Exhibit 10.1.5
FOURTH AMENDMENT TO
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
CBL & ASSOCIATES LIMITED PARTNERSHIP
Dated as of June 1, 2005
---------------------------------------------
THIS FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF CBL & ASSOCIATES LIMITED PARTNERSHIP (this
"Amendment") is hereby adopted by CBL Holdings I. Inc., a Delaware corporation
(the "General Partner") as the general partner of CBL & Associates Limited
Partnership, a Delaware limited partnership (the "Partnership"), and by CBL
Holdings II, Inc., a Delaware corporation, a limited partner of the partnership
representing a Majority-In-Interest of the Limited Partners of the Partnership
(the "Limited Partner"). For ease of reference, capitalized terms used herein
and not otherwise defined have the meanings assigned to them in the Second
Amended and Restated Agreement of Limited Partnership of CBL & Associates
Limited Partnership as the same may be amended (the "Agreement").
WHEREAS, the General Partner desires to establish and set
forth the terms of a new series of Partnership Units designated as Series L
Special Common Units (the "L-SCUs").
WHEREAS, Section 4.4(a) of the Agreement grants the General
Partner authority to cause the partnership to issue partnership units in the
Partnership to any Person in one or more classes or series, with such
designations, preferences and relative, participating, optional or other special
rights, powers and duties as may be determined by the General Partner in its
sole and absolute discretion so long as the issuance does not violate Section
9.3 of the Agreement.
WHEREAS, the General Partner desires to amend the Agreement
to, among other things, set forth the terms of the L-SCUs.
WHEREAS, Sections 4.4(a) and 14.7(b) of the Agreement grant
the General Partner power and authority to amend the Agreement (including,
without limitation, the distribution and allocation provisions thereof) without
the consent of any of the Partnership's Limited Partners to evidence any action
taken by the General Partner pursuant to Section 4.4(a) and to set forth the
rights, powers and duties of the holders of any Additional Units issued pursuant
to Section 4.4(a).
WHEREAS, Section 14.7(a) of the Agreement provides for the
amendment of the Agreement with the approval of the General Partner and the
Consent of the Limited Partners, subject to the limitations set forth therein.
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WHEREAS, the Company has declared a stock dividend of one
share of Common Stock for each outstanding share of Common Stock and has set the
record date for such stock dividend as June 1, 2005 and a payment date of June
15, 2005 (the "6/15/05 Stock Split").
NOW, THEREFORE, the General Partner, with the Consent of the
Limited Partners, hereby amends the Agreement as follows:
1. Section 1.1 of the Agreement is hereby amended and supplemented as set forth
below:
(a) The following definitions are hereby deleted and replaced with the
following:
"Common Unit Conversion Factor" shall mean 1.0, provided,
that, in the event that the Partnership (i) makes a
distribution to all holders of its Common Units in Common
Units (other than a distribution of Common Units pursuant to
an offer to all holders of Common Units, SCUs , S-SCUs and
L-SCUs permitting each to elect to receive a distribution in
Common Units in lieu of a cash distribution (such a
distribution of Common Units is referred to herein as a
"Distribution of Common Units in Lieu of Cash")), (ii)
subdivides or splits its outstanding Common Units (which shall
expressly exclude any Distribution of Common Units in Lieu of
Cash), or (iii) combines or reverse splits its outstanding
Common Units into a smaller number of Common Units (in each
case, without making a comparable distribution, subdivision,
split, combination or reverse split with respect to the SCUs,
S-SCUs and L-SCUs), the Common Unit Conversion Factor in
effect immediately preceding such event shall be adjusted by
multiplying the Common Unit Conversion Factor by a fraction,
the numerator of which shall be the number of Common Units
issued and outstanding on the record date for such
distribution, subdivision, split, combination or reverse split
(assuming for such purposes that such distribution,
subdivision, split, combination or reverse split occurred as
of such time), and the denominator of which shall be the
actual number of Common Units (determined without the above
assumption) issued and outstanding on the record date for such
distribution, subdivision, split, combination or reverse
split. Any adjustment to the Common Unit Conversion Factor
shall become effective immediately after the record date for
such event in the case of a distribution or the effective date
in the case of a subdivision, split, combination or reverse
split.
"Common Stock Amount: shall mean, with respect to any number
of Common Units, SCUs, S-SCUs or L-SCUs, the number of shares
of Common Stock equal to such number of Common Units, SCUs,
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S-SCUs or L-SCUs, as the case may be, multiplied by the
Conversion Factor; provided, however, that in the event that
the Company issues to all holders of Common Stock rights,
options, warrants or convertible or exchangeable securities
entitling the shareholders to subscribe for or purchase
additional Common Stock, or any other securities or property
of the Company, the value of which is not included in the
first sentence of the definition of Closing Price of the
shares of Common Stock (collectively, "additional rights"),
other than a right to receive a divided or other distribution
of Common Stock that corresponds to Common Units issued to the
Company pursuant to a Distribution of Common Units in Lieu of
Cash, then the Common Stock Amount shall also include, other
than with respect to any Common Units, SCUs, S-SCUs or L-SCUs
"beneficially owned" by an "Acquiring Person" (as such terms
are defined in the Company's Rights Agreement, dated as of
April 30, 1999, as amended and as it may be further amended
from time to time, and any successor agreement thereto), such
additional rights that a holder of that number of shares of
Common Stock would be entitled to receive.
"Conversion Factor" shall mean 1.0, provided that in the event
that the Company (i) pays a dividend on its outstanding shares
of Common Stock in shares of Common Stock or makes a
distribution to all holders of its outstanding Common Stock in
shares of Common Stock (in either case other than a dividend
or other distribution of shares of Common Stock that
corresponds to Common Units issued to the Company pursuant to
a Dividend of Common Units in Lieu of Cash), (ii) subdivides
or splits its outstanding shares of Common Stock, or (iii)
combines or reverse splits its outstanding shares of Common
Stock into a smaller number of shares of Common Stock (in each
case, without making a comparable dividend, distribution,
subdivision, split, combination or reverse split with respect
to the Common Units, the SCUs, S-SCUs or L-SCUs), the
Conversion Factor in effect immediately preceding such event
shall be adjusted by multiplying the Conversion Factor by a
fraction, the numerator of which shall be the number of shares
of Common Stock issued and outstanding on the record date for
such dividend, distribution, subdivision, split, combination
or reverse split (assuming for such purposes that such
dividend, distribution, subdivision, split, combination or
reverse split occurred as of such time), and the denominator
of which shall be the actual number of shares of Common Stock
(determined without the above assumption) issued and
outstanding on the record date for such dividend,
distribution, subdivision, split, combination or reverse
split. Any adjustment to the Conversion Factor shall become
effective immediately after the record date for such event in
the case of the dividend or distribution of the effective date
in the case of a subdivision, split, combination or reverse
split.
"Partnership Units" shall mean the Common Units, the Preferred
Units, the SCUs the S-SCUs and the L-SCUs.
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(b) The following definitions are hereby added to Section 1.1
o the Agreement:
"L-SCUs" shall have the meaning set forth in Exhibit J.
"L-SCU Basic Distribution Amount" shall mean, with respect to
an L-SCU, $1.5144 (and shall be $.7572 following the 6/15/05
Stock Split); provided, however, that such amount will be
adjusted appropriately to account for any further unit splits,
combinations or other similar events with respect to the
L-SCUs.
"Series L Exchange Notice" shall have the meaning set forth in
Exhibit J.
"Series L Exchange Rights" shall have the meaning set forth in
Exhibit J.
"Series L Offered Units" shall have the meaning set forth in
Exhibit J.
2. Pursuant to the Sections 4.5 and 7.8 of the Agreement, upon
execution of a Limited Partner Acceptance of the Partnership
Agreement in the form attached hereto as Attachment 1 (a
"Limited Partner Acceptance") or by causing a Limited Partner
Acceptance to be executed on its behalf, the initial holder of
L-SCUs automatically will be admitted as an Additional Partner
of the Partnership, without any further action or approval and
the General Partner herby agrees to cause the name of such
recipient to be recorded on the book and records of the
Partnership on the date of such admission.
3. Sections 6.2(c)(1), 6.2(c)(2) and 6.2(d) of the Agreement
are hereby renumbered as Sections 6.2(d)(1), 6.2(d)(2) and
6.2(e) respectively.
4. The following shall be added as new Section 6.2(c) of the
Agreement:
"(c) Distributions shall also be made in accordance with the
following order of priority:
(i) Concurrently, ratably and on parity and with the
distributions to holders of SCUs and S-SCUs provided for under
Sections 6.2(a)(iii) and 6.2(b)(i), respectively, to the
extent that the amount of Net Cash Flow distributed to the
holders of L-SCUs for any prior quarter was (for any reason,
including as a result of Section 6.2(e), a lack of legally
available funds or a decision by the General Partner not to
make distributions for such quarter) less than the amount
required to be distributed for such quarter on account of the
L-SCUs pursuant to subparagraph (ii) below, and such shortfall
has not been subsequently distributed pursuant to this Section
6.2(c)(i), Net Cash Flow shall be distributed to the holders
of L-SCUs until they have received an amount per L-SCU, as
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applicable, necessary to satisfy such shortfall for all prior
quarters of the current and all prior Partnership taxable
years;"
"(ii) Concurrently, ratably and on parity with the
distributions to holders of SCUs and S-SCUs provided for under
Sections 6.2(a)(iv) and 6.2(b)(ii), respectively, Net Cash
Flow shall be distributed among the holders of L-SCUs until
they have received for the quarter to which the distribution
relates an amount for each outstanding L-SCU equal to the
applicable L-SCU Basic Distribution Amount;
(iii) Concurrently, ratably and on parity with the
distributions to holders of SCUs, S-SCUs and Common Units
provided for under Section 6.2(a)(v) and 6.2(b)(iii), the
balance of the Net Cash Flow to be distributed, if any, shall
be distributed to holders of L-SCUs pro rata in accordance
with their proportionate ownership of the aggregate number of
SCUs, S-SCUs and L-SCUs and Common Units outstanding (counting
each SCU, S-SCU or L-SCU as the number of Common Units or
number of shares of Common Stock, as applicable, into which it
is convertible pursuant to the terms of Exhibit E, Exhibit H
or Exhibit J, as applicable), provided, however, that such
distribution to the holders of L-SCUs shall be reduced by the
amount of the distribution made to such Holders on account of
their L-SCUs with respect to such quarter pursuant to
subparagraph (c)(ii) above and the reduction will be allocated
among the holders of L-SCUs pro rata in accordance with their
respective percentage interests in the total number of L-SCUs
then outstanding.
(iv) Notwithstanding the foregoing, all distributions pursuant
to this Section 6.2(c) shall remain subject to the provisions
of (i) each Certificate of Designation for any class or series
Preferred Units, (ii) Exhibit E hereto with respect to the
SCUs, (iii) Exhibit H hereto with respect to the S-SCUs and
(iv) Exhibit J hereto with respect to the L-SCUs.
5. Sections 6.2(e) and 6.2(f) of the Partnership Agreement
shall also apply to distributions with respect to the L-SCUs.
6. Section 6.6 of the Agreement shall be amended by replacing
the words "(or Series J or Series S Exchange Rights) with the
words "(or Series J, Series S or Series L Exchange Rights)".
7. The last sentence of Section 8.2 of the Agreement is hereby
deleted and replaced in its entirety with the following:
"Notwithstanding the foregoing, all distributions pursuant to
this Section 8.2 shall remain subject to the provisions of (i)
the Certificate of Designation for each class or series of
Preferred Units set forth in Exhibit B hereto; (ii) Exhibit E
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hereto with respect to the SCUs,; (iii) Exhibit H with respect
to the S-SCUs and (iv) Exhibit J with respect to the L-SCUs."
8. The following paragraph is added as Section 9.2(e) of the
Agreement:
"(d) The applicable Approved Transfers permitted in Paragraph
8 of Exhibit J hereto shall also be available, mutatis
matandis, to holders of any Common Units issued in exchange
for or upon the redemption of L-SCUs."
9. Exhibit A of the Agreement is hereby deleted and is
replaced in its entirety by new Exhibit A attached hereto as
Attachment 2.
10. Exhibit C of the Agreement is hereby deleted and is
replaced in its entirety by new Exhibit C attached hereto as
Attachment 3.
11. The exhibit attached to this Amendment as Attachment 4 is
hereby added to the Agreement as Exhibit J thereof.
12. Except as expressly amended hereby, the Agreement shall
remain in full force and effect.
[Signatures on Next Page]
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IN WITNESS WHEREOF, the General Partner as executed this
Fourth Amendment as of the date first written above.
CBL HOLDINGS I, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇
Title: Vice Chairman of the Board
and Chief Financial Officer
Accepted and Agreed:
CBL & ASSOCIATES PROPERTIES, INC.
/s/ ▇▇▇▇ ▇. ▇▇▇
By:
-----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇
Title: Vice Chairman of the Board
And Chief Financial Officer
Consented to:
CBL HOLDINGS II, INC.
/s/ ▇▇▇▇ ▇. ▇▇▇
By:
-----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇
Title: Vice Chairman of the Board
and Chief Financial Officer
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Attachment 1
ACCEPTANCE
8
LIMITED PARTNER ACCEPTANCE OF
PARTNERSHIP AGREEMENT
This Limited Partner Acceptance of Partnership Agreement (this
"Acceptance") is made as of June 1, 2005 by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Park Retail Holding
LLC, a Michigan limited liability company (the "Limited Partner"), to and for
the benefit of CBL & Associates Limited Partnership, a Delaware limited
partnership ("the "Partnership").
Capitalized terms used and not defined herein shall have the
meaning set forth in the Second Amended and Restated Agreement of limited
partnership of the Partnership, dated as of June 30, 1998, as amended through
the date hereof (the "Partnership Agreement").
WHEREAS, on the date hereof, the Partnership has agreed to
issue the Limited Partner 285,850 L-SCUs (the "Units") in connection with the
closing of the transactions contemplated by that certain Contribution and
Exchange Agreement dated March 18, 2005 (the "Contribution Agreement"), by and
among Newburgh/Six Mile Limited Partnership, the Limited Partner and the
Partnership;
WHEREAS, in connection with the acceptance of the Units by the
Limited Partner, the Limited Partner has agreed to affirm its obligations as a
limited partner under the Partnership Agreement with respect to the Units and to
confirm the additional agreements set forth herein;
NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Limited partner
herby confirms that it has been given the opportunity to review the terms of the
Partnership Agreement and affirms and agrees that it is bound by each of the
terms and conditions of the Partnership Agreement applicable to a holder of
L-SCUs, including, without limitation, the provisions thereof relating to
limitations and restrictions on the transfer of L-SCUs. The Limited Partner
hereby confirms that Informational Materials (as defined in the Contribution
Agreement).
[Signature on Next Page]
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IN WITNESS WHEREOF, the Limited Partner has caused this
Acceptance to be duly executed and delivered as of the date first written above.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ PARK
RETAIL HOLDING LLC
By: Six Mile/Newburgh Venture, Inc.
a Michigan corporation
Its Manager
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
Acknowledged and accepted:
CBL & ASSOCIATES LIMITED
PARTNERSHIP
By: CBL Holdings I, Inc., its
general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇
-----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇
Title: Vice Chairman of the Board
and Chief Financial Officer
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Attachment 2
EXHIBIT A
[Exhibit A a/k/a Schedule A to Partnership Agreement]
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Attachment 3
EXHIBIT C
Allocations
1. Allocations of Gross Income, Net Income and Net Loss.
(a) Except as otherwise provided herein, in each tax year in which there is
sufficient Gross Income and Net Income to make all of the allocations described
in subsections (i) through (iv) below, Gross Income, Net Income and Net Loss of
the Partnership for such tax year shall be allocated among the Partners in the
following order and priority:
(i) First, Net Income shall be allocated to the relevant Partner, on
account of the Preferred Units, in an amount equal to the excess
of (A) the amount of Net Cash Flow distributed to such Partner
pursuant to Sections 6.2(a)(i) and (ii) and Section 6.2(d) (but
only to the extent of the Preferred Distribution Requirement and
Preferred Distribution Shortfalls) for the current and all prior
Partnership tax years over (B) the amount of Net Income
previously allocated to such Partner pursuant to this Section
(a)(i) or pursuant to Section (b)(i);
(ii) Second, for any Partnership tax year ending on or after a date on
which Preferred Units are redeemed, Net Income (or Net Losses)
shall be allocated to the relevant Partner, on account of the
Preferred Units, in an amount equal to the excess (or deficit) of
the sum of the applicable Preferred Redemption Amounts for the
Preferred Units that have been or are being redeemed during such
Partnership tax year over the Preferred Unit Issue Price of such
Preferred Units;
(iii) Third, Gross Income shall be allocated to the relevant Partner,
on account of SCUs or S-SCUs, or Common Units received on a
conversion or redemption of SCUs or S-SCUs in an amount equal to
the amount of cash distributed to such Partner in respect of such
SCUs or S-SCUs, or Common Units pursuant to Sections 6.2(a)(iii),
(iv) and (v); 6.2(b)(i), (ii) and (iii); and 6.2(c)(i)(ii) and
(iii) (the "Target Amount"). The character of the items of Gross
Income allocated to the relevant Partners pursuant to this
subsection (iii) shall proportionately reflect the relative
amounts of the Partnership's Gross Income having such character
for such year, excluding from such Gross Income Net Capital Gain
allocated pursuant to Section 1(c) below; provided, however, that
such items shall not include items described in section (e) of
the definition of Net Income or Net Loss, it being the intention
of the parties that the tax items allocated under Section 3(a)
corresponding to the items of Gross Income allocated pursuant to
this Section 1(a)(iii) will equal the Target Amount. If the
amount of such items differs from the Target Amount, the items of
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Gross Income allocated pursuant to this Section 1(a)(iii) shall
be adjusted to cause the amount of such tax items to equal the
Target Amount. For purposes of determining the amount of cash
distributed to such Partners, Special Tax Distributions shall not
be taken into account, and Extraordinary Return of Capital
Distributions shall be taken into account only to the extent that
the amount of such Extraordinary Return of Capital Distributions
exceed the aggregate of the Excess Allocations made to such
Partners. For this purpose, "Excess Allocations" mean the excess
of the Tax Net Capital Gain allocated under Section 3(a) to
holders of SCUs or S-SCUs and holders of Common Units received on
a conversion or redemption of SCUs and S-SCUs in connection with
allocations of Net Capital Gain under Section 1(c) over the
Special Tax Distribution made to such Partners. A distribution
shall be treated as an Extraordinary Return of Capital
Distribution to the extent that such distribution is reasonably
attributable to (x) Net Financing Proceeds or (y) proceeds
allocable to a transaction generating Net Capital Gain allocated
pursuant to Section 1(c); in either case limited to the excess of
the Tax Net Capital Gain allocated under Section 3(a) to holders
of SCUs or S-SCUs and holders of Common Units received on a
conversion or redemption of SCUs or S-SCUs in connection with
allocations of Net Capital Gain under Section 1(c) over the
Special Tax Distributions made to such Partners.
(iv) Fourth, Gross Income shall be allocated to the relevant Partner,
on account of L-SCUs or Common Units received on a conversion or
redemption of L-SCUs in an amount equal to the amount of cash
distributed to such Partner in respect of such L-SCUs or Common
Units pursuant to Sections 6.2(a)(iii), (iv) and (v); 6.2(b)(i),
(ii) and (iii); and 6.2(c)(i)(ii) and (iii) (the "Target
Amount"). The character of the items of Gross Income allocated to
the relevant Partners pursuant to this subsection (iv) shall
proportionately reflect the relative amounts of the Partnership's
Gross Income having such character for such year (such that if,
for example, X% of the Partnership's Gross Income for such year
consisted of net capital gain, then X% of the Gross Income
allocated under this subsection (iv) would consist of net capital
gain); provided, however, that such items shall not include items
described in section (e) of the definition of Net Income or Net
Loss, it being the intention of the parties that the tax items
allocated under Section 3(a) corresponding to the items of Gross
Income allocated pursuant to this Section 1(a)(iv) will equal the
Target Amount. If the amount of such items differs from the
Target Amount, the items of Gross Income allocated pursuant to
this Section 1(a)(iv) shall be adjusted to cause the amount of
such tax items to equal the Target Amount.
(v) Fifth, any remaining Net Income and Net Losses, taking into
account in determining such Net Income or Net Losses the
allocation of Gross Income provided for in subsections (a) (iii)
and (a)(iv) above, shall be allocated among the Partners, on
account of their Common Units other than Common Units received on
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a conversion or redemption of SCUs, S-SCUs or L-SCUs, in
accordance with their proportionate ownership of Common Units
other than Common Units received on a conversion or redemption of
SCUs, S-SCUs or L-SCUs (except as otherwise required by the
Regulations).
(b) Except as otherwise provided herein, in each tax year in which there is
not sufficient Gross Income and Net Income to make all of the allocations
described in subsections (a)(i) through (a) (iv) above, Gross Income, Net Income
and Net Loss of the Partnership for such tax year shall be allocated among the
Partners in the following order and priority:
(i) First, Net Income shall be allocated to the relevant Partner, on
account of the Preferred Units, in an amount equal to the excess
of (A) the amount of Net Cash Flow distributed to such Partner
pursuant to Sections 6.2(a)(i) and (ii) and Section 6.2(d) (but
only to the extent of the Preferred Distribution Requirement and
Preferred Distribution Shortfalls) for the current and all prior
Partnership tax years over (B) the amount of Net Income
previously allocated to such Partner pursuant to this Section
(b)(i) or pursuant to Section (a)(i)
(ii) Second, for any Partnership tax year ending on or after a date on
which Preferred Units are redeemed, Net Income (or Net Losses)
shall be allocated to the relevant Partner, on account of the
Preferred Units, in an amount equal to the excess (or deficit) of
the sum of the applicable Preferred Redemption Amounts for the
Preferred units that have been or are being redeemed during such
Partnership tax year over the Preferred Unit Issue Price of such
Preferred Units;
(iii) Third, Gross Income, to the extent not previously taken into
account in making the allocations required under Section (a)(i)
and (a)(ii), shall be allocated to the relevant Partner, on
account of SCUs or S-SCUs, or Common Units received on a
conversion or redemption of such SCUs or S-SCUs in an amount
equal to the Target Amount. The character of the items of Gross
Income allocated to the relevant Partners pursuant to this
subsection (iii) shall proportionately reflect the relative
amounts of the Partnership's Gross Income having such character
for such year, excluding from such Gross Income Net Capital Gain
allocated pursuant to Section 1(c) below; provided, however, that
such items shall not include items described in section (e) of
the definition of Net Income or Net Loss, it being the intention
of the parties that the tax items allocated under Section 3(a)
corresponding to the items of Gross Income allocated pursuant to
this Section 1(b)(iii) will equal the Target Amount. If the
amount of such items differs from the Target Amount, the items of
Gross Income allocated pursuant to this Section 1(b)(iii) shall
be adjusted to cause the amount of such tax items to equal the
Target Amount. For purposes of determining the amount of cash
distributed to such Partners, Special Tax Distributions shall not
be taken into account, and Extraordinary Return of Capital
Distributions shall be taken into account only to the extent that
the amount of such Extraordinary Return of Capital Distributions
exceed the aggregate of the Excess Allocations made to such
Partners. For this purpose, `Excess Allocations" mean the excess
of the Tax Net Capital Gain allocated under Section 3(a) to
holders of SCUs or S-SCUs, and holders of Common Units received
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on a conversion or redemption of SCUs or S-SCUs in connection
with allocations of Net Capital Gain under Section 1(c) over the
Special Tax Distribution made to such Partners. A distribution
shall be treated as an Extraordinary Return of Capital
Distribution to the extent that such distribution is reasonably
attributable to (x) Net Financing Proceeds or (y) proceeds
allocable to a transaction generating Net Capital Gain allocated
pursuant to Section 1(c); in either case limited to the excess of
the Tax Net Capital Gain allocated under Section 3(a) to holders
of SCUs or S-SCUs, and holders of Common Units received on a
conversion or redemption of SCUs or S-SCUs in connection with
allocations of Net Capital Gain under Section 1(c) over the
Special Tax Distributions made to such Partners.
(iv) Fourth, Gross Income, to the extent not previously taken into
account in making the allocations required under subsections
(a)(i), (a)(ii), or (a)(iii) shall be allocated to the relevant
Partner, on account of L-SCUs or Common Units received on a
conversion or redemption of such L-SCUs in an amount equal to the
Target Amount. The character of the items of Gross Income
allocated to the relevant Partners pursuant to this subsection
(iv) shall proportionately reflect the relative amounts of the
Partnership's Gross Income having such character for such year
(such that if, for example, X% of the Partnership's Gross Income
for such year consisted of net capital gain, then X% of the Gross
Income allocated under this subsection (iv) would consist of net
capital gain); provided, however, that such items shall not
include items described in section (e) of the definition of Net
Income or Net Loss, it being the intention of the parties that
the tax items allocated under Section 3(a) corresponding to the
items of Gross Income allocated pursuant to this Section 1(b)(iv)
will equal the Target Amount. If the amount of such items differs
from the Target Amount, the items of Gross Income allocated
pursuant to this Section 1(b)(iv) shall be adjusted to cause the
amount of such tax items to equal the Target Amount.
(v) Fifth, any remaining Net Income and Net Losses, taking into
account in determining such Net Income or Net Losses the
allocation of Gross Income provided for in subsections (b)(iii)
and (b)(iv) above, shall be allocated among the Partners, on
account of their Common Units other than Common Units received on
a conversion or redemption of SCUs, S-SCUs, or L-SCUs, in
accordance with their proportionate ownership of Common Units
other than common units received on a conversion or redemption of
SCUs, S-SCUs, or L-SCUs (except as otherwise required by the
Regulations).
(c) Notwithstanding subsections (a) (iii) and (a)(iv), and subsections (b)
(iii) and (b)(iv), above, holders of SCUs or S-SCUs and holders of Common Units
received upon a conversion or redemption of SCUs or S-SCUs may be allocated
their proportionate share of Net Capital Gain recognized by the Partnership in a
taxable year (in accordance with their proportionate ownership of the aggregate
number of SCUs, S-SCUs, L-SCUs and Common Units, counting each SCU, S-SCU or
L-SCU, as applicable, as the number of Common Units into which it is convertible
in accordance with Exhibit E, Exhibit H, or Exhibit J as applicable), in
addition to the amount specified in subsection (a) (iii) above and subsection
(b) (iii) above, if each of the following requirements is satisfied:
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(i) the Partnership shall have distributed to each holder of SCUs and
S-SCUs in cash pursuant to Section 6.2(a)(iv), 6.2(b)(ii) or
6.2(c)(ii) for the last quarter of such taxable year an amount
equal to the Basic Distribution Amount or the S-SCU Basic
Distribution Amount, as applicable (determined without taking
into account any Special Tax Distribution);
(ii) during such taxable year, the Partnership has recognized Net
Capital Gain in connection with a sale of, condemnation of, or
disposition of one or more Properties;
(iii) the Partnership has made or will make prior to January 30, of
the following tax year a cash distribution (a "Special Tax
Distribution') to the Partners, and the portion of such Special
Tax Distribution made (x) to the holders of SCUs and holders of
Common Units received upon a conversion or redemption of SCUs
equals or exceeds the product of the maximum combined federal,
Ohio and Cleveland rates imposed on net capital gains of the
applicable holding period (taking into account recapture, if
applicable, and the deductibility of state and local taxes)
multiplied by the amount of Tax Net Capital Gain allocated under
Section 3(a) to holders of SCUs and holders of Common Units
received upon a conversion or redemption of SCUs in connection
with the allocation under this Section 1(c) of Net Capital Gain
to such holders; and (y) to the holders of S-SCUs and holders of
Common Units received upon a conversion or redemption of S-SCUs
equals or exceeds the product of the maximum combined federal,
Ohio and Cleveland rates imposed on net capital gains of the
applicable holding period (taking into account recapture, if
applicable, and the deductibility of state and local taxes)
multiplied by the amount of Tax Net Capital Gain allocated under
Section 3(a) to holders of S-SCUs and holders of Common Units
received upon a conversion or redemption of S-SCUs in connection
with the allocation under this Section 1(c) of Net Capital Gain
to such holders. For these purposes, Tax Net Capital Gain means
net capital gain, as determined for federal income tax purposes,
which is governed by Section 3(a) and not Section 3(c) hereof.
For the avoidance of doubt, no portion of any Special Tax
Distribution will be taken into account when determining whether
the Partnership has satisfied the distribution requirement of
Section 6.2(a)(iii), 6.2(a)(iv), 6.2(b)(i), 6.2(b)(ii), 6.2(c)(i)
and 6.2(c)(ii);
(iv) (A) with respect to Special Tax Distributions to be made within
two years of the final Closing provided for in the Master
Contribution Agreement, the Special Tax Distribution will not
cause the aggregate distributions to a holder of SCUs or a holder
of Common Units received on a conversion or redemption of SCUs,
other than distributions to such holder in respect of the Basic
Distribution Amount, to exceed the product of (x) the lesser of
such holder's percentage interest in Partnership profits for the
year in which the Special Tax Distribution is made or such
16
holder's percentage interest in Partnership profits for the life
of the Partnership (as determined for purposes of Treasury
Regulations Section 1.707-4(b)) and (y) the Partnership's net
cash flow from operations for the year in which the Special Tax
Distribution is made (as determined for purposes of Treasury
Regulations Section 1.707-4(b)).
(B) with respect to Special Tax Distributions to be
made within two years of the Closing Date provided for in the
Contribution and Exchange Agreement for Monroeville Mall, the Special
Tax Distribution will not cause the aggregate distributions to a holder
of S-SCUs or a holder of Common Units received on a conversion or
redemption of S-SCUs, other than distributions to such holder in
respect of the S-SCU Basic Distribution Amount, to exceed the product
of (x) the lesser of such holder's percentage interest in Partnership
profits for the year in which the Special Tax Distribution is made or
such holder's percentage interest in Partnership profits for the life
of the Partnership (as determined for purposes of Treasury Regulations
Section 1.707-4(b)) and (y) the Partnership's net cash flow from
operations for the year in which the Special Tax Distribution is made
(as determined for purposes of Treasury Regulations Section
1.707-4(b)).
(d) Notwithstanding subsections (a)(v) and (b)(v), above, holders of L-SCUs
shall be allocated Gross Income in excess of the amount in subsections (a)(iv)
and (b)(iv) above if and only if (i) all other Common Unit holders have received
an income and/or gain allocation equivalent to their cash distributions, and
(ii) such allocation of income and/or gain to holders of the L-SCUs is in an
amount equivalent to their pro rata portion, treating each SCU, S-SCU, and L-SCU
as the number of Common Units into which such SCU, S-SCU, and L-SCU are
convertible pursuant to Exhibit E, Exhibit H, or Exhibit J, as applicable, of
the aggregate of the income and/or gain remaining after the other Common Unit
holders have been allocated income and/or gain in an amount equivalent to the
cash distributions that they received for such fiscal year.
(e) Notwithstanding subsections (a), (b), (c) and (d), Net Income and Net
Losses from a Liquidation Transaction shall be allocated as follows:
(i) First, Net Income (or Net Losses) from the Liquidation
Transaction shall be allocated to the relevant Partner, in
connection with the Preferred Units, in an amount equal to the
excess (or deficit) of the sum of the applicable Preferred
Redemption Amounts of the Preferred Units which have been or will
be redeemed with the proceeds of the Liquidation Transaction over
the Preferred Unit Issue Price of such Preferred Units;
(ii) Second, Net Income (or Net Losses) from the Liquidation
Transaction shall be allocated among the Partners owning SCUs,
S-SCUs, L-SCUs or Common Units so that the Capital Accounts of
the Partners (excluding from the Capital Account of any Partner
the amount attributable to such Partner's Preferred Units) are
proportional to the number of Common Units held by each Partner.
For purposes of this subsection (ii), each SCU, S-SCU or L-SCU
17
shall be treated as the number of Common Units into which the
SCU, S-SCUs or L-SCUs are convertible pursuant to the terms of
Exhibit E, Exhibit H or Exhibit J, as applicable, to the
Agreement.
(iii) Third, any remaining Net Income or Net Losses from the
Liquidation Transaction shall be allocated among the Partners
owning SCUs, S-SCUs, L-SCUs or Common Units in accordance with
their proportionate ownership of Common Units. For purposes of
this subsection (iii), each SCU, S-SCU or L-SCU shall be treated
as the number of Common Units into which the SCU, S-SCU or L-SCU
is convertible pursuant to the terms of Exhibit E, Exhibit H or
Exhibit J, as applicable, to the Agreement.
2. 2. Special Allocations.
Notwithstanding any provisions of Section 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
subsection (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 subsection (a) shall be
made in proportion to the respective amounts required to be allocated to each
Partner pursuant thereto.
(b) Minimum Gain Attributable to Partner Nonrecourse Debt. If there is a
net decrease in minimum Gain Attributable to Partner Nonrecourse Debt during any
fiscal year (other than due to the conversion, refinancing or other change in
the debt instrument causing it to become partially or wholly nonrecourse,
certain capital contributions, or certain revaluations of Partnership property
as further outlined in Regulation Section 1.704-2(i)(4)), each Partner shall be
specially allocated items of Partnership income and gain for such year (and, if
necessary, subsequent years) in an amount equal to that Partner's share of the
net decrease in the Minimum Gain Attributable to Partner Nonrecourse Debt. The
items to be so allocated shall be determined in accordance with Regulation
Sections 1.704-2(i)(4) and (j)(2). This subsection (b) is intended to comply
with the minimum gain chargeback requirement with respect to Partner Nonrecourse
Debt contained in said sections of the Regulations and shall be interpreted
consistently therewith. Allocations pursuant to this subsection (b) shall be
made in proportion to the respective amounts required to be allocated to each
Partner pursuant thereto.
(c) Qualified Income Offset. In the event a Limited Partner unexpectedly
receives any adjustments, allocations or distributions described in Regulation
18
Sections 1.704-1(b)(2)(ii)(d)(4), (5), or (6), and such Limited Partner has an
Adjusted Capital Account Deficit, items of Partnership income and gain shall be
specially allocated to such Partner in an amount and manner sufficient to
eliminate the Adjusted Capital Account Deficit as quickly as possible. This
subsection (c) is intended to constitute a "qualified income offset" under
Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith.
(d) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal year or
other applicable period shall be allocated to the Partners in accordance with
their proportionate ownership of Common Units other than Common Units issued on
a redemption or conversion of SCUs, S-SCUs, or L-SCUs.
(e) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for any
fiscal year or other applicable period shall be specially allocated to the
Partner that bears the economic risk of loss for the debt (i.e., the Partner
Nonrecourse Debt) in respect of which such Partner Nonrecourse Deductions are
attributable (as determined under Regulation Sections 1.704-2(b)(4) and (i)(1)).
(f) Curative Allocations. The Regulatory Allocations (as defined below)
shall be taken into account in allocating other items of income (including Gross
Income), gain, loss, and deduction among the Partners so that, to the extent
possible, the cumulative net amount of allocations of Partnership Items under
Sections 1 and 2 of this Exhibit C shall be equal to the net amount that would
have been allocated to each Partner if the Regulatory Allocations had not
occurred. To the extent that there is an allocation under Section 2(a) or (b)
hereof of Partnership income or gain to a holder of SCUs, S-SCUs, or L-SCUs or
Common units issued on a redemption or conversion of SCUs, S-SCUs, or L-SCUs,
there will be a correspondingly smaller allocation of Gross Income to such
holder under Section 1(a)(iii) or l(b)(iii) hereof. This subsection (f) is
intended to minimize to the extent possible and to the extent necessary any
economic distortions which may result from application of the Regulatory
Allocations and shall be interpreted in a manner consistent therewith. For
purposes hereof, "Regulatory Allocations" shall mean the allocations provided
under this Section 2.
3. 3. Tax Allocations.
(a) Generally. Subject to subsections (b) and (c) hereof, items of income,
gain, loss, deduction and credit to be allocated for income tax purposes
(collectively, "Tax Items") shall be allocated among the Partners on the same
basis as their respective book items.
(b) Sections 1245/1250 Recapture. If any portion of gain from the sale of
property is treated as gain which is ordinary income by virtue of the
application of Code Section 1245 or 1250 ("Affected Gain"), then (A) such
Affected Gain shall be allocated among the Partners in the same proportion that
the depreciation and amortization deductions giving rise to the Affected Gain
were allocated and (B) other Tax Items of gain of the same character that would
have been recognized, but for the application of Code Section 1245 and/or 1250,
shall be allocated away from those Partners who are allocated Affected Gain
pursuant to subsection (A) so that, to the extent possible, the other Partners
are allocated the same amount, and type, of capital gain that would have been
allocated to them had Code Section 1245 and/or 1250 not applied. For purposes
19
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 subsection (b)
hereof, Tax Items with respect to Partnership property that is subject to Code
Section 704(c) and/or Regulation Section 1.704-1(b)(2)(iv)(f) (collectively,
`Section 704(c) Tax Items") shall be allocated in accordance with said Code
section and/or Regulation Section 1.704-1(b)(4)(i), as the case may be. The
allocation of Tax Items shall be subject to the ceiling rule stated in
Regulation Section 1.704-1(c) and Regulation Section 1.704-3, except that with
respect to the properties contributed to the Partnership (the "▇▇▇▇▇▇
Properties") pursuant to the Master Contribution Agreement dated September 25,
2000 among ▇▇▇▇▇▇ Realty Investors Limited Partnership, CBL & Associates
Properties, Inc., CBL & Associates Limited Partnership and others (as amended,
the "Master Contribution Agreement'), the property ( "Monroeville Mall")
contributed to the Partnership pursuant to the Contribution and Exchange
Agreement for Monroeville Mall and the property ( "Laurel Park Place")
contributed to the Partnership pursuant to the Contribution and Exchange
Agreement for Laurel Park Place, curative allocations of gain recognized on a
disposition of a direct or indirect interest in a ▇▇▇▇▇▇ Property, the
Monroeville Mall or Laurel Park Place may be made to the extent permitted in
Regulation Section 1.704-3(c). The Partnership shall allocate items of income,
gain, loss and deduction allocated to it by a Property Partnership to the
Partner or Partners contributing the interest or interests in such Property
Partnership, so that, to the greatest extent possible, such contributing Partner
or Partners are allocated the same amount and character of items of income,
gain, loss and deduction with respect to such Property Partnership that they
would have been allocated had they contributed undivided interests in the assets
owned by such Property Partnership to the Partnership in lieu of contributing
the interest or interests in the Property Partnership to the Partnership.
Notwithstanding the above, with respect to property contributed to the
Partnership after the date hereof, such Section 704(c) Tax Items may be
allocated under such method selected by the General Partner that is consistent
with the Section 704(c) Regulations.
4. 4. Certain Allocations of Depreciation and Loss. Notwithstanding
anything in this Exhibit C to the contrary, depreciation, amortization, gain and
loss attributable to an adjustment under Section 743 or Section 734 of the Code
of the federal income tax basis of Partnership assets (including adjustments
made prior to or after the contribution of the relevant assets or indirect
interests therein to the Partnership) shall be allocated to the direct or
indirect partner, or such partner's successor or assign, whose death or
acquisition of a direct or indirect interest gave rise to the adjustments,
except to the extent such allocations would not be valid as a result of a change
in tax law occurring after the date of the Master Contribution Agreement.
20
4.5 Clarification Regarding L-SCUs' Conversion to Common Units. Throughout
this Exhibit C, reference is made to "L-SCUs or Common Units received on a
conversion or redemption of such L-SCUs" or words to similar effect. The terms
and rights of the L-SCUs are set forth on Exhibit J of the Partnership Agreement
and such rights do not include the right on the part of the holder of L-SCUs to
convert such L-SCUs to Common Units in all circumstances. However, circumstances
may arise where holders of L-SCUs receive Common Units in exchange for or in
redemption of L-SCUs, i.e., on a Recapitalization Transaction as defined in
Exhibit J. The references to L-SCUs being converted to Common Units or Common
Units being received in redemption of L-SCUs as set forth above shall not be
construed as amending, reducing, expanding or otherwise changing the terms and
rights of the L-SCUs as set forth on Exhibit J.
21
Attachment 4
EXHIBIT J
TERMS
OF
SERIES L SPECIAL COMMON UNITS
OF
CBL & ASSOCIATES LIMITED PARTNERSHIP
(the "Operating Partnership")
Pursuant to Article 4.4 of the
Second Amended and Restated Partnership Agreement of
the Operating Partnership
WHEREAS, Article 4.4 of the Second Amended and Restated Partnership
Agreement of the Operating Partnership (as amended through June 1, 2005, and as
the same may hereafter be amended as permitted therein and herein, the
"Partnership Agreement") grants CBL Holdings I, Inc., the general partner of the
Operating Partnership (the "General Partner"), authority to cause the Operating
Partnership to issue interests in the Operating Partnership to persons other
than the General Partner in one or more classes or series, with such
designations, preferences and relative, participating, optional or other special
rights, powers and duties as may be determined by the General Partner in its
sole and absolute discretion. (For ease of reference, capitalized terms used
herein and not otherwise defined have the meanings assigned to them in the
Partnership Agreement.)
WHEREAS, the Company (as defined in the Partnership Agreement) has declared
a stock dividend of one share of Common Stock for each outstanding share of
Common Stock and has set the record date for such stock dividend as June 1, 2005
and a payment date of June 15, 2005 (the "6/15/05 Stock Split").
NOW THEREFORE, the General Partner hereby designates a series of priority
units and fixes the designations, powers, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, of such units, as follows:
1. Designation and Amount.
The units of such series shall be designated "Series L Special Common
Units" (the "L-SCUs") and the number of units constituting such series shall
initially be 285,850 (and shall be 571,700 after the 6/15/05 Stock Split). The
rights and obligations of the L-SCUs shall be as set forth herein (to the extent
not inconsistent with the Partnership Agreement) and in the Partnership
Agreement. The Operating Partnership may not issue any additional L-SCUs unless
(i) the issuance is required to deliver additional consideration as required by
the terms of the Contribution Agreement, dated as of March 18, 2005, among
Newburgh/Six Mile Limited Partnership, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Park Retail Holding LLC
and the Operating Partnership (the "Contribution Agreement") or (ii) it has
22
obtained the prior written consent of the holders of record of a majority of the
outstanding L-SCUs ("Majority Holders"). Nothing in the foregoing shall be
deemed to limit the right and power of the General Partner to cause the
Operating Partnership to designate and issue additional L-SCUs, designate and
issues other series of units, and/or designate and issue other securities to the
fullest extent permitted under the terms of the Partnership Agreement and this
Exhibit J.
2. Distribution Rights.
(a) Holders of L-SCUs shall be entitled to receive distributions with
respect to the L-SCUs in the manner and to the fullest extent set forth in the
Partnership Agreement.
(b) L-SCU Basic Distribution Amount. Until the earlier to occur of (i) June
1, 2020 or (ii) the date upon which the L-SCU Threshold is met, holders of the
L-SCUs shall be entitled to receive distributions equal to the L-SCU Basic
Distribution Amount as provided in Section 6.2(c)(ii) of the Partnership
Agreement. The foregoing amounts shall be adjusted to reflect any splits,
reverse splits, distributions of Common Units or similar adjustments to the
amount of the Operating Partnership's outstanding Common Units.
(c) Additional Distributions. Until the earlier to occur of (i) June 1,
2020 or (ii) the date upon which the L-SCU Threshold is met, Holders of L-SCUs
shall be entitled to receive additional quarterly distributions with respect to
the L-SCUs in the event that the quarterly distributions to the holders of
Common Units exceed the L-SCU Basic Distribution Amount on a per unit basis with
such additional distribution to the holders of L-SCUs to be in the amount of
such excess (the "Additional Distributions") and such Additional Distribution
shall be payable in the same manner as distributions are made to holders of
Common Units.
(d) Distribution Procedures. Distributions with respect to the L-SCUs shall
be payable quarterly on the dates designated by the General Partner for the
payment of distributions to the holders of Common Units. Any distribution
payable on the L-SCUs for the quarter in which the L-SCUs are first issued will
be prorated and computed on the basis of a 360-day year consisting of twelve
30-day months. Distributions will be payable to holders of record of the L-SCUs
as they appear in the records of the Operating Partnership at the close of
business on the applicable record date, which shall be the record date
designated by the General Partner for the payment of distributions for such
quarter to the holders of Common Units.
(e) L-SCU Distribution Threshold and Conversion to Distribution Rights of
Common Units. At the earlier to occur of (i) such time as the holders of Common
Units have received distributions that have equaled or exceeded the L-SCU Basic
Distribution Amount payable to holders of L-SCUs for each of four consecutive
calendar quarters (the "L-SCU Threshold"); or (ii) June 1, 2020, then the
distribution rights of holders of all L-SCUs shall be converted to the
distribution rights of holders of Common Units and there shall be no further
distinction between the distribution rights attributable to L-SCUs and the
distribution rights attributable to Common Units. Specifically and by way of
clarification, upon the occurrence of the events set forth in this Paragraph
2(e), there shall be no further priority distributions paid or payable to the
holders of L-SCUs pursuant to Section 6.2(c ) of the Partnership Agreement and
each holder of L-SCUs shall automatically thereupon be deemed to hold the
distribution rights attributable to Common Units in the same per unit amount as
such holder holds L-SCUs. Following a conversion of distribution rights, all
other rights attributable to L-SCUs shall remain as stated in this Exhibit J.
23
(f) At such time, if any, as there is any distribution shortfall as
described in Section 6.2(c)(iii) of the Partnership Agreement, none of the
Operating Partnership, the General Partner or the REIT will redeem, purchase or
otherwise acquire for any consideration (or any moneys be paid to or made
available for any sinking fund for the redemption of any such units) any Common
Units or any other units of interest in the Partnership by their terms ranking
junior as to distributions to the rights of the L-SCUs (except by conversion
into or exchange for shares of Common Stock of the REIT or other units of the
Operating Partnership ranking junior to the L-SCUs as to distributions).
(g) Distributions with respect to the L-SCUs are intended to qualify as
permitted distributions of cash that are not treated as a disguised sale within
the meaning of Treasury Regulation 1.707-4 and the provisions of this Exhibit J
shall be construed and applied consistent with such Treasury Regulations.
3. Rights of L-SCU Holders.
(a) So long as any L-SCUs remain outstanding, the Operating Partnership
shall not, without the affirmative vote or consent of the holders of two-thirds
of the L-SCUs outstanding at the time, given in person or by proxy, either in
writing or at a meeting (such series voting as a class):
(i) undertake, consent to, or otherwise participate or acquiesce to
any recapitalization transaction (including, without limitation,
an initial public offering, a merger, consolidation, other
business combination, exchange, self-tender offer for all or
substantially all of the Common Units, or sale or other
disposition of all or substantially all of the Operating
Partnership's assets)(each of the foregoing being herein referred
to as a "Recapitalization Transaction") unless in connection with
such Recapitalization Transaction, (x) either each L-SCU
outstanding prior to the Recapitalization Transaction will (A)
remain outstanding following the consummation of such
Recapitalization Transaction without any amendment to the rights
and obligation of the holders of the L-SCUs that is materially
adverse to the holders of L-SCUs (as reasonably determined by the
Board of Directors of the Company) or (B) be converted into or
exchanged for securities of the surviving entity having
preferences, conversion and other rights, voting powers,
restrictions, distribution rights and terms and conditions of
redemption thereof materially no less favorable than those of an
L-SCU holder under this Exhibit J and the Partnership Agreement
(as reasonably determined by the Board of Directors of the
Company), and (y) each holder of L-SCUs shall have the option to
convert its L-SCUs into the amount and type of consideration
and/or securities receivable by a holder of the same number of
Common Units as such holder of L-SCUs;
(ii) amend, alter or repeal the provisions of this Exhibit J or
Section 6.2(b) of the Partnership Agreement, the provisions of
Sections 9.2(a) or 9.2(d) as they apply to holders of L-SCUs or
the provisions of Section 9.2(c), in each case whether by merger,
consolidation or otherwise, in a manner adverse to the holders of
the L-SCUs (as reasonably determined by the Board of Directors of
the Company); or
24
(iii) otherwise amend, alter or repeal the provisions of the
Partnership Agreement in a manner that would adversely affect in
any material respect the holders of the L-SCUs disproportionately
with respect to the rights of the holders of the Common Units (as
reasonably determined by the Board of Directors of the Company);
it being understood that nothing in this Exhibit J shall be
deemed to limit the right of the Operating Partnership to issue
securities to holders of any interests in the Operating
Partnership that rank on a parity with or prior to the L-SCUs
with respect to distribution rights and rights upon dissolution,
liquidation or winding-up of the Operating Partnership or to
amend, alter or repeal the terms of any such securities. (b)
Unless specifically set forth in this Exhibit J, holders of
L-SCUs shall have each and every right, privilege and entitlement
as holders of Common Units, including but not limited to voting
rights, i.e., each holder of one L-SCU shall have the same voting
rights as a holder of one Common Unit and the holders of the
L-SCUs shall have the right to vote with the holders of Common
Units, as a single class, on any matter on which the holders of
Common Units are entitled to vote. Unless specifically set forth
in this Exhibit J or in the Partnership Agreement, holders of
L-SCUs do not have rights that are superior or that take priority
over the rights of holders of Common Units. If and to the extent
the Operating Partnership may issue to all holders of Common
Units additional rights, options, warrants or convertible or
exchangeable securities entitling such holders to subscribe for
or purchase additional Common Units, or any other securities or
property of the Operating Partnership, then such additional
rights shall automatically be issued to all holders of L-SCUs
such that the holders of L-SCUs shall at all times (except as
specifically set forth in this Exhibit J) have the rights,
privileges and entitlements of holders of Common Units. Holders
of L-SCUs shall have the rights set forth in that certain
Registration Rights Agreement dated June 1, 2005 between the
holders and the Company (the "Rights Agreement").
4. Exchange.
(a) At any time following the issuance of the L-SCUs, subject to the
remainder of this Paragraph 4, a holder of L-SCUs shall have the right (the
"Series L Exchange Right") to exchange all or any portion of such holder's
L-SCU's (the "Series L Offered Units") for Exchange Consideration (as defined
below), subject to the limitations contained in Paragraphs 4(c) and 4(d) below.
Any such Series L Exchange Right shall be exercised pursuant to an exchange
notice comparable to the Exchange Notice required under Exhibit D to the
Partnership Agreement (such notice, a "Series L Exchange Notice") delivered, at
the election of the holder exercising the Series L Exchange Right (the "Series L
Exercising Holder"), to the Company or to the Operating Partnership, by the
Series L Exercising Holder.
(b) The exchange consideration (the "Series L Exchange Consideration")
payable by the Company or the Operating Partnership, as applicable, to each
Series L Exercising Holder shall be equal to the product of (x) the Common Stock
Amount with respect to the Series L Offered Units multiplied by (y) the Current
Per Share Market Price, each computed as of the date on which the Series L
Exchange Notice was delivered to the Company. In connection with a Series L
Exchange Notice delivered to the Company, the Series L Exchange Consideration
shall, in the sole and absolute discretion of the Company, be paid in the form
of (A) cash, or cashier's or certified check, or by wire transfer of immediately
25
available funds to the Series L Exercising Holder's designated account or (B)
subject to the applicable Ownership Limit, by the issuance by the Company of a
number of shares of its Common Stock equal to the Common Stock Amount with
respect to the Series L Offered Units or (C) subject to the applicable Ownership
Limit, any combination of cash and Common Stock (valued at the Current Per Share
Market Price). In addition to the Series L Exchange Consideration, concurrently
with any exchange pursuant to this Paragraph 4, the Operating Partnership shall
pay the Series L Exercising Holder cash in an amount equal to any distribution
shortfall described in Section 6.2(b)(i) of the Partnership Agreement with
respect to the Series L Offered Units outstanding on the date of the Exchange.
(c) Notwithstanding anything herein to the contrary, any Series L Exchange
Right with respect to the Company may only be exercised to the extent that, upon
exercise of the Series L Exchange Right, assuming payment by the Company of the
Series L Exchange Consideration in shares of Common Stock, the Series L
Exercising Holder will not, on a cumulative basis, Beneficially Own or
Constructively Own shares of Common Stock, including shares of Common Stock to
be issued upon exercise of the Series L Exchange Right, in excess of the
applicable Ownership Limit. If a Series L Exchange Notice is delivered to the
Company but, as a result of the applicable Ownership Limit or as a result of
restrictions contained in the certificate of incorporation of the Company, the
Series L Exchange Right cannot be exercised in full as aforesaid, the Series L
Exchange Notice shall be deemed to be modified to provide that the Series L
Exchange Right shall be exercised only to the extent permitted under the
applicable Ownership Limit under the certificate of incorporation of the
Company, and the Series L Exchange Notice with respect to the remainder of such
Series L Exchange Right shall be deemed to have been withdrawn.
(d) Series L Exchange Rights may be exercised at any time after the date
set forth in Paragraph 4(a) above and from time to time, provided, however,
that, except with the prior written consent of the General Partner, (x) only one
(1) Series L Exchange Notice may be delivered to either the Company or the
Operating Partnership by all holders of L-SCUs during any consecutive twelve
(12) month period; and (y) no Series L Exchange Notice may be delivered with
respect to L-SCUs either (A) having a value of less than $3,000,000 calculated
by multiplying the Common Stock Amount with respect to such L-SCUs by the
Current Per Share Market Price or (B) if the holders of all of the
then-outstanding L-SCUs do not own L-SCUs having a value of $3,000,000 or more
as calculated in (A) above, constituting less than all of the L-SCUs owned by
such holders as a group.
(e) Within thirty (30) days after receipt by the Company or the Operating
Partnership of any Series L Exchange Notice delivered in accordance with the
requirements of Paragraph 4(a) hereof, the Company or the Operating Partnership,
as applicable, shall deliver to the Series L Exercising Holder a notice (a
"Series L Election Notice"), which Series L Election Notice shall set forth the
computation of the Series L Exchange Consideration and, in the case of a Series
L Election Notice delivered by the Company, shall specify the form of the Series
L Exchange Consideration (which shall be in accordance with Paragraph 4(b)
hereof), to be paid by the Company or the Operating Partnership, as applicable
to such Series L Exercising Holder and the date, time and location for
completion of the purchase and sale of the Series L Offered Units, which date
shall, to the extent required, in no event be more than (A) in the case of
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Series L Offered Units with respect to which the Company has elected to pay the
Series L Exchange Consideration by issuance of shares of Common Stock, ten (10)
days after the delivery by the Company or the Operating Partnership, as
applicable, of the Series L Election Notice for the Series L Offered Units or
(B) in the case of Series L Offered Units with respect to which the Company has
elected to pay the Series L Exchange Consideration in cash, sixty (60) days
after the initial date of receipt by the Company of the Series L Exchange Notice
for such Series L Offered Units; provided, however, that such sixty (60) day
period may be extended for an additional sixty (60) day period to the extent
required for the Company to cause additional shares of its Common Stock to be
issued to provide financing to be used to acquire the Series L Offered Units.
Notwithstanding the foregoing, each of the Company and the Operating Partnership
agrees to use its reasonable efforts to cause the closing of the exchange
hereunder to occur as quickly as possible. If the Company or the Operating
Partnership, as applicable, has delivered a Series L Election Notice to the
Series L Exercising Holder with respect to a Series L Exchange Notice, the
Series L Exchange Notice may not be withdrawn or modified by the Series L
Exercising Holder (except to the extent of any deemed modification required by
Section 4(c) above) without the consent of the General Partner. Similarly, if
the Company or the Operating Partnership delivers a Series L Election Notice to
a Series L Exercising Holder, the Company or the Operating Partnership, as
applicable, may not modify the Series L Election Notice without the consent of
the Series L Exercising Holder.
(f) At the closing of the purchase and sale of Series L Offered Units,
payment of the Series L Exchange Consideration shall be accompanied by proper
instruments of transfer and assignment and by the delivery of (i)
representations and warranties of (A) the Series L Exercising Holder with
respect to (x) the Series L Exercising Holder's due authority to sell all of the
right, title and interest in and to such Series L Offered Units to the Company
or the Operating Partnership, as applicable, (y) the status of the Series L
Offered Units being sold, free and clear of all Liens and (z) the Series L
Exercising Holder's intent to acquire the Common Stock for investment purposes
and not for distribution, and (B) the Company or the Operating Partnership, as
applicable, with respect to due authority of the Company or the Operating
Partnership, as applicable, for the purchase of such Series L Offered Units, and
(ii) to the extent that any shares of Common Stock are issued in payment of the
Series L Exchange Consideration or any portion thereof, (A) an opinion of
counsel for the Company or the Operating Partnership, as applicable, reasonably
satisfactory to the Series L Exercising, to the effect that (I) such shares of
Common Stock have been duly authorized, are validly issued, fully-paid and
non-assessable and (II) if shares of Common Stock are issued, that the issuance
of such shares will not violate the applicable Ownership Limit, and (B) a stock
certificate or certificates evidencing the shares of Common Stock to be issued
and registered in the name of the Series L Exercising Holder or its designee,
with an appropriate legend reflecting that such shares or units are not
registered under the Securities Act of 1933, as amended, and may not be offered
or sold unless registered pursuant to the provisions of such act or an exemption
therefrom is available as confirmed by an opinion of counsel satisfactory to the
Company or the Operating Partnership.
(g) To facilitate the Company's ability to fully perform its obligations
hereunder, the Company covenants and agrees, for the benefit of the holders from
time to time of L-SCUs, as follows:
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(i) At all times during the pendency of the Series L Exchange Rights,
the Company shall reserve for issuance such number of shares of
Common Stock as may be necessary to enable the Company to issue
such shares in full payment of the Series L Exchange
Consideration in regard to all L-SCUs which are from time to time
outstanding;
(ii) As long as the Company shall be obligated to file periodic
reports under the Exchange Act, the Company will timely file such
reports in such manner as shall enable any recipient of Common
Stock issued to holders of L-SCUs hereunder in reliance upon an
exemption from registration under the Securities Act to continue
to be eligible to utilize Rule 144 promulgated by the SEC
pursuant to the Securities Act, or any successor rule or
regulation or statute thereunder, for the resale thereof;
(iii) Each holder of L-SCUs, upon request, shall be entitled to
receive from the Operating Partnership in a timely manner all
reports filed by the Company with the SEC and all other
communications transmitted from time to time by the Company to
its shareholders generally; and
(iv) Other than as contemplated under the terms of the Rights
Agreement, issuances of stock pursuant to the Company's dividend
reinvestment plan (as described in the Company's prospectus dated
June 12, 2001) or any customary dividend reinvestment plan
adopted by the Company after that date and other than the
issuance of deferred stock awards or the grant of stock options
to officers, directors and employees of the Company, the Company
shall not issue or sell any shares of Common Stock or other
equity securities or any instrument convertible into any equity
security for a consideration less than the fair value of such
Common Stock or other equity security, as determined in each case
by the Board of Directors of the Company in its sole discretion,
and under no circumstances shall the Company declare any stock
dividend, stock split, stock distribution or the like, unless
fair and equitable arrangements are provided, to the extent
necessary, to fully adjust, and to avoid any dilution in, the
rights of holders of the L-SCUs under this Exhibit J and the
Partnership Agreement (as reasonably determined by the Board of
Directors of the Company). The provisions of this clause (iv) of
Paragraph 4(g) shall not prohibit the Company from issuing shares
of its Common Stock or other equity securities or any instrument
convertible into any equity security in lieu of a cash dividend
declared by the Company.
(h) All Series L Offered Units tendered to the Company or to the Operating
Partnership, as applicable, in accordance with the exercise of Series L Exchange
Rights shall be delivered to the Company or to the Operating Partnership, as
applicable, free and clear of all Liens and should any Liens exist or arise with
respect to such Units, the Company or the Operating Partnership, as applicable,
shall be under no obligation to acquire the same unless, in connection with such
acquisition, the Company or the Operating Partnership, as applicable, has
elected to pay such portion of the Series L Exchange Consideration in the form
of cash consideration in circumstances where such consideration will be
sufficient to cause such existing Lien to be discharged in full upon application
of all or a part of such consideration, and the Company or the Operating
Partnership, as applicable, is expressly authorized to apply such portion of the
Series L Exchange Consideration as may be necessary to satisfy any indebtedness
in full and to discharge such Lien in full. In the event any state or local
property transfer tax is payable as a result of the transfer of Series L Offered
Units to the Company, the transferring holder thereof shall assume and pay such
transfer tax.
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(i) Subject to the restrictions on transfer set forth in the Partnership
Agreement and in Paragraph 5 hereof, the Assignee of any holder of L-SCUs may
exercise the rights of such holder of L-SCUs pursuant to this Paragraph 4, and
such holder of L-SCUs shall be deemed to have assigned such rights to such
Assignee and shall be bound by the exercise of such rights by such holder's
Assignee. In connection with any exercise of such rights by such Assignee on
behalf of such holder, the Series L Exchange Consideration shall be paid by the
Company or the Operating Partnership, as applicable, directly to such Assignee
and not to such holder.
(j) In the event that the Company shall be a party to any transaction
including, without limitation, a merger, consolidation or statutory share
exchange with respect to the Common Stock, in each case as a result of which
shares of Common Stock are converted into the right to receive shares of capital
stock, other securities or other property (including cash or any combination
thereof), the Series L Exchange Consideration payable thereafter by the Company
pursuant to clauses (B) and (C) of Paragraph 4(b) in lieu of a share of Common
Stock shall be the kind and amount of shares of capital stock and other
securities and property (including cash or any combination thereof) that was
received upon consummation of such transaction in return for one share of Common
Stock, and the Series L Exchange Consideration payable by the Operating
Partnership pursuant to the last sentence of Paragraph 4(b) shall be adjusted
accordingly.
(k) As of the date hereof (i) the Conversion Factor is 1.0 and (ii) the
Common Unit Conversion Factor is 1.0.
5. Restrictions on Transfer.
(a) In addition to Transfers permitted pursuant to Article IX of the
Partnership Agreement, but subject to Section 9.3 of the Partnership Agreement,
the General Partner hereby consents to (i) an Approved Transfer of L-SCUs, and
(ii) the admission of any transferee of a L-SCU pursuant to any Approved
Transfer as a Substituted Limited Partner (and the conditions set forth in
Section 9.2 of the Partnership Agreement for such admission will be deemed
satisfied) upon the filing with the Operating Partnership of (A) a duly executed
and acknowledged instrument of assignment between the transferor and the
transferee specifying the L-SCUs being assigned, setting forth the intention of
the transferor that such transferee succeed to the transferor's interest as a
Limited Partner with respect to the L-SCUs being assigned and agreement of the
transferee assuming all of the obligations of a Limited Partner under the
Partnership Agreement with respect to such transferred L-SCUs accruing from and
after the date of transfer, (B) a duly executed and acknowledged instrument by
which the transferee confirms to the Operating Partnership that it accepts and
adopts the provisions of the Partnership Agreement applicable to a Limited
Partner and (C) any other instruments reasonably required by the General Partner
and payment by the transferor of a transfer fee to the Operating Partnership
sufficient to cover the reasonable expenses of the transfer, if any.
29
(b) For the purposes of this Paragraph 5, an "Approved Transfer" shall mean
(i) any pledge by an initial holder of L-SCUs or any permitted
transferee thereof to an institutional lender as security for a
bona fide obligation of the holder, and any transfer to any such
pledgee or any designee thereof or purchaser therefrom following
a default in the obligation secured by such pledge; or
(ii) any transfer by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Park Retail Holdings LLC or its
Affiliate to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Brothers Four LLC, ▇▇▇▇▇▇ ▇. ▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, or to any trust for their
benefit, provided however, that the aggregate number of holders
of record of L-SCUs shall not, as a result of any such transfers,
exceed eight (8).
6. Headings of Subdivisions.
The headings of the various subdivisions hereof are for convenience of
reference only and shall not affect the interpretation of any of the provisions
hereof.
7. Severability of Provisions.
If any rights, voting powers, restrictions, limitations as to dividends or
other distributions, qualifications or terms or conditions of redemption of the
L-SCUs set forth in the Partnership Agreement and this Exhibit J are invalid,
unlawful or incapable of being enforced by reason of any rule of law or public
policy, all other preferences or other rights, voting powers, restrictions,
limitations as to distributions, qualifications or terms or conditions of
redemption of L-SCUs set forth in the Partnership Agreement which can be given
effect without the invalid, unlawful or unenforceable provision thereof shall,
nevertheless, remain in full force and effect and no rights, voting powers,
restrictions, limitations as to dividends or other distributions, qualifications
or terms or conditions of redemption of the L-SCUs herein set forth shall be
deemed dependent upon any other provision thereof unless so expressed therein.
8. No Preemptive Rights.
No holder of L-SCUs shall be entitled to any preemptive rights to subscribe
for or acquire any unissued units of the Operating Partnership (whether now or
hereafter authorized) or securities of the Operating Partnership convertible
into or carrying a right to subscribe to or acquire units of the Operating
Partnership.
[Signature on Next Page]
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IN WITNESS WHEREOF, CBL Holdings I, Inc., solely in its capacity as the
general partner of the Operating Partnership, has caused this Terms of Series L
Special Common Units to be duly executed to be effective this 1st day of June,
2005.
CBL HOLDINGS I, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇
Title: Vice Chairman of the Board
and Chief Financial Officer
Acknowledged and Agreed:
CBL & ASSOCIATES PROPERTIES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇
------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇
Title: Vice Chairman of the Board
and Chief Financial Officer
31
Attachment 1 to Exhibit J (Terms of L-SCUs)
Original Holders and Record Holders
Original Holder Record Holder Number of L-SCUs
------------------------------------------- ------------------------------------- ---------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Park Retail Holding LLC Same 285,850 (571,700 after
6/15/05 Stock Split)