
the terms and conditions of the public offering and sale of
Units (including the length of the offering period) and the
General Partner is authorized to do all things which it deems to
be necessary, convenient, appropriate or advisable in connection
therewith, including but not limited to the preparation and
filing on behalf of the Partnership of a registration statement
with the Securities and Exchange Commission and the securities
commissions (or similar agencies or officers) of such
jurisdictions as the General Partner shall determine, and the
execution or performance of agreements with underwriters and
others concerning the marketing of Units on such basis and upon
such terms as the General Partner shall determine. It is
expressly agreed that Shearson Lehman Hutton Inc. ("Shearson"),
an Affiliate of the General Partner, shall be selling agent and
that The Robinson-Humphrey Company Inc., Foster & Marshall Inc.
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and IDS Financial Services Inc., which are Affiliates of the
General Partner, and any other securities brokerage firms that
are or may become affiliated with the General Partner and its
Affiliates during the offering period, may participate in such
offering as dealers and that Shearson may select such
unaffiliated securities firms as it may choose to act as dealers
and that each of the foregoing may receive selling commissions.
(b) The public offering of Units shall be effected
in accordance with the provisions set forth in the Prospectus,
including, without limitation, the provisions set forth under
the caption "Terms of the Offering." Prior to the Termination
Date (as defined in the Prospectus), Certificates of Limited
Partnership Interest may be issued by the Partnership only to
the Assignor Limited Partner (on behalf of subscribers for
Units) and prior to that date no person other than the Assignor
Limited Partner shall be entitled to acquire Limited Partnership
Interests from the Partnership. After the Termination Date, no
additional Units or Limited Partnership Interests may be sold by
the Partnership (provided that following the Termination Date,
Units may be converted to Limited Partnership Interests as
provided in Section 7.02(b)).
(c) Units and Partnership Interests, when sold and
issued on the terms and in the manner set forth in this
Partnership Agreement and the Prospectus, shall be fully paid
and nonassessable.
2.03. Partnership Capital.
(a) No Partner shall be paid interest on any
Capital Contribution.
(b) The Partnership shall not redeem any
Partnership Interest and no Partner shall have the right to
withdraw, or receive any return of, his Capital Contribution,
except as specifically provided herein. No Limited Partner or
Unit Holder shall have priority over any other Limited Partner
or Unit Holder, either as to the return of his Capital
Contribution or as to profits, losses or distributions, except
as otherwise specifically provided herein.
(c) Under circumstances requiring a return of any
Capital Contribution, no Partner shall have the right to receive
property other than cash.
(d) The General Partner shall have no personal
liability for the repayment of the Capital Contribution of any
Limited Partner or Unit Holder nor any obligation to make
Capital Contributions (except as provided in Schedule A and
Section 4.06), loans or advances to the Partnership subject to
the provisions of Section 6.04.
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2.04. Execution of the Depositary Agreement.
On or before the first Closing Date, the Partnership, the
General Partner and the Assignor Limited Partner shall execute the
Depositary Agreement in favor of the Unit Holders.
2.05. No Fractional Interests and Units.
No fractional Interests or Units may be issued by the
Partnership or assigned by Partners or Unit Holders except as provided in
Section 2.06.
2.06. Splits and Combinations.
(a) The General Partner may (i) make a distribution
in Units (or any other instrument evidencing ownership or
assignment of Interests) to all Unit Holders or (ii) effect a
subdivision or combination of Units (or any other instrument
evidencing ownership or assignment of Interests) but in each
case only on a pro rata basis so that, after such distribution,
subdivision or combination, each Partner and Unit Holder shall
have the same Percentage Interest in the Partnership as before
such distribution, subdivision or combination. The Partnership
may, but shall not be required to, issue fractional Units (or
any other instrument evidencing ownership or assignment of
Interests) upon any such distribution, subdivision, or
combination of Units (or any other instrument evidencing
ownership or assignment of Interests). In the event any
distribution, subdivision or combination of Units (or any other
instrument evidencing ownership or assignment of Interests)
would result in the issuance of fractional Units (or other
instrument evidencing ownership or assignment of Interests) but
for the provisions of this Section 2.06(a), in the sole
discretion of the General Partner, the final fraction of a Unit
(or any other instrument evidencing ownership or assignment of
Interests) issuable to each Unit Holder may be rounded to the
nearest whole Unit (or any other instrument evidencing ownership
or assignment of Interests).
(b) Whenever such distribution, subdivision or
combination is declared, the General Partner shall select a
record date (the "Record Date") as of which the distribution or
combination shall be effective and shall send notice of the
distribution, subdivision or combination at least 20 days prior
to such Record Date to each Unit Holder of record ("Record
Holder") as of the date 10 days prior to the date of such
notice. The General Partner also may cause the Partnership's
accounting firm or another firm of independent public
accountants selected by it to calculate the number of Units (or
any other instrument evidencing ownership or assignment of
Interests) to be held by each Record Holder after giving effect
to such distribution, subdivision or combination. The General
Partner shall be entitled to rely on any certificate provided by
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such firm as conclusive evidence of the correctness of such a
calculation.
(c) Promptly following any such distribution,
subdivision or combination, the General Partner may cause
Depositary Receipts to be issued to the Record Holders of Units
(or any other instrument evidencing ownership or assignment of
Interests) as of the applicable Record Date representing the new
number of Units (or any other instrument evidencing ownership or
assignment of Interests) held by such Record Holder, or the
General Partner may adopt such other procedures or instruments
as it may deem appropriate to reflect such distribution,
subdivision or combination; provided, however, that in the event
any such distribution, subdivision or combination results in a
smaller total number of Units (or any other instrument
evidencing ownership or assignment of Partnership Interests)
outstanding the General Partner may require, as a condition to
the delivery to a Record Holder of such new Depositary Receipt,
the surrender of any Depositary Receipt owned by such Record
Holder immediately prior to such Record Date.
(d) Notwithstanding any provision in this Section
2.06 to the contrary, no distribution or subdivision or
combination of Units (or other instrument evidencing ownership
or assignment of Interests) shall be made unless:
(i) the Partnership shall have received an
opinion of legal counsel to the effect that such action
will not have any material adverse effect on the
taxation of the Limited Partners or Unit Holders as a
class or any group of Limited Partners or Unit Holders;
and
(ii) such action shall not result in any
change in the rights of any Limited Partner or Unit
Holder to cash distributions by the Partnership or the
allocable share of such Limited Partner or Unit Holder
in the income, gain or losses of the Partnership (except
any immaterial change resulting from any issuance or
elimination of fractional Units (or other instrument
evidencing ownership or assignment of Interests))
permitted hereunder.
(e) In connection with any distribution,
subdivision or combination of Units under this Section 2.06, the
General Partner shall make a corresponding distribution,
subdivision or combination of Interests the legal title to which
is held of record by the Assignor Limited Partner and as to
which corresponding Units have been assigned to Unit Holders
under the provisions of Section VII hereof, as well as in the
number of Interests held of record by Limited Partners who have
exchanged their Units for Interests in accordance with the
provisions of Section 7.02(a), and the foregoing provisions of
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this Section 2.06 shall be equally applicable to such Interests
(it being the intent that the Percentage Interest of all Unit
Holders and Limited Partners shall be affected on a pro rata
basis).
2.07. Additional Issuances of Interests or Units.
No Interests or Units (either of the same class or of a
different class as the Units sold pursuant to the terms of the
Prospectus) or any rights, warrants or options to acquire Interests or
Units, except those Interests and Units issued by the Partnership
pursuant to Section 2.02 or 2.06, shall be offered for sale or issued by
the Partnership unless: (i) such issuance is for the purpose of financing
capital improvements to the Malls or the acquisition or development of
Additional Property by the Owner Partnership, (ii) such issuance is
approved by the General Partner and a Majority in Interest of the Limited
Partners and (iii) the Partnership is furnished with an opinion of
counsel to the effect that such issuance will not have any material
adverse effect on the federal income tax consequences to the Limited
Partners or the Unit Holders from their investment in the Units.
SECTION III
Capital Accounts
3.01. Capital Account Calculation.
Each Partner shall have a capital account which will consist of
the initial cash contributed by such Partner to the capital of the
Partnership as described in Section II.
The Capital Account of the Assignor Limited Partner shall be
subdivided into "Unit Holder Capital Accounts." One Unit Holder Capital
Account shall be established for each Unit Holder for whom a Depositary
Receipt is issued by the Assignor Limited Partner and shall be treated as
the Capital Account of the Unit Holder (or his predecessor in interest)
on whose behalf the Assignor Limited Partner received the purchase price
for corresponding Interests held of record by the Assignor Limited
Partner. The capital account of each Partner shall be increased by:
(a) the amount of income from operations allocated
to it pursuant to Section 4.01, 4.07, 4.08 and 4.09; and
(b) the amount of gains allocated to it pursuant to
Sections 4.02, 4.03, 4.07, 4.08 and 4.09; and shall be decreased
by:
(c) the amount of losses allocated to it pursuant
to Sections 4.01, 4.02, 4.03, 4.07 and 4.09;
(d) all amounts distributed to it pursuant to
Section V hereof;
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(e) such Person's distributive share of
expenditures of the Partnership described in Code section
705(a)(2)(B) (relating to expenditures which are neither
deductible nor properly chargeable to capital) and expenditures
which pursuant to the Regulation promulgated under Code section
704(b) are characterized as Code section 705(a)(2)(B)
expenditures; and
(f) the amount of any commission paid with respect
to such Person's acquisition of Units.
3.02. Special Provisions.
For purposes of computing the amount of any item of income,
gain, deduction, or loss to be reflected in Capital Accounts, the
determination, recognition and classification of each such item shall be
the same as its determination, recognition and classification for federal
income tax purposes, provided that:
(a) Any deductions for depreciation, cost recovery,
amortization, or expense in lieu of depreciation, attributable
to property contributed (or deemed contributed) to the
Partnership (a "Partnership Asset") shall be determined as if
the adjusted basis for federal income tax purposes (the
"Adjusted Basis") of such Partnership Asset on the date it was
acquired by the Partnership was equal to the fair market value
of such Partnership asset as of such date (the "Carrying
Value");
(b) Any income, gain, deduction or loss
attributable to the taxable disposition of any Partnership asset
shall be determined by the Partnership as if the Adjusted Basis
of such Partnership Asset as of such date of disposition was
equal to the Carrying Value of such Partnership Asset as of such
date as adjusted by deductions for depreciation, cost recovery,
amortization or expense in lieu of depreciation;
(c) Immediately prior to the distribution of any
Partnership Asset any unrealized gain or unrealized loss
attributable to such Partnership Asset shall, for purposes
hereof, be deemed to be a gain or loss recognized by the
Partnership and shall be allocated among the Partners and the
Unit Holders in accordance with the provisions of Sections 4.02
or 4.03. In determining such unrealized gain or unrealized
loss, the fair market value of such Partnership Asset shall be
determined pursuant to an appraisal report; and
(d) The computations of all items of income, gain,
loss and deduction shall be made without regard to any election
which may be made by the Partnership under Code section 754.
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3.03. Transfers.
Any transferee of Units shall succeed to the Unit Holder Capital
Account of the transferor relating to the Units transferred.
3.04. Timing.
Except as otherwise provided in this Agreement, whenever it is
necessary to determine the Unit Holder Capital Account of any Unit Holder
for purposes of Section IV or V, the Unit Holder Capital Account of such
Unit Holder shall be determined after giving effect to all Capital
Contributions theretofore made to the Partnership and all allocations for
transactions effected prior to the time as of which such determination is
made, of income, gains, deductions and losses pursuant to Section IV, and
to all distributions theretofore made for such year pursuant to Section
V.
3.05. Allocations and Distributions Among Unit Holders; Status
of Unit Holders.
Except as otherwise provided in this Agreement, all amounts
allocated or distributed to the Unit Holders shall be further allocated
or distributed among the Unit Holders in accordance with their respective
Percentage Interests. For purposes of Section III, IV and V, the term
Unit Holders shall mean and include Unit Holders who, pursuant to Section
7.02(a) or 7.02(b), have been admitted to the Partnership as Limited
Partners, in which case each such Person shall be deemed to own a number
of Units equal to the number of Interests then owned by such Person.
3.06. Admissions and Transfers; Allocations and Distributions.
(a) After the first Closing Date and during the
Offering Period, income and losses from operations shall be
determined and allocated to the Unit Holders on a monthly basis,
using the interim-closing method. For purposes of allocating
income or loss from operations and for purposes of distributing
Net Cash Flow:
(i) If a Closing Date occurs within the
first fifteen days of a month, the Unit Holder shall be
treated as being a Record Holder on the first day of
such month;
(ii) If a Closing Date occurs after the
fifteenth day of the month, the Unit Holder shall be
treated as being a Record Holder on the first day of the
next month; and
(iii) Any transferee of a Unit shall be
treated as a Record Holder on the first day of the month
succeeding the month in which such transfer has been
effected on the books of the transfer agent pursuant to
Section 7.03. Income or loss from operations for a
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month shall be allocated to the Unit Holders who are
Record Holders on the first day of such month or who are
deemed to be of record pursuant to (a)(i) above.
(b) After the first Closing Date and during the
Offering Period, Net Cash Flow for each fiscal quarter (or part
thereof) shall be prorated over the fiscal quarter (or part
thereof). If there is one or more Closing Dates (other than the
Closing Date which represents the first closing of Units) in the
fiscal quarter (or part thereof), the following rules shall be
applied:
(i) Net Cash Flow prorated to the period
prior to the Closing Date (which for this purpose is
determined by applying the rules of (a)(i) and (ii)
above) shall be distributed to the Record Holders (or
are deemed Record Holders under (a)(i) above) as of the
first day of the month preceding such deemed Closing
Date. Net Cash Flow prorated for the period from the
Closing Date (as determined) to the end of the fiscal
quarter (or the last day of the month immediately before
the next Closing Date (as determined) if an additional
Closing Date in such fiscal quarter occurs), shall be
distributed to the Record Holders as of the first day of
the last month of the quarter (or the first day of the
month immediately before the next Closing Date (as
determined)).
(ii) If the final Closing does not occur on
the last day of a fiscal quarter, Net Cash Flow for that
fiscal quarter shall be allocated in accordance with the
principles of (b)(i) above.
(c) After the Offering Period, for purposes of
allocating income and loss from operations and distributions of
Net Cash Flow, any transferee of a Unit shall be treated as
being a Unit Holder on the first day of the month succeeding the
month in which such transfer has been effected on the books of
the transfer agent pursuant to Section 7.03. In addition,
income and loss from operations shall be divided on the
proration method, using the monthly convention as described
above. Net Cash Flow for a fiscal quarter (or part thereof)
shall be distributed to the Record Holders on the first day of
the last month in such quarter (or part thereof).
(d) Notwithstanding the above, but subject to
applicable Regulations, gain or loss realized in connection with
a Capital Transaction shall be allocated to those Unit Holders
who are Record Holders as of the last day of the month in which
the Capital Transaction occurs. Net Proceeds to be distributed
from a Capital Transaction shall be distributed to the Record
Holders on the last day of the month in which the Capital
Transaction occurs. The same rules shall be applied for gain
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and loss upon dissolution and Net Proceeds from dissolution and
for distributions pursuant to Section 5.07.
(e) The General Partner is authorized to apply tax
allocation rules other than those contained in this Section 3.06
to the extent that the General Partner determines that the
application of the tax allocation rules contained in this
Section 3.06 would result in a substantial mismatching of the
allocation of income or loss attributable to a period and the
distribution of cash attributable to the same period as between
the transferor and transferee of the Partnership Interest or
Unit transferred that could be minimized by the application of
an alternative tax allocation rule, or (ii) to the extent
necessary to conform the Partnership's tax allocations to the
requirements of any Regulations.
(f) Subject to the provisions of Section 6.04
hereof, the General Partner shall not incur any liability for
making allocations and distributions in accordance with the
provisions of this Section 3.06, whether or not the General
Partner has knowledge or notice of any transfer or purported
transfer of ownership of any Unit or Partnership Interest, other
than as shown on the records of the Partnership or the Transfer
Agent.
(g) Offering Period means the period from the first
Closing Date until the final Closing Date.
SECTION IV
Allocation of Income and Losses, Gains and Losses
4.01. Operations.
Subject to the provisions of Sections 4.04, 4.06, 4.07, 4.08 and
4.09, all income and losses of the Partnership from operations (as
distinguished from transactions described in Sections 4.02 and 4.03) of
the Partnership for each fiscal year shall be allocated 99% to the Unit
Holders and 1% to the General Partner.
4.02. Capital Transactions.
All gains and losses of the Partnership in connection with a
Capital Transaction shall be allocated, after adjustment of the capital
accounts of the Unit Holders and the General Partner to reflect the
distributions and amounts available for distribution pursuant to Section
5.02 in connection with such Capital Transaction, such gains, and losses,
shall be allocated in the following order of priority:
(a) in the event there are gains to be allocated;
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(i) first, if any one or more Unit Holders
or the General Partner has a negative balance in its
capital account, then an amount of gains up to the
aggregate of such negative balances shall be allocated
among such Unit Holders and General Partner in the
proportion that the negative balance of each such Unit
Holder's and General Partner's capital account bears to
the aggregate of such negative balances; and
(ii) then, after such allocation has been
made (or in the event that each Unit Holder and the
General Partner has a zero or positive balance in its
capital account), 99% to the Unit Holders and 1% to the
General Partner until the capital account of each Unit
Holder is equal to his unpaid Preferred Return and
Unrecovered Capital and the remainder of the gains shall
be allocated to the extent possible so that the positive
balances in the aggregate capital accounts of the Unit
Holders (in excess of their aggregate unpaid Preferred
Return and Unrecovered Capital) and the capital account
of the General Partner are in the proportions of 88.25%
and 11.75%, respectively; or
(b) in the event there are losses to be allocated;
(i) first, if any one or more Unit Holders
or the General Partner has a positive balance in its
capital account, an amount of losses up to the aggregate
of such positive balances shall be allocated among such
Unit Holders and the General Partner in the proportion
that the positive balance of each such Unit Holder's and
the General Partner's capital account bears to the
aggregate of such positive balances; and
(ii) then, after such allocation has been
made (or in the event that each Unit Holder and the
General Partner has a zero or negative balance in his
capital account), the remainder of the losses shall be
allocated to the extent possible so that the negative
balances in the aggregate capital accounts of the Unit
Holders and the capital account of the General Partner
are in the proportions of 88.25% and 11.75%,
respectively.
4.03. Dissolution.
All gains and losses of the Partnership in connection with a
sale of all or substantially all of the assets of the Partnership or any
other event causing a dissolution and termination of the Partnership,
shall be allocated in the following order of priority:
(a) in the event there are gains to be allocated,
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(i) first, if any one or more Unit Holders
or the General Partner has a negative balance in its
capital account, then an amount of gains up to the
aggregate of such negative balances shall be allocated
among such Unit Holders and the General Partner in the
proportion that the negative balance of each such Unit
Holder's and General Partner's capital account bears to
the aggregate of such negative balances;
(ii) then, after such allocation has been
made (or, in the event that each Unit Holder and the
General Partner has a zero or positive balance in its
capital account), there shall be determined the amount
by which the amount of proceeds distributed or available
for distribution to the General Partner and each Unit
Holder pursuant to Section 5.03(a) (without regard to
the proviso contained in such Section) exceeds the
capital account of such Person (such excess for each
person being referred to as its "Amount"), and an amount
of gains equal to the aggregate of the Amounts shall be
allocated among the General Partner and the Unit Holders
in the proportion that each such Person's Amount bears
to the aggregate of the Amounts;
(iii) then, after adjustment of the capital
accounts of the Unit Holders to reflect the allocations
of gains under subclauses (i) and (ii) above and
distributions and amounts available for distribution to
the General Partner and the Unit Holders pursuant to
Section 5.03(a), the remainder of the gains shall be
allocated to the extent possible so that the positive
balances in the aggregate capital accounts of the Unit
Holders and in the capital account of the General
Partner are in the proportions of 88.25% and 11.75%,
respectively; or
(b) in the event there are losses to be allocated,
(i) first, if any one or more Unit Holders
or the General Partner has a positive balance in its
capital account, an amount of losses equal to the
aggregate of such positive balances shall be allocated
among such Unit Holder and General Partner in the
proportion that the positive balance of each such Unit
Holder's and General Partner's capital account bears to
the aggregate of such positive balances; and
(ii) then, after such allocation has been
made (or in the event that each Unit Holder and the
General Partner has a zero or negative balance in his
capital account), the remainder of the losses shall be
allocated to the extent possible so that the negative
balances in the aggregate capital accounts of the Unit
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Holders and in the capital account of the General
Partner are in the proportions of 88.25% and 11.75%,
respectively.
4.04. Minimum Gain Limitation.
Anything contained in this Section IV to the contrary
notwithstanding, cumulative allocations of Partnership losses or
deductions to any Unit Holder pursuant to this Section IV shall not
exceed the sum of the following amounts, determined as of the end of each
taxable year of the Partnership: (i) such Unit Holder's Capital
Contribution theretofore made pursuant to Section II, (ii) any further
increases to such Unit Holder's capital account less any further
decreases to such Unit Holder's capital account (other than for
allocations of loss), and (iii) such Unit Holder's Pro Rata Share of
Minimum Gain (as hereinafter defined). To the extent that the foregoing
limitation results in a non-allocation of Partnership losses or
deductions to a Unit Holder, such Partnership losses or deductions shall
be allocated or reallocated to the General Partner. For the purposes of
this Section IV, (A) the term "Minimum Gain" shall mean that portion of
the excess, if any, of (x) the outstanding aggregate principal balance,
or any part thereof, of any non-recourse debt of the Partnership or the
Owner Partnership that is secured by an interest in the Partnership's or
the Owner Partnership's property or any part thereof, over (y) the
adjusted basis of such property to the Partnership for federal income tax
purposes, (B) the term "non-recourse debt" shall mean a liability (or
that portion of a liability) of the Partnership or the Owner Partnership
with respect to which no partner or Unit Holder (or Affiliate thereof) of
the Partnership or the Owner Partnership has any personal liability, as
determined under section 1.752-1(e) of the Regulations, or any successor
provision, and (C) a Unit Holder's "Pro Rata Share of Minimum Gain" shall
mean, with respect to each Unit Holder, 99% of its Percentage Interest.
4.05. Amendments to Allocations.
It is the intent of the Unit Holders and the General Partner
that each Unit Holder's and the General Partner's distributive share of
income, gain, loss or deduction (or items thereof) shall be determined
and allocated in each year of the Partnership in accordance with this
Section IV to the fullest extent permitted by Code section 704(b) and the
Regulations. In order to preserve and protect the determinations and
allocations provided for in this Section IV, the General Partner shall
be, and hereby is, authorized and directed to allocate income, gain, loss
or deduction (or items thereof) arising in any year differently than
otherwise provided for in this Section IV, or to otherwise amend the
provisions of this Section IV, if, and to the extent that, allocating
income, gain, loss or deduction (or items thereof) in the manner provided
for in this Section IV would cause the determination and allocation of
each Unit Holder's or the General Partner's distributive share of income,
gain, loss or deduction (or items thereof) not to be permitted by Code
section 704(b) or the Regulations. Any allocation, or amendment, as the
case may be, made pursuant to this Section 4.05 shall be deemed to be a
complete substitute for any allocation otherwise provided for in this
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Section IV and no other amendment of this Agreement or approval of any
Unit Holder shall be required.
In making any allocation or amendment (the "new allocation") as
set forth above, the General Partner is authorized to act only after
having been advised by Willkie Farr & Gallagher or other tax counsel to
the Partnership that in its opinion, after examining Code section 704(b)
and the Regulations, (i) the new allocation is necessary, and (ii) the
new allocation is the minimum modification of the allocations otherwise
provided for in this Section IV necessary in order to insure that, either
in the current year or in any preceding year, each Unit Holder's and the
General Partner's distributive share of income, gain, loss or deduction
(or items thereof) is determined and allocated in accordance with this
Section IV to the fullest extent permitted by Code section 704(b) and the
Regulations. New allocations made by the General Partner in reliance
upon the advice of Willkie Farr & Gallagher or such other tax counsel
shall be deemed to be made pursuant to the fiduciary obligation of the
General Partner to the Partnership and the Unit Holders, and no such new
allocation shall give rise to any claim or cause of action by any Unit
Holder.
4.06. General Partner Deficit Restoration. If upon the
dissolution and termination of the Partnership the capital account of the
General Partner is less than zero (after allocation of net income and net
gains and tax losses recognized upon the disposition of Partnership
assets in connection with the liquidation of the Partnership), the
General Partner shall contribute to the Partnership an amount equal to
the lesser of (a) the deficit balance in its capital account or (b) the
excess of 1.01% of the aggregate Capital Contributions of the Unit
Holders over the aggregate capital contributions previously made to the
Partnership by the General Partner.
4.07. Allocations on Account of Optional Loans. Anything
contained in Sections 4.01 and 4.03 to the contrary notwithstanding, in
each taxable year of the Partnership, (i) an amount of Partnership losses
equal to the principal amount of any Optional Loans made to the
Partnership by the General Partner or its Affiliates in such year (or in
any prior year to the extent losses have not heretofore been allocated on
account of such loans) shall be allocated to the General Partner, and
(ii) an amount of Partnership income shall be allocated to the General
Partner to the extent all or any portion of the principal amount of any
Optional Loan made to the Partnership by the General Partner or its
Affiliates has been repaid in such year of the Partnership, but in no
event greater than the amount of Partnership losses theretofore allocated
to the General Partner pursuant to clause (i) of this Section 4.07;
provided, however, that all other items of Partnership income, gain,
deductions and loss for each year of the Partnership shall be allocated
in accordance with the provisions of Sections 4.01, 4.02 and 4.03.
4.08. Minimum Gain Chargeback.
Anything contained in Section IV to the contrary
notwithstanding, if after the allocation of any income and gain under
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this Section IV the aggregate deficit capital account balances of the
Unit Holders and/or the General Partner with deficit capital account
balances exceeds the Minimum Gain, an amount of income or gain for such
year sufficient to eliminate such excess shall be reallocated among the
Unit Holders and the General Partner with deficit capital account
balances (in accordance with such deficits) so as to eliminate such
excess.
4.09. Qualified Income Offset.
For purposes of this Agreement, each Unit Holder's capital
account balance as of the end of any taxable year of the Partnership
shall be reduced by the amount (whether made or reasonably expected to be
made) of any adjustments, allocations and distributions described in
sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations. In the
event that during any fiscal year any Unit Holder unexpectedly receives
such an adjustment, allocation or distribution, such Unit Holder will be
allocated items of income and gain in an amount and manner sufficient to
eliminate as quickly as possible any deficit balance in its capital
account in excess of such Unit Holder's Pro Rata Share of Minimum Gain
resulting from such unexpected adjustment, allocation or distribution.
4.10. Termination.
In the event a "technical termination" of the Partnership occurs
under Code section 708, it is intended that the allocations provided in
Section 4.03 be applied to take into account the variation, if any,
between the Carrying Value of each Partnership Asset and its adjusted
basis for federal income tax purposes, as determined under Code section
732, in accordance with the provisions of Code section 704(c) and the
Regulations thereunder, following the deemed distribution and
recontribution of Partnership Assets which occurs as a result of such
termination.
SECTION V
Distributions
5.01. Operations.
Net Cash Flow for each fiscal year (or part thereof) of the
Partnership, after making provision for the liabilities and obligations
of the Partnership, shall be distributed 99% to the Unit Holders and 1%
to the General Partner; provided, however, that during each fiscal year
commencing on the first Closing Date and ending on December 31, 1992, the
General Partner's 1% interest shall be subordinated for each fiscal year
(or part thereof), such that if distributions to each Unit Holder equal
less than an 8.5% return (in such fiscal year or part thereof) on such
Unit Holder's Unrecovered Capital, the General Partner will contribute to
such Unit Holder any or all of its 1% distribution to reduce the
shortfall to each Unit Holder.
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5.02. Capital Transactions.
Net Proceeds from any Capital Transaction, after making
provision for the liabilities and obligations of the Partnership, shall
be distributed in the following order of priority:
(a) first, until each Unit Holder has received its
Preferred Return, all such proceeds shall be distributed 99% to
the Unit Holders and 1% to the General Partner;
(b) then, until each Unit Holder has received its
Unrecovered Capital, all such proceeds shall be distributed 99%
to the Unit Holders and 1% to the General Partner; and
(c) then, the balance of such proceeds shall be
distributed 88.25% to the Unit Holders and 11.75% to the General
Partner.
5.03. Dissolution.
Upon dissolution and termination of the Partnership, after
making payment of or provision for the liabilities and obligations of the
Partnership, Net Proceeds shall be distributed in the following order of
priority:
(a) first, until each Unit Holder has received its
Unrecovered Capital and Preferred Return, all such proceeds
shall be distributed 99% to the Unit Holders and 1% to the
General Partner; provided, however, that the amount so
distributed to each Unit Holder pursuant to this clause (a)
shall not exceed the amount of any positive balance in the
capital account of such Unit Holder, as adjusted to reflect the
allocations of gains or losses under Section 4.03;
(b) then, an amount of such proceeds up to the
aggregate positive balance of the General Partner's and each
Unit Holder's capital accounts (as adjusted to reflect the
allocations of gains or losses under Section 4.03 and
distributions and amounts available for distribution under
clause (a) above), shall be distributed to the General Partner
and each Unit Holder in the proportion that each such positive
balance bears to the aggregate of such positive balances; and
(c) then, the remaining proceeds shall be
distributed 88.25% to the Unit Holders and 11.75% to the General
Partner.
5.04. Working Capital Reserve.
The General Partner shall have the right to establish and
maintain a Working Capital Reserve for operating expenses, contingencies
and such additional funding requirements for the Partnership, the Owner
Partnership and the Malls as deemed necessary in the discretion of the
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General Partner. The initial Working Capital Reserve shall be an amount
equal to not less than 2.5% of the Limited Partners' Capital
Contributions. The General Partner may establish such reserve in the
Owner Partnership. The General Partner shall invest the Working Capital
Reserve in such investments as the General Partner shall deem prudent in
accordance with the provisions of Section 8.08. The General Partner may,
in its discretion, distribute from time to time as a component of Net
Cash Flow any portion of such reserve which the General Partner
determines to be in excess of the amounts required for the purposes
enumerated above. In addition, to the extent that offering and
organizational expenses exceed budgeted amounts as set forth in the
Prospectus, the General Partner may utilize a portion of the working
capital reserve (not to exceed $500,000) to pay such excess amounts.
5.05. Miscellaneous.
(a) No Unit Holder shall be entitled to demand and
receive property other than cash in return for its Capital
Contribution.
(b) Except as otherwise expressly provided in this
Agreement to the contrary, no salary or other compensation shall
be paid to any Partner or Unit Holder by the Partnership.
5.06. Rules Governing Distributions Generally.
(a) Whenever any distribution is to be made with
respect to Interests held by the Assignor Limited Partner, such
distribution shall be made directly to the Record Holders and
not to the Assignor Limited Partner.
(b) The Gene
