EXHIBIT 10.2
FIRST AMENDMENT
TO THE
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
GGP LIMITED PARTNERSHIP
THIS FIRST AMENDMENT is made and entered into as of the 10th day of
June, 1998, by and among the undersigned parties.
W I T N E S S E T H:
WHEREAS, a Delaware limited partnership known as GGP Limited
Partnership (the "Partnership") exists pursuant to that certain Second Amended
and Restated Agreement of Limited Partnership of GGP Limited Partnership dated
as of April 1, 1998 (the "Second Restated Partnership Agreement") and the
Delaware Revised Uniform Limited Partnership Act; and
WHEREAS, General Growth Properties, Inc., a Delaware corporation which
is the general partner of the Partnership (the "General Partner"), has issued
and sold 12,000,000 Depositary Shares (with a liquidation preference equal to
$25.00 per Depositary Share) through its depository agent, each representing
1/40th of a share of 7.25% Preferred Income Equity Redeemable Stock, Series A, a
series of preferred stock, par value $100.00 per share, of the General Partner
(the "PIERS Offering"), and
WHEREAS, concurrently with the execution and delivery of this First
Amendment, the General Partner is contributing to the capital of the Partnership
the net proceeds of the PIERS Offering in exchange for the Series A Preferred
Units (as defined below); and
WHEREAS, the parties hereto, being the sole general partner and a
majority-in-interest of the limited partners of the Partnership, desire to amend
the Second Restated Partnership Agreement as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, do hereby amend the Second Restated Partnership Agreement as
follows:
1. CAPITALIZED TERMS. Terms which are capitalized and not
defined herein shall have the definitions assigned to such terms in the
Second Restated Partnership Agreement.
2. ADDITIONAL DEFINITIONS. Article I of the Second Restated
Partnership Agreement is hereby amended by the addition of the
following new definitions:
"Common Units" shall mean all Units other than the
Series A Preferred Units.
"Series A Preferred Shares" shall mean shares of the
7.25% Preferred Income Equity Redeemable Stock, Series A of
the General Partner, par value $100.00 per share, commonly
referred to as "PIERS".
"Series A Preferred Units" shall mean the series of
preferred units of the Partnership designated as the 7.25%
Series A Cumulative Redeemable Preferred Units having the
designations, preferences and other rights described herein.
"Series A Preferred Units Distribution Payment Dates"
shall mean the 15th day of January, April, July and October of
each year, commencing October 15, 1998.
3. AMENDED DEFINITIONS. Article I of the Second Restated
Partnership Agreement is hereby amended as follows:
(i) The third sentence of the definition of
Conversion Factor set forth in Section 1.1 hereof is hereby
deleted and the following sentence is hereby inserted in its
place and stead:
The Conversion Factor shall be adjusted by
multiplying the Conversion Factor (as in effect
immediately prior to such adjustment) by a fraction,
the numerator of which shall be the actual number of
shares of Common Stock issued and outstanding on the
record date for such dividend, distribution,
subdivision or combination (determined without the
below assumption), and the denominator of which shall
be the number of shares of Common Stock issued and
outstanding on the record date for such dividend,
distribution, subdivision or combination (assuming
for such purposes that such dividend, distribution,
subdivision or combination has occurred as of such
time).
(ii) Subsection (a) of the definition of Gross Asset
Value set forth in Section 1.1 thereof is hereby deleted and
the following new Subsection (a) is hereby inserted in its
place and stead:
(a) the initial Gross Asset Value of (i) the
assets contributed by each Partner to the Partnership
prior to the date hereof is the gross fair market
value of such contributed assets as indicated in the
books and records of the Partnership as of the date
hereof, and (ii) any asset hereafter contributed by a
Partner, other than money, is the gross fair market
value thereof as reasonably determined by the General
Partner using such reasonable method of valuation as
the General Partner may adopt; provided that the
gross fair market value of any such assets hereafter
contributed by the General Partner shall be the
Acquisition Cost thereof (without reduction for any
borrowings incurred by the General Partner in
connection with the acquisition of such assets and
assumed by the
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Partnership or, if such assumption was not possible,
with respect to which borrowings the Partnership
obligates itself to make payments to the General
Partner in a like amount and on like terms);
(iii) The definition of Majority-In-Interest of the
Limited Partners set forth in Section 1.1 thereof is hereby
amended by the deletion of the words "existing Limited
Partners," and by the substitution of the words "Limited
Partners as at April 1, 1998," in their place and stead.
(iv) The definition of Percentage Interest set forth
in Section 1.1 thereof is hereby amended by the deletion of
such definition in its entirety and by the substitution of the
following new definition in its place and stead:
"Percentage Interest" shall mean, with
respect to any Partner at any time, the percentage
ownership interest of such Partner in the Partnership
at such time, which percentage ownership interest
shall be equal to the quotient of the number of
Common Units owned by such Partner at such time
divided by the aggregate number of issued and
outstanding Common Units at such time, and any Series
A Preferred Units owned by such Partner at such time
shall be disregarded for such purpose. The Percentage
Interest of each Partner on the date hereof is set
forth opposite its name on Exhibit A.
(v) The definition of Units set forth in Section 1.1
thereof is hereby amended by the deletion of such definition
in its entirety and by the substitution of the following new
definition in its place and stead:
"Units" shall mean the partnership units in
the Partnership established and issued from time to
time in accordance with the terms hereof, including
without limitation Common Units and Series A
Preferred Units. The number and designation of all
Units held by each Partner is set forth opposite such
Partner's name on Exhibit A.
4. LOCATION OF THE PRINCIPAL PLACE OF BUSINESS. Article II of
the Second Restated Partnership Agreement is hereby amended by the
deletion of Section 2.4 thereof in its entirety and by the substitution
of the following new Section 2.4 in its place and stead:
2.4 LOCATION OF THE PRINCIPAL PLACE OF BUSINESS. The
location of the principal place of business of the Partnership
shall be at 110 North Wacker Drive, Chicago, Illinois 60606,
or at such other location as shall be selected by the General
Partner from time to time in its sole discretion.
5. GENERAL PARTNER CONTRIBUTION. Article IV of the Second
Restated Partnership Agreement is hereby amended by the deletion of the
first sentence of Section 4.1 thereof and by the substitution of the
following new sentence in its place and stead:
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The General Partner has contributed to the Partnership as its
Capital Contribution the cash and property reflected in the
Partnership's books and records as having been contributed by
it, including without limitation the cash being contributed by
the General Partner to the Partnership contemporaneously with
the execution hereof in connection with the PIERS Offering.
6. ADDITIONAL FUNDS. Article IV of the Second Restated
Partnership Agreement is hereby amended by the deletion of Subsection
4.3(b) thereof in its entirety and by the substitution of the following
new Subsection 4.3(b) in its place and stead:
(b) Effective on each Adjustment Date, the
Partnership shall issue to the General Partner (i) with
respect to Contributed Funds relating to an issuance by the
General Partner of Common Stock, the number of additional
Common Units equal to the product of (x) the number of shares
of Common Stock issued by the General Partner in connection
with obtaining such Contributed Funds, and (y) the Conversion
Factor, and (ii) with respect to Contributed Funds relating to
an issuance by the General Partner of Series A Preferred
Shares, an equal number of Series A Preferred Units. The
General Partner promptly shall provide the Limited Partners
with notice of the issuance of any such Units.
7. STOCK INCENTIVE PLAN. Article IV of the Second Restated
Partnership Agreement is hereby amended by the deletion of Subsection
4.4(b) thereof in its entirety and by the substitution of the following
new Subsection 4.4(b) in its place and stead:
(b) the Partnership shall issue to the General
Partner, with respect to any exercise of Incentive Options,
the number of additional Common Units equal to the product of
(i) the number of shares of Common Stock issued by the General
Partner in connection with such exercise of Incentive Options,
multiplied by (ii) the Conversion Factor.
8. ESTABLISHMENT OF SERIES A PREFERRED UNITS. Article IV of
the Second Restated Partnership Agreement is hereby amended by the
insertion of the following new Sections 4.7, 4.8, 4.9 and 4.10:
4.7. ESTABLISHMENT OF SERIES A PREFERRED UNITS. A
series of preferred units of the Partnership designated as
Series A Preferred Units is hereby established and shall have
such preferences and other rights as are described herein. The
maximum number of Series A Preferred Units which may be issued
by the Partnership from time to time shall be 345,000, and the
number of Series A Preferred Units set forth on Schedule A
hereto opposite the name of the General Partner are hereby
issued to the General Partner in exchange for the capital
contribution being made by the General Partner concurrently
herewith. Any Series A Preferred Units which may be issued and
are thereafter cancelled or converted into Common Units in
accordance with the terms hereof shall be retired, and the
Partnership shall not reissue any such Series A Preferred
Units.
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4.8. RANK OF THE SERIES A PREFERRED UNITS. The Series
A Preferred Units shall, with respect to distribution rights
and rights upon liquidation, dissolution or winding up of the
Partnership, rank senior to the Common Units.
4.9. MANDATORY REDEMPTION OF SERIES A PREFERRED
UNITS. On July 15, 2008, (a) the Partnership shall redeem each
Series A Preferred Unit then outstanding for a purchase price
equal to the entire liquidation preference then payable with
respect to such Series A Preferred Unit as provided in Section
7.8 below (including without limitation any and all accrued
and unpaid distributions with respect thereto), and (b) each
Series A Preferred Unit shall thereupon be deemed cancelled,
and all rights hereunder with respect to such cancelled Series
A Preferred Units, including without limitation all rights to
distributions and liquidation preferences, shall cease.
4.10. CONVERSION OF SERIES A PREFERRED UNITS. Series
A Preferred Units shall be converted into Common Units in
accordance with the following:
(a) If any Series A Preferred Shares shall
be converted into shares of Common Stock pursuant to
the exercise of any such right by either the General
Partner or the holder of such Series A Preferred
Shares, then that number of Series A Preferred Units
which is equal to the number of Series A Preferred
Shares so converted shall simultaneously and without
further action or notice be converted into that
number of Common Units which is equal to the product
of (i) the number of shares of Common Stock into
which such Series A Preferred Shares were converted,
multiplied by (ii) the Conversion Factor.
(b) If the General Partner shall redeem any
Series A Preferred Shares for cash in a transaction
in which the redemption price thereof (other than the
portion thereof equal to the then accumulated and
unpaid dividends thereon) is payable directly out of
the sale proceeds of then newly issued shares of
Common Stock (and to the extent that such sale
proceeds are so used, the General Partner shall be
relieved of the obligation to contribute such sale
proceeds to the capital of the Partnership pursuant
to Section 4.3(a)(2) hereof), then that number of
Series A Preferred Units which is equal to the number
of Series A Preferred Shares so redeemed shall
simultaneously and without further action or notice
be converted into that number of Common Units which
is equal to the product of (i) the number of shares
of Common Stock issued and sold by the General
Partner to generate the sale proceeds used to redeem
such Series A Preferred Shares, multiplied by (ii)
the Conversion Factor.
9. DISTRIBUTIONS WITH RESPECT TO COMMON UNITS. Article V of
the Second Restated Partnership Agreement is hereby amended by (a)
deleting the caption of Section 5.2 thereof and substituting the
caption "DISTRIBUTIONS WITH RESPECT TO COMMON UNITS" in its place and
stead, and (b) deleting the word "The" from the beginning of Subsection
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5.2(a) thereof, and by substituting the words "Except as otherwise
expressly provided in Section 5.9 below, the" in its place and stead.
10. DISTRIBUTIONS WITH RESPECT TO SERIES A PREFERRED UNITS.
Article V of the Second Restated Partnership Agreement is hereby
further amended by the insertion of the following new Section 5.9:
5.9. DISTRIBUTIONS WITH RESPECT TO SERIES A PREFERRED
UNITS. Holders of Series A Preferred Units shall have the
following preferences and rights with respect to
distributions:
(a) With respect to each quarterly
distribution period commencing on (and including) the
fifteenth day of each January, April, July and
October and ending on (and including) the fourteenth
day of the next succeeding such month (other than the
initial distribution period, which shall commence on
June 10, 1998 and end on and include October 14,
1998), the holders of Series A Preferred Units of
record as of the first day of the month in which the
applicable Series A Preferred Units Distribution
Payment Date falls, or as of such other date as the
General Partner shall designate which is not more
than 30 days nor less than 10 days prior to such
Series A Preferred Units Distribution Payment Date,
shall be entitled to receive cumulative preferential
distributions of Net Operating Cash Flow, when, as
and if declared by the General Partner on behalf of
the Partnership, in an amount per Series A Preferred
Unit equal to the greater of (i) 7.25% of the
$1,000.00 liquidation preference for such Series A
Preferred Unit divided by four (equivalent to a fixed
quarterly amount of $18.125 per Series A Preferred
Unit), and (ii) the amount of the quarterly cash
distribution paid or payable as of the Series A
Preferred Units Distribution Payment Dates with
respect to that number of Common Units into which
such Series A Preferred Unit is then convertible as
provided herein. Notwithstanding the foregoing, the
amount of the distribution payable with respect to
the initial distribution period, which shall commence
on June 10, 1998 and end on and include October 14,
1998, and with respect to any other distribution
period which is shorter or longer than a full
quarterly distribution period as described above,
shall be prorated and computed on the basis of twelve
30-day months and a 360-day year. Such distributions
shall accumulate and be cumulative from June 10,
1998, and shall be payable quarterly in arrears on or
before each Series A Preferred Units Distribution
Payment Date. Accrued but unpaid distributions on the
Series A Preferred Units shall accumulate as of the
Series A Preferred Units Distribution Payment Date on
which they first become payable. No interest, or sum
or money in lieu of interest, shall be payable in
respect of any distribution payment or payments on
Series A Preferred Units which may be in arrears. To
the extent of any such accrued and unpaid
distributions on the Series A Preferred Units, a
distribution with respect to the Series A Preferred
Units may be declared and paid at any time, without
reference to any Series A Preferred Units
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Distribution Payment Date, to holders on such date,
not exceeding 45 days preceding the payment date
thereof, as may be fixed by the General Partner.
(b) In no event shall any distributions with
respect to Series A Preferred Units be authorized,
paid or set apart for payment at any time if (i) the
terms and provisions of any agreement to which the
Partnership is a party or by which it is bound,
including any agreement relating to its indebtedness,
prohibits such authorization, payment or setting
apart for payment, or provides that such
authorization, payment or setting apart for payment
would constitute a breach thereof or a default
thereunder, or (ii) such authorization, payment or
setting apart for payment is restricted or prohibited
by law. In any such event, distributions with respect
to the Series A Preferred Units shall accrue in
accordance with the terms hereof whether or not there
is sufficient Net Operating Cash Flow for such
distributions and whether or not such distributions
are authorized.
(c) If the Partnership has not authorized
and paid full cumulative distributions with respect
to the Series A Preferred Units for all past
distribution periods and the then current
distribution period, or has not authorized and set
apart a sum sufficient for the payment thereof, then
the Partnership shall not authorize, pay or set aside
for payment any distributions with respect to the
Common Units (other than distributions made in the
form of Common Units), nor shall the Partnership
redeem, purchase or otherwise acquire any Common
Units (or set apart any monies as a sinking fund for
such purpose) for any consideration other than Common
Stock (including without limitation in connection
with the exercise of Rights).
(d) Holders of the Series A Preferred Units
shall not be entitled to any distribution, whether
payable in cash, property or Units, in excess of the
full cumulative distribution with respect to the
Series A Preferred Units as described herein. Any
distribution made with respect to the Series A
Preferred Units shall first be credited against the
earliest accrued but unpaid distribution with respect
to such Series A Preferred Units.
11. ALLOCATIONS. Exhibit C of the Second Restated Partnership
Agreement, describing the allocations of the Net Income, Net Loss
and/or other Partnership items, is hereby amended by the deletion of
such Exhibit C in its entirety, and the document identified as Exhibit
C attached hereto is hereby substituted in its place and stead.
12. DISTRIBUTIONS ON DISSOLUTION. Article VII of the Second
Restated Partnership Agreement is hereby amended by the deletion of
Subsection 7.2(d) thereof in its entirety and by the substitution of
the following new subsections in its place and stead:
(d) Payment to the holders of Series A Preferred
Units in accordance with the terms of Section 7.8 below (and
to each holder thereof pro rata based on the
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proportion of the total number of outstanding Series A
Preferred Units represented by such holder's Series A
Preferred Units); and
(e) To the Partners holding Common Units in
accordance with their respective Percentage Interests.
13. LIQUIDATION PREFERENCE OF SERIES A PREFERRED UNITS.
Article VII of the Second Restated Partnership Agreement is hereby
amended by the insertion of the following new Section 7.8:
7.8. LIQUIDATION PREFERENCE OF SERIES A PREFERRED
UNITS. The holders of Series A Preferred Units shall have the
following rights and preferences with respect to liquidation
of the Partnership:
(a) Upon any voluntary or involuntary
liquidation, dissolution or winding up of the affairs
of the Partnership, the holders of Series A Preferred
Units then outstanding shall be entitled to be paid,
out of the assets of the Partnership available for
distribution to the Partners pursuant to Section 7.2
hereof, a liquidation preference of $1,000.00 per
Series A Preferred Unit, plus an amount equal to any
accrued and unpaid distribution with respect to such
Series A Preferred Unit through the date of payment,
before any distribution of assets shall be made to
holders of Common Units.
(b) If, upon any such voluntary or
involuntary liquidation, dissolution or winding up of
the affairs of the Partnership, the available assets
of the Partnership are insufficient to pay the amount
of the liquidating distribution preference on all
outstanding Series A Preferred Units, then such
assets shall be allocated among the holders of Series
A Preferred Units in proportion to the full
liquidating distribution preferences to which they
would otherwise be respectively entitled.
(c) After payment of the full amount of the
liquidating distribution preferences to which they
are entitled, the holders of Series A Preferred Units
shall not have any right or claim to any of the
remaining assets of the Partnership with respect to
their Series A Preferred Units. Neither the
consolidation or merger of the Partnership with or
into any other partnership, corporation, trust or
other entity, or the sale, lease or conveyance of all
or substantially all of the Partnership's property or
business, shall be deemed to constitute a
liquidation, dissolution or winding up of the
Partnership for purposes of this Section 7.8.
14. ISSUANCE OF ADDITIONAL COMMON UNITS. Article VIII of the
Second Restated Partnership Agreement is hereby amended by the deletion
of Section 8.3 thereof in its entirety and by the substitution of the
following new Section 8.3 in its place and stead:
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8.3 ISSUANCE OF ADDITIONAL COMMON UNITS. At any time
without the consent of any Partner, but subject to the
provisions of Section 8.4 hereof, the General Partner may,
upon its determination that the issuance of additional Common
Units ("Additional Units") is in the best interests of the
Partnership, cause the Partnership to issue Additional Units
to and admit as a limited partner in the Partnership, any
Person (the "Additional Partner") in exchange for the
contribution by such Person of cash and/or property desirable
to further the purposes of the Partnership under Section 2.3
hereof. The number of Additional Units issued to any
Additional Partner shall be equal to the product of the (a)
Conversion Factor multiplied by (b) the quotient of (i) the
Gross Asset Value of the property contributed by the
Additional Partner (net of liabilities assumed by the
Partnership in connection with the contribution of such
property to the Partnership or to which such property is
subject) as of the date of contribution (the "Contribution
Date") divided by (ii) Current Per Share Market Price in
respect of such transaction, and the General Partner may admit
an Additional Partner to the Partnership upon such other terms
as it deems appropriate. The General Partner shall be
authorized on behalf of each of the Partners to amend this
Agreement to reflect the admission of any Additional Partner
in accordance with the provisions of this Section 8.3 in the
event that the General Partner deems such amendment to be
desirable, and the General Partner promptly shall deliver a
copy of such amendment to each Limited Partner.
Notwithstanding anything contained herein to the contrary, an
Additional Partner that acquires Additional Units pursuant to
this Section 8.3 shall not acquire any interest in, and may
not exercise or otherwise participate in, any Rights pursuant
to the Rights Agreements unless they are expressly granted
such rights.
15. NEW EXHIBIT A. Exhibit A to the Second Restated
Partnership Agreement, identifying the Partners and their respective
interests, is hereby amended by deleting such Exhibit A in its entirety
and by substituting Exhibit A attached hereto in its place and stead.
16. OTHER PROVISIONS UNAFFECTED. Except as expressly amended
hereby, the Second Restated Partnership Agreement shall remain in full
force and effect in accordance with its terms.
IN WITNESS WHEREOF, the undersigned have executed this First Amendment
as of the day and year first above written.
GENERAL PARTNER:
GENERAL GROWTH PROPERTIES, INC.,
a Delaware corporation
By: /s/ Bernard Freibaum
----------------------------
Its: Executive Vice President/CFO
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LIMITED PARTNERS:
M.B. CAPITAL PARTNERS III, a South
Dakota general partnership
By: GENERAL TRUST COMPANY, not
individually but solely as Trustee
of Martin Investment Trust G, a partner
By: /s/ Marshall E. Eisenberg
-----------------------------
Its: President
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EXHIBIT A
NUMBER OF PERCENTAGE NUMBER OF SERIES A
COMMON UNITS INTEREST PREFERRED UNITS
------------ -------- ---------------
GENERAL PARTNER:
- ----------------
General Growth Properties, Inc. 35,542,256.5822 65.0032 300,000.00
LIMITED PARTNERS:
- -----------------
M.B. Capital Partners III 15,555,864.0240 28.4501 0
Stanley Richards Revocable Trust 149,706.3938 0.2738 0
Joe W. Lowrance 57,620.0000 0.1054 0
LWLDA Limited Partnership 45,223.0000 0.0827 0
Brent M. Milgrom 57,620.0000 0.1054 0
GDC/A&B Limited Partnership 45,223.0000 0.0827 0
Edward S. Brown 25,000.0000 0.0457 0
Lawrence A. Brown 17,647.0000 0.0323 0
Merrill H.J. Roth 29,024.0000 0.0531 0
The Roth Family
Limited Partnership 22,308.0000 0.0408 0
Arthur B. Morgenstern 54,625.0000 0.0999 0
Joseph Straus, Jr. 78,017.0000 0.1427 0
Warren Weiner and Penny
Weiner, Husband and Wife,
as Tenants-by-the-Entirety 15,855.5000 0.0290 0
Joint Revocable Trust of
Marvin Rounick and Judy
Rounick 15,855.5000 0.0290 0
Arthur Bruce Associates 31,711.0000 0.0580 0
Marvin Rounick and
Judy Rounick, Husband
and Wife, as Tenants-by-
the-Entirety 55,670.0000 0.1018 0
Joint Revocable Trust of
Warren and Penny Weiner 18,557.0000 0.0339 0
Irrevocable Trust of
Warren Weiner dated
January 24, 1978 F/B/O
Robyn Weiner 18,557.0000 0.0339 0
Irrevocable Trust of
Warren Weiner dated
January 24, 1978 F/B/O
Kimberly Weiner 18,557.0000 0.0339 0
Forbes/Cohen Properties 801,842.0000 1.4665 0
Jackson Properties 346,795.0000 0.6343 0
Lakeview Square Properties 296,363.0000 0.5420 0
CA Southlake Investors, Ltd. 353,537.0000 0.6466 0
Peter D. Leibowits 518,833.0000 0.9489 0
Southwest Properties Venture 505,420.0000 0.9244 0
------------ ------ --
Total Units: 54,677,687.0000 100.0000 300,000.00
=============== ======== ==========
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EXHIBIT C
ALLOCATIONS
1. Allocation of Net Income and Net Loss.
(a) Net Income. Except as otherwise provided herein, Net Income for any
fiscal year or other applicable period shall be allocated in the following order
and priority:
(1) First, to the holders of the Series A Preferred Units
until the cumulative amount of Net Income allocated to them pursuant to
this subparagraph (a)(1) for such period and all prior periods equals
the cumulative amount of the Net Losses allocated to them pursuant to
subparagraph (b)(2) below for all prior periods;
(2) Second, to the holders of the Series A Preferred Units
until the cumulative amount of Net Income allocated to them pursuant to
this subparagraph (a)(2) equals the cumulative amount of accrued
distributions in respect of the Series A Preferred Stock for such
period and all prior periods (whether or not declared or paid);
(3) Third, to the General Partner until the cumulative amount
of Net Income allocated to it pursuant to this subparagraph (3) for
such period and all prior periods equals the cumulative amount of Net
Losses allocated to the General Partner pursuant to subparagraph (b)(3)
below for all prior periods; and
(4) Fourth, to the Partners holding Common Units, until the
cumulative Net Income allocated to them pursuant to this subparagraph
(a)(4) for such period and all prior periods equals the cumulative Net
Losses allocated to them pursuant to subparagraph (b)(1) hereof for all
prior periods (such allocation to be among the Partners holding Common
Units in the reverse order that such Net Losses were allocated to
them); and
(5) Thereafter, the balance of the Net Income, if any, shall
be allocated to the Partners holding Common Units in accordance with
their respective Percentage Interests.
(b) Net Loss. Except as otherwise provided herein, Net Loss of the
Partnership for each fiscal year or other applicable period shall be allocated
as follows:
(1) First, to the Partners holding Common Units in accordance
with their respective Percentage Interests (provided, however, that to
the extent any Net Loss allocated to a Partner holding Common Units
under this subparagraph (b)(1) would cause such Partner (hereinafter, a
"Restricted Partner") to have an Adjusted Capital Account Deficit as of
the end of the fiscal year to which such Net Loss relates, such Net
Loss shall not be allocated to such Restricted Partner but shall
instead, to the extent possible, be allocated to the other Partner(s)
(hereinafter, the "Permitted Partners") pro rata in accordance with
their relative Percentage Interests (for this purpose, a Partner's
Adjusted Capital Account Deficit shall be determined by disregarding
any capital contributed by
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the Partner to the Partnership that is attributable to the Partner's
Series A Preferred Units));
(2) Second, to the holders of the Series A Preferred Units,
pro-rata, in accordance with the number of Units held by them, until
the cumulative amount of Net Loss allocated to them under this
subparagraph (b)(2) for such period and all prior periods equals the
capital contributed by such holders to the Partnership with respect to
their Series A Preferred Units; and
(3) Third, to the General Partner.
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 hereto.
(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
Section 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 section 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 hereto.
(c) Qualified Income Offset. In the event a Limited Partner
unexpectedly receives any adjustments, allocations or distributions described in
Regulation Section 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
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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 respective Percentage Interests.
(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 Section 1.704-2(b)(4) and (i)(1).
(f) Precontribution Gain. In the event that, during any fiscal year or
other applicable period, any Property Partnership allocates to the Partnership
Precontribution Gain, each Partner (or its successors in interest) who
heretofore contributed to the capital of the Partnership an interest in such
Property Partnership shall be allocated that Precontribution Gain in accordance
with its respective interest in such Precontribution Gain. For purposes hereof,
"Precontribution Gain" shall mean, with respect to each Shopping Center Project
owned by an existing Property Partnership, that unrealized gain attributable to
the excess of (a) the fair market value of such Shopping Center Project on April
15, 1993, over (b) the adjusted tax basis of such Shopping Center Project on
such date; provided, however, that the amount of any Precontribution Gain
associated with a Shopping Center Project shall be adjusted to account for
allocations made in accordance with the provisions of Section 3(c) of this
Exhibit C and shall not, in any event, exceed that amount of gain actually
allocated to the Partnership by the Property Partnership as a result of the sale
or other disposition of such Shopping Center Project.
(g) Curative Allocations. The Regulatory Allocations shall be taken
into account in allocating other items of income, gain, loss, and deduction
among the Partners so that, to the extent possible, the cumulative net amount of
allocations of Partnership items under 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. This subparagraph (g) 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 Sections 1245 or
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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 Sections 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 Sections
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 in accordance with the "traditional method" set
forth in Treas. Reg. Section 1.704-3(b)(1), unless otherwise determined by the
General Partner, and shall be subject to the ceiling rule stated in Regulation
Section 1.704-3(b)(1). The General Partner is authorized to specially allocate
Tax Items (other than the Section 704(c) Tax Items) to cure for the effect of
the ceiling rule. The intent of this Section 3(c) and Section 2(f) above is that
each Partner who contributed to the capital of the Partnership a partnership
interest in an existing Property Partnership will bear, through reduced
allocations of depreciation and increased allocations of gain or other items,
the tax detriments associated with any Precontribution Gain and this Section
3(c) and Section 2(f) are to be interpreted consistently with such intent.
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